Two groups representing union pension funds turned their sights on Countrywide Financial Corp.'s directors Thursday, saying board members failed to curb what they called excessive compensation for Chairman and Chief Executive Angelo Mozilo.
One group -- the American Federation of State, County and Municipal Employees -- said Countrywide directors had become conflicted by their own "excessive pay" and stock options that had allowed five members of the board to cash out more than $20 million in stock gains over the last two years.
"Directors who are making as much as CEOs make at other companies may lose the perspective of shareholder advocate, and instead blur their self-interest with that of the executive," said Gerald W. McEntee, president of the federation, which represents union pensions holding 3.5% of Calabasas-based mortgage lender Countrywide's stock.
Separately, 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.
Countrywide officials did not return calls seeking comment on the claims of excessive pay and inadequate board oversight.
The company has previously defended Mozilo's compensation, saying that it was justified by Mozilo's pivotal role in founding Countrywide and contributing to historical performance that soundly beat the market as a whole. A good portion of his pay was composed of stock and options, which became valuable only because Countrywide's share price had appreciated rapidly until this year.
As the mortgage industry went into a nose dive in late 2006 and 2007, Mozilo cashed out about $140 million in stock options, becoming one of the highest-paid executives in the country.
