Countrywide CEO Gets Lucky Grantitis

Angelo Mozilo, CEO of Countrywide Financial (CFC), received some very interesting grants of Employee Stock Options, Stock Appreciation Rights and Restricted Stock.

Lets look back over the past three years for Lucky Angelo.

On April 2, 2007 .....Granted 152,766 shares of restricted stock - Market Price 32.73

On April 2, 2007 .... Granted 566,894 SARs - Market Price 32,73

On April 3, 2006 ... Granted 1,400,000 SARs - Market price 36.41

On April 3, 2006..... Granted 1,400,000 ESOs - Market Price 36.41

On April 1, 2005.... Granted 1,400,000 ESOs - Market Price 32.60

In each year the grants were very close to or on April 2 and were all followed by substantial increases in the stock:

For example:

May 2, 2007 stock = 37.26

May 3, 2006 stock = 40.00

May 1, 2005 stock = 35.95

In two cases (2005 and 2007) the grants were made at the low prices of 3 months before and after the grant.

And Angelo was not timid about selling his stock, Virtually all his stock was sold above the earlier options grant date prices.

Was he worried about the short swing rule Section 16b of the Securities Act of 1934? No, the SEC fixed that problem with Rule 16b-3 in 1996. Yes the SEC accommodated all of the back dating and spring loading that we are hearing about today. And we will see more of it in the future because the Federal Courts are ruling for the back daters.

So Countrywide is going broke. But Angelo and his comrades got their options and much of the company money. Is this the fate that lies ahead for many companies, where executives abuse the options grants?

Where is the FBI and why no media coverage of Angelo's equity grants?

Comments

[Paul Meisel:]

I have to believe that given the prominence of both the stock and the CEO that the SEC has looked into this and found nothing worth pursuing.

2007 Sep 10 08:53 AM

[Tony Rand:]

Didn't Angelo once say something about it being hard to raise a family on a salary of $350,000 a year??? I'm sure there are a lot of us that would like to see just how difficult it really is.

2007 Sep 11 12:35 PM

[Ray Wollney:]

The author of this article is absolutely correct. It is beyond naive to think that Mozil could have been granted the options at the low of the stock simply by coincidence.
It is also naive to think that the SEC is in the business of protecting the public investor.

2007 Sep 11 01:02 PM

[jjason:]

Thank you for writing about what Mozilo and the Board of Directors at CFC have done. Everyone who has lost money by investing in CFC should send your article to their Congressman and Senators. Mozilo and others like him have enriched themselves at the expense of shareholders and I would hope someone can file a lawsuit and make Mozilo give all the money back. Also, if it was up to me, I would put him in jail.

2007 Sep 11 01:18 PM

[John Olagues:]

Mozilo pocketed over $355,000,000.00 over the past 2 1/2 years by exercising options (much with exercise prices at $5.70) and selling stock in the $40's and high 30 s.

He may have even topped Terry Semel who grabbed over $500,000,000 for being head Ya(ho) at Yahoo! since 2001.

Mozilo could be sued for a 16b violations and made to disgorge $20-30 million in my view, but there are exemptions granted him by the SEC, which have been expanded by the courts so that 16 b may be dead.

John Olagues

2007 Sep 11 09:11 PM