Skip to comments.Lavish Payout, Perks for Failed Mortgage CEO (Jet Use, Country Club Dues and a Hefty Payout)
Posted on 01/13/2008 3:41:56 PM PST by DogByte6RER
Lavish Payout, Perks for Failed Mortgage CEO
His Severance Package Includes Jet Use, Country Club Dues and a Hefty Payout
By DANIEL ARNALL
ABC NEWS Business Unit
Jan. 11, 2008
Angelo Mozilo, the co-founder and public face of troubled mortgage giant Countrywide, is eligible for tens if not hundreds of millions in compensation and perks on the sale of the company to Bank of America.
During calendar 2006, the latest period available for review in Securities and Exchange Commission filings, Mozilo took home $48.1 million in compensation. An early analysis of SEC filings by the Los Angeles Times suggests he could get upward of $115 million when he leaves after the sale is complete, despite the fact that the company tanked during the recent subprime mortgage crisis.
In December, Countrywide reported a record number of foreclosures and delinquencies in its loan portfolio. The value of shares has fallen more than 84 percent since mid-May of last year.
Bank of America today confirmed that Mozilo will stay on with the company through a "transition period." Countrywide wouldn't comment on Mozilo's pay.
His long tenure with the firm he has been there since its beginning in 1969 and extensive employment agreement gives him the right to a significant payout when he leaves.
Immediately upon a change in control, Mozilo would get $13.3 million in accelerated vesting of stock grants, according to the terms of his 2004 compensation agreement, included in the company's latest proxy statement.
Should he leave the company after the firm's buyout, Mozilo would get a one-time cash payment of $88 million.
These numbers are presented in the proxy in the context of a "hypothetical" change in control on Dec. 31, 2006. The date is necessary since some of the value of the benefits is based on share price. The company entered into a new employment agreement with Mozilo in 2007, which the proxy statement says guarantees substantially the same post-merger benefits.
A senior Democratic lawmaker welcomed on Friday Bank of America's $4 billion acquisition of Countrywide Financial Corp, but urged Countrywide's chief executive to donate some of his millions of dollars in pay to help subprime mortgage borrowers, Reuters reported.
The deal could be a "positive development" in the subprime mortgage crisis, said Barney Frank, chairman of the House Financial Services Committee.
Some of the perks to which Mozilo is entitled after a change in control, according to the official filing:
The company will retain Mozilo as a consultant. Mozilo is obligated to make himself available for a specified period of time each month through December 2011 and at the rate of $400,000 per year.
He will also be entitled to receive other benefits, including office space, secretarial support, use of the company's aircraft, financial consulting services and payment of annual country club dues.
For three years, continuing health, life insurance and financial planning benefits for Mozilo and his beneficiaries.
After those three years, health benefits for the lifetimes of Mozilo and his spouse.
A "gross-up payment" equal to the excise tax charged to him as a result of his receipt of any of the above (with certain exceptions).
All this is based on contractual obligations made with Mozilo when the company was doing well. The terms of the sale to Bank of America might have forced Mozilo to give up some of these benefits.
I went into the wrong line of work.
The elite of this country live in a world of their own, and the rules of merit, responsibility, and honest labor don’t apply to them.
Why is it that when most people are ridiculed and denounced for behavior like this, it’s done in the name of traditional American values, but when those standards are applied to people of power and wealth, any criticism makes the critic a socialist?
indicted for what? The shareholders set compensation.
"Lawmakers" just can't help themselves. They want to be in control of all money everywhere, even before paying the IRS overlords, and even when they're not going to be entitled to it. Why the hell is a member of congress suggesting how someone spend their money? My word . . .
Oh, yeah, you did such a great job, Angelo. I hope you'll be able to eke out a living in the future. Nice reward for a job not very well done.
The stock holders should clean his clock.
That's a lie. It's set by the Board of Directors. Shareholders' votes don't add up enough to counter the heavily weighted votes of Board members.
It’s not a lie it’s a mistake.
Its good to be the king and sucks to be a peon. Lesson to self, be the king.
“The elite of this country live in a world of their own, and the rules of merit, responsibility, and honest labor dont apply to them.”
Thats why they are called elite. The nice thing about America is anyone has the possibility of becoming an “elite” whereas in most countries you must be born into it.
If shareholders really cared things would change but deals like this are what it takes to get top talent to take on these jobs. IMO it all comes down to greed. Greed by the CEO’s and greed by the shareholders.
He has been with the company since 1969. How much money has he made for the company/stockholders in those 38 years? I’m willing to bet it is a tidy sum. He basically devoted his entire career to the company, and now he is getting his reward. Where is the problem?
Some background from Wikipedia:
Countrywide was founded in 1969 by David Loeb and Angelo R. Mozilo. Loeb died in 2003. The initial public offering was less than successful, with company stock trading over the counter at less than $1 per share. In 1985 Countrywide stock was re-listed on the New York Stock Exchange under the ticker symbol CFC.
CFC has been described as the “23,000% stock” by Fortune magazine. Between 1982 and 2003, Countrywide delivered investors a 23,000% return, exceeding the returns of Washington Mutual, Wal-Mart, and Warren Buffett’s Berkshire Hathaway.
Also, profit from 2005-2006 exceeded $5 BILLION!
And the shares are mostly in the hands of institutions.
I knew Countrywide was in trouble when I saw this guy in a TV interview.
He was wearing one of those expensive colored shirts with the white collars, a very expensive suit, he had a $150 haircut and he was tanned. Very tanned. An expensive year round tan. More image conscious than work and bottom line conscious.
That’s real special.
One way or the other the responsible citizens of this country will bail out the rich and corrupt .
I’m doing it right now. Every time the Fed lowers interest rates to buffer the shock of these bad mortgage loans, savers like me lose money.
The serfs bail out their masters again..
I certainly hope so.
Until then, his golden parachute is salt in the wounds of the American Taxpayer.
That man needs to be taught how to sky dive without a parachute.
That is one of these least addressed items around. Every time they lower the interest rate the dollars becomes weaker, and people with savings take a beating. But the government will run out later this month and say there is no inflation.