Countrywide CEO Gets $160 Million
Angelo Mozilo, chief executive of Calabasas-based mortgage lender Countrywide Financial Corp., took home $160 million in pay and stock-option profit last year -- keeping his place among California’s highest-paid executives and drawing the ire of compensation watchdogs.
Mozilo’s earnings, reported in the company’s proxy statement filed with the Securities and Exchange Commission on Friday, were equal to 6% of Countrywide’s 2005 net income. His pay also dwarfed that of some executives at much larger financial firms, including Citigroup Inc.
About $41 million of Mozilo’s package was the total of cash, stock option awards and the value of company-paid perks such as country club memberships and the personal use of Countrywide’s plane.
The remaining $119 million was the profit on previously granted stock options that Mozilo exercised in 2005.
Nell Minow, co-founder of the Corporate Library, a Portland, Maine-based firm that tracks pay and corporate governance issues, said Mozilo’s compensation was “a mountain of pay for a molehill of performance.
“It’s unthinkable that the board’s compensation committee would continue to shovel money into this man’s pocket,” she said.
Countrywide defended Mozilo’s pay, pointing to the company’s earnings growth rate of 48% a year over the last five years. The company earned a record $2.5 billion last year.
“This success supports the board’s belief that it has implemented an effective pay-for-performance approach that has benefited the company’s stockholders and helped position Countrywide for continued growth and success,” the company said in a statement.
But Minow said Countrywide’s executive pay-for-performance measures were vague, that a large amount of pay had no performance element, and that the raw amount of compensation was excessive. She said the Corporate Library gives the company’s compensation practices an F rating, the lowest possible.
Mozilo’s 2005 pay package included $2.7 million in base salary, a $19.6 million bonus, stock option awards with an estimated value of $18.4 million and $726,314 worth of perks.
The perks included $40,282 for country club memberships; $26,660 for automobile use; $340,000 paid to Mozilo’s deferred compensation account; $29,750 for tax and investment advice; and $230,452 worth of personal rides on the company jet, as well as tax “gross-up” payments so Mozilo wouldn’t have to pay tax on the value of his jet use.
Mozilo’s pension plan previously has been singled out for criticism by the AFL-CIO in its evaluation of executive-pay issues. Countrywide discontinued its pension plan for rank-and-file workers in 2005. The 67-year-old Mozilo, however, has an “enhanced supplemental executive retirement plan” that will pay him about $3 million a year when he stops working.
“Countrywide, unfortunately, is an all too typical an example of what’s wrong in CEO pay,” said Brandon Rees, assistant director of the AFL-CIO’s office of investment. “The use of super pensions, excessive perks, on top of astounding amounts of cash compensation is just not justified.”
Mozilo, who co-founded Countrywide in 1969, has ranked as one of California’s highest-paid executives in recent years. In 2004 he earned $53 million in cash, stock and perks.
Mozilo’s pay also stands out in the financial services industry.
Charles Prince, chief executive of New York-based Citigroup, the largest U.S. financial services company, last year had a base salary of $1 million, earned a bonus of $12 million and received restricted stock awards valued at $9.7 million, according to the company’s proxy statement. Citigroup earned $24.6 billion last year.
Countrywide’s stock, which closed at $39.80 on Monday, down 86 cents, is up 16.4% year to date after falling 7.6% last year.
The stock has risen 531% since the end of 1999 as Countrywide’s mortgage business has soared with the U.S. housing boom. In the same period, the blue-chip Standard & Poor’s 500 stock index has fallen 11%.
