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WaMu CEO Gets 3.2 Million Stock Options for '08

NEW YORK (Reuters) - Washington Mutual Inc WM.N, whose share price sank 70 percent last year as mortgage losses soared, said on Tuesday it awarded Chief Executive Kerry Killinger 3.2 million stock options for 2008.

In a U.S. Securities and Exchange Commission filing, the largest U.S. savings and loan said its human resources committee granted the award to provide “a strong incentive to restore shareholder value.” Killinger will not receive a bonus for 2007, after being awarded $4.07 million for 2006.

Washington Mutual also said the committee made smaller option grants to three other top executives: Chief Operating Officer Stephen Rotella, Chief Financial Officer Thomas Casey and retail banking chief James Corcoran.

Seattle-based Washington Mutual said that “due to the current unprecedented challenges in the mortgage and credit markets, retaining executive officers ... was a primary compensation objective for the awards.”

Analysts have said the thrift might be a takeover target after mortgage defaults and write-downs led to a $1.87 billion fourth-quarter loss and a $67 million loss for 2007. They have pointed to JPMorgan Chase & Co JPM.N as a possible suitor. Washington Mutual has declined to discuss merger prospects.

The thrift awarded Rotella, Casey and Corcoran 2007 bonuses equal to 32.6 percent of targeted amounts. This resulted in respective payouts of $912,800, $391,200 and $277,100, down more than 70 percent from the sums awarded for 2006, it said.

Washington Mutual said one-half of Killinger’s options will vest in three years or if the thrift’s shares close at or above $26 for 15 straight trading days, whichever is later. The rest will vest after four years or if the shares close at or above $35 for 15 straight days, whichever is later.

Shares of Washington Mutual shares closed Tuesday up $1.22, or 9 percent, at $14.77 on the New York Stock Exchange. The company announced the option grants and bonuses after U.S. markets closed.

Reporting by Jonathan Stempel; Editing by Leslie Gevirtz