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 Union pension adviser CtW Investment Group demanded Monday that the board of Washington Mutual Inc. request the resignation of any director who fails to win a majority vote of shareholders at the company's annual meeting Tuesday. Votes cast by brokers holding shares in street name only should be excluded, CtW added. CtW's demand was delivered in a letter to the WaMu board.
"Washington Mutual directors must not hide behind broker votes to improperly seat directors who do not win the support of the shareholder," said CtW Investment Group executive director William Patterson. Under current NYSE rules, brokers may vote on behalf of certain shareholders in director elections. Last year such votes accounted for over 19% of the total at Washington Mutual. The NYSE has proposed to change its rules to eliminate broker votes in director elections, but the SEC has so far failed to act on the matter. Last week CtW urged shareholders to withhold votes from directors Mary Pugh and James Stever based on their respective failures to independently oversee risk and maintain the link between pay and performance. The group says each individual bears responsibility for the 70% drop in shareholder value and $6 billion in losses incurred by WaMu in the past year as a result of the collapse of the subprime lending market. Because of WaMu's exposure to subprime lending, the company agreed to a $7 billion infusion from a private equity consortium led by TPG that will dilute existing shareholders' stake in the company by half. Pugh and Stever deserve particular blame for WaMu's troubles, CtW argues, because they head the directors' committee directly charged with overseeing risk undertaken by the company and ensuring that executives' compensation formulas did not encourage management to take undue risks. Monday Patterson added that the TPG favored management over shareholders. "Reports that WaMu spurned a takeover offer from J.P. Morgan in favor of a TPG deal that permits current management to stay in place underscore the need for a strong, independent and accountable board that will put shareholder interests first." - Bill McConnell See CtW's April 14 letter to WaMu board (pdf)See earlier story about CtW campaign from Dealscape See earlier story on calls for unseating WaMu directors from TheDeal.com See story about the capital infusion from TheDeal.com Categories Deal Video
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