Lavish Payout, Perks for Failed Mortgage CEO

Angelo Mozilo, the co-founder and public face of troubled mortgage giant Countrywide, is eligible for tens if not hundreds of millions in compensation and perks on the sale of the company to Bank of America.

During calendar 2006, the latest period available for review in Securities and Exchange Commission filings, Mozilo took home $48.1 million in compensation. An early analysis of SEC filings by the Los Angeles Times suggests he could get upward of $115 million when he leaves after the sale is complete, despite the fact that the company tanked during the recent subprime mortgage crisis.

In December, Countrywide reported a record number of foreclosures and delinquencies in its loan portfolio. The value of shares has fallen more than 84 percent since mid-May of last year.

Bank of America today confirmed that Mozilo will stay on with the company through a "transition period." Countrywide wouldn't comment on Mozilo's pay.

His long tenure with the firm — he has been there since its beginning in 1969 — and extensive employment agreement gives him the right to a significant payout when he leaves.

Immediately upon a change in control, Mozilo would get $13.3 million in accelerated vesting of stock grants, according to the terms of his 2004 compensation agreement, included in the company's latest proxy statement.

Should he leave the company after the firm's buyout, Mozilo would get a one-time cash payment of $88 million.

These numbers are presented in the proxy in the context of a "hypothetical" change in control on Dec. 31, 2006. The date is necessary since some of the value of the benefits is based on share price. The company entered into a new employment agreement with Mozilo in 2007, which the proxy statement says guarantees substantially the same post-merger benefits.

A senior Democratic lawmaker welcomed on Friday Bank of America's $4 billion acquisition of Countrywide Financial Corp, but urged Countrywide's chief executive to donate some of his millions of dollars in pay to help subprime mortgage borrowers, Reuters reported.

The deal could be a "positive development" in the subprime mortgage crisis, said Barney Frank, chairman of the House Financial Services Committee.

Some of the perks to which Mozilo is entitled after a change in control, according to the official filing:

The company will retain Mozilo as a consultant. Mozilo is obligated to make himself available for a specified period of time each month through December 2011 and at the rate of $400,000 per year.

He will also be entitled to receive other benefits, including office space, secretarial support, use of the company's aircraft, financial consulting services and payment of annual country club dues.

For three years, continuing health, life insurance and financial planning benefits for Mozilo and his beneficiaries.

After those three years, health benefits for the lifetimes of Mozilo and his spouse.

A "gross-up payment" equal to the excise tax charged to him as a result of his receipt of any of the above (with certain exceptions).

All this is based on contractual obligations made with Mozilo when the company was doing well. The terms of the sale to Bank of America might have forced Mozilo to give up some of these benefits.