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Countrywide CEO gets retirement pay on the job

By ASSOCIATED PRESS
Published November 1, 2006

As if Countrywide Financial Corp.'s CEO isn't getting paid enough, the mortgage lender's board is taking the unprecedented step of lavishing him with $1-million in retirement money.

And he isn't even retiring.

Countrywide is spinning it as a "reimbursement" because Angelo Mozilo agreed to stay on at the helm until 2009 instead of retiring this year as was expected. That will come on top of the hefty salary he will get to stay at work.

The company released details of Mozilo's financial package on the same day it announced plans to lay off 2,500 Countrywide employees. Talk about tone-deaf timing.

Mozilo has long drawn flak for his pay, which the Calabasas, Calif., company has defended as appropriate since under Mozilo's watch Countrywide has become the nation's largest mortgage lender.

Over the last decade, Countrywide's market capitalization has gone from just more than $2-billion to levels above $20-billion. Its stock has had more than a sevenfold gain during that time - which shows that shareholders have been rewarded.

But some investors think Mozilo's big payouts show his too-cozy relationship with board members who are supposed to be monitoring his work.

Last year, Mozilo made nearly $142-million, including $2.7-million in salary, $19.6-million in bonus and $119-million in realized stock-option gains. That's not all - he got plenty of perks, including $40,282 for country-club memberships, $230,452 for personal use of company aircraft and $29,750 for tax and investment advice, according to securities filings.

That made him the sixth highest-paid executive in corporate America, according to a study of 2005 compensation at 1,400 public companies by the independent governance research firm the Corporate Library.

When details of Mozilo's contract were released in a regulatory filing, it looked like Countrywide had gotten the message that Mozilo's compensation was out of hand.

His base pay had been cut to $1.9-million, while his bonus would range from $4-million to $10-million annually depending on the company's return on equity and net income.

But thrown into the mix was the promise of the retirement "reimbursement" that would pay Mozilo $10-million over the next three years, an arrangement that compensation experts say may be the first of its kind. Of that, $5-million is guaranteed while the rest is contingent on the company's shareholder return ranking at the median or above those in the Standard & Poor's Financial Services Index.

"This is allowing him to have his cake and literally eat it, too," said Patrick McGurn, executive vice president and special counsel to Institutional Shareholder Services, a proxy advisory firm. "He is entitled to get retirement pay even though he chose to not retire and still work. It is not a reimbursement. It is an entitlement."

[Last modified November 1, 2006, 01:17:29]