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Countrywide CEO Ripped
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![[Angelo Mozilo]](https://web.archive.org/web/20071022025921im_/http://online.wsj.com/public/resources/images/HC-GF401_Mozilo_20070824194450.gif) |
| Mozilo |
A draft of the letter, reviewed by The Wall Street Journal, cited questions raised by the Securities and Exchange Commission over heavy selling by Mr. Mozilo of shares that he acquired through stock options. The letter also said that an apparent "culture of non-compliance" exposed Countrywide to litigation and increased regulatory scrutiny. Brishen Rogers, legal counsel for CtW, said criticism reflects news reports alleging that Countrywide steered borrowers into high-cost loans, a charge the company has denied.
Mr. Mozilo couldn't be reached to comment. Countrywide didn't comment.
Various shareholder groups have sued the Calabasas, Calif., lender, alleging that it misled them about the company's prospects. Shares of Countrywide have plunged about 60% this year amid a surge in defaults. The company has drastically cut lending in the past two months and is slashing its work force by as many as 12,000 jobs, or 20%.
The SEC's request for information related to questions about Mr. Mozilo's heavy sales of shares through prearranged programs that trigger sales at regular intervals. Mr. Mozilo sold $130.6 million in company stock in the first half of the year through such sales plans, up from $60.4 million in the year-earlier half, according to securities filings. Mr. Mozilo, 68 years old, has said he increased the pace of selling through these plans late last year to reduce his stake in the company and diversify his personal investments in an orderly way ahead of his retirement, scheduled for December 2009.
CtW Investment, based in Washington, is an activist-shareholder group affiliated with Change to Win, an organization representing seven unions including the International Brotherhood of Teamsters and the United Food and Commercial Workers International Union. CtW doesn't have the clout to put much pressure on Countrywide by itself. Mr. Rogers, the legal counsel for CtW, said pension funds sponsored by the unions it represents hold around 3.5 million shares of Countrywide, or less than 1% of common stock outstanding. But CtW is trying to line up support from other shareholders.
"Mozilo has become a distraction at this point," Mr. Rogers said.
On Thursday, the American Federation of State, County and Municipal Employees Pension Plans, which has long criticized what it calls excessive compensation for Mr. Mozilo, wrote a separate letter to the board calling for changes in its corporate governance, including the appointment of an independent chairman.
The draft of CtW's letter said Mr. Mozilo "has failed to provide leadership as the company attempts to navigate its way out of the current U.S. mortgage crisis. Indeed, Mr. Mozilo's decision to increase the frequency and magnitude of his stock sales has not only sent the wrong signal to Wall Street and investors, but brought increased regulatory scrutiny to the company at a time when it can least afford it."
Write to James R. Hagerty at bob.hagerty@wsj.com and Joann S. Lublin at joann.lublin@wsj.com
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