By Martin Bosworth
Why is this man smiling?
Angelo Mozilo, the well-tanned and always smiling soon-to-be-ex-CEO of failed mortgage lender Countrywide, announced today that he would magnanimously give up his massive severance package for running his company into the ground and being bought out by Bank of America:
“My primary focus today — as it has been for the past 40 years — is to do what is in the best interests of Countrywide’s employees, customers and shareholders,” Mr. Mozilo said. “I believe this decision is the right thing to do as Countrywide works toward the successful completion of the merger with Bank of America”…Mr. Mozilo would be entitled to $36.4 million in cash severance pay and $400,000 per year in consulting fees, as well as private airplane use and other perquisites. These are the amounts and benefits he will be forfeiting.
It should come as no surprise, of course, that Mozilo thought nothing of accepting such a ridiculously ostentatious gift bag even as his company was teetering on the verge of bankruptcy from its heavy investment in subprime mortgages and subsequent rising foreclosures. Indeed, the only reason Mozilo is giving the pay and perks up at all is because the House Oversight Committee and the Securities & Exchange Commission are taking a skeptical look at lavish CEO compensation packages in general, and his in particular.
And lest you think Mozilo will be on the welfare rolls by next year, fear not–he’s still walking away with retirement funding and deferred compensation totaling $40 million or so. Oh, the horror! How will he show his face at the country club now?
The Fine Art Of Money has a great roundup and timeline of the slings and arrows of outrageous fortune that The Tanned One has benefitted from over the years, particularly thanks to the housing boom of 2000-2005, when Mozilo led the charge in giving credit and loans to anyone with a pulse, and making sure their names were on the dotted line before ever reading the fine print.
And how’s that worked out? Not so well for homeowners, it seems:
Purchases of new homes in the U.S. unexpectedly fell to a 12-year low in December, ending the worst sales year since records began in 1963 and signaling little prospect for a recovery. Sales decreased 4.7 percent to an annual pace of 604,000, the Commerce Department said today in Washington. The median price dropped 10 percent from December 2006, the most in 37 years. The dollar extended its drop as the figures spurred speculation the Federal Reserve will keep reducing interest rates. The report may also reinforce concern that declining home prices and stricter lending will lead to more foreclosures and hurt consumer spending.
As homeowners rush to refinance into fixed loans and the Fed plans to cut interest rates to the bone in order to spur spending and avoid recession, Angelo Mozilo is–even without his lavish severance package–quite literally smiling all the way to the bank. And all he had to do was help wreck a country’s economy to do it, and get clean away with it. Nice work if you can get it.
Why is this man smiling? Wouldn’t you be?