By David Ellis
February 22, 2008
High-profile execs head to Capitol Hill next week after initial postponement to defend pay packages amid mortgage crisis.
NEW YORK (CNNMoney.com) -- Two high-profile former Wall Street CEOs and the head of the nation's largest home lender will testify next week before a congressional committee examining the link between executive pay and the mortgage crisis.
A total of 10 witnesses are due to appear before the House Committee on Oversight and Government Reform on Thursday including Countrywide Financial's (CFC) founder and CEO Angelo Mozilo, former Merrill Lynch (MER) Chairman and CEO Stanley O'Neal and ex-Citigroup (C) chief Charles Prince.
All three executives made headlines last year for their companies' bad bets on the U.S. housing market - and for their own lofty compensation. Their pay is drawing scrutiny from lawmakers at a time when homeowners across the country are at risk of losing their homes and as the country teeters on the brink of recession.
Upon his departure from Citigroup in November, Prince left with approximately $68 million, while O'Neal collected about $161 million after he stepped down in October.
Citigroup and Merrill Lynch lost billions of dollars on risky investment in mortgage-backed securities.
Countrywide's Mozilo reportedly stood to collect a windfall of $115 million dollars after his firm agreed in January to a $4 billion sale to Bank of America (BAC, Fortune 500). But after facing heavy criticism from lawmakers, Mozilo said he would forfeit $37.5 million in payments tied to the deal.
Calls made to Merrill Lynch and Countrywide Financial seeking comment were not immediately returned.
A Citigroup spokesman declined to comment specifically on the hearing but said the company was cooperating with the committee. The hearing, which was originally scheduled for Feb. 7 but was postponed due to scheduling conflicts, is the second of its kind in nearly three months.
In December, the same congressional committee, chaired by Rep. Henry Waxman, D-Calif., quizzed a number of experts on executive pay packages and potential conflicts of interest with compensation consultants, who receive payment and advise corporate directors about pay packages.
This time around lawmakers are expected to take a closer look at how compensation and severance packages for Mozilo, O'Neal and Prince were determined and how they were approved.
Congress, however, will not only hear from the executives themselves, but also from those corporate directors that signed off on their pay packages.
Due to testify is Richard Parsons, chair of Citigroup's compensation committee and former CEO of Time Warner (TWX, Fortune 500), the parent company of CNNMoney.com. The chairmen of Countrywide and Merrill Lynch's compensation committees are also scheduled to address the committee.
In mid-January, the committee sent letters to John Thain, current chairman and CEO of Merrill Lynch, and Citigroup chief Vikram Pandit for documents related to Prince and O'Neal's pay packages.
Excessive compensation and hefty severance packages or "golden parachutes," however, have been burning issues in recent years. Many companies have rewarded CEOs handsomely through multi-million dollar salaries, eye-popping bonuses or attractive perks like country club memberships.
Source: CNNMoney
Congress to grill Mozilo, O'Neal, Prince over pay
