Countrywide CEO Angelo Mozilo dumps $138 million in stocks; shareholders stock value shrinks

[dajoki]

Countrywide CEO sold big as stock dropped

Quick changes in Mozilo's trading plan raise red flags, experts say. The mortgage firm says the sales were in line with company policy.

By Kathy M. Kristof, Los Angeles Times Staff Writer
September 29, 2007
http://www.latimes.com/news/la-fi-mozilo29sep29,0,6718989.story?coll=la-tot-topstories&track=ntottext

As the mortgage industry swooned in late 2006 and 2007, Countrywide Financial Corp. Chief Executive Angelo Mozilo cashed in stock options valued at $138 million -- vastly expanding his wealth even as his shareholders watched their stock shrink in value.

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But most executives adopt a plan and stick with it, compensation and securities experts say. Mozilo didn't.

Instead, he shifted course twice in late 2006 and early 2007, according to regulatory filings, amid mounting signs of trouble in the housing and mortgage industries. Mozilo adopted a new trading plan, added a second and then revised it, allowing him to unload hundreds of thousands of additional shares before Countrywide stock went into a tailspin.

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Compensation experts who reviewed Mozilo's trading activity, however, said the changes he made could prove to be a liability as Mozilo and Countrywide defend themselves against shareholder suits.

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Six days later, on Dec. 12, Mozilo filed a new stock trading plan, Samuels said. Mozilo and Countrywide declined to provide copies of this or his other trading plans, but the company confirmed that the Dec. 12 plan allowed Mozilo to sell an additional 115,000 shares each month.

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On Feb. 2, Mozilo revised the trading plan he had adopted less than two months earlier, doubling the number of additional shares Mozilo was authorized to sell under his second plan to 230,000 a month. Between the two plans now in effect, Mozilo could sell 580,000 shares each month.