A Washington Mutual Inc director resigned on Tuesday under pressure from shareholders who have faulted the company for its declining market value amid a sharp housing downturn.

Mary Pugh, 48, who served on WaMu's board of directors for nine years and as Chair of its Finance Committee for three years, resigned from the board Kerry Killinger, CEO, said during the bank's annual shareholders meeting.

WaMu – as the bank is known – announced an agreement last week to raise $7 billion in capital by selling new stock to strengthen the company's balance sheet. The move, however, will dilute the value of current shares.

Shares fell more than 8 percent after the capital raising move last week.

During the meeting, shareholders re-elected the rest of the eligible board members, according to a preliminary count. Shareholders also voted to separate the jobs of chairman and CEO by a tally of 51 percent.

During the meeting, Killinger said the company will revise the company's 2008 executive bonus plan which has been criticized for not taking into account the bank's mortgage related losses.

CtW, a pension fund with shares in the bank, had called for shareholders to withhold their votes for Pugh and fellow director James Stever, who heads the company's human resources committee. Stever was re-elected.

We commend Washington Mutual's board for promptly accepting Ms. Pugh's resignation and urge them to also demand the resignation of any other directors who fail to win majority shareholder support, said CtW in a statement.

The company also released its first quarter results today, announcing it lost $1.1 billion, or $1.40 per share. Shares rose 31 cents, or 3 percent, to close at $10.66.

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