Management Turnover as Change Agent

Monday, November 12, 2007

CEO Watch - Angelo Mozilo, Countrywide Financial Corp. Update 1

Angelo Mozilo, the CEO of embattled Countrywide Financial Corporation, continues to exude confidence about his company's prospects as well as his own to survive the turmoil in the mortgage business. His confidence seems to run in the face of reality. Since my initial CEO Watch on Mozilo, CTW an adviser to pension funds has added itself to the company's list of critics. CTW has begun to put pressure on Countrywide's board of directors particularly its chairman. In a recent Los Angeles Times article by Kathy M. Kristoff and E. Scott Reckard it was stated,
CtW Investment Group, which represents the pension funds for the Teamsters, United Farmworkers and other unions that hold Countrywide shares, also criticized the board for excessive compensation for its directors.
"Current and historic director pay is both unjustified and a likely source of the board's passivity in the face of the company's current crisis," CtW Executive Director William Patterson wrote in a letter to Harley Snyder, Countrywide's lead director.

The letter says Snyder bears "central responsibility for Countrywide's egregious compensation."

"Your excessive compensation, together with your aggressive divestment of your own Countrywide stock at the peak of the housing bubble, militates powerfully against any inclination you might have to lead your fellow independent directors or hold Mr. Mozilo accountable," Patterson wrote.
The likelihood of the credit crisis continuing will only result in increased pressure on both Mozilo and the board. Stay tuned and keep a close eye on moves surrounding the firm and its top executives.

For more:

New York Times

1 comment:

Nancy said...

I think African Americans were also disproportionately affected by the subprime foreclosures as well. For the most part, they were the ones who had the American dream pulled out from underneath them by loosing their houses. The world could hardly seem like a fair place to them. It does seem like powerful people are no longer accountable, though. For example, you lose money on Wall Street as a big-time CEO and you get fired. This is ultimately why O’Neal lost his job. Merrill’s board members, whom the NewsVisual article identifies, needed to replace O’Neal because he lost huge sums of money. Nevertheless, Mr. O’Neal still leaves as a wealthy man.