Subprime CEOs to Face Congressional Heat Over Pay

By Kevin Drawbaugh and Rachelle Younglai

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: Quote, Profile, Research). Also scheduled to testify at the public hearing are former Merrill Lynch (MER.N: Quote, Profile, Research) CEO Stanley O'Neal and former Citigroup (C.N: Quote, Profile, Research) 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.