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: