CEO Angelo Mozilo could receive $10 million in stock awards in April that will vest when Countrywide changes control. Mozilo gave up $37.5 million in severance in response to the extreme heat he has taken over the subprime-mortgage breakdown.
COO David Sambol will be entitled to a $1.9 million retention package and $2.6 restricted stock award. Sambol may oversee the consumer mortgage operation once the merger is completed. If his employment is terminated following the merger, he could receive $15 cash severance payment.
This merger is also facing obstacles including 5 lawsuits and a definite "NO" vote from a 5.2% stake owner, hedge fund SRM Global Fund. Stay tuned, this one is far from done being over.
Posted Jan 30th 2008 5:35AM by Jon Ogg Filed under: Deals
Maybe the U.S. is heading into a slowdown, and maybe private equity and traditional M&A has been slowing down in recent months. But there are many deals still pending, and regardless of the economy the temptation for consolidation and acquisitions is just going to be too great for nothing new to occur in this space. Below are some snippets from many deals going on in recent IPO's, M&A, private equity, and more.
Alliance Data Systems (NYSE: ADS) is an interesting situation, despite the private equity acquisition of it all but formally blowing up. I am not convinced this one is dead entirely because of lawsuits and break-up or termination fees likely, but it's hard to imagine the original terms being anything realistic now.
Basically, the robustly profitable (those overdraft fees have to go somewhere!) BofA will be able to use Countrywide's losses to offset its own income. One tax expert told Sloan that the acquisition could save the company half a billion dollars in taxes over the next five years, and considerably more after that.
So let me get this straight: Countrywide CEO Angelo Mozilo is getting a $100 million plus severance package for dumping stock while running his company into the ground and then tossing it to Bank of America at a tiny fraction of its previous high -- and part of the deal is essentially being financed through tax savings for Bank of America.
Given that taxpayers, you and me, will essentially be paying for this in the form of lower taxes for Bank of America (shifting the tax burden to other people), I think I'm entitled to at least as much of a bonus as Mr. Mozilo. But I'm not greedy, so I'll be happy to settle for an even $50 million.
If you're a Countrywide Financial executive and you have my check ready, leave a comment and I'll be in touch.
You would think that having sold millions of shares at inflated prices would have been enough for Angelo Mozilo, who is now dumping Countrywide Financial (NYSE: CFC) on Bank of America (NYSE: BAC) for less than a fifth of what the company traded at earlier this year.
The company has taken huge writedowns on ill-advised subprime loans, even as Mozilo sold about $140 million worth of stock during late 2006 and 2007. But according to the Los Angeles Times, "If he engineers a sale of battered Countrywide Financial to Bank of America, Countrywide CEO Angelo Mozilo stands to walk away with a severance package worth more than $110 million."
The Times adds that Mozilo and wife will get health benefits for life, three years of life and financial planning help, and "tax gross-up payments" to compensate for any penalties he has to pay on a package that the IRS will likely consider grossly excessive.
This is an absolute parody of corporate governance. It's hard to imagine anyone less entitled to any severance than Mr. Mozilo. The irony is that by selling to Bank of America at a depressed price, Mozilo reaps a windfall far larger than he likely could have earned through continued employment with the company. And he won't have to work any more!
On the bright side, he'll have more time to work on that wonderful tan, though it appears that he's already been spending time doing that as the company has slid to the brink of bankruptcy
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