CEO’s Pocket Big Pay While Their Companies Tank

Three CEOs—Angelo Mozilo of Countrywide Financial Corp., E. Stanley O’Neal of Merrill Lynch andCharles Prince of Citigroup—presided over companies that lost a combined $20 billion in just the past two quarters of 2007 as a result of investments in subprime and other risky mortgages.

For that kind of performance, the CEO trio pocketed more than $320 million in compensation, stock bonuses and other rewards last year.

That disconnect between performance and pay, says Rep. Henry Waxman (D-Calif.), shows that "there seems to be two different economic realties in this country. Most Americans live in a world where economic security is precarious and there are real economic consequences for failure. But our nation’s top executives seem to live by a different set of rules.…CEOs seem to hit the lottery when companies collapse."

Waxman made his remarks at his U.S. House Oversight and Government Reform Committee’s hearing this morning on CEO pay and the mortgage crisis.

Waxman says all three companies “bet heavily on the subprime market” and suffered enormous losses. Countrywide lost $1.6 billion in 2007 and its stock lost 80 percent of its value. Merrill Lynch lost $10 billion and its stock lost 45 percent of its value. Citigroup also lost $10 billion and its stock lost 48 percent of its value.

According to a report released by the committee, the companies’ nosedives paid off for the three CEOs. O’Neal and Prince pulled the rip chords on their golden parachutes and resigned. Mozilo appears ready to do the same as soon as Bank of America completes a deal to buy Countrywide.

The report shows that O’Neal left Merrill Lynch with a $161 million retirement package. Prince was awarded a $10 million bonus, $28 million in unvested stock options and $1.5 million in annual perquisites when he left Citigroup. Mozilo received more than $120 million in compensation and sales of Countrywide stock.