Angelo's angles: How Mozilo made $138 million

News item from the LATimes tonight: "As the mortgage industry swooned in late 2006 and 2007, Countrywide Financial Corp. Chief Executive Angelo Mozilo cashed in stock options valued at $138 million -- vastly expanding his wealth even as his shareholders watched their stock shrink in value."

More: "Company officials say Mozilo did nothing wrong and that the transactions were made under trading plans that specified how many shares would be sold each month."

Here's the interesting twist, though: Mozilo changed his trading plan twice -- in late 2006 and early 2007, the Times reports.

More: "Although trading plans usually protect executives against allegations that they traded on inside information, experts say Mozilo may have weakened his defense by making changes in a relatively short period of time. 'This raises a slew of red flags,' said Andrew Stoltmann, a Chicago-based securities lawyer. 'Any time you have revisions or modified plans. . . it is extremely suspicious.'

Your thoughts? Comments? Email story tips to lalandblog@yahoo.com.
Photo Credit: Reuters

Comments

[Willie]

I know now why he is so filthy rich besides being a scumbag it most be the ORANGE GLOW he uses.

Fellow bloggers let us all agree that from now on we will call Mr. Mozillo

ORANGE GLOW

[Brian]

Incredible. The man is beneath contempt. I think back to him appearing on CNBC in April, saying how all the turmoil in the mortgage business was going to be good for Countrywide, as it would weed out the weaker competitors. Meanwhile, he was busy selling 580,000 shares a month. Ken Lay lives!

[sunsetbeachguy]

The tan man, or the oompah loompah CEO will join Ken Lay and Bernie Ebbers at Club Fed.

Even if he isn't guilty there HAS to be a poster-child prosecution, it is in the rule book.

[Amused]

This doesn't surprise me at all, tanning beds are not cheap. No CEO has the time to get a natural tan like that.

[Michael Snyder]

Talk about insider trading! There was a revealing article August 29th in the NY Times detailing Mr. Mozilo's stock options and trading practices. This same article detailed a plethora of questionable practices ranging from computer programs that manipulated the client's cash reserves to failing to "1099" their loan officers. Large prepayment penalties and future rate increases were written into the corporate profit margin inflating the stock into an over priced house of cards. Then in the first quarter of this year; well you already know what happened. Mr. Mozilo unloaded every share of Countrywide he had an option on only retaining the options that hadn't matured under SEC regulations. The rest as they say, is history. This has to call to question the manner in which top executives are compensated in America. Now I'm all for performance based compensation, but using the stock price as a yardstick is fraught with peril. If you don't believe me walk into any Home Depot and either try to assemble a complete project, or ask an employee if they'd recommend working there. As a contractor I can assure you you'll get a different answer than you would have before Bob Nardini gutted the company. They've lost at least $10,000 in my business this year because I won't put myself through the aggravation of shopping there. The man who left a viable concern a cardboard box was given $235,000,000 on his way to work his "magic" on Chrysler's stock. Regulations like contracts are only as good as the people behind them. Mozilo and Nardini are classic examples of "trickle down economics". Gutted corporations, demoralized staff, poor service and a huge bonus for the CEO who boosted the stock price. What did Regan think flowed downhill?

[Arnett]

WOW! - Thanks Mike Snyder!

Excellent Insight and Articulation

I have been telling friends and clients this same thing for awhile. You can also throw the CEO of New Century Mortgage in as another example of this trend by these pimps. I wonder if indicted for any fraud would he punk out like Kenny Lay because he couldn't do the years?

[Kathy]

I've been waiting for one of the major newspapers or other media to cover this, and I'm glad it's on page one, but it would have been great if it had made the Sunday edition. Now let's see who picks up the story...

[Willie]

ORANGE GLOW must have been exposed to AGENT ORANGE!!! He sure has this ORANGE GLOW on his face! No need for face paint on Halloween he will make a great jack-o-lantern!

[Martin]

What upsets me is the leader of the pack is putting tens of thousands of lives -- all workers of Countrywide and other purveyors -- in jeopardy.

As the CEO of the nation's largest home lender, he also has an indirect impact on most of us. His leadership -- or lack thereof -- is a major cause of the current U.S. housing crisis.

As any child would say, he's a baaaaad man.

[JUAN SALINAS]

What do people like this Mozilo hope to do with their obscene wealth?
The underlying weakness in the system that allows this accumulation of riches will someday be changed. I think of all the poverty this engenders. I would like to see where Mozilo spends this money and how much is spent on philanthropic activities. An ode to human greed.

[Kaye Thomas]

Just to keep things interesting.. rumor has it that on properties that were refinanced where CW has the first and second.. they will not do a short sale..
Instead they are foreclosing on the first.. letting the second go and going after the owners for the full amount of the second or if the property sells at the foreclosure sale the difference between what they receive and the amount owed.. all legal as once you refinance... the loan is no longer a non-recourse loan.

[investorguy]

Kaye: not in CA. It doesn't work that way.

[Jason Hoppe]

Just think how many job salaries his one little stock sale is equal to. How much money is enough for a rich person? Answer, it will never be enough. Their all aimed at owning the world. However in the end it's all the same. We all die, rich or poor.

Do the CEO's deserve to be paid well. Maybe. But if you ask me, a CEO's salary should be based upon the companies performance and success. And right now all I see for countrywide is red flags and red numbers. In that case he should get paid nothing. Any common worked would paid nothing if they couldn't do their job. They would be fired that's why! That's exactly what Mozilo deserves!