USATODAY.com
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The payments of stock valued at $10 million for chief executive Angelo Mozilo and $9 million for President David Sambol were disclosed in a regulatory filing late Thursday by Bank of America. The payments, described as “performance-based” stock rights and grants, are required by agreements the executives struck with Countrywide less than a year before the sub-prime meltdown forced the mortgage lender to sell itself, according to the filing. Some lawmakers were incensed by the payouts. “It’s perverse for Bank of America to reward the principal architects of the bad business practices that caused this housing crisis,” Sen. Charles Schumer, D-N.Y, said in a statement. Bank of America also disclosed in the filing that it would pay Sambol $28 million to stay with the company. The bank wants Sambol to lead its consumer mortgage business when the deal is complete.
Bank of America is in the process of acquiring California-based Countrywide for about $4 billion in stock. Bank of America agreed to the acquisition in January, and the transaction is expected to close in the third quarter.
And here I was thinking he should have resigned in disgrace, silly me.
# 30 bobbo
“#28–J==for my education==are the SEC rules just for disclosure or do they set any actual requirements?”
Both. They don’t really set limits or anything like that but they do regulate illegal transactions like stock that is pre dated and shit like that. My point was that pat doesn’t really know or understand the rules that he claims people are following.
“Do you know of a website that is on point?”
http://www.sec.gov
“PS–I’m thinking “sometimes” excessive ceo compensation packages are poison pills designed not to compensate ”
Well as they go this one wasn’t really excessive in the big scheme of things except for the fact that it is a performance-based one and when it comes to performance I would say he disserves nothing. He ran the company into the ground.
Those property values went up in the first place because companies like Countrywide made loans that other banks weren’t giving to people who otherwise couldn’t buy homes. So they get no credit for sending property values up, but are criticized when the values go down? The real problem is that the government kept collecting property taxes on the higher values without lowering rates. They spent all this windfall tax money, and now they are upset at having to cut spending if property values go down.
Whining about the CEO getting this money is misplaced. More power to him. The real crooks are the board of directors that signed the CEO and the stockholders for letting the board make the deal that gave this guy a contract with a $10 million buyout with no qualifications. Whining about the CEO making this money is like whining about the Yankees overpaying for a player. The player isn’t the one you should complain about; it is the organization that agreed to pay him.
#33–Well Thomas==you raise your ugly head again?
You know that boards are nothing more than a self-selected mob of CEO’s from other companies with similar CEO packages and not so subtle pay-off to ex political and military leaders for past services rendered.
You are such a shill.
The blind hand of the market is quite appropriate for some kinds of corrective action but when boards fail to do their fidiciary duties, as has been the case for the last 30 years in America==the government is past due in putting these folks and their fellow travelers in JAIL! No money for YOU!
Keep the posting coming though, good to put it on display.
JESUS CHRIST!!! QUIT YOUR FIGHTING!!!
You are why Mommy drinks!
You are why Daddy left us!
You are why we can’t have nice things here at Dvorak.org!
JESUS CHRIST!!! QUIT YOUR FIGHTING!!! ///Jesus was a shill too.
You are why Mommy drinks! /// No, Mommy and all other drinkers need to take responsibility for their own actions.
You are why Daddy left us! /// I would too if Mommy drank.
You are why we can’t have nice things here at Dvorak.org! /// Probably true.
#34
We need to clearly separate whether he did anything illegal or was just incompetent. From what I understand, only the later is applicable. Again, you keep booing the player because they signed a huge deal instead of the club for signing it. You are directing your hate at the wrong people. Why are we blaming the employee for being crafty enough broker an agreement which pays him an exorbitant salary and has all kinds of exit benefits instead of the company that was dumb enough to agree to it? It is not illegal to mismanage a company.
#37 – If the guys here who want us to become the People Republic of the U.S. have their way, it will be illegal for CEO’s to fail. Of course, the only help to companies that will come from gov’t will be endless regulation and meddling but, hey that’s what totalitarian states are for.
I can always tell when I’m dealing with a neo-communist; they start talking about criminal and/or civil sanctions for leaving the great People’s Republic.
It is a common theme amongst totalitarian regimes.
Gulags or all!
#37–Thomas==”My issue” certainly isn’t what illegal vs whats incompetent.
1.–Can we agree that neither should be rewarded????
2.–If the laws allow such reward today, can we agree the laws should be changed to not allow such reward???
So, “my issue” in our various threads has been how to “motivate and structure the system” so that these illegal, questionable, incompetent motivations are not omnipresent.
EVERY CONTRACT between baseball teams and managers, or between Countrywide and its CEO is in reality a THREE PARTY CONTRACT with the government as the third party. Certain terms of unjust enrichment simply should not be allowed reqardless of the source of that unjust enrichment.
People will still be allowed to fail, just not profit from it.
#39 – Your primary mistake is thinking there is a law that allows people to get paid. There is no “law” to change. It is not a right the gov’t gives. The right is inherent, not granted.
#40–pat==you need to rephrase your thoughts as it is very vague. But I’ll take a stab at it.
The right to be paid a bonus is set forth by contract. bonues are not inherent and are totally granted by contract. Contract terms have to be enforced and therefore approved by government.
Contracts/bonuses poorly crafted that allow illegal/incompetent/badly motivated CEO’s to benefit while others get the shaft should not be enforced.
Surely, this makes sense?–(?)
#39
1. He should get whatever was agreed between him and the company. If the company agreed to pay him $10 million even if he sent the company down the tubes then they made a bad deal.
2. The law allows people to make stupid deals. If someone is selling a cookie for $10000 and you buy it, that is your fault, not the person selling the cookie.
How do you figure that every contract is between more than just the two parties? THe government lays out the rules about what you can and cannot put in a contract. After that, it is up to the two parties.
#40
Actually, it is very likely that his bonus terms are laid out in the contract. However, even if they are not and the company still pays him $10 million, then they are idiots. If some guy walks up to you and gives you $100,000 even though you piss on his shoe, you shouldn’t blame the guy that received the money.
#42–Thomas==as you say “THe government lays out the rules”
Rule #1==you cannot profit when a company goes bankrupt, nor get a bonus when the stock price plummets and you get a mercy buy-out supported by government funds.
#43
Agreed. Bankruptcy is an entirely different matter. However, I do not believe that Countrywide went into bankruptcy (although they would have.) I believe they were bought prior to that. Bankruptcy laws are far stricter about the employees getting paid.
#41 “Contract terms have to be enforced and therefore approved by government.”
Wrong. My contracts for comp in a public company are/were not approved by the gov’t. The ability to have civil recourse is not equal to gov’t approval. Your premise is flawed.
#41, bobbo,
Contracts/bonuses poorly crafted that allow illegal/incompetent/badly motivated CEO’s to benefit while others get the shaft should not be enforced.
You’re right. In this case it may be challenged because the CEO and Board did not work for the good of the company. If the company’s actions led the shareholders to lose money, they may be sued. That is the whole argument about Bear Stearns takeover by JPMorgan. Another well known incident is Raytheon lying to investors. Shareholders won a pile of money there.
Conrad Black and Hollinger Inc. is being sued for misappropriated money while he led the company.
Dennis Kozlowski of Tyco fame was charged for “stealing” $600 million “authorized” by the Board of Directors. Yes, he has to pay it back.
While the list is not endless, CEOs may be and are sued.
#46 – You are totally correct. Shareholder lawsuits are a great thing indeed.
One more time. Why should the American taxpayer have to pay for their $19 million performance based stock rights.
You are a fool if you don’t think BoA isn’t going to right off as much of those Countrywide bad loans as they can.
#48
If the contract that Countrywide gave him contained terms that are unenforceable or were breeched because of behavior, then by all means prosecute the man. However, if the man was simply incompetent and Countrywide signed a contract that gave him a fat bonus regardless of company performance, then Countrywide and its Board are to blame for that stupidity.
# 50 Thomas
I agree that Countrywide BOD is very much to blame but you seem to not understand the fact that these were performance-based stock options.
“However, if the man was simply incompetent…..”
They are being investigated right now by the Illinois state prosecutor. I am sure there are other states looking at the legality of what has taken place. Incompetent or criminal doesn’t matter these were performance-based stock options. What performance targets did he achieve? The transaction itself might be illegal not to mention all the potentially illegal predatory loans they made.