March 6, 2008 in City

Housing woes won’t cost WaMu execs

From Wire Reports The Spokesman-Review
 

The U.S. housing crisis slashed Seattle-based Washington Mutual Inc.‘s earnings, but it won’t drain executives’ 2008 cash bonuses.

WaMu’s board will exclude costs related to mortgage defaults and real estate foreclosures when it calculates executive compensation for the year, the thrift disclosed in a Securities and Exchange Commission filing made Monday.

The move protects WaMu Chief Executive Officer Kerry Killinger and about 100 others from ongoing effects of the housing market downturn, even as that fallout remains the biggest challenge to the thrift’s finances.

Soaring loan loss provisions – the amount WaMu socks away to cover bad loans – helped drag the country’s largest savings and loan to a loss of $1.87 billion in the fourth quarter of 2007. Executives said fallout from the mortgage crisis would continue to slam the thrift’s finances through 2008, and forecast up to $8 billion more will be needed this year to cover future loan losses.

Killinger said he wouldn’t accept his 2007 bonus after WaMu reported abysmal annual results.

•The Securities and Exchange Commission has accused Boston-based Fidelity Investments and 13 of its current or former employees of improperly receiving gifts totaling more than $1.6 million.

Among the 13 former and current Fidelity employees named is Peter Lynch, formerly a star manager at Fidelity’s Magellan Fund. The order found Fidelity accepted lavish gifts such as travel and entertainment from outside brokers who courted Fidelity’s massive trading business.

The SEC announced civil charges against Boston-based Fidelity on Wednesday in an order that requires the company to pay an $8 million penalty in the influence-peddling case.

•Slumping Internet pioneer Yahoo Inc. on Wednesday postponed a key deadline in a looming battle with spurned suitor Microsoft Corp., hoping to gain more wiggle room as it tries to escape a takeover.

The Sunnyvale, Calif.-based company’s maneuver means that March 14 is no longer the deadline for Microsoft to nominate a slate of candidates to replace Yahoo’s current board – the 10 directors who rejected the world’s largest software maker’s initial takeover offer of $44.6 billion.

Microsoft had already signaled it was prepared to oust the board if Yahoo didn’t come to the negotiating table before March 14.

Yahoo hasn’t offered a new nominating deadline. It will be set once Yahoo announces the date of its annual shareholders meeting. Microsoft will have 10 days after the notice to nominate directors and begin what’s known as a “proxy” battle.


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