The guy would have taken the CEO job without the bonus; it serves zero purpose to the shareholders to give him $7.5 million.
Why don't companies base executive compensation on performance? Doesn't that seem logical?
My suspicion is that this is why some companies start out as good and are later perceived as evil. The game changes once you have legal fiduciary responsibilities to shareholders. It seems to me that it can get very hard to defend your strategy of not maximizing profits when others around you are raking it in.
Put the money in a 5 years escrowed account. If the changes that you made were sound and the company continues to succeed, you get it. Otherwise, you forfeit.
Your situation is bad exactly because you are not paying attention to this how to build an empire (China) vs. collapse one (USA).
Beyond that the board wants to reassure themselves that they are making good decisions, consequently they can justify a slightly larger payday for the new CEO on the grounds that since they are such fine people they have hired an above average CEO and should pay him slightly more than the median compensation for Executives in comparable companies...
Acting like Fishman was appointed CEO just because he was a friend of the board is completely false.
He was preivously the CEO of two other banks: Sovereign Bank and Independence Community Bank. He has 25+ years experience as a senior executive in banking.
I'm curious why you are so offended by a general viewpointon executive compensation.
Must remember </sarcasm> tag
It would work out nicely if every leader thought leading was so fun that he'd do it for free. Berkshire Hathaway chooses its managers in this way. The people they hire seem to enjoy building something rugged.
Unfortunately, many leadership positions just aren't fun enough for this to be a viable option. And it's not even just a question of choosing the right man for the job. Public companies are notorious for their ruthless owners (the market), which often require different things than what would be necessary for long-term growth and stability. Even if all shareholders were interested in the distant future, the market is nothing if not a committtee. Necessary decisions are sometimes unpopular. No one who masters his craft (in this case domain-specific leadership) wants to be bogged down with politics, but this is exactly what public companies offer.
Hence, these positions attract the wrong type of people - those who are attracted to money or power. The 'right man for the job' is probably enjoying a tenth of the salary leading some small company somewhere, because leading a large market-exposed company just isn't worth it. It's not just a question of choosing the right guy and writing him a big check; he might not want the job.
A board of directors in a state of panic. Note that Mr Fishman was serving as Chairman at the third largest mortgage brokerage in the country (who do commercial, industrial and multi-unit residential deals - not sub-prime stuff) - not the type of job to leave for a company about to go under without big incentives.