Author: muckety

Troubled Washington Mutual, the nation’s largest savings and loan, has seen its stock price nearly double from its lows over the past month. Takeover speculation has certainly helped, as have the Federal Reserve’s interest rate cuts.

But don’t discount the importance of the message chairman and CEO Kerry Killinger sent when he decided not to take a 2007 bonus that he had earned. Executives at other companies caught in the real estate mess — Countywide Financial and D.R. Horton, for example — have not set the same tone of accountability. (Story continues below interactive map.)

Killinger, who also sits on the board of Safeco, qualified for a 2007 bonus of $1.2 million, about a third of his target level, based on Washington Mutual’s financial performance for the year. His 2006 bonus was $4 million.

President Stephen Rotella and CFO Thomas Casey will receive bonuses for 2007, but Washington Mutual said its executives would forfeit two-thirds of their restricted stock awards for the year.

This week, Killinger estimated that Washington Mutual’s net interest income increases by $150 million for every quarter-point cut by the Fed. Doing the math, the 1.25 points the Fed shaved in January equals $750 million.

More Fed cuts could follow.

In late December, we wrote about how the directors at Washington Mutual were staying the course in troubled times. Five weeks later, that appears to be a solid approach.

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