Subprime CEOs to Face Congressional Heat Over Pay

WASHINGTON (Reuters) - The soaring pay of U.S. CEOs looks likely to reclaim the political spotlight on Friday when three handsomely compensated senior executives face a grilling before a congressional committee.

The House Oversight and Government Reform Committee is expected to question Angelo Mozilo, chief executive of Countrywide Financial Corp CFC.N. Also scheduled to testify at the public hearing are former Merrill Lynch MER.N CEO Stanley O'Neal and former Citigroup (C.N) CEO Charles Prince.

As a stream of bad news and heavy losses hits these firms and others swept up in the spreading mortgage crisis, committee Chairman Henry Waxman is expected to focus the hearing on details of each manager's large pay packages.

The California Democrat is expected to ask about Prince's $10 million bonus and say he did not have a "contractual entitlement" to it when he stepped down as CEO because he did not have an employment contract with the bank.

Lawmakers are also expected to question the terms of O'Neal's $161 million retirement package, of which $131 million was in unvested stock and options. It was granted despite O'Neal's ouster days after the world's biggest brokerage reported the largest quarterly loss in its 94-year history.

Merrill Lynch's shares closed at $45.86 on Thursday, down from its 52-week high of $95.

The poor performance of many financial firms is in stark contrast to the rewards given to senior managers, said investor activists.

"There is a major disconnect between the pain being suffered by average investors and the huge bonuses being enjoyed by the investment bankers," said Consumer Federation of America director of investor protection Barbara Roper.

But the committee's ranking Republican, Tom Davis of Virginia, said in a statement, "Markets correct themselves, and we need to let that process proceed. Directors and shareholders already have begun to work to correct the problems."

Prince resigned from Citigroup in November as the largest U.S. bank warned it would write off billions of dollars in subprime mortgage-related losses. Overall, Prince was compensated with a $40 million pay package, which included more than $28 million in unvested restricted stock and stock options.

Citigroup's shares closed at $21.17 on the New York Stock Exchange, setting a new 52-week low.

The board also awarded Prince with perquisites worth $1.5 million a year upon his retirement that include an office, an administrative assistant and a car and driver for five years.

Mozilo will be questioned about the discrepancy between his pay and Countrywide's performance. In 2007, Countrywide, the largest U.S. mortgage lender, announced significant losses and weathered an 80 percent drop in its stock price.

Its shares closed at $5.20 on the New York Stock Exchange, down from a 52-week high of $42.24.

In 2007, Mozilo was paid $1.9 million in salary, received $20 million in stock awards based upon performance and sold millions of dollars worth of stock.

(Reporting by Rachelle Younglai and Kevin Drawbaugh, editing by Leslie Gevirtz)