Human Capital & Careers

Countrywide Repays CEO for Staying Put

The mortgage and financial services company will reimburse the CEO $10 million for the pension payout he gave up when he postponed his retirement.
Stephen TaubOctober 25, 2006

Angelo R. Mozilo is a team player. The chairman and chief executive officer of Countrywide Financial Corp. said that instead of retiring, he would remain on the job an additional three years.

To show their appreciation, the board agreed to give him an extra $10 million to compensate him for the retirement benefits he would have received had he abandoned the executive suite for the golf range, or wherever he prefers to spend his idle moments. Mozilo will also take home a salary and bonus.

Under his new, extended contract, Mozilo will receive an annual salary of $1.9 million, “with annual reviews of potential changes to the base salary,” according to a regulatory filing. He will also be eligible to receive a bonus of between $4 million and $10 million, based on specific performance targets. In addition, Mozilo will also receive stock appreciation rights and performance-based restricted stock units having a targeted value of $10 million.

In what seems like an unusual move, Mozilo will also be reimbursed $10 million “to compensate him for the three years of foregone supplemental retirement payments” that he would have received under the company’s Supplemental Executive Retirement Plan (SERP). If he had retired, Mozilo would have been entitled to receive the SERP at the end of 2006, according to the filing.

Mozilo is accustomed to large pay packages. For example, in 2005 he earned a total of $142 million. This included a salary that exceeded $2.6 million and a bonus of more than $19.5 million.

He also received more than $700,000 for what the company defines as “other compensation,” which refers to $370,000 the company contributed to a deferred compensation account; more than $230,000, which is what the company estimates is the value of using the corporate jet; $40,000 for the use of a country club membership; and more than $26,000 related to the use of an automobile. Topping off the 2005 package: $119 million from exercising stock options.

In 2004, Mozilo earned $72 million, including nearly $49 million from exercising options and a bonus exceeding $17 million.

Countrywide missed analysts’ earnings expectations when it announced a $1.03 third-quarter profit on Tuesday. Howeverm, over the past two days, the stock price has risen by 10 percent to about $38.88, on news that it expects to layoff 2,500 employees (4 percent of the workforce) and buyback about $2 billion worth of stock during the fourth quarter.

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