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"Tracey de Morsella (formerly Tracey L. Minor)" <[EMAIL PROTECTED]> wrote:
Lavish Payout, Perks for Failed Mortgage CEO
http://abcnews.go.com/Business/MarketTalk/Story?id=4121306&page=1
His Severance Package Includes Jet Use, Country Club Dues and a Hefty Payout
By DANIEL ARNALL
ABC NEWS Business Unit
Jan. 11, 2008 â
Angelo Mozilo, the co-founder and public face of troubled mortgage giant
Countrywide, is eligible for tens if not hundreds of millions in
compensation and perks on the sale of the company to Bank of America.
During calendar 2006, the latest period available for review in
Securities and Exchange Commission filings, Mozilo took home $48.1
million in compensation. An early analysis of SEC filings by the Los
Angeles Times suggests he could get upward of $115 million when he
leaves after the sale is complete, despite the fact that the company
tanked during the recent subprime mortgage crisis.
In December, Countrywide reported a record number of foreclosures and
delinquencies in its loan portfolio. The value of shares has fallen more
than 84 percent since mid-May of last year.
Bank of America today confirmed that Mozilo will stay on with the
company through a "transition period." Countrywide wouldn't comment on
Mozilo's pay.
His long tenure with the firm he has been there since its beginning in
1969 and extensive employment agreement gives him the right to a
significant payout when he leaves.
Immediately upon a change in control, Mozilo would get $13.3 million in
accelerated vesting of stock grants, according to the terms of his 2004
compensation agreement, included in the company's latest proxy statement.
Should he leave the company after the firm's buyout, Mozilo would get a
one-time cash payment of $88 million.
These numbers are presented in the proxy in the context of a
"hypothetical" change in control on Dec. 31, 2006. The date is necessary
since some of the value of the benefits is based on share price. The
company entered into a new employment agreement with Mozilo in 2007,
which the proxy statement says guarantees substantially the same
post-merger benefits.
A senior Democratic lawmaker welcomed on Friday Bank of America's $4
billion acquisition of Countrywide Financial Corp, but urged
Countrywide's chief executive to donate some of his millions of dollars
in pay to help subprime mortgage borrowers, Reuters reported.
The deal could be a "positive development" in the subprime mortgage
crisis, said Barney Frank, chairman of the House Financial Services
Committee.
Some of the perks to which Mozilo is entitled after a change in control,
according to the official filing:
The company will retain Mozilo as a consultant. Mozilo is obligated to
make himself available for a specified period of time each month through
December 2011 and at the rate of $400,000 per year.
He will also be entitled to receive other benefits, including office
space, secretarial support, use of the company's aircraft, financial
consulting services and payment of annual country club dues.
For three years, continuing health, life insurance and financial
planning benefits for Mozilo and his beneficiaries.
After those three years, health benefits for the lifetimes of Mozilo and
his spouse.
A "gross-up payment" equal to the excise tax charged to him as a result
of his receipt of any of the above (with certain exceptions).
All this is based on contractual obligations made with Mozilo when the
company was doing well. The terms of the sale to Bank of America might
have forced Mozilo to give up some of these benefits.
"There is no reason Good can't triumph over Evil, if only angels will get
organized along the lines of the Mafia." -Kurt Vonnegut, "A Man Without A
Country"
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