Countrywide Controversy – CEO Scandal

January 11, 2008 | Filed Under News, scandals 

Top Headline on Reddit:

Countrywide CEO will get $110 million severance for creating subprime mess, and dumping $400 million in stock before CFC fell 80% as he was saying ‘everything is fine’. Where’s the investigation?

Well, suffice to say that it got my attention.  Here’s an excerpt from the article:

Mozilo has two pensions that his severance agreement gives him the right to receive as a lump sum upon his departure. Those pensions were worth $24 million as of December 2006, the last time the company was required to report their value.

There is more. The Times reports Mozilo would receive continuing health benefits for life for himself and his spouse, three years of life and financial planning benefits, and “tax-gross-up payments” to compensate him for any penalties he’d have to pay for receiving payments the IRS might consider excessive.

Given the slashing of 10,900 jobs at Countrywide this year, and the 81% decline in Countrywide stock over the last year, it is likely Mozilo’s severage package will prove more controversial than his previous stock sales.

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