Difficult times for a company mean difficult times for its board of directors.
And these certainly are difficult times for Washington Mutual, the nation’s largest savings and loan.
Because of losses related to subprime mortgage lending, the Seattle-based firm has closed operations, cut jobs, slashed its dividend, and watched the price of its stock plummet to its lowest level in more than 11 years, closing Friday at $13.07.
Washington Mutual is also cooperating with the Securities and Exchange Commission in an inquiry of its lending practices. In November, New York state attorney general Andrew Cuomo alleged that Washington Mutual pressured appraisers to inflate home valuations that came in too low. Washington Mutual says the claim is not true.
Unlike Countrywide Financial, another mortgage lender battered by the subprime meltdown whose lending practices are under investigation, the board of Washington Mutual has remained intact this year.
Three Countrywide directors have resigned since March, including Henry Cisneros and Kathleen Brown. Cisneros is a former HUD secretary and mayor of San Antonio. Brown is a former treasurer of the state of California. Her brother, Jerry, is current California attorney general and a former governor.
Cisneros is connected to Regina Montoya, a Washington Mutual director, through the New America Alliance, which promotes economic opportunities for Hispanics. Montoya is CEO of the alliance and Cisneros is a director. Washington Mutual is a corporate sponsor of the alliance.
Washington Mutual’s 13-member board includes experienced corporate titans like Orin Smith, the former CEO of Starbucks, and Stephen Frank, the former CEO of Southern California Edison.
It also includes the sitting mayor of Dallas, Tom Leppert; the president emeritus of the The Seattle Foundation, Anne Farrell and a trustee of The Seattle Foundation, Mary Pugh.
The Seattle Foundation has about a half-billion dollars in assets and works to improve the quality of life in the Seattle area.
Leppert is the former chairman and CEO of The Turner Corporation, one of the nation’s largest construction companies. He became a Washington Mutual director in 2005 and was elected mayor earlier this year.
Montoya, a Harvard Law School graduate, is married to Paul Coggins, a former U.S. Attorney for the Northern District of Texas, who is now a partner in a Dallas law firm.
Coggins, a Rhodes Scholar and Harvard Law graduate, specializes in complex business and securities litigation, just the expertise that Washington Mutual could use as it navigates the SEC probe.
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3 Comments
#1. M. Dellen 12.29.2007
The Board of Directors ought to immediately fire the CEO Kerry Killinger for mismanagement, else the Board is irresponsible in their duties to us Shareholders. He was warned about the impending housing market crash by many early indicators well before the current ‘crisis,’ and should’ve worked to exit this high-risk environment of subprime mania much sooner. Instead, he gambled and failed.
Washington Mutual needs a new visionary, and a strong leader that knows how to analyze trends and reasonably predict volatility instead of deferring to comments like “unprecedented times.”
#2. Steve R. 03.06.2008
Since the above story was written it appears that on approximately March 5, 2008 that the board of directors has revised their compensation package in such a manner that the loan losses will NOT affect their bonuses. The obvious implication is the board cares more about itself than the shareholders. If the board retained any ethical behavior they would all resign for failing to protect the shareholders.
#3. Steve R. 03.06.2008
From the Wall Street Journal:
———————————————————————————————–
WaMu Board Shields Executives’ Bonuses
By Valerie Bauerlein and Ruth Simon
Word Count: 801 | Companies Featured in This Article: Washington Mutual
The board of Washington Mutual Inc. has set compensation targets for top executives that will exclude some costs tied to mortgage losses and foreclosures when cash bonuses are calculated this year.
The move, approved last week and disclosed in a securities filing late Monday, essentially shields the pay of chairman and chief executive of the thrift, Kerry Killinger, and more than 100 other executives from the continuing mortgage fallout.
Washington Mutual has been hit hard by the housing crisis. The nation’s largest thrift by market cap is exposed to some of the worst housing markets in the U.S., where home …
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