Usage-based models of grammar claim that, in a nutshell, speakers glean their tacit knowledge about language from their linguistic experience in communicative exchanges. Verbal compounding can be considered a challenge to usage-based models: on the one hand, genuine verbal compounding is generally regarded as not being a productive pattern for the formation of new English words; on the other hand, complex lexemes which could very well be the result of such a process, but were created by means of back-formation or conversion, e.g. to dry-clean, to babysit or to house-train, exist in non-negligible quantities. From a usage-based perspective, then, the question arises as to why speakers of English apparently do not have a productive schema for the creation of genuine verbal compounds at their disposal, even though they are confronted with linguistic input that seems to suggest, at least on the surface, that verbal compounding is indeed a productive process. Given that speakers with no training in linguistics are unlikely to be aware of the formation history of existing verbal compounds, what is the nature of the tacit knowledge they do seem to have that generally prevents them from creating new genuine verbal compounds and from judging them as acceptable when they come across them? This is the question addressed in the present paper. We offer findings from a systematic dictionary-cum-corpus analysis and from an acceptability and comprehension task which strongly suggest that hearers actually do not process novel genuine verbal compounds as compounds, but rely on different processing strategies instead, trying to take recourse to possible base nouns or adjectives and interpreting meanings on the basis of analogies to similar lexical items in the network. A check for the nameworthiness of the concepts denoted by the verbal compounds also seems to be involved. The paper concludes with a set of models representing the processing of different types of genuine verbal compounds and verbal pseudo-compounds, and showing that the ways in which these forms are processed are not conducive to the formation of a productive schema.