Countrywide Still Rots From the Head

Why does everybody want to rub salt into the wounds of Countrywide Financial's (NYSE: CFC  ) shareholders?

Wasn't it bad enough that the company destroyed the value of the stock so thoroughly that Bear Stearns (NYSE: BSC  ) investors are almost compelled to snicker? Wasn't it sufficient punishment that company co-founder Angelo Mozilo stands to earn $115 million in severance pay for running the company into the ground?

Sure, Countrywide investors breathed a sigh of relief when Bank of America (NYSE: BAC  ) cuddled up to them and agreed to bail them out. But must Bank of America's managers tap-dance on their grave, too?

I'm sure shareholders are just thrilled that Bank of America has offered Countrywide's president, David Sambol, a $20 million retention bonus. And just in case that wasn't enough of an inducement for him to stay, the company is bestowing on him $8 million in restricted Bank of America shares as well. Considering that he was already being appointed to head up Bank of America's consumer-mortgage business after the Countrywide deal went through, was the probability that he was going to be bolting out the door so high that Bank of America needed to give him an "incentive" to stay?

I'm not one who thinks CEOs need to beg for mercy at the feet of Congress for the way they run their companies. It's to the shareholders they need to answer -- and apologize. But they won't, because the individual shareholder -- whose life savings or retirement funds in Countrywide stock still don't add up to any significant portion of the stock -- doesn't have much of a say.

At least when Bear Stearns went belly-up, Chairman James Cayne felt the pain along with the rest of the shareholders. He was still able to pocket $61 million, but that's a far cry from the $1 billion his shares were worth not all that long ago.

The inertia we have today on excessive CEO compensation could be dealt with more swiftly if the institutional stockholders -- who are typically a company's majority shareholders -- raised a stink. I'm talking about companies such as Legg Mason (NYSE: LM  ) , Fidelity, and Goldman Sachs (NYSE: GS  ) , which own substantial amounts of Countrywide shares.

Again, don't count on it anytime soon. The only stink raised will be from the rewards that continue to go to the Countrywide executives who oversaw the destruction of this once inimitable company.

Pay it forward with these related Foolish articles:

Bank of America is an Income Investor recommendation. Legg Mason is a selection of Inside Value .

Fool contributor Rich Duprey most definitely does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 609250, ~/Articles/ArticleHandler.aspx, 9/22/2014 12:35:42 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 17,279.74 13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASD 4,579.79 -13.64 -0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/19/2014 4:04 PM
BAC $16.95 Down -0.09 -0.53%
Bank of America CAPS Rating: ****
CFC $4.25 Down +0.00 +0.00%
COUNTRYWIDE FINANC… CAPS Rating: No stars
BSC.DL $0.00 Down +0.00 +0.00%
ELEMENTS Benjamin… CAPS Rating: No stars
GS $186.20 Down -1.69 -0.90%
Goldman Sachs CAPS Rating: ****
LM $50.78 Down -0.41 -0.80%
Legg Mason CAPS Rating: ****

Advertisement