The founding Wonkette editor signs on to do irreverent political coverage for Maer's magazine, another Charles Kushner associate goes down, and Andrew Cuomo noses around Dick Grasso's package, in our daily roundup of news from the worlds of media, real estate, law, and finance.
• After testifying in front of the House Committee on Government and Oversight Reform last week about the gargantuan pay package he picked up while his company hemorrhaged money, Countrywide CEO Angelo Mozilo made Congress a nice little offer: "Mr. Mozilo said he had left a card in each Congressional office with a help line for constituents having problems with their loans. He added that if the number didn’t work, “call me— I take this very seriously.’” [NYT]
• Since the federal death-penalty statute was revived in 1998, New York federal juries have been reluctant to impose the death sentence. [NYT]
• You know those ads for legal firms in the Metro? Yeah, they're really not all that effective. [Legal Blog Watch]
Oh, not really. We're just exaggerating. That's what the media does, according to former Citigroup CEO Chuck Prince, Countrywide CEO Angelo Mozilo, and former Merrill Lynch CEO Stan O'Neal,all of whom who have all offered up the line that the media has "grossly exaggerated" the amounts of their compensation in their testimony in front of the House Oversight and Government Reform Committee today. “The reality is that I received no severance package," said O'Neal. This is technically true: but he did recieve $161.5 million in cash, stock and stock options upon his "retirement" in October. Over at Portfolio, Elizabeth Olson is live-blogging the hearing, and she has reported that, among other things, Countrywide Financial CEO Mozilo looks "tan and confident," but everyone looks totes unhappy. The day started out with a bang: Chair Henry Waxman, who called for the hearing, wondered aloud whether the "hundreds of millions of dollars [the CEOs] were given represent a complete disconnect from reality," but Republican representative Tom Davis killed his joy by saying that they "should not degenerate into a sanctimonious search for scapegoats.… Punishing individual corporate executives with public floggings like this may be a politically satisfying ritual — like an island tribe sacrificing a virgin to a grumbling volcano." Indeed. Also, who knew Davis was so creative?
Credit C.E.O. Comp Under Fire, IV [Daily Brief/Portfolio]
As you may know, Countrywide CEO Angelo Mozilo, recently deposed Merrill Lynch CEO Stan O'Neal, and recently deposed Citigroup CEO Chuck Prince are scheduled to testify in front of the House and Government Reform Committee tomorrow, having been called by Representative Henry Waxman of California to defend the gigantic paychecks they received precisely as their companies were hemorrhaging billions of dollars in subprime investments. Muckraked got hold of a memo Waxman wrote summarizing the issue for his colleagues, and it is kind of awesome. "During the five-year period from January 2002 through December 2006, the stock of Countrywide, Merrill Lynch, and Citigroup appreciated, and the three CEOs collectively received more than $460 million in compensation," he wrote. Then, "Any alignment between the compensation of the CEOs and their shareholders' interests appears to break down in 2007, however." But the best part is an e-mail from October 2006, wherein Mozilo smacks down shareholders who suggest his $120 million compensation might be a little much.
Quoth the e-mail:
I appreciate your input but at this stage in my life at Countrywide this process is no longer about money but more about respect and acknowledgement of my accomplishments.… Boards have been placed under enormous pressure by the left wing business press and the envious leaders of unions and other so called 'CEO Comp Watchers' and therefore Boards are being forced to protect themselves irrespective of the potential negative long term impact on public companies. I strongly believe that a decade from now there will be a recognition that entrepreneurship has been driven out of the public sector resulting in underperforming companies and a willingness on the part of Boards to pay for performance.
That's right, Angelo. You've got to fight those liberal bastards or else they'll take away everything that is right and good in the world. Now go tell it on the mountain, friend.
[Muckraked via Salon]
Not so fast there, boys. House Oversight and Government Reform Committee chair Henry Waxman isn't going to let fired Merrill Lynch CEO Stan O'Neal and fired Citigroup CEO Charles Prince III waste away in Margaritaville just yet. He's organizing a little field trip down to Washington February 7, where he's holding a hearing as part of an "ongoing investigation into executive pay" related to subprime. The executives will be expected to answer questions about the massive pay and severance packages they received after making a mess of their companies and why they thought they could get away with armfuls of money while leaving the rest of America holding the bag. Yeah. Who do they think they are, anyway? "You collected tens of millions of dollars in payments and other compensation upon your departure from Citigroup," Waxman wrote in a letter to Prince, according to the Financial News. "You should plan to address how it aligns with the interests of Citigroup’s shareholders and whether this level of compensation is justified in light of your company’s recent performance and its role in the national mortgage crisis." Countrywide CEO Angelo Mozilo has also been invited along for the ride, since Bank of America announced they would acquire that ailing beast for $4 billion on Friday, and if Mozilo, thought he was going to go sailing into the sunset scot-free, well, we guess he's got another think coming.
Congress Panel Wants to Grill Subprime CEOs on Pay [Reuters]
Oh no he didn't! In what looks like a fuck-you to his predecessor, new Merrill Lynch CEO John Thain has announced he is hiring back Jeff Kronthal, one of six top trading executives former CEO Stan O'Neal fired back in the summer of 2006, reportedly after they resisted his directive to increase risk-taking by underwriting mortgage-backed securities. O'Neal, of course, was fired himself this past November for precisely that — his enthusiasm for the subprime poison apple left Merrill with record losses. Awesomely, Kronthal's new role at Merrill will be fixing the mess his old boss made; he's been hired, according to Merrill co-pres Gregory Fleming, to "advise on the firm's fixed-income business and risk management." The job is temporary — Kronthal has his own hedge fund launching in mid-2008 — but the gesture is still meaningful, as many have said that had Kronthal and the other sacked fixed-income veterans not left, the bank might not be in the shape it is today. According to the Journal, Kronthal received a standing ovation when he appeared on a Merrill trading floor yesterday. Basically, it's kind of like the second half of that seminal film Bring It On, after high-school cheerleading squad the Rancho Carne Toros are embarrassed by their spirit-fingers performance, and Torrance Shipman (Kirsten Dunst) takes control back from Courtney and Whitney and leads the squad to victory with an original routine. Go Merrill!
Kronthal to Return As Merrill Advisor [WSJ]
• Jeff Bercovici wants to know: "What's Regan's price for selling out her country?" After all, if Regan's info on Giuliani is that damaging, shouldn't she divulge it in any case, no matter how much Uncle Murdoch is willing to offer? [Mixed Media/Portfolio]
• Dan Rather's lawyers are getting fed up with CBS nondisclosure agreements. "Who do these guys think they are? The National Security Agency?" [NYO]
• Intrepid Observer reporter spends 45 minutes staring through a window just to see who showed up to a lame Times party. Now that's journalism! [Media Mob/NYO]
• Stan O'Neal wasn't invited to a big Merrill Lynch reunion party thrown by Evelyn Juan, the son of a Merrill founder. Guess Stan will just have to drink himself to sleep in his board-provided office. [DealBreaker]
• Goldman's unbelievable success is forcing all the other top banks to dig deep into the honey pot and pay out a record-setting $38 billion in bonuses, despite losing $74 billion in market value. Goldman, of course, accounts for almost half of the bonus pool. Let's just say it's good to be Goldman. [Deal Journal/WSJ, Bloomberg]
• Steve Schwarzman spared no expense for his son's wedding and the tab ran to $150,000, including a $20,000 BBQ supper, $7,000 for drinks, and $50,000 to rent an entire hotel and keep the riffraff out. Still pales in comparison to Schwarzman's $3 million birthday bash. [NYP]
• Al Gore, venture capitalist? The Nobel laureate and Apple board member is taking a hands-on role at Kleiner Perkins, the leading Silicon Valley venture firm. His goal: Save the world. And annoy GE's Jeff Immelt as much as possible. [Fortune]
• Harvard picked Robert S. Kaplan, a former Goldman Sachs vice-chairman, as the new steward for the $35 billion endowment. Something tells us his kids won't have any trouble getting in. [Reuters via NYT]
• A few management consultants with nothing better to do gave the Times its newest buzzword: CEO version 3.0. With the departures of Stan O'Neal, Chuck Prince, and Richard Parsons, it's now time for leaders "who can assemble a team that functions as smoothly as a jazz sextet." Because, as James Cayne showed, the old CEOs were way too bebop. [NYT]
• Princely girlfriend Kate Middleton quit her job at fashion chain Jigsaw, sparking rumors of an imminent engagement! [British Vogue]
• Daria Werbowy is doing a line of makeup for Lancôme that benefits a Brazilian children’s charity. Hot and philanthropic? Sigh. [Fashionista]
• Surprise, surprise: This holiday shopping season is gonna suck for retailers. [NYT]
• The struggle to find a successor at Merrill and Citi demonstrates another big flaw in the current culture of Wall Street: Do-or-die standards, and growing demands on public executives, have left firms with no succession plan and few capable of stepping in to take over. Both firms have been forced to turn outside for help: Laurence Fink, the CEO of BlackRock, has been approached about O'Neal's old job, while Robert Willumstad and John Thain are in the lead to take Prince's place. [WSJ]
• Why did Chuck Prince and Stan O'Neal fail? They took Gordon Gecko's favorite maxim—"I create nothing, I own"—a little too seriously, and forgot the other part of banking is to sell, sell, sell. [NYT]
• Andrew Ross Sorkin dons his Miss Manners cap to explain the rules of corporate courting—and why Stan O'Neal's worrywart parents, the Merrill Lynch board, were only looking for an excuse when they grounded him for asking Wachovia to "merge." [NYT]
We've said it before and we'll say it again: Chuck Prince has been on our—and everyone's—about-to-get-axed list for about three years. Look, there he is right there, in this week's magazine, with a little axe hovering over him! It's been especially bad the past month or so, after Citigroup announced a $6.5 billion write-down, and everyone started openly talking about how Prince sucked and should leave, even though Rick Rubin and Prince Al-Waleed bin Talal defended him. It sort of reminded us of when Lacey was on Rock of Love: Even when everyone in the house was hating Prince, when it seemed like there was just no way he was going to win, the board still had the hots for that crazy bitch and refused to kick him off the show. Of course, as with Lacey and Rock of Love, all things come to pass, and this past Saturday, the Citigroup tour ended for Prince. But we have to ask, why now, as opposed to back then? Did Stan O'Neal inspire Prince? Are the fourth quarter numbers just too heinous for him to stick around? Was he fed up, as the Wall Street Journal this morning suggests, with rassling with the mammoth bureaucracy that is Citigroup? Or: Was Prince merely afraid that if he stayed on a moment longer someone at the Journal would uncover his stash? In any case: Now that the floodgates have been opened, we're looking at you, Cayne.
Citigroup Statement on CEO Prince [WSJ]
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