With losses due to poorly supervised subprime lending now in excess of $60 billion, you wonder what happened to the compensation in the Executive Suite.
At the head of the list has to be Angelo Mozilo, the CEO of Countrywide. His salary for 2007 was reduced to $1,900,000 from $2,900,000. That isn’t unreasonable compensation, but like the TV ads say. "But wait! There’s more!" Here was the announcement in the company’s Proxy Statement.
"As consideration for Mr. Mozilo’s agreement to extend his term as Chief Executive Officer beyond December 31, 2006 and pursuant to his new employment agreement effective Fiscal 2007, Mr. Mozilo received a one-time award of restricted stock units having a grant date fair value of $10,000,000."
But what was not in the statement but has lifted a few eyebrows was his sale of stock valued at over $200 million. This is a graph of his stock sales this year. Not bad.
That ought to provide a comfortable retirement.
But what was happening to the shareholders in 2007?
The stock went from a high of over $45 per share down to a recent closing price of $9.65, a decline of over 75%.
Obviously, there was none of that silly "I feel your pain" here.
From a cursory examination of the situation, it "appears" that people in Headquarters saw that bleak times were ahead and that Mr. Mozilo thought it was a good time to start reducing his exposure to losses.
Such sales have to be done in accordance with a plan filed with the IRS but what is bizarre here is that he kept amending the plan to increase the number of shares sold each month. This caught the attention of the Securities and Exchange Commission too, and the word is out that they are investigating this as well.
That’s not all, folks. Stay tuned. The next episode stars the folks at NovaStar Financial.
Randy Johnson Randy is a Credit.com contributor and seasoned mortgage expert. He writes about home buying, mortgage laws and real estate finance issues. He has financed over $1 billion in properties, is the author of How to Save Thousands of Dollars on your Home Mortgage and he is a feature columnist for Savvy Borrower.
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