House Committee
Focuses on Mozilo

Angelo Mozilo resisted advice from some outside consultants who sought to scale back his often-criticized pay and perquisites as chairman and chief executive officer at Countrywide Financial Corp., according to a report by a House committee.

The House Committee on Oversight and Government Reform -- headed by Rep. Henry Waxman, a California Democrat -- is due to question Mr. Mozilo this morning at a hearing on executive compensation at companies involved in the mortgage-market shakeout. The committee also plans to quiz Stanley O'Neal, former chief executive of Merrill Lynch & Co., and Charles Prince, former CEO of Citigroup Inc.

While the report depicts as excessive the compensation received by all three executives, it concentrates most of its fire on Mr. Mozilo, who founded Countrywide in 1969. In early January, the ailing home-mortgage lender agreed to be acquired by Bank of America Corp. for about $4 billion, or one-fifth of its year-earlier market value.

Mr. Mozilo received total compensation of nearly $250 million for 1998 through 2007 and collected an additional $406 million from the sale of Countrywide stock, the report says.

Neither Countrywide nor Mr. Mozilo responded to a request for comment. In the past, Mr. Mozilo has defended his compensation as being deserved. Countrywide has defended its executive pay as being based on "performance in alignment with stockholder value creation."

Citigroup declined to comment. Spokesmen for both Merrill and Mr. O'Neal declined to comment.

The report says two compensation consultants hired in recent years urged the board to cut back on certain aspects of Mr. Mozilo's compensation. The first was pay consulting firm Pearl Meyer & Partners Inc., which advised Countrywide in 2004 when it was discussing an extension of Mr. Mozilo's contract. "It's unfortunate in retrospect that the company did not follow all of our recommendations," said Pearl Meyer, who at the time ran the eponymous firm and is now senior managing director of Steven Hall & Partners, another pay consultancy.

A second consultant, Exequity LLP, in 2006 recommended reductions in Mr. Mozilo's compensation, the report says. After the board's compensation committee proposed making those cuts, the report says, Countrywide management hired another consulting firm, Towers Perrin, to review the board's proposal. Though the firm was being paid by Countrywide, Mr. Mozilo regarded the Towers Perrin representative, John England, as his own adviser, emails reviewed by the committee staff suggest.

"The board made a number of revisions to accommodate Mr. Mozilo and Mr. England," the report says. Among other things, the board put larger companies into the peer group used to gauge Mr. Mozilo's pay and gave him a $10 million bonus to stay on as CEO longer than planned.

The report cites an email from Mr. England to Mr. Mozilo expressing disappointment that the board's final proposal "lowers your maximum opportunity significantly." According to the report, Mr. Mozilo replied: "At this stage in my life...this process is no longer about money but more about respect and acknowledgement of my accomplishments... Boards have been placed under enormous pressure by the left wing antibusiness press and the envious leaders of unions..."

For 2007, Mr. Mozilo accepted a pay reduction, saying he didn't "want to be the lightning rod that casts any negativity on the company." Countrywide said in May 2007 that his base salary, performance-based bonus and equity-incentive pay would be down by between 48% and 62% for that year, depending on company performance. Those items totaled about $42 million in 2006, the company said.

In a statement, Towers Perrin said it "neither represented nor acted as a personal advocate for Mr. Mozilo." The firm said its recommendations resulted in lower compensation than Mr. Mozilo had received in the past. Mr. England didn't respond to requests for comment. Ross Zimmerman, the Exequity consultant who advised the board, declined to comment.

Mr. Mozilo exercised options and sold nearly $150 million of Countrywide stock from November 2006 through the end of last year, the report says. That decision "raises questions," the report says, particularly because the company had borrowed $1.5 billion to repurchase its shares during that period, helping to support the price. Mr. Mozilo has argued that stock options were a tax-efficient way for the company to pay him and that he wanted to diversify his investments before his retirement.

The report says Countrywide's board agreed to pay any taxes due when Mr. Mozilo's wife joined him on business trips on the corporate jet.

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