Rewarding failure

I guess it's no wonder that Sarah Palin thinks "confidence" and arrogance are sufficient preparation for the second-highest office in the country. After all, the people who pay for political campaigns in this country are a perfect example of how competence is regarded as weakness, and failure of the spectacular kind is richly rewarded:

Merrill Lynch & Co. chief executive John Thain and two former Goldman Sachs Group Inc. colleagues he recruited may reap almost $200 million for their year running Merrill if they leave or are given lesser roles after Bank of America Corp. buys the brokerage.

Thain, who got a $15 million bonus when hired in December, stands to get an additional $11 million in accelerated stock payouts if he doesn't stay after the deal, compensation consultant Graef Crystal said.

Trading chief Thomas Montag, 51, who joined in August, may get $76 million, including bonus and accelerated awards. Strategy head Peter Kraus, 56, was given $95 million, including bonus and stock awards, to replace a Goldman package he had to forfeit, people familiar with the matter said.

Meanwhile, we haven't written about Washington Mutual yet. WaMu is now up for sale. The linked article says Federal regulators are looking to broker a deal, which means that if a buyer isn't found, we may become owners of a bank in addition to an insurance company -- anything to keep it from bankrupting the FDIC. But Wells Fargo, JPMorgan Chase, and HSBC Holdings are said to be interested.

So what kind of reward does WaMu's chief get for running his bank into the ground? Let's take a look, shall we? Check this out, from March of this year:

Washington Mutual (NYSE: WM), the nation's largest thrift institution, announced a new compensation plan Wednesday that would protect its top executives' annual bonuses. Specifically, performance targets used to evaluate executives' performance will be calculated without factoring in some of the damage mortgage losses and foreclosures have caused.

Remember all the fuss surrounding the mortgage market in the past year? When calculating the top execs' bonuses, just pretend it didn't happen.

You've got to be kidding me
Wait a minute. Is this the same Washington Mutual that:

• Slid 70% in the past year amid mortgage and foreclosure headaches?


• Canned 3,000 employees and shuttered 190 of its 336 loan centers last year, in the wake of an ugly real estate mess?


• Announced a $1.8 billion quarterly loss related to losses in its loan portfolio?

Yes, it is.

Please, enlighten me
Washington Mutual justified the plan by acknowledging the "challenging business environment and the need to evaluate performance across a wide range of factors." Apparently, that "wide range of factors" doesn't include evaluating management members whose jobs include ensuring the feasibility of the company's loan portfolio in the first place.

If any of us had the kind of poor job performance that these executives had, we'd be fired. But these guys get to create their own compensation packages, then amend them based on information that shareholders may not have yet, in order to protect their own multimillions.

Funny how John McCain was utterly silent on this until his poll numbers started to drop.