Countrywide, CEO Mozilo faulted on executive pay

By Jonathan Stempel

NEW YORK, Sept 20 (Reuters) - Countrywide Financial Corp CFC.N, which will fire as many as 12,000 workers by December, needs to fix a "poorly designed" executive compensation policy that may cause Chief Executive Angelo Mozilo to be overpaid, a corporate governance research group said on Thursday.

The Corporate Library said it had complained about Mozilo's pay for three years, predating the U.S. housing slump that caused the largest U.S. mortgage lender this summer to lose normal access to capital markets and tighten its lending standards.

Countrywide shares have fallen by more than half this year.

Compensation for Mozilo totaled $42.98 million in 2006. Late that year, he signed a contract that reduced his annual salary to $1.9 million and maximum bonus to $10 million, and awarded stock-related grants initially valued at $10 million.

The Corporate Library said Countrywide now links more of Mozilo's pay to performance, but is awarding him unnecessary perks, and may be rewarding him twice by tying performance-restricted stock units to a metric used to set the bonus.

"Any board which can make such poor decisions about a CEO's compensation package is almost certain to be making poor decisions elsewhere," wrote Corporate Library analysts Ric Marshall and Paul Hodgson.

In an e-mailed statement, Calabasas, California-based Countrywide said it found "nothing new" in the report.

"Countrywide's executive compensation agreements are strongly tied to the company's performance, including stock and earnings results," it said.

"The board of directors has established a pay-for-performance model that assures alignment of executive strategies with the shareholders' interests. (Angelo Mozilo's) personal wealth remains centered in Countrywide, further aligning him with the interest of all shareholders." the e-mail said.

Mozilo received about $387 million from pay and stock option gains from 2002 to 2006, regulatory filings show.

Shareholders in June rejected a "say-on-pay" proposal that would have given them an advisory vote on setting executive pay. Mozilo then called such proposals "irresponsible," saying there is "absolutely no evidence" they enhance shareholder value.

Morgan Stanley analyst Kenneth Posner, in a Sept. 18 report, said Countrywide could lose $3.47 per share, or roughly $2.4 billion, in the third quarter, hurt by write-downs of mortgage-related securities.

Countrywide sold $2 billion of convertible preferred stock to Bank of America Corp (BAC.N) four weeks ago.

Shares of Countrywide were down 86 cents, or 4.2 percent, to $19.68 near the close of trading on the New York Stock Exchange. They began the year at $42.45.