Recommended Reading - WaMu Board Protects Bonus Compensation of Top Execs

As the pay of top executives becomes a topic of discussion in Washington D.C. (today's hearings on C-Span) according to story in Reuters Washington Mutual's WM (NYSE) Board of Directors earlier this week defied the growing resentment over executive pay and,

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 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.

Boards need to at least face reality in today's market and try make sound judgments. It does not appear that WaMu's board succeeded in this circumstance. Will their filing stand? Stay tuned.

For more:

Financial Week 3/10

New Ways To Avoid the CEO Watch List

Surprise, surprise, Wall Street CEOs have discovered a new tool to save their jobs or at least their reputation. Some of the CEOs who had the potential to be on my CEO Watch List have chosen to pass on bonuses. You did not read this wrong, they chose to pass. Here's a brief list: John Mack, Morgan Stanley and James Cayne, Bear Stearns, more can be expected.

Peter Cohan of BloggingStocks has a slightly different take on why the CEOs decided to forgo a bonus. Here is what he said,

Why are they doing this? Because it's going to make it easier for them to stiff lots of employees who they don't think will be essential to making a profit in 2008 and 2009. Investment banks have less bonus money to go around and they will try hard to pay enough to their top performers to keep them from jumping ship. If they can keep these top performers around, then they will be able to reap the rewards in the future. In the meantime, those no-bonus CEOs will need to make do with the hundreds of millions they've gotten in the last few years.

Whatever the reason, it is definitely a new approach.

For more:

NY Times (Update Dec. 21)
CNN Money (Update Dec. 21)
CNN Money
Investment News
Baynews9.com