CEO Apologizes, but Not for
Lender
By JAMES R. HAGERTY and DAMIAN PALETTA
March 8, 2008; Page A3
WASHINGTON -- With home foreclosures sweeping the
country and his own company beset by huge losses, Angelo Mozilo, chief
executive of mortgage giant Countrywide Financial Corp., finally
apologized -- for the tone of an email complaining about reimbursement
for his wife's travel expenses.
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Angelo Mozilo, founder and former CEO of Countrywide, told a House
panel that almost all of his net worth was in the mortgage company. |
At a hearing of the House Committee on Oversight and
Government Reform Friday, Mr. Mozilo didn't apologize for his company's
performance or the problems that threaten to put hundreds of thousands
of families out of their homes. He blamed those events on unexpected
turmoil in the credit markets and falling home prices.
Instead, Mr. Mozilo said he now regrets the phrasing of
a November 2006 email to a pay consultant -- uncovered by the
committee's staff -- in which he suggested he might leave the company
unless the board resolved certain issues, including his demand for
reimbursement of taxes owed when his wife rode on the corporate jet.
It was "a trivial issue in retrospect," Mr. Mozilo
acknowledged to the committee, headed by Rep. Henry Waxman, a California
Democrat. "I apologize for that [email]. I regret the words I used. I
tend to be an emotional person."
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Friday's House Oversight and Government Reform hearing on Capitol
Hill. |
Explaining the email, Mr. Mozilo said he had intended
to retire at the end of 2006, but the board urged him to stay, and a
proposed cut in his compensation wasn't what he was expecting. In the
end, the board agreed to cover the taxes for Mr. Mozilo. He said a
"substantial" amount of money was at stake.
A report by committee Democrats said that Mr. Mozilo
received nearly $250 million of compensation for 1998 through 2007 and
collected an additional $406 million from sales of Countrywide stock.
Mr. Mozilo repeatedly defended Countrywide, a company
that he co-founded nearly 40 years ago. It is due to be acquired later
this year by Bank of America Corp. "I've spent my life trying to
lower the barriers of entry for Americans to own homes," he said. He
told Rep. Elijah Cummings, a Maryland Democrat, that he would send staff
to the congressman's district to help Countrywide customers who were
struggling with their mortgages, and he promised to give Rep. Eleanor
Holmes Norton (D., D.C.) his personal phone number to help her
constituents.
"I understand more than anyone else the importance of
homeownership," Mr. Mozilo said.
Rep. Cummings wasn't impressed with Mr. Mozilo's
apology over the email. "I've got some constituents who are pretty
emotional, too, because they're losing their homes," said the
congressman.
Mr. Mozilo's email warned that if he left the company,
it would owe him significant payouts upon retirement, and he would be
able to liquidate his 12 million shares. And when he was gone, he said,
the company would no longer benefit from his "travel all over the world
on behalf of the shareholders."
Former Citigroup Inc. Chief Executive Charles
Prince and former Merrill Lynch Chief Executive Stan O'Neal also
testified at the hearing, but lawmakers aimed most of their attention at
Mr. Mozilo. The hearing was supposed to consider executive-compensation
policies, but lawmakers also questioned each companies' role in the
mortgage meltdown.
Congress rarely holds hearings on Fridays, and roughly
a dozen lawmakers showed up. The Republicans in attendance defended the
witnesses, arguing that they were compensated based on their market
value and can't be blamed for the country's housing-market problems now.
"Punishing individual corporate executives with public
floggings like this may be a politically satisfying ritual -- like an
island tribe sacrificing a virgin to a grumbling volcano," said Rep. Tom
Davis (R., Va.). "But in the end, it won't answer the questions that
need to be answered."
Write to James R. Hagerty at
bob.hagerty@wsj.com9
and Damian Paletta at
damian.paletta@dowjones.com10
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