Countrywide Compensation of Executives

In what appears to be a farewell free for all, Countrywide continues to exhibit troubling signs of excess. It has been revealed that COO David Sambol is getting a total salary of $19.3 million dollars and "other" packages for 2007. David Sambol is getting a base salary of $1.4 million dollars. His compensation package is higher than many CEOs at many top banks in the nation including Wachovia's CEO Ken Thompson who earned $18.26 million in 2006.

This outrageous pay package is in addition to CEO Angelo Mozilo's outlandish compensation in 2005 of $160 million and possible severance package of $250 million, if he actually left the company. His contract with Countrywide is set to expire in 2009. We all know the intensive selling of the Countrywide CEO and other executives in a time, when this industry is mired in a severe scrutiny for its lending practices. Many of the competitors are either out of business or filing for Chapter 11 bankruptcy protection. It is either a brazen efforts to milk the shareholders for what appears to be the final swan song for the company or an exhibition of strength of the company. I would agree with the final swan song. If true, this would bring up serious conflict of interest between the shareholders of the company and its insiders.

The release by Reuters of this fact appears to be another clever PR efforts by Countrywide to legitimize the recent insider selling. It is likely that the insiders plan on using this as a shield for possible scrutiny that this excessive pay package will have if and when the company's financial troubles surface. It is a preemptive strike for legitimacy of the insider selling in recent months. I disagree, if this notion is true, that the American investment community will be that easily fooled. This is a brazen exhibition of irresponsible greed that seems to have infected this beloved darling of Wall Street. While the analysts contiue to look the other way in addressing these issues, the insiders continue to pad their wealth by selling out of the company. I don't know if anyone reading this blog remembers Lucent during 1999 to 2000 before its downward spiral. It was quite frankly, one of the most beloved companies in Wall Street. Even as their booking of future earnings, which inevitably got them into trouble, and their customers began to die out one by one, defaulting on the "loan" that was incorrectly posted as earnings, Wall Street continued to stay enamoured with this company. As the shares continue to dwindle in price, the investment community continued to urge the shareholders to buy and hold until, of course, it was too late. By the time sell ratings became ubiquitous on Lucent, it was too late.

The interesting thing about Countrywide is that it has the makings of an Enron but also has a strong resemblence to Lucent, all before each respective company's downfall from grace. Therefore, I can only deduce that the fallout from Countrywide can only be uglier than either Enron or Lucent. I do not believe that anyone remotely related to the mortgage or housing industry will be found to be clean years from now, when the dust settles. Sadly, once again, it will the retail investors who will be left holding the bag, and the news media who once extolled the virtues of this once great company, will be pointing fingers as if a pulitzer worthy journalistic event has occurred. Oh the hypocrisy.

Democrats in the House and the Senate who are already harping on excessive CEO packages should think twice and possibly consider just concentrating on Countrywide. Not only is this company paying excessively to its CEO, every bit of their insiders are making out quite nicely. $19.3 million for a COO? Give me a break. It should be a nice spot light on these politicians who can kill two birds with one stone. That is to expose the fraud that Countrywide potentially represents but also an opportunity to condemn the excessive greed that permeates this company.