WaMu urged to name independent chair after big loss
NEW YORK (Reuters) - Washington Mutual Inc WM.N shareholders voted on Tuesday to ask Chief Executive Kerry Killinger to give up his role as chairman, after the largest U.S. savings and loan was throttled by losses tied to the nation's sinking housing market.
The Seattle-based thrift also announced the resignation of director Mary Pugh, who chaired its finance committee and had been fiercely criticized for failing to protect Washington Mutual from exposure to subprime and other risky mortgages.
Washington Mutual also bowed to pressure from investors and governance experts in reversing a decision to ignore mortgage losses in awarding performance bonuses to top executives, such as Killinger and Chief Operating Officer Stephen Rotella.
Earlier in the day, Washington Mutual posted a first- quarter loss of $1.14 billion, or $1.40 per share. That compared with a year-earlier profit of $784 million, or 86 cents. Washington Mutual set aside $3.51 billion for loan losses, up from $1.53 billion in the fourth quarter.
The loss was in line with the company's forecast on April 8 and matched analysts' average forecasts, according to Reuters Estimates. It came on top of a $1.87 billion loss the prior quarter. Killinger said the nation faces "the worst housing market downturn since the Great Depression."
With a 51 percent majority, shareholders at Washington Mutual's annual meeting in Seattle voted in favor of a proposal by the SEIU Master Trust to ask the thrift's board to appoint an independent director as chairman.
That vote was a rebuke for Killinger and his board, which has long been considered strongly loyal to him. A Washington Mutual spokeswoman said the thrift will consider the non- binding proposal at its next board meeting.
All directors up for reelection won seats. Shareholders rejected a proposal to require a majority vote for directors to be seated, taking into account "withheld" votes. That proposal received 42 percent of the vote in favor.
Washington Mutual closed Tuesday up 31 cents, or 3 percent, at $10.66 on the New York Stock Exchange, but it shares have dropped 77 percent since the end of 2006.
KILLINGER "HURT"
Killinger, who became chief executive in 1990 and chairman the following year, adopted a pleading tone responding to criticism of angry shareholders who said management and directors should be accountable for the thrift's troubles.
He was also faulted for raising $7 billion of new capital at a discount to market prices from investors, including private equity firm TPG Inc. When Washington Mutual announced that investment on April 8, it also set plans to cut up to 3,000 jobs and slashed its dividend 93 percent.
"I'm not happy. This thing has hurt," Killinger told shareholders. "I just want people to calm down."
In February, Washington Mutual's human resources committee, which sets executive pay, decided not to count mortgage-related credit losses and foreclosure costs in setting bonuses.
Killinger said the committee will instead "incorporate specific credit-related targets for which we are accountable" in setting executive bonuses. He said he supported the change. Continued...
