NEW YORK - As if Countrywide Financial Corp.'s CEO isn't getting paid enough, the mortgage lender's board is taking the unprecedented step of lavishing him with $10 million in retirement money.
And he isn't even retiring.
Countrywide is spinning it as a ''reimbursement'' because Angelo Mozilo agreed to stay on at the helm until 2009 instead of retiring this year as was expected. That will come on top of the hefty salary he will get to stay at work.
The company released details of Mozilo's financial package on the same day it announced plans to lay off 2,500 Countrywide employees. Talk about tone-deaf
Mozilo has long drawn flak for his pay, which the Calabasas, Calif.-based company has defended as appropriate since under Mozilo's watch Countrywide has become the nation's largest mortgage lender.
Over the last decade, Countrywide's market capitalization has gone from just over $2 billion to levels above $20 billion. Its stock has had more than a seven-fold gain during that time - which shows that shareholders have been rewarded.
But some investors still think Mozilo's big payouts show his too-cozy relationship with board members who are supposed to be monitoring his work.
Last year, Mozilo made nearly $142 million, including $2.7 million in salary, $19.6 million in bonus and $119 million in realized stock-option gains. That's not all - he got plenty of perks, including $40,282 for country club memberships, $230,452 for personal use of company aircraft and $29,750 for tax and investment advice, according to securities filings.
That made him the sixthhighest-paid executive in corporate America, according to a study of 2005 compensation at 1,400 public companies by the independent governance research firm The Corporate Library.
Mozilo, who co-founded Countrywide and has been at the helm since 1998, was expected to retire this year, but last Friday the company announced he would stay on through 2009.
When details of his contract were released in a regulatory filing on Tuesday, it first looked like Countrywide had gotten the message that Mozilo's compensation was out of hand. His base pay had been cut to $1.9 million, while his bonus would range from $4 million to $10 million annually depending on the company's return on equity and net income.
But thrown into the mix was also the promise of the retirement ''reimbursement'' that would pay Mozilo $10 million over the next three years, an arrangement that compensation experts say may be the first of its kind. Of that, $5 million is guaranteed while the rest is contingent on the company's shareholder return ranking at the median or above those in the Standard & Poor's Financial Services Index.
''This is allowing him to have his cake and literally eat it too,'' said Patrick McGurn, executive vice president and special counsel to Institutional Shareholder Services, a proxy advisory firm. ''He is entitled to get retirement pay even though he chose to not retire and still work. It is not a
reimbursement. It is an entitlement.''
Countrywide declined to comment beyond what was said in the securities filing.
News of the pension payout came as Countrywide announced Tuesday that it earned $648 million in the third quarter, up only slightly from $634 million a year earlier. Facing a slowdown in its lending business due to the housing slump, Countrywide also said it plans to cut $500 million in expenses, which will include reducing its work force by 2,500, or 5 percent.
Mozilo's pay continues to rankle the pension plan of the American Federation of State, County and Municipal Employees, a Washington-based government workers union.
Its proposal to give Countrywide shareholders an annual nonbinding advisory vote on executive compensation was defeated last spring by a narrow margin - 43 percent for, 55 percent against and 2 percent abstaining. This week, they took up that cause again, filing to have the proposal voted on by shareholders at next year's annual meeting.
''It takes a huge amount of creativity to put more money in this CEO's pocket,'' said Richard Ferlauto, director of pension and benefits policy for the AFSCME. ''The compensation committee of this board is failing to do its job. They are either deaf to
shareholders or totally incompetent.''
Still, many on Wall Street have decided to look the other way. Analysts cheered during the company's conference call that Mozilo was sticking around. The stock in recent days has jumped 10 percent to more than $38 a share, largely fueled by news that Countrywide would buy back $1 billion to $2 billion worth of stock in the fourth quarter.
That conveniently managed to dim the spotlight on Mozilo's retirement pay.
Rachel Beck is the national business columnist for The Associated Press. Write to her at email@example.com.