Countrywide Financial CEO Is Running For the Hills

Countrywide Financial Corp. Chairman and CEO Angelo Mozilo (CFC) has been selling shares like a shipwreck survivor bailing water out of the emergency life boat. Since May 1, he has disposed of approximately 2 million shares. He has been actively selling well before that.

The stock sale was conducted under a prearranged 10b5-1 trading plan, which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material nonpublic information.

Angelo Mozilo is a co-founder and aged 68. So with his perspective and long in the tooth experience, now that he is in the twilight of his career he has decided to liquidate as quickly as possible and put his money somewhere much safer, I assume.

You can listen to all the guidance you want, but when the CEO runs for the hills investors need to worry.

CFC 1-yr chart:

Comments

[Stephen Ros...:]

He's got to get out sometime. That's where his assets are. I don't think it tells much about the company's prospects.

2007 Jun 19 12:54 PM

[kurt walter:]

He has been dumping shares for years now. He got those cheap stock options and cashed in. Even though he was one of the 2 guys to start the company in 1969, he never really kept a signficant share of the ownership (unlike Bill Gates or Warren Buffett did with their companies) His famous quote, "It was hard to raise a family on a $350,000.00 salary for many years" kind of sums up his mindset. Years later the board of directors gave him very cheap stock options and a crazy pay and perk package. For the past 3 years, the stock has done nothing but trade in a range. Yet, he is still cashing in those cheap options. It is like there is no end to it. Not too bad when you have the board in your pocket, I guess.

2007 Jun 19 02:16 PM

[kurt walter:]

AND IT SEEMS THE SHAREHOLDERS DON'T CARE

NEW YORK (Reuters) - Countrywide Financial Corp. (NYSE:CFC - News) shareholders on Wednesday rejected a proposal to give them an advisory vote on setting pay for top executives.
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The result was a victory for Chief Executive Angelo Mozilo, whom critics have long targeted for his hefty compensation, which totaled $42.98 million last year. Mozilo co-founded the largest U.S. mortgage lender in 1969.

Countrywide said the so-called "say-on-pay" proposal won support from 31.7 percent of the votes cast -- less than last year -- with 59.6 percent opposed. The rest abstained.

The American Federation of State, County and Municipal Employees, which owns 4,000 Countrywide shares, had offered the proposal. It won the backing of some governance experts and the California Public Employees' Retirement System pension fund.

Shareholders have submitted proposals seeking nonbindingvotes on executive pay at dozens of U.S. companies this year, winning passage at least four times. Companies have generally opposed such proposals.

Speaking at Calabasas, California-based Countrywide's annual meeting, AFSCME representative Scott Adams argued "the current system of paying CEOs in the U.S. is broken." He said five top Countrywide officials were last year paid $117 million, including some $267,000 in country club fees.

Mozilo defended the payouts, saying Countrywide pays top executives for performance. Countrywide shares rose 24 percent last year, topping a 7 percent gain in the KBW Mortgage Finance Index (Philadelphia:^MFX - News).

"The board has done a very good job in aligning my compensation with the benefits to the shareholders," Mozilo said.

He also called say-on-pay proposals "irresponsible, irrelevant" and a "destructive concept." There is "absolutely no evidence" that they enhance shareholder value and they make it harder to attract talent, he said.

Mozilo's compensation for 2006 excludes $78.87 million of gains from stock options and the vesting of shares.

Saying it was acting "proactively," Countrywide this year cut Mozilo's annual salary by a third to $1.9 million and potential bonus and equity awards by half to $20 million. Mozilo's contract ends in 2009, when he will be 71.

Shareholders have this year endorsed say-on-pay proposals at Blockbuster Inc. (NYSE:BBI - News), Ingersoll-Rand Co. (NYSE:IR - News), Motorola Inc. (NYSE:MOT - News) and Verizon Communications Inc. (NYSE:VZ - News).

The U.S. House of Representatives in April approved a measure requiring companies to hold nonbinding votes on say-on-pay. Sen. Barack Obama, an Illinois Democrat seeking the White House, offered a companion bill in the Senate, whose approval would also be necessary to enact a law.

Many British companies give shareholder nonbinding votes on executive pay, though the concept is new to the United States.

Countrywide shares fell 20 cents to $37.90 in afternoon trading on the New York Stock Exchange. They began the year at $42.45

2007 Jun 19 02:29 PM

[Paul Meisel:]

Here is a relatively rare example of a CEO behaving like a normal, rational human and being fairly transparent about his actions.

The performance of the stock given the state of housing and mortgage financing is no surprise....... it's actually done better than some of it's competitors.

Disclosure: no position but on my watch list

2007 Jun 20 07:58 AM