Subprime CEOs Explain Why They Made Millions While Americans Lost Homes

Snyder also said that under Mozilo's tenure, Countrywide's stock saw large increases and that many of the recent changes to Mozilo's contract tied pay to stock price. Those benefits would be worthless until the stock price rose.

"As with the earlier contract, we believed that this aligned Mr. Mozilo's interests with that of the shareholders," Snyder said.

But other witnesses said that the pay incentives still didn't force the CEOs to make prudent long-term decisions but just to make decisions that benefited their company and, more importantly, their stock price.

Susan M. Wachter, a financial management professor at the University of Pennsylvania's Wharton School, said that incentives are an important element in the subprime debacle.

"The current crisis is a textbook case of how misaligned incentives can cause markets to fail," Wachter said.

Nell Minow, editor and co-founder of The Corporate Library, which tracks executive compensation, went further saying: "There is no excuse for paying people so much for doing so little."

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