Saturday, January 12, 2008

MY NOMINEE FOR THE KEN LAY AWARD--AND A PRISON TERM

Big Payday Awaits Chairman After Countrywide Sale
By Frank Ahrens Washington Post Staff Writer Saturday, January 12, 2008; D01
Angelo R. Mozilo has pocketed $410 million in salary, bonuses and stock-option gains since he became executive chairman of mortgage lender Countrywide Financial in 1999, according to the executive compensation company Equilar.
Now, the man at the center of the national mortgage crisis stands to collect an additional $112 million in severance when Bank of America buys the company he helped found.
Equilar's numbers are based on Countrywide's most recent proxy statement, which is a year old. According to the statement, if Countrywide is acquired and Mozilo leaves, he is entitled to a cash severance of $88 million. He would also receive a retirement package worth $24 million.
Equilar said that most of Mozilo's compensation since becoming chairman -- $285 million -- has come from stock options. Mozilo has been criticized for selling pieces of his stake in Countrywide, cashing in tens of millions of dollars in options as the housing market dropped.
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I nominate Angelo Mozila, Chairman and CEO of the biggest player in the sub-prime fraud for this year's inaugural award.
More and more chairmen are being sentenced these days and everyone is looking for someone to pin this latest disaster on. Mozilo's a social nobody, son of a butcher, Fordham graduate. No Yale or Harvard connections and in that, he joins poor-boy Ken Lay. Ken Lay, the errant Chairman of Enron (if anyone still remembers Enron) had the good grace to die prior to checking in at the Big House.
One of the particular slip-ups of 'Kenny Boy' (as our president chose to nickname him) was selling stock options ahead of and during the fall, when he knew the fall was coming. That a very big no-no. That's the most egregious of the crimes that fall under the general general heading of 'insider trading,' which has sent many an insider off to stamp out license-plates.
Back in March, prosecutors charged 13 people, including employees at top Wall Street banks UBS, Morgan Stanley and Bear Stearns in what they called one of the most pervasive trading rings since the 1980s. The SEC also brought civil charges against 11 people as well as against three hedge funds. Goldman Sachs, the Treasury Secretary's alma mater, has since joined the bunch.
Ivan Boesky, Michael Miliken, Joe Nacchio, the beat is louder.
You need evidence of course--and plea bargains with little guys have been devastating to the big hitters. Voila! The solution is at hand--Henry Paulson take note--Mozilo may be the stalking-horse that keeps the Feds off your trail.
In June last year, three former Countrywide execs plead guilty to federal charges that they engaged in insider trading in the mortgage lender's shares in the week leading up to a disappointing earnings report.
Ready-made, those guys might want to ruin Angie Mozilo's retirement, pensioning him off to the Fed to soften their own sentences. Back in 2003, Mozilo characterized his just-deceased co-founder (David Loeb), as "a tough and brilliant business strategist who put Countrywide years ahead of the industry with pioneering hedging strategies, including our successful macro-hedge capability that continues to grow and serve the company and its shareholders."
Success is a momentary thing and, as Countrywide stock went from $58 to $5, obviously some shareholders are trying to sort out who was served the finer cut. A no-no. Did I say that? A very big no-no.
During that one-year 87% plunge, Mozilo cashed in $13 million.
Oops.
Mozilo, in the photo accompanying the WaPo article, looks tan and fit. Fit to be tried. The once vast empire he built now looks half-vast.