Countrywide Financial Corp. founder Angelo R. Mozilo, one of the nation's highest-paid chief executives, stands to reap $115 million in severance-related pay if his troubled company is acquired by Bank of America, regulatory filings show.
Free rides on the company jet also are included in Mozilo's departure deal, and the company would pick up his country club bills until 2011.
Other executives, including Home Depot's jettisoned chief executive Robert L. Nardelli, have garnered bigger packages. But critics say Mozilo's arrangement is especially nettlesome given the extensive losses that Countrywide investors have suffered.
"This is a failed chief executive - a failed and overpaid chief executive - who has driven his company to the brink of bankruptcy," said Daniel Pedrotty, director of the office of investment at the AFL-CIO. "I think shareholders are going to be especially outraged if he walks away with another pay-for-failure package."
Neither Mozilo nor Countrywide officials returned calls for comment.
Bank of America announced yesterday that it would acquire Countrywide for $4.1 billion in stock. If the deal wins all the necessary approvals, Mozilo potentially could stay on with the company.
But he probably could make more money by leaving, compensation experts say.
For one thing, Bank of America is unlikely to pay Mozilo more than its own chief executive, Kenneth D. Lewis. Lewis, whose company has a market capitalization of $174 billion, earned $27.9 million in 2007, according to regulatory filings. Mozilo earned $48.1 million last year, and Countrywide's market capitalization is $4.5 billion.
If Mozilo is fired or resigns voluntarily, his employment contract guarantees Mozilo three times his base salary, plus a cash payment equal to three times the amount of whichever is greater: his average bonus over the past two years or his bonus from the previous year.
That would be $87.9 million, according to Countrywide's most recent proxy statement.
In addition, Mozilo has two pensions that his severance agreement gives him the right to receive as a lump sum upon his departure. Those pensions were worth $24 million as of December 2006, the last time the company was required to report their value.
Finally, Mozilo would be eligible for accelerated payment of stock options and stock grants if the buyout goes through. Those are worth at least $3 million at current market prices, estimated Richard C. Ferlauto, director of pension and benefits policy at the American Federation of State, County and Municipal Employees.
Add it all up, and the severance package is potentially worth $115 million.
"He has driven the stock price into the ground, and the company has been destroyed. Their customers have lost their homes, and he is potentially walking away with more than $100 million," Ferlauto said. "For us, that's unconscionable enrichment."
In the past, Countrywide has defended Mozilo's pay, saying that shareholders had reaped riches thanks to Mozilo's leadership, a company founder who has served as chief executive since 1998. Until it was struck by rising loan defaults last year, the company had been profitable.
Mozilo also has defended his sale of company stock options, which are now the subject of an inquiry by the Securities and Exchange Commission.
Combining those sales with pay and previous gains on the sale of stock, Mozilo has taken more than $650 million out of Countrywide over the past 10 years, Ferlauto said.
Add in potential severance payments and the Calabasas, Calif.-based company would have enriched Mozilo to the tune of three-quarters of $1 billion.
"Compensation abuse has been a recurring travesty with this company," said William Patterson, director of the CtW Investment Group in Washington, which is affiliated with Change to Win, a federation of unions.
Kathy M. Kristof writes for the Los Angeles Times.