Credit C.E.O. Comp Under Fire, IV

He's tan. He's confident. But he's not smiling. Angelo Mozilo, chief executive of mortgage giant Countrywide Financial, takes center stage at the Housing hearing on the compensation of mortgage C.E.O.'s

Elizabeth Olson is blogging live from the hearing:

Mozilo says that the philosophy that guided executive compensation at Countrywide Financial was to align "the interests of top executives with shareholdes by making compensaton primarily performance based."

"From 1982 through April 2007, our stock price appreciated over 23,000 percent. As a result, earlier this decade, I received substantial income from performance-based bonuses earned under a formula based on earnings per share. This bonus formulation was approved on at least two separate occasions by the company's stockholders."

A significant portion of the compensation was "in the form of stock options rather than cash."

"In short, as our company did well, I did well. But when the company last year experienced the unanticipated and unprecedented seizing-up of the capital and credit markets, we suffered a loss for the first time in 30 years. as a result, my direct compensation and obviously the value of my own Countrywide stock holdings declined substantially, which is as it should be. I have not received, and will not receive, a bonus for 2007 and 2008."

He said numbers such as the $115 million he allegedly received in severance "were grossly exaggerated" and "I have voluntarily elected to forego the specific severance payments that had been included in my contract in the event of a transaction like the one with Bank of America." (He is giving up $36.4 million in severance and $1.1 million in future consulting fees and other perks as part of the sale of BofA.)

Mozilo got some help from Harley Snyder, an Indiana real estate business owner, who is the lead director and chairman of the Countrywide board's compensation committee. Mozilo got more compensation by agreeing to defer his retirement - twice.

"As with many companies, the board's compensation philosophy had continually evolved to reflect changes in compensation practices and norms," Snyder

But for 2006, there was a "significant reduction in the guaranteed portion" of Mozilo's cash compensation by reducing his base salary from nearly $2.9 million to $1.9 million.

Snyder said Mozilo's new contract also included provisions that would require a certain return on equity and net income targets be met before he would be eligible for an annual bonus. He received no bonus in 2007, the "only time in the last 30 years in which the company suffered an annual loss."

Elizabeth Olson

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