SALON

Thursday, Mar 6, 2008 7:33 PM UTC

Countrywide and the “left-wing anti-business press”

How dare journalists criticize Angelo Mozilo's big fat honking utterly undeserved executive compensation?! Have they no respect?

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Topics: Globalization, How the World Works,

Angelo Mozilo’s executive compensation package is the gift that keeps on giving. This is especially true for the “left-wing anti-business press” whose goal in life is to destroy the profitability of fine, upstanding public companies like Countrywide.

Mozilo, you will recall, is the Countrywide CEO who raked in $120 million in compensation while driving his company into a ditch. Along with other high-flying stars of the business world, such as former Citigroup CEO Charles Prince and former Merrill Lynch CEO Stanley O’Neal, Mozilo has been a target of an investigation into exorbitant executive compensation led by California Rep. Henry Waxman.

Muckraked, a blog run by former Wall Street Journal editor Marcus Baram, got its hands on a 23-page memo summarizing the findings to date by Waxman, one day before a congressional hearing in which Mozilo, O’Neal and Prince are expected to testify. For those who might be interested in exactly how state-of-the-art executive compensation packages are put together these days, the document provides a wealth of fascinating detail.

But Muckraked plucks out one particularly juicy nugget that bears repeated highlighting. It is part of an e-mail in which Mozilo responds to an executive compensation consultant who was working for Mozilo, but was disappointed in the terms of the agreement ultimately decided upon, because, sadly, they limited Mozilo’s “maximum opportunity.”

Mozilo writes:

I appreciate your input but at this stage in my life at Countrywide this process is no longer about money but more about respect and acknowledgement of my accomplishments. … Boards have been placed under enormous pressure by the left wing anti business press and the envious leaders of unions and other so called “CEO Comp Watchers” and therefore Boards are being forced to protect themselves irrespective of the potential negative long term impact on public companies. I strongly believe that a decade from now there will be a recognition that entrepreneurship has been driven out of the public sector resulting in underperforming companies and a willingness on the part of Boards to pay for performance.

That e-mail was written on Oct. 20, 2006, well before the astonishing decline and fall of Countrywide was apparent to anyone outside of the company. Back then, perhaps Mozilo had some reason to consider himself a titan of industry attacked by annoying communist termites intent on destroying the American way of option-ARM, no-money-down mortgage life. But today, as the United States continues to experience record numbers of home foreclosures, in part because of the eagerness of companies like Countrywide to lure home buyers into mortgages that they couldn’t afford, Mozilo’s petulance doesn’t come off too well. How the World Works strongly believes that a decade from now, Angelo Mozilo will be remembered as a pathetic icon of his time — a man who “earned” hundreds of millions of dollars while incompetently managing a public company that was once the largest mortgage lender in the United States, but now is just a footnote to the greatest housing bust since the Great Depression.

We leave the final words to the Waxman memo:

While Countrywide, Merrill Lynch, and Citigroup prospered, Mr. Mozilo, Mr. O’Neal, and Mr. Prince received lucrative pay packages. During the five-year period from January 2002 through December 2006, the stock of Countrywide, Merrill Lynch, and Citigroup appreciated, and the three CEOs collectively received more than $460 million in compensation

Any alignment between the compensation of the CEOs and their shareholders’ interests appears to breakdown in 2007, however. Despite steep declines in the performance and stock price of the three companies resulting from the mortgage crisis, Mr. Mozilo, Mr. O’Neal, and Mr. Prince continued to be well rewarded: Mr. Mozilo received over $120 million in compensation and sales of Countrywide stock; Mr. O’Neal was allowed to leave Merrill Lynch with a $161 million retirement package; and Mr. Prince was awarded a $10 million bonus, $28 million in unvested stock and options, and $1.5 million in annual perquisites upon his departure from Citigroup.

“Collectively, the companies run by Mr. Mozilo, Mr. O’Neal, and Mr. Prince lost more than $20 billion in the last two quarters of 2007 alone as a result of investments in subprime and other risky mortgages.”

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard.

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