It was really a pleasant morning. At 5 a.m. the temperature was a balmy 35 degrees, no wind and no cars on the road. What do people do on a Saturday morning?
So why was I mad when I finished my run?
Well, I was thinking about the mortgage and credit debacle – which has weakened our economy and hurt plenty of homeowners and others throughout the country. And it isn’t over yet, especially if the U.S. economy slips into recession. One person who should be OK though is Angelo R. Mozilo, the executive chairman of Countrywide Financial. Countrywide, now being acquired by Bank of America, appears to have been at the front of the line in helping borrowers get mortgages that, according to news reports, they couldn’t afford.
I heard on the news last night that Mozilo now stands to get more than $100 million in severance and retirement benefits. Say what? Have you checked your savings plan or investments lately?
Here’s a story by Frank Ahrens on washingtonpost.com titled “Big Payday Awaits Chairman After Countrywide Sale.”
“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.”
Mozilo may have earned every penny of the $410 million. I don’t know. If shareholders, employees and customers benefited as well, then OK, if he feels he needs that much money and his board of directors goes along for the ride. But here’s the rub from a public relations perspective. It’s hard to justify executive compensation when it is so far out of line from the compensation of other employees. Even if it is based on incentives such as higher share prices. It’s nearly impossible to justify these exorbitant out-the-door payments. His wasn’t the first. It won’t be the last. And at some point the company’s board must have approved the compensation package. But these payments sure don’t enhance the reputations of corporations and business leaders in general. They undercut the trust that many have in the business community and business executives. And they don’t help to engage employees, particularly when times are tough.
Maybe there is a lesson here for my ethics class. Better think about it before Spring Semester classes begin Monday.
As best I can tell from The New York Times and others sources Mozilo managed Countrywide to the point where there was speculation the company would finish in bankruptcy. Heck, I could have done that.