In a class-warfare driven media, where the "haves" are often pitted against "have-nots," you would think an outgoing CEO giving up $37.5 million in pay would be celebrated.
Not quite. CNN's "American Morning" didn't think it was quite good enough when Countrywide Financial's Angelo Mozilo forfeited $37.5 million in severance pay because he said he felt it was the "right thing to do."
"It's another disconnect with Main Street," "American Morning" anchor Kiran Chetry said Jan. 28, 2008. "Because most people don't get rewarded when things go wrong at their job, and this is what we see with these CEOs."
"Over and over and over again," CNN's personal finance editor Gerri Willis added.
But it isn't quite as simple as Chetry stated. Mozilo co-founded Countrywide (NYSE:CFC) 40 years ago and grew it to the nation's largest mortgage lender. On January 11, Bank of America Corp. (NYSE:BAC) announced it agreed to acquire Countrywide for roughly $4 billion in stock and Mozilo was to step down as part of the deal.
Willis also echoed Chetry's sentiment about CEO pay and used other CEOs as examples. However, it wasn't clear what Willis and Chetry thought these CEOs should do with compensation they rightfully earned.
"[L]et's take a look at other CEOs, as a matter of fact, who have gone through the same thing," Willis said. "Poor performance, they get rewarded. They forego severance. People like Stanley O'Neal who ran Merrill Lynch (NYSE:MER) walks away with $161.5 million. Charles Prince, similar story here, Citigroup (NYSE:C) taking big losses - he walks away with $29.5 million. All three of these fellows forego severance, but still walk away with lots of money and I think it's a big question for folks out there - pay for performance? Maybe not."
"Yeah, it doesn't seem fair," Chetry added.
As Washington Post columnist Allan Sloan pointed out when Home Depot CEO Bob Nardelli was fired early in 2007, "The time to have the debate over CEO compensation isn't when the CEO is fired. It's when he's hired." That's a point too often missed when the media exhibit consternation over previously negotiated pay packages.
