And I Thought Michael Ovitz Was bad…
January 15, 2008
In 1996, Michael Ovitz was “fired” by Disney. The entertainment golden boy was brought on to be the new crown prince of the world’s biggest entertainment company. Ovitz, a big time power broker and owner of arguably Hollywood’s most impressive Rolodex, lasted just 16 months before he was unceremoniously ousted. The cost for Disney to relieve themselves of this burden, a cool $140 Million dollars.
In what was then, the biggest golden parachute of all time, Ovitz received a severance package that stunned shareholders and cost Disney an unbelievable sum of yes…$140 Million bucks. That’s a lot of rides on Space Mountain!
Now fast forward to 2008. Angelo Mozilo, the driver of the bus at Countrywide, the Chairman, the head honcho of the mortgage industry Titanic, engineers a sale of his company to Bank of America and his severance package is going to be just as huge and ridiculous as the one Ovitz received. Maybe even more ridiculous.
The LA Times has now reported that in his contract agreement, which extended the 69-year-old’s employment contract through 2009, Mozilo was guaranteed three times his base salary, plus a cash payment equal to three times the greater of his average bonus or the incentive bonus paid the previous year. Net value: $87.8 million.
In addition, Mozilo has two pensions that his severance agreement gives him the right to receive as a lump sum upon his departure. Those pensions were worth $24 million as of December 2006, the last time the company was required to report their value. Net value: $24 million+
Oh don’t stop counting yet…there’s more. The LA Times reports also Mozilo would receive continuing health benefits for life for himself and his spouse, three years of life and financial planning benefits, and “tax-gross-up payments” to compensate him for any penalties he’d have to pay for receiving payments the IRS might consider excessive.
Let’s not stop there, that could not possibly be enough compensation for the head of the nation’s worst foreclosure mill, who was at the helm as Countrywide’s stock values plummeted 82% from last year, and the subject of a current SEC probe into his accelerated sale of about $145 million in company shares. Let’s also throw in free rides on the company jet and all of his country club bills paid up until 2011, according to his severance deal.
Estimated total of his golden parachute: In excess of $120 million dollars not including the aforementioned stock dump that netted him an additional $145 million. this has to be the best game of Monopoly ever played!
At least when Ovitz left Disney, the kingdom Walt built was still standing. Mozilo left a barely breathing, traumatized shell of a company with shareholders and mortgage holders gasping for air.
Bank of America may indeed have purchased a bargain, and the $4 Billion they shelled out may prove to be an unbelievable and shrewd investment and a huge windfall for its shareholders.
Otherwise, we may be reading about the severance package of Bank of America Chairman Kenneth D. Lewis very soon. After all can this guy really lose? If the gamble pays off..he’s got it made, and if it does not, there’s always the golden parchute exit strategy.
Man..this is great work if you can get it. Anyone want to buy Park Place or Boardwalk?
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