Who Says There’s No Justice?
In an abrupt turn of events yesterday it seems Angelo Mozilo, CEO of Countrywide Financial (CFC), is looking at his “golden parachute” turn to a lead parachute.
Last week, Bank of America (BAC), announced it would buy the troubled mortgage lender for $4 billion in stock, bailing out the company suffering from the mortgage crisis and providing Mozilo with a $115 million compensation package for running the company into the ground.
It appears B of A has had a change of heart. The Wall Street Journal reported yesterday the deal with Countrywide could go south unless the terms of the deal are renegotiated.
Countrywide Financial Corp. shares dropped nearly 10% Friday amid growing investor fears that Bank of America Corp. could walk away from its agreement to acquire
the struggling home-mortgage lender.
Countrywide shares were at $4.96 in 4 p.m. composite trading on the New York Stock Exchange Friday, a 12-year low, down from $5.48 Thursday and $6.33 on Jan. 11, the day plans were announced for a merger in which shareholders would get 0.1822 Bank of America share for each share in the mortgage company.If the deal fails under certain circumstances, Countrywide has to pay a $160 million penalty. Nice negotiating there Mozilo. This was the ultimate “cash back at close” deal with only Mozilo’s interests being considered.
And it gets worse. Government is starting to wonder why they have to pony up $800 per person to help with recession fears when guys like Mozilo are banking hundreds of millions of dollars for failing his company, shareholders, employees and homeowners. The House Committee on Oversight and Govemment Reform has invited Mozilo to a little soiree on February 7th to address executive compensation and severance arrangements for CEOs involved in the ongoing mortgage crisis. The invitation further stated -
you stand to collect tens of millions of dollars in severance payments and other compensation. I request that you be prepared to provide your perspective on this reported pay package.
You should plan to address how it aligns with the interests of Countrywide’s shareholders and whether this level of compensation is justified in light of your company’s recent performance and its role in the national mortgage crisis.
I guess the uproar about Countrywide has finally yielded some results. Whether justice actually ends up being served, we won’t know for a while. It feels good to know that someone is actually paying attention.