Investors reject ‘say on pay’ at lender
Shareholders of mortgage giant Countrywide Financial Corp. on Wednesday rejected a proposal to give them an advisory say on pay packages for the company’s top executives, including Chief Executive Angelo Mozilo, whose hefty compensation has been widely criticized.
The measure, considered at the Calabasas company’s annual meeting, was opposed by shareholders representing nearly 60% of the shares voted. Only 32% voted in favor of the proposal, down from more than 43% for a similar resolution last year.
The results were similar to those at many companies where public employee pension funds and other activist groups have raised the issue.
Scott Adams, a pension program coordinator for the American Federation of State County and Municipal Employees, nonetheless said the “say on pay” effort was making progress. Last year the union sponsored seven such proposals, none of which prevailed, while this year four of about 50 measures sponsored by a coalition of pension funds, asset managers and shareholders were approved, he said.
Introducing the measure at the shareholder meeting, Adams said a nonbinding shareholder review would encourage the company to link pay to performance and “encourage our company to explain and justify the executive pay policy to shareowners.”
But Mozilo, who took home $48 million in total compensation last year, said shareholders were wise to reject the measure.
Countrywide’s board, especially the compensation committee, fulfills the say-on-pay function on behalf of all shareholders, Mozilo said. He added that the company had become the nation’s No. 1 home lender by attracting key employees with robust bonuses and stock options.
“It’s all about people,” he said. “It’s important that we pay them well to reward them.”
Adams praised Mozilo and Countrywide for having met at length with AFSCME representatives to discuss the proposal for an advisory vote on compensation. Such a vote would have provided a snapshot of investor sentiment but would not have been binding on the company. Advisory votes on pay are the norm in Britain and have been adopted by several big U.S. companies.
The dapper Mozilo, clad as usual in a blue shirt with a white collar and a yellow tie, listened as Adams took Countrywide to task for spending $267,372 on golf-related fees last year for its top executives. In his reply, Mozilo, a golf enthusiast, said the company awarded such perquisites to attract and retain top people.
Mozilo, who co-founded Countrywide in 1969, has been rewarded with total compensation of more than $285 million over the last 11 years, by AFSCME’s count.
At this year’s annual meeting, Mozilo was less vocal in defense of his own pay than at last year’s meeting, when a shareholder berated him for the more than $160 million he had received in 2005, including cashed-in stock options.
“This company came from zero and created $22 billion in shareholder value,” Mozilo said then. “People like me, entrepreneurs, are not going to come into the public arena if ... their reputation is ruined because they did well.”
At this year’s meeting, Mozilo made a similar point by displaying a list of the companies that generated the greatest returns for shareholders over the last 25 years. Countrywide occupied the No. 12 spot on the list, and Mozilo pointed out that Dell Inc. and Berkshire Hathaway Inc., Nos. 15 and 20 respectively, were headed by “multibillionaires” Michael Dell and Warren Buffett.
Countrywide shares fell 20 cents Wednesday to $37.90.
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