WaMu Rewrites Executive Bonus Plan To Avoid Subprime Meltdown Responsibility

The Seattle Times reports that Washington Mutual has revised its executive bonus plan so continuing fallout from the subprime meltdown won’t affect their annual bonus checks. In a regulatory filing on Monday, the bank moved to exclude the cost of bad loans and expenses arising from foreclosures when calculating net operating profit. By way of explanation, “Spokeswoman Libby Hutchinson said the bonus plan covers almost 3,000 WaMu executives, many of whom are not directly involved in lending,” writes the Seattle Times. When those subprime raping dollars were rolling in, did any of these same executives object that their bonuses was being unfairly pumped by profits not coming from their department? (Pictured: CEO Kerry Killinger, looking clever)

(Thanks to Doug!)

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  1. Jefeweizen says:

    I’m finding it very hard to choose between WaMu and Comcast for the Worst Company competition. I’m currently getting screwed by both. Fortunately, I will be dumping WaMu soon.

    Did you know that at WaMu, if you call in to get the daily spending limit increased on your DEBIT CARD, you will have to get APPROVAL? Yes, approved to access your own money. This goes way beyond the security check, IMO.

  2. SOhp101 says:

    I know this is completely off topic, but I think their poor management is also reflected in their recent decisions regarding advertising.

    Woo Hoo? One of the lamest ‘phrases’ ever used.

  3. apotheosis says:

    Wait…WaMu’s CEO is an old white guy?

    Their commercials totally lied. :(

  4. savvy999 says:

    The priveleged class (‘executives’) rewriting the rules for their sole benefit? Nevah!

  5. johnva says:

    Isn’t a “bonus” supposed to be extra pay based on performance? If the company is doing poorly, why should they get “bonuses” at all?

  6. synergy says:

    @johnva: IAWTC

  7. tape says:

    I think the two most noteworthy things about that article are:

    1) There are apparently in excess of three thousand executives at Washington Mutual. THREE THOUSAND!

    2) 25% of these executives bonuses will now be awarded on the basis of fees from retail banking. This should be an obvious sign to Get Out Now.

  8. ConsumerAdvocacy1010 says:

    Can’t someone stop this? Anyone? Can’t a WaMu shareholder or shareholders sue or file something against this?

    What’s with all these companies giving their executives golden parachutes and giving their customers binding arbitration? (I know…off topic).

    Seriously, I’ve gotten at least five letters in the mail from companies I conduct business with…and each are now implementing arbitration as of early 2008. *whine*

    This reminds of what’s going on with Take-Two and EA. Take-Two rejects the buy-out from EA, rewrites the bonus structure increasing profits if they are bought out (for the highest execs)…and EA makes another bid. A shareholder of Take-Two is now suing….

  9. Ben Popken says:

    @tape: I thought #2 was pretty crazy too. I didn’t want to overstuff this post but I was even thinking about doing a whole second post just about that.

  10. CaptRavis says:

    Dear WAMU CEO and Media Flack,

    Please look around your offices you should see a big poster that says “OUR VALUES” There are 5 bulletpoints, number 3 says “TEAMWORK(HUMAN): Cooperation, trust ans shared objectives are vital to success.” number 5 says “Excellence(Driven) High standards for service and performance are expected and rewarded.”
    I believe you have a disconnect, and no real way to spin it without looking like an corporation teetering on the edge of collapes.

  11. missdona says:

    @johnva: My company (big Wall St. financial services firm) cut bonuses drastically this year, but we still got something. I was prepared to get nothing.

    I think by still giving something, they don’t piss off their long-time employees. Even though a few hundred have been shown the door already, the they don’t want the remaining employees to want to find other work.

  12. jeff303 says:

    @tape: #1 isn’t too hard to believe. In large financial companies it’s pretty common to have tons of “Vice President”s running around (the lowest officer level).

  13. missdona says:

    @jeff303: Not only that, Managers and Senior-level staff are usually bonus-eligible as well.

  14. Beerad says:

    @missdona: That’s fine, but this is way beyond just giving something. This is pretending that the whole subprime mess didn’t happen for purposes of determining what bonuses should be.

  15. DeepFriar says:

    Having never taken Accounting 101, there is something strange about the notion that costs do NOT equal loss.
    Am I baked?

  16. beavis88 says:

    @ConsumerAdvocacy1010: Only one way to stop crap like this – cease doing business with WaMu.

  17. soulman901 says:

    Hmmm, let’s see. Isn’t this akin to hiding something from SEC? I didn’t think that was a good thing.
    SEC: How did you guys get a bonus when you also had a huge loss
    WaMU: That was the loss, the Bonuses that we gave to our CEO’s for picking their noses.
    SEC: But I see you wrote down, Loss due to Subprime
    WaMU: Subprime is the code word we use for Bonus.
    SEC: Then what’s this handwriting underneath, Subprime does not mean Bonuses we got, the guy is lying to you about what it really means. What is the meaning of that?
    WaMU: I’ll have to talk to my lawyer and get back to you in a year or two

  18. jeremybwilson says:

    It is too bad that nobody has the guts to tell that man that his toupe could double as a landing pad for a helicopter. I never understood why, but he apparently has this “cult of personality” cultivated at WaMu. If they can’t question his poor choice of a hair piece, how are they going to question his callous disregard for sound financial practices. Sadly, his oblviousness to the world around him is well documented, which I know more than few Wall Street analysts would wholeheartedly agree. :points to Jim Cramer:

  19. babaki says:

    rich get richer. song remains the same.

  20. trickonion says:

    @beavis88:

    Yep, just switched from WaMu to BECU for all my banking needs. Our economy sucks right now, and I blame WaMu for part of it, so continuing business with them would bother me.

  21. randombob says:

    Man Fuck all this. Seriously, this is why I’m FOR Gov’t regulation. This is utter bull, and everyone who decided to rewrite the structure should be PUNISHED for even contemplating such a maneuver.

  22. jeremybwilson says:

    @tape

    Depends on how you define Executive.

    WaMu is notorious for its practice of labeling everybody a Vice President or Something or Other.

    Many entry level employees there start with Asst. VP and work their way up to low level manager positions assigned such lofty titles as First Vice President or Senior Vice President (which from what I observed is actually akin to a VP in the majority of corporate USA.

  23. jeremybwilson says:

    You should hear some of the internal company speak currently being spun by the senior exec… er talking heads…

    How some of them sleep at night is a wonder to me. It makes one realize that not only do many company executives think that consumers are incredibly stupid village peasants but that the way they talk to their employees internally says exactly the same thing about how they view them too.

  24. ARP says:

    @jeremybwilson: It’s pretty simple- nobody is going to do anything about it because the shares are so diluted that organized shareholder action is next to impossible. It’s also similar to what the current administration does- they play chicken and win every time because nobody is willing to stand up and do something.

  25. That70sHeidi says:

    Sounds a little bit like what we went through with PNC… they hid some serious losses under sub-sub-sub fake companies. They got caught, employees and stockholders got screwed, employees had to go through 6 months of ethics training, and no one who made those decisions lost their job or, well, anything at all. Bonuses were still awarded, somehow, some way.

    Also sounds like I’m pulling my WaMu checking account.

  26. Tank says:

    i wonder how the shareholders feel about that. probably pisses them off just a tad.

  27. landsnark says:

    I agree that this is total BS and that these guys are basically stealing this money from shareholders (immediately after throwing away even more money in stupid investments).

    The silver lining, though, is this: if you own stock in WaMu, you can sell this stock now and at least prevent these jerks from stealing the rest of it.

    Capitalism – the worst system in the world (except for every other system).

  28. Trai_Dep says:

    Not only should they not get bonuses, they should have past bonuses tied to their fraudulent bonuses retroactively seized, then used to service conned borrowers.

  29. TWSS says:

    You know, I was planning to close my account anyway (just joined a credit union), so I think I’m going to walk in there and tell them that the reason why I’m severing my relationship with WaMu is because their executives rewrite the rules to abdicate responsibility for their actions.

  30. landsnark says:

    @TWSS: You go girl (or boy).

    Actually, failing to take responsibility for their actions was a few months ago.

    This is electing to take responsibility (and lots of money) for a success that is actually a huge failure. The mind reels.

  31. Kounji says:

    Wait a second, I’m going to use a bush term “Fuzzy Math” why the heck would they not include expenses, this is just foul seriously, I’m so glad I’m not a shareholder, I’d be screaming at the top of my lungs

  32. CumaeanSibyl says:

    What the hell is this voodoo accounting bullshit?

    Seriously, WaMu, there is no way you can spin this that will look good to normal people.

  33. bethanyp07 says:

    WaMu held our mortgage. They attempted to forclose in the middle of a bankruptcy filing, realized their mistake and then forgot to send us any bills. We attempted to pay and the checks were returned. If I try to call and talk to someone, I get sent to their automatic REO hotline, which leads to a number that simply does not work. If I speak to someone in customer service, they always put me through to loss mitigation, which ends up in a disconnected call. I’m not sure if they forgot about us or what. At this point, our attorney has advised us to hold on to the payments. It’s crazy the way this has been handled. It’s even crazier that they now own a property they cannot legally evict the tenant from and now we sit in a weird kind of detente. Not the way I would run my business, that’s for sure.

  34. TrialSword says:

    Been working as a Teller for WaMu for the past year and a half now, and you wouldn’t believe the changes over the past 4 months or so.

    Though this one is the icing on the cake. Only because they recently changed the bonus/incentive program for tellers too. On the last day of every month tellers and PFR’s get a bonus based on store goals. This past month, myself and half the branch didn’t get one. Why? New rule: if you are “on notice” you no longer get incentives until you’re taken off. Yeah, I was “on notice” for a 10 dollar difference months beforehand. ETA on getting off the list? Nobody knows. So yeah, myself and everyone else on the branch level is screwed out of ~70 dollars or more a month if you have a miniscule offense.

  35. Anonymous says:

    I made an accounting error on my account and got charged $965 in overdraft fees. I take responsibility for my screw up, but at the same time, WAMU is paying bonuses to their execs with MY (and yours) tax money that I didn’t want to give them. So, I make a mistake and get pumped, they make mistakes, destroy their own bank and get bonuses? I’m having a hard time writing this and not exploding. Furious doesn’t even touch how I’m feeling. So, no Christmas presents, no anniversary trip, nothing for one mistake. I’d love to see what items are purchased with the bonuses that are passed out.