CEOs defend their prime-choice salaries
Chief executives from three top mortgage lenders hit by the subprime mortgage crisis went before a congressional panel to answer lawmakers' questions on how they were able to earn hundreds of millions of dollars while their companies were bleeding money. John Dimsdale reports.
Signs of mortgage lenders Countrywide Financial, Merrill Lynch & Citigroup. (Countrywide Financial, Merrill Lynch & Citigroup)
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TESS VIGELAND: Cue the photographers for yet another round of CEO's holding up their right hands swearing to tell the truth before a Congressional hearing. This time it isn't about corporate malfeasance, per se. Instead three CEOs from financial companies were grilled about why they made piles of money even while presiding over massive corporate losses because of the subprime crisis.
Marketplace's John Dimsdale was there.
JOHN DIMSDALE: Citigroup, Merrill Lynch, and the nation's largest mortgage lender, Countrywide Financial, lost a combined total of over $20 billion in the last half of 2007. During that year, Charles Prince resigned from Citigroup with a $40 million package, Merrill Lynch gave Stanley O'Neal a $160 million package and the CEO of Countrywide Angelo Mozilo got more than $120 million.
Committee chairman, California Democrat Henry Waxman, wondered why in light of steep subprime losses, CEO pay was so extraordinary.
Henry Waxman: Any reasonable relation between their compensation and the interests of their shareholders appears to have been broken down.
Waxman wanted to know why Mozilo speeded up selling his company stock in 2006 just as Countrywide's stock price hit its peak. Mozilo said the sales were merely in preparation for his impending retirement.
Angelo Mozilo: I was with the company 40 years. Almost all my net worth was in Countrywide. I had to come to a point of diversifying my investments, my assets.
Virginia Republican Tom Davis accused Democrats of holding a public flogging of corporate executives. He said markets sometimes produce inequities, but they also correct them.
Tom Davis: The last thing union pension funds and other investors want is Congress second guessing and micro-managing the people looking after their money.
This was the committee's second hearing on executive compensation. So far, there are no plans for more.
In Washington, I'm John Dimsdale for Marketplace.
