WASHINGTON - Three corporate executives called in for a shaming by Democratic lawmakers Friday defended raking in hundreds of millions of dollars despite contributing to the subprime mortgage crisis that has their companies reeling from losses and the nation on the edge of recession.
'There's a complete disconnect with reality,' said Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee.
But the CEOs testifying before the committee, Angelo Mozilo of Countrywide Financial Corp.; Stanley O'Neal, formerly of Merrill Lynch & Co; and Charles Prince, formerly of Citigroup Inc.; defended their pay as appropriate.
'As our company did well, I did well,' said Mozilo, founder of Countrywide, the nation's largest mortgage lender and a key player in the subprime problem. 'But when our company did not do well, as in 2007, my direct compensation and the value of my holdings declined materially, which is as it should be.'
Republicans on the committee generally agreed. 'This is a hearing in search of bad guys,' said Rep. Darrell Issa, R-Calif. 'All of you complied with the transparency rules and the best practices rules.'
The hearing was the second held by Waxman on the issue of executive pay, which Forbes magazine said averaged $15.2 million for the CEOs in the largest 500 U.S. companies in 2006, an increase of 38 percent in one year.
He questioned how all three CEOs could profit handsomely at a time when their companies were losing billions of dollars and stock values were plunging.
'You're in the middle of an enormous debacle,' Waxman said. 'It seems like everyone is hurting except for you.'
'It's only in the wacky world of CEOs where you get severance for failing,' said Nell Minow, editor of The Corporate Library and one of the economic experts testifying.