Do you remember Countrywide Mortgage? Just before the subprime debacle, Countrywide was one of the biggest players in the mortgage business. A man named Angelo Mozilo became chief executive. The company was on a roll. Its motto was "let's think outside the box." And it did.

Countrywide was the first to process applications by computer. Then it let the computer assign a credit score. Then, in a bizarre move, if the credit score was too low, Countrywide just tacked on a few more percentage points to the interest on the mortgage.

Stockholders of publicly traded companies, as well as the general public, have recently become outraged with executive compensation and their hefty bonuses, especially in light of the mounting losses at some companies. It seems that no matter what happens or what they do, executives somehow always win. They win big during their employment, and sometimes even more as they retire. With all that money, you'd think that haggling over some perks in their package would be beneath them . . . but it isn't.

The recent outrageous perk award goes to Continental Airlines (NYSE: CAL) CFO Jeffrey Misner who asked for and was granted a free lifetime parking spot at Jacksonville International Airport. As long as the 54-year-old retiree lives within 200 miles of Jacksonville Airport, and providing Continental has operations at the airport, Misner will have a free parking place. Of course, that's just a perk that goes with a $2,997,000 retirement pay.

At the beginning of the year, many were shocked to hear that Countrywide Financial Corp. -- the poster child of the subprime mortgage meltdown, which has been bought by Bank of America (NYSE: BAC) -- CEO Angelo Mozilo was going to receive a $36.4 million cash severance payments, $400,000 per year for consulting services, and perks including the use of a private airplane. He walked away from most of these after a public outcry. Don't feel bad though, he still left with at least $23.8 million.

It just doesn't cease to amaze me how some people have the nerve to ask for certain perks in addition to their very fine salaries and severance pays. Here are some more examples:

• Hanmi Financial (NASDAQ: HAFC) President and CEO Dr. Sung Won Sohn requested and got a 2005 Mercedes Benz 430S, as well as the transfer of his membership to the Wilshire Country Club and the Jonathan Club. This was in addition to his $1,298,000 lump sum retirement pay.

Countrywide Financial's (NYSE: CFC) corporate governance satire worthy of Gilbert & Sullivan continues with the release of the company's proxy statement.

CEO Angelo Mozilo's pay package dropped 79% -- to $10.8 million. Worse, president and COO David Sambol and managing director Andrew Gissinger III did not even come close to meeting the company's insider stock ownership guidelines -- which worked out well for them given the company's precipitous decline in value.

Just for laughs, here's an excerpt from the company's executive pay philosophy pulled directly from the proxy statement:

Pay for Performance. Our compensation programs are intended to motivate our named executive officers to achieve a superior level of performance in the diversified financial services industry. The amount of compensation for each named executive officer is intended to reflect the executive's experience, his or her individual performance and the performance of the Company. Several of our compensation programs are expressly tied to performance of the Company or the named executive officer, including our annual incentive awards program and our equity awards program. In general, our compensation is heavily weighted toward performance-based pay, and we seek to balance incentives for both short-term and long-term performance.

Here's my question. If you're a Countrywide director reading this, feel free to respond in the comment section: When you're stock declines from over $40 to under $10, how can your CEO earn $10.8 million under a pay-for-performance philosophy?

Perhaps Countrywide has a sense of humor, and the description of executive pay was meant to be ironic. But the company's shareholders probably aren't laughing.

As Jonathan Berr wrote on Friday, Former Merrill Lynch & Co. (NYSE: MER) Chief Executive Stan O'Neal, former Citigroup Inc. (NYSE: C) CEO Chuck Prince and former Countrywide Financial Corp. (NYSE: CFC) Angelo Moziilo will make their much-delayed appearance before Congress this week.

The topic of conversation will be their outrageous pay packages -- especially 8- and 9-figure severance packages -- and how they can justify packages that seems so blatantly excessive.

Here's the problem: executive compensation consultants generally present compensation committees with the pay packages that executives at companies of similar size in the same industry are earning. Here's the beauty of that: by that standard none of these guys is overpaid because all of them are overpaid! Isn't that beautiful?

If that sounds circular it is, but that's how executive pay has spiraled out of control. Hopefully, Congress will keep the focus on the raping of shareholders, and not make this into a sound-byte spectacle full of rah-rah populist rabble-rousing.

I've been banging the drum on Angelo Mozilo's heinously bad stewardship and overcompensation for awhile now but sorry folks: I gotta get at least one more post out of this travesty.

Mozilo, who is CEO of troubled lender Countrywide Financial (NYSE: CFC), is eligible to receive stock awards valued at $10 million this April. The awards consist of performance-based restricted stock units and stock-appreciation right and will vest upon the consummation of Bank of America (NYSE: BAC)'s acquisition of the company.

The fact that Mozilo sold hundreds of millions of dollars worth of stock at prices 5 times the current price raises questions about whether he really need to be compensated further.

But that's not the worst of it. Chief Operating Officer David Sambol could receive a $1.9 million retention bonus upon completion of the merger.

The purpose of a retention payment is to keep an executive from jumping ship to another more lucrative opportunity. But I've got to ask: Given that Countrywide is the poster child for idiotic lending, bad management, and poor corporate governance, is Mr. Sambol really that in demand that a $1.9 million retention payment is necessary. Or is this just more of the "loot the company while you still can!" stuff that has come to characterize the descent of Countrywide?

Two leading lawmakers, Senator Charles Schumer and Congressman Barney Frank, are calling on disgraced Countrywide Financial (NYSE: CFC) CEO Angelo Mozilo to donate some of the $100 million plus in severance that he will receive as part of the Bank of America (NYSE: BAC) buyout to families facing foreclosure.

Mr. Schumer said that, "Mr. Mozilo could display some goodwill by donating any severance pay he stands to receive to the nonprofit housing counselors trying to prevent foreclosures."

That would certainly be a nice gesture but, with all due respect to our elected officials, it completely misses the point. It is a travesty that Mr. Mozilo was awarded this severance package. The company's performance over the past year and myriad writedowns on bad loans should have given the board more than ample reason to fire Mr. Mozilo with cause.

The people getting royally screwed over by Mozilo's pay package are the company's shareholders. Compensation committee members Harley Snyder, Robert Donato, and Oscar Robertson should be hauled before Congressional hearings to explain this abject failure of corporate governance. It would be a much better use of taxpayer resources than holding hearings on what Roger Clemens did or didn't inject into his buttocks.

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

The Sunday New York Times takes a fascinating look at Countrywide Financial (NYSE: CFC) and Angelo Mozilo, the company's embattled CEO who is under SEC investigation and receiving widespread calls for his resignation. Mozilo has been declining interviews of late, but a Countrywide spokesman was there to provide Baghdad Bob-like assurances that Countrywide has great governance and Mr. Mozilo is a great executive. Right.

According to The Times: To this day, he says his beleaguered company did nothing wrong during the loose-lending craze that is now unraveling nationwide with record foreclosures and mountainous losses. Instead, Mr. Mozilo considers himself and his company to be victims of financial forces beyond their control.

You have to love that attitude: these executives have no problem paying themselves huge bonuses when things are going well, easy credit is driving up home prices and defaults are virtually non-existent. But the second the pendulum swings, these CEOs emerge as helpless victims of forces beyond their control.

The Times piece presents Mozilo as an imperial CEO, hellbent on increasing market share and building his empire -- even when his comments would appear to indicate that he knew the loans were no good.

Expect the calls for Mozilo's resignation to continue -- but the thing that really needs changing is the company's board of directors.

The Wall Street Journal is declaring (subscription required) Countrywide Financial Corp. (NYSE: CFC) CEO Angelo Mozilo's days numbered. Granted the paper is not going out on a limb. The stock has been an absolute dog of late, and several big investors have called for Mozilo's head. Oh, and then there's the small matter of the SEC investigating his stock sales.

And according to the Heard on the Street column:

In another blow, Henry Cisneros, a former U.S. Secretary of Housing and Urban Development, stepped down from the Countrywide board this week, the third director to quit this year. Mr. Cisneros expressed "enormous confidence" in Mr. Mozilo.

Still, as Oscar Wilde might have put it, losing one board member at a time of crisis might be called a misfortune; losing three looks careless.

Does anyone have confidence in Mozilo and Countrywide Financial? Resigning from the board and expressing "enormous confidence" doesn't count. Judging from his huge stock sales, it appears Mr. Mozilo might not have confidence in either himself. The company reports its earnings today, and huge losses are expected.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that the SEC is investigating Countrywide Financial Corporation (NYSE: CFC) CEO Angelo Mozilo for selling $130.6M in stock in the first half of the year.
• While all eyes have been on a possible AT&T (NYSE: T) play for EchoStar Communications (NASDAQ: DISH), the Wall Street Journal's "Deal Journal" says AT&T may go after DirecTV Group (NYSE: DTV), and may be more likely, and could be a better deal for AT&T.

OTHER PAPERS:

• The U.S. Department of Veteran Affairs has decided to sharply limit the use of GlaxoSmithKline's (NYSE: GSK) once-popular drug for Type 2 diabetes, Avandia. The decision is likely to further reduce revenue from Avandia, whose sales have dropped in the U.S. by an estimated 60% in the last five months, reported the New York Times.
• Goldman Sachs Group (NYSE: GS) said it would pay $172M for a majority stake in Indian metal castings maker Sigma Electricals and its affiliated companies, reported the Business Standard.
• A molecular diagnostic test for HPV developed by Digene, which is now part of Qiagen (NASDAQ: QGEN), has been found to be almost 40% more accurate than traditional cytology in identifying women with advanced cervical disease, according to a report published today in The New England Journal of Medicine.

Countrywide Financial-(NYSE-CFC) Put volume & implied volatility Spikes on sell off. CFC, the largest U.S. home mortgage lender, is recently down $3.16 to $21.40. CFC call option volume of 98,035 contracts compares to put volume of 191,635 contracts. CFC September option implied volatility of 141 is above its 26-week average of 55 according to Track Data, indicating larger price fluctuations.

ExxonMobil-(NYSE-XOM) September implied volatility of 31 above 26-week average of 24. XOM is recently up .65 to $83.76. Crude oil futures are up 1.02% to $73.12 according to Bloomberg. XOM September option implied volatility of 31 is above its 26-week average of 24 according to Track Data, suggesting larger price fluctuations.

Bear Stearns (NYSE: BSC) September volatility elevated at 75; August straddle at $12.70.

• BSC is recently down $3.89 to $111.80.
  
• S&P revised BSC outlook to Negative from Stable.
  
• BSC call option volume of 16,664 contracts compares to put volume of 39,448 contracts. BSC August straddle at $12.70. BSC September option implied volatility of 75 is above its 26-week average of 32 according to Track Data, suggesting larger price movement.

Countrywide Financial (NYSE: CFC) put volume heavy; August straddle at $9.

• CFC, the largest U.S. home mortgage lender, is recently down $1.63 to $25.14.
  
• CFC call option volume of 17,165 contracts compares to put volume of 58,859 contracts. CFC August straddle is priced at $9. CFC September option implied volatility of 117 is above its 26-week average of 43 according to Track Data, suggesting larger price risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.