Congress quizzes financial execs on CEO pay 'lottery'

WASHINGTON -- Lawmakers aimed their sights at three corporate executives Friday as they questioned how the CEOs managed to take home hundreds of millions of dollars in compensation while their companies were taking a financial nosedive due to the subprime mortgage crisis.

"It seems that CEOs hit the lottery as their companies collapse," House Oversight and Government Reform Committee Chairman Henry Waxman, D-Calif., said at the opening of the hearing. "Any reasonable relation between their compensation and the interests of their shareholders appears to have broken down."

CEOs who were scheduled to appear before the committee included Angelo Mozilo of Countrywide Financial Corp., the nation's largest mortgage lender; Stanley O'Neal, formerly of Merrill Lynch & Co.; and Charles Prince, formerly of Citigroup Inc.

All three companies have been major losers in the mortgage crisis.

Waxman said Friday's hearing was to examine many issues including "when companies fail to perform should they give millions of dollars to their senior executives?"

Waxman said that Mozilo received more than $120 million in compensation and sales of Countrywide stock last year while that company recorded losses of $1.6 billion.

Merrill Lynch lost $10 billion in 2007, but O'Neal got a $161 million retirement package.

Waxman noted that each of the CEOs who would be questioned had achieved "incredible success through hard work" and should be commended "for their many contributions to our country."

The questions are "not intended to disparage their records," he said, but rather understand if "the extraordinary compensation packages" the CEOs are receiving are reasonable or "is it a disconnect with reality?"

The committee questioned a panel of experts on CEO compensation in the first half of the hearing.

Nell Minow, co-founder of (a watchdog group) The Corporate Library, said "it's appalling that people should get paid like this for the kind of performance that they turned in. There's an outrageous disconnect between pay and performance."