Nine Washington Mutual board members should be rejected by shareholders, advisory firm ISS Governance said Friday, delivering the second independent critique of WaMu's board in two days.
A second proxy-advisory firm has taken aim at Washington Mutual’s directors, urging shareholders to vote against nine of the 13 candidates standing for board positions.
ISS Governance Services, a unit of RiskMetrics Group, blasted the board’s finance committee for not raising more red flags as WaMu loaded up on subprime mortgages and other higher-risk loans during the housing boom — contributing to what ISS called “a systematic failure of risk management oversight at WaMu.”
The firm also slammed the compensation committee for excluding loan-loss reserves — the money WaMu must set aside to cover its rising tide of busted loans — and foreclosure and restructuring costs from 2008 executive bonus calculations.
“This modification runs counter to the pay-for-performance concept and holds no executives responsible for the subprime mess that the company is currently facing,” ISS said in a report made available to The Seattle Times today.
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ISS recommended that WaMu shareholders withhold their votes from all members of the finance and compensation committees, except for one director who took office last month.
The targeted directors are Stephen Frank, Charles Lillis, Phillip Matthews, Margaret Osmer McQuade, Regina Montoya, Michael Murphy, Mary Pugh, William Reed Jr. and James Stever.
On Thursday, the advisory firm Glass, Lewis & Co. recommended votes against the entire compensation committee and Pugh, the finance committee chair.
None of the board candidates face opposition; shareholders have the option of voting for each company-endorsed candidate or withholding their vote. Under a bylaw change adopted last year, candidates who receive fewer “for” votes than “withholds” must offer to resign; the full board then decides whether to accept the resignation.
WaMu’s annual meeting is scheduled for 1 p.m. on April 15 at Benaroya Hall in downtown Seattle.
Drew DeSilver: 206-464-3145 or firstname.lastname@example.org