Generally, the point of stock options is to reward executives if the stock performs well -- if it doesn't, they don't get a reward, and their options expire worthless.Well there's generally, and then there's Countrywide Financial (NYSE: CFC). The stock has had an absolute meltdown this year, and everyone with the exception of the company's board of directors is demanding change at the top. CEO Angelo Mozilo's sky-high compensation has attracted criticism, and the SEC is investigating his all-too timely stock sales.
Well now, more compensation madness at the company. Countrywide Financial has granted restricted stock and postponed the expiration dates on the stock options on some of the company's top executives including its executive managing director for residential lending who, presumably, had something to do with the subprime loans that have been the company's downfall.
In other words, the executives were, as part of their pay packages, given options that would reward them if the stock appreciated in a certain amount of time -- Well, obviously, it didn't, so now Countrywide is just extending the expiration date.
This is the logical equivalent of an umpire declaring that the bottom of the 9th inning will consist of 43 outs because the home team is losing.
You really have to wonder about Countrywide's management these days and, perhaps more importantly, its well-paid board of directors.
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Reader Comments (Page 1 of 1)
11-05-2007 @ 6:51PM
covingtonridge said...
You only told half the story. The options were extended for all employees...not just the top. Quit trying so hard to make the managers look so bad! Get the information right or not at all.
11-05-2007 @ 8:15PM
Americas Watchdog said...
We have the groups Americas Watchdog & the Corporate Whistleblower Center and we think Zac is right. How does a CEO tell CNBC earlier this year "our company is a great position" and "we will get more market share" and at the same time be dumping his stock? How does that work? If there is a casting call for movie called Enron, we hope CFC's CEO shows up to play Ken Lay. It appears he has the part down.
This all begs the question how stupid is Wall Street? Only a blind person would have a problem seeing the coming real estate train wreck. Where were the fund managers? At a cocktail party everyday? And we thought Wall Street was supposed to be looking 6 to 10 months out? Kind of leaves shareholders and their 401 K's SOL for the rest of 2007 & all of 2008. Especially fund managers who figured to go heavy on banks, homebuilders and related areas. Just so no one can say they didn't know....................the next big thud you hear on Wall Street will be commercial REIT's. Followed by the 4th quarter results where there are more thuds. In contrast to CNBC and the rah rah crowd, we think we have a lot to be very concerned about right now & we think its time for a lot more integrity from boards, from executives, and from CEO's. A year from now the big worry will no longer be limited to real estate, it will have expanded into saving pension funds that are failing. Again we ask where were the fund managers?
11-06-2007 @ 12:59PM
Lisa said...
Let's get the story entirely correct. Only Countrywide management receives stock options. It regular employees do NOT receive stock options. That benefit was taken away from employees several years ago when the Company was doing well.
Countrywide also severely limited it's regular employee bonuses last year while giving management the largest bonuses ever rewarded last year.
11-07-2007 @ 6:23PM
NoMoreJob said...
I was laid off from Countrywide 1 month ago; stock options went away for non-management a long time ago (I worked there for over 11 years); I got 2 weeks pay & no bonus for September because in October when they pay the previous month's bonus, I was no longer an 'active' employee! No exceptions granted .... at least not to the little people!