WaMu modifies 2008 executive bonus to exclude housing woes

By Scot Herrick | Job Performance

Mar 05

In a regulatory filing, Washington Mutual’s Board of Directors decided that executive bonuses for 2008 would exclude housing-related loan losses and expenses tied to foreclosures.

For example, this will allow the CEO’s 2008 bonus to now equal — and achieve — 365% of his base salary.

The reasoning for the formula according to the Securities and Exchange Commission filing was in response to:

the challenging business environment and the need to evaluate performance across a wide range of factors.

Excluding the issues with the home loan and foreclosure problems in bonus calculations should be a great boon for employees too. Much of the bonus, as in most companies, is dependent upon company performance and the home loan business really hurt the hard working employees.

Excluding these non-performing assets from the bonus calculations for employees like they are doing for the executives should really help.

They are excluding the home loan issues from the employee bonus calculation just like for the executives, aren’t they?

Any bets?

  • […] More profits should equal larger bonuses. No profits could mean little or no bonus (unless you are the CEO, of […]

  • […] will become leaner and bonuses lower (unless you are one of the 3,000 officers of WaMu). Cash flow — the inventory turnover of money for financial institutions — becomes […]

  • Scot Herrick says:

    Not a problem, Eric. I do not know for a fact that the rest of the employees are not getting the same calculation for their bonus pay, but I can’t imagine that they are. The values of the company, ones that they are very proud of, include “fair” and “caring.” Makes you wonder what constitutes fair and caring, doesn’t it?

    As a former employee, I was at those rah, rah sessions. Trying to figure out what was the real truth behind some (honest) spin. Trying to correlate data from outside the company (stockholders in most corporations get better information than internal company communication) with what was being said inside the company.

    Companies that have this sort of disconnect between the rules for executives and the rules for everyone else (which is the vast majority of large corporations here in the US) shouldn’t be surprised when employee engagement is a problem. When the rules are different, you get different behavior.

  • I was so angry when I read your post that I had to walk away for awhile. I’m not a populist at heart, but I am outraged that a board of directors would authorize such a bonus program. I know we’ve come to expect this from corporate America, but come on!

    I spent a lot of time in the mortgage banking world in my former life, and you can bet that the middle managers, CSRs, underwriters, etc. had no say in what type of loans were being put on the books/sold to Wall Street. Does anyone wonder who did? Oh wait, their heading to the bank/thrift to deposit their blood money. It’s becoming more of a sick joke everyday.

    I would imagine if the rank and file of WaMu knew how stupid it was for the organization to do loans that were beyond risky, they would have headed for doors a long time ago. But more than likely they were the ones sitting at rah, rah sessions listening to senior management tell them that all was well and the future was so bright that they needed to wear shades.

    What’s an employee to do when their “leaders” are selling snake oil?

    Sorry, Scot for my rant.

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