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Your 70% Less Important Than Bonuses

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March 05, 2008 – Comments (5) | RELATED TICKERS: WAMUQ

 These executives know no limits in terms of they ought to be paying their bonuses for the past 10 years back, yet they continue to rob investors..

Seriously, bonuses ought to be tied to long term performance and tied to a 10 year moving averages on earnings, debt ratios, and other measure that measure the health of a business, not this make moves that can manipulate stock prices above true value and give executives wealth beyond any reasonable measure of worth at the expense of investors.  Executive's have increased the lining of their pockets from 40 times the average worker to 600 times the average worker.  Stock option should simply be done away with.

Seriously, if insiders are selling like crazy, it is a good signal to consider doing the same.

This story completely gets to me (the link...).  They are down 70%, completely capital impaired, and they think they have a right to even be looking at bonuses...

NEW YORK (Reuters) - Washington Mutual Inc's board of directors approved a plan which helps protect its management's bonus targets from the impact of the subprime loan fallout, according to a filing with U.S. regulators.

The board's human resources committee on February 26 approved bonus targets, some of which will be calculated to exclude expenses related to business re-sizing or restructuring, foreclosed real estate assets and loan loss provisions other than related to its credit card business.

The filing, made with the Securities and Exchange Commission on Monday, refers to targets for WaMu chief executive Kerry Killinger, chief financial officer Thomas Casey, chief operating officer Stephen Rotella, and retail banking chief James Corcoran.

The board's committee said in light of the challenging business environment and the need to evaluate performance across a wide range of factors it will take a three-step approach to rewarding its executives including subjectively evaluating company performance in credit risk management.

In January, Seattle-based Washington Mutual said it awarded Killinger 3.2 million stock options for 2008 to provide a "strong incentive to restore shareholder value".

WaMu's share price sank 70 percent in 2007 as mortgage losses soared.

WaMu is one of the big players in the thrift lenders industry which suffered a record $5.4 billion loss in the fourth quarter of 2007 as the housing market deteriorated.

(Reporting by Yinka Adegoke; editing by Rory Channing)

 

5 Comments – Post Your Own

#1) On March 05, 2008 at 9:45 AM, dwot (97.03) wrote:

Reading list...

From Minyanville 

Let History Be Your Guide

Mark Twain once wrote that history doesn’t repeat but it often rhymes.

The mainstream media is filled with folks asking the Federal Reserve to save the day. It is reminiscent of the mindset we saw following the implosion of the tech bubble in 2001. The Fed eased, sentiment briefly bounced and the S&P proceeded to fall 40%.

Perhaps a more daunting analogy can be drawn as we step back and digest the macroeconomic landscape. From Netherland tulips to the roaring twenties to Japan, excess has always, without fail, led to excess. You don’t have to agree with the potential path but you should most certainly ignore it at your own risk.

This one on unemployment data is excellent.

 I strongly recommend giving it a read.  I'd say what it describes about the labour market has been true my entire adult life in Vancouver.  The more I look at this stuff, the more I think Vancouver has been a micro economy of what's to come for masses of workers across North America.  Vancouver is unique in that it had massive, massive immigration, and wealthy immigration, but for the masses, there haven't been enough jobs and wages have been utterly flat.  This is no longer mostly limited to local economies, but is more likely to be the norm in local economies.  I could be mistaken in my analysis that this has happened earlier in Vancouver and it was the immigration and the pushing up the housing costs that made Vancouver suffer for it earlier and made this trend more apparent.  But, here's the change from when I decided to go to university, I could have bought a home for 1.6x the wages a friend in the occupation of my choice made in 78.  I went back to school in 86.  Today that same home would be 8-10 times the wages you'd expect to earn.  This is how f--king flat the wages have been, and it is spreading.  This should be a blog, not a comment...

"Consider this: the average unemployment rate in this decade, just above 5 percent, has been lower than in any decade since the 1960s. Yet the percentage of prime-age men (those 25 to 54 years old) who are not working has been higher than in any decade since World War II. In January, almost 13 percent of prime-age men did not hold a job, up from 11 percent in 1998, 11 percent in 1988, 9 percent in 1978 and just 6 percent in 1968."

 

 

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#2) On March 05, 2008 at 11:09 AM, CycleFreak7 (23.13) wrote:

Executive compensation is so out of hand it makes want to vomit on my keyboard.

No more clear example than Robert Nardelli's $200 million exit package when he left Home Depot after doing absolutely nothing for that company during his tenure other than keep the stock price low and bungle an effort to venture into commercial sales.

( BTW, it is "You're". ) 

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#3) On March 05, 2008 at 3:17 PM, AnomaLee (28.88) wrote:

I'm disappointed. I expected to hear a new refreshing take on the market with statistics and charts. Maybe my optimism has lessened that much, but these corporate ******s have always been over-compensated.

Good article nonetheless....

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#4) On March 05, 2008 at 6:25 PM, dwot (97.03) wrote:

Yeah, I saw that error CycleFreak, of course after I hit to accept...  I don't like that we can't go back and edit...

Look at Citigroup, didn't the guy there make about a half billion or something outrageous? 

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#5) On March 05, 2008 at 8:40 PM, SpaceMonkey01 (73.93) wrote:

I am considering putting some real world dollars in FMD and ETFC for a number of reasons, but in no small part due to management that seems to have tied their financial benefit to the prosperity of their stocks. FMD execs took a paycut to acknowledge that their stock is in the crapper and ETFC CEO Layton taking all payment in restricted stock. One benefit of a bear market....execs show their true colors when times are not so good.

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