At least there will be some people who will not suffer unduly from the subprime
mortgage mess - even if they played a role in creating it.
The Wall Street Journal is reporting that Washington Mutual
(WaMu) has approved compensation targets for its top executives
that will exclude some of the costs tied to mortgage losses and foreclosures
when cash bonuses are calculated later this year.
The decision will protect the compensation of the company's chairman
Kerry Killinger and more than 100 other executives from potential cuts in spite
of the fact that the major mortgage servicer reported a 1.87 billion loss in
the fourth-quarter. According to the bonus plan, loan-loss provisions on mortgages
and foreclosure costs will both be omitted from the new bonus formulas.
In a statement late yesterday, WaMu said, "The success with which credit
costs are managed will unequivocally continue to be a major part of the Board's
final deliberations." The company added that it will include further information
on the company's compensation philosophy in its proxy statement later this month.
According to The Journal, the new formula angered some WaMu
investors, who have seen the value of their holdings shrivel as the thrift's
mortgage troubles worsened. In the past year, WaMu's share price has tumbled
about 70% to a recent price of $13.39. The article quoted one investment banker
as saying "Bonuses should be given to the executives who enhance shareholder
value, not destroy it."