Lawmakers take aim at CEO compensation

High-profile former Wall Street CEOs and the head of the nation's largest home lender will testify before a Congressional committee examining the link between executive pay and the mortgage crisis.

Rep. Henry Waxman, D-Calif.
Why were executives at the helm of some of the world's largest banks compensated so richly even as their industry was being pummeled by the mortgage meltdown?
Lawmakers will pursue this question Friday when the House Committee on Oversight and Government Reform hears testimony from two former Wall Street CEOs, Charles Prince and Stanley O'Neal, and the chief of the nation's largest mortgage lender, Angelo Mozilo.

At issue are the salaries, bonuses, perks and stock awards that the executives received as the companies under their leadership took enormous losses on bad bets related to mortgage backed securities. Calls for accountability have become increasingly louder as the housing market continues to deteriorate and homeowners across the country face foreclosure.

Henry Waxman, the Democratic congressman who chairs the Committee, has developed a reputation as an aggressive reformer during his thirty years representing the Los Angeles area on Capitol Hill.

As a ranking member on the Committee, Waxman has tackled issues ranging from the high cost of prescription drugs to waste, fraud, and abuse in government contracting. Most recently, Waxman's committee made headlines when it held a series of high-profile hearings on the illegal use of steroids in major league baseball.


Stanley O'Neal, Merrill Lynch & Co.
2006: $46 million.
Stanley O'Neal relinquished his title as chairman and CEO of Merrill Lynch & Co. in October, after a 21-year career there, and less than a week after the company reported an $8 billion loss on subprime related investments.

According to a profile from Harvard Business School, where he earned his MBA in 1978, O'Neal was born into poverty in Alabama. As a young boy, he labored on his family's cotton farm while his mother worked as a cleaning lady.

He rose through the ranks at Merrill, becoming president and chief operating officer in July 2001. He was tapped as CEO in December 2002 and added the title of chairman in April 2003. The posts made him one of the most powerful African-American executives on Wall Street.

O'Neal was eventually replaced by John Thain, the former chief of NYSE Euronext. In 2006, O'Neal received $46 million in total compensation, including an $18.5 million bonus and $26.8 million in stock awards, according to SEC filings.


Charles O. Prince, Citigroup Inc.
2006: $24.8 million.
Charles Prince stepped down as CEO of Citigroup Inc. in November, not long after world's largest bank reported a 57% drop in quarterly earnings and lost nearly a quarter of its market value.

"It is my judgment that given the size of the recent losses in our mortgage- backed securities business, the only honorable course for me to take as chief executive officer is to step down," Prince said in a statement at the time.

Two months after Prince walked away, Citigroup suffered a $10 billion quarterly loss -- the largest ever in the company's history -- and announced an $18.1 billion writedown due to mortgage-backed investments.

In 2006, Prince's total compensation was $24.8 million, including a $13.2 million bonus and $10.4 million in stock awards. As part of his separation agreement with Citigroup, Prince is entitled to an office, executive assistant, and a car and driver for up to five years, according to a SEC filing.


Angelo Mozilo, Countrywide Financial
2006: $42.9 million.
Angelo Mozilo has already heard from lawmakers about the level of his compensation as the CEO of Countrywide Financial Corp.

Mozilo reportedly stood to collect a windfall of $115 million dollars after his firm agreed in January to a yet-to-be completed $4 billion sale to Bank of America. But after facing heavy criticism from lawmakers, including Sen. Hillary Clinton, Mozilo said he would forfeit $37.5 million in payments tied to the deal.

In January, Sen. Charles Schumer and Rep. Barney Frank, both openly criticized Mozilo's compensation as Countrywide became a symbol of the subprime mortgage crisis.

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

In 2006, Mozilo took home $42.9 million in compensation.