Lender criticized over pay to Mozilo

Countrywide Financial Corp., which will fire as many as 12,000 workers by December, needs to fix a “poorly designed” executive compensation policy that may have resulted in Chief Executive Angelo Mozilo being overpaid, a corporate governance research group said Thursday.

The Corporate Library said it had complained about Mozilo’s pay for three years, predating the U.S. housing slump that caused the largest U.S. mortgage lender this summer to lose normal access to capital markets and tighten its lending standards.

Countrywide shares have fallen by more than half this year.

Compensation for Mozilo totaled $42.98 million in 2006. Late that year, he signed a contract that reduced his annual salary to $1.9 million and maximum bonus to $10 million, and awarded stock-related grants initially valued at $10 million.

The Corporate Library said Countrywide now links more of Mozilo’s pay to performance but is awarding him unnecessary perks and may be rewarding him twice by tying performance-restricted stock units to a metric used to set the bonus.

“Any board which can make such poor decisions about a CEO’s compensation package is almost certain to be making poor decisions elsewhere,” wrote Corporate Library analysts Ric Marshall and Paul Hodgson.

Calabasas-based Countrywide said it found “nothing new” in the report.

“The board of directors has established a pay-for-performance model that assures alignment of executive strategies with the shareholders’ interests. [Mozilo’s] personal wealth remains centered in Countrywide, further aligning him with the interest of all shareholders,” the company said.

Mozilo received about $387 million in pay and stock option gains from 2002 to 2006, regulatory filings show.