Big signing bonus for new WaMu top exec

Washington Mutual will pay new Chief Executive Alan Fishman a $7.5 million signing bonus and $1 million annual salary to return the lender to profitability.

Should he remain CEO for all of 2009, Fishman will be entitled to a long-term incentive award of at least $8 million.

Starting next year, Fishman may be eligible for a bonus of 365 percent of his salary, Seattle-based WaMu said Thursday in a filing with the Securities and Exchange Commission.

WaMu tapped Fishman, 62, to replace Kerry Killinger, 59, who was ousted this week after subprime and option adjustable-rate mortgages contributed to $6.3 billion in losses over the past three quarters.

Fishman, a lifelong New Yorker who started in banking almost 40 years ago, joins as WaMu faces a deteriorating housing market and increased scrutiny from its chief regulator, the Office of Thrift Supervision.

Fishman also gets 612,500 restricted shares and options to buy 5 million common shares. The restricted stock will generally vest at an annual rate of 33 1/3 percent over three years provided performance targets are met, WaMu said.

The options will have a term of seven years and price equal to WaMu's closing price on the day of the grant.

Fishman will receive one-quarter of the options after one year. He'll get another quarter if WaMu's average closing stock price over 20 straight trading days is at least $10, another quarter if the same holds true at $14, and the last quarter if it trades that long at $18.

WaMu stock closed Thursday at $2.83.

If Fishman is removed without cause or resigns because of a "constructive termination," he will receive 2.5 times the sum of his base salary and annual bonus as well as unvested options and shares, WaMu said.

The bank also agreed to pay up to $50,000 in legal fees related to his employment agreement and will reimburse his expenses for moving to Seattle.

Fishman is WaMu's first new CEO since Killinger took the post in 1990.