Congressional panel rips subprime CEOs' lavish pay

By Kevin Drawbaugh

WASHINGTON (Reuters) - The fat compensation packages of three U.S. CEOs whose companies are being hammered by the widening mortgage crisis came under harsh criticism on Friday at a congressional hearing on executive pay.

In the last two quarters of 2007 alone, the three executives' firms lost more than $20 billion on investments in subprime and other risky mortgages, said the House of Representatives Oversight and Government Operations Committee.

Yet the three took home fortunes in 2007 -- $120 million for Countrywide Financial Corp CEO Angelo Mozilo; a $161 million retirement package for ex-Merrill Lynch CEO Stanley O'Neal; and $39.5 million in stock, options, bonus and perks for former Citigroup CEO Charles Prince.

"The mortgage crisis is having enormous repercussions. Families are losing their homes ... Thousands are losing their jobs. It seems like everybody is hurting, except for the CEOs who had the most responsibility," said California Democratic Rep. Henry Waxman, committee chairman.

In a hearing room packed with bank lobbyists and lawyers, Waxman said, "I have no problem with paying for success. But it looks like when you're a CEO you get paid for failure."

Mozilo, O'Neal and Prince told Waxman's panel that they earned their compensation. They conceded misjudgments in the subprime debacle, while one Republican lawmaker blasted the hearing as "a sanctimonious search for scapegoats."

Virginia Rep. Tom Davis said, "Punishing individual corporate executives with public floggings like this may be a politically satisfying ritual -- like an island tribe sacrificing a virgin to a grumbling volcano.

"But in the end, it won't answer the questions ... about corporate responsibility and economic stability."

The hearing marked Congress' latest foray into one of corporate America's most enduring controversies -- the sky-rocketing compensation of chief executive officers.

On a global scale, U.S. CEOs earn considerably more money on average than their peers abroad, and about 600 times more than the average U.S. worker, up from just 40 times in 1980, according to academic studies of executive pay.

With companies headed into the spring annual meeting season when they disclose managers' compensation, the rich winnings of some financial executives are contrasting starkly with heavy losses at many firms as a historic home price bubble deflates.

Maryland Democratic Rep. Elijah Cummings said he was not hunting scapegoats. But looking at Mozilo, he said, "You run the largest mortgage originator in the country. If you don't have some personal responsibility, I don't know who does."

U.S. banks have written off more than $120 billion in assets in the housing slump, while thousands of jobs have been lost and home foreclosures are soaring to record highs.

Cummings said he was disturbed by what he said was a "disconnect" between the troubles of average homeowners and the generous golden parachute severance deals some executives get.

"I worry about this whole culture where the little guy gets squeezed and next thing you know, he has a debt, not a house ... and the parachutes just drift on up the golf course."