Mozilo’s take-home pay of $71.8 million topped last year’s highest-paid executive, Ray Irani, chairman and chief executive of Occidental Petroleum Corp. Irani came in second with $68 million, while No. 3, Bruce Karatz, chairman and chief executive of homebuilder KB Home, earned $50.1 million last year.

Despite Countrywide’s success – the Calabasas-based company has become the nation’s largest mortgage lender over the past several years – Mozilo’s pay package seems astronomical by the standards of normal working folk.

In fact, CEO pay remains stubbornly high, despite reforms aimed at better linking executive pay to performance. Scrutiny of reported results has been increased and penalties stiffened. In addition, certain forms of compensation, such as loans to CEOs that were later forgiven, have been outlawed. And the role of CEOs in setting their own compensation has been circumscribed.

Even so, pay keeps going up.

“The classic economic justification for why executive compensation is so high and disproportionate is similar to why baseball players or world-class ballerinas are paid so well,” said Richard Cellini, senior vice president and head of research at Salary.com. “People are willing to pay an extreme amount for tiny increments of better performance. So corporate directors are willing to pay a huge amount for a guy who is running slightly faster than the next guy.”

Mozilo received a base salary of $2.5 million in 2004, supplemented by a bonus of $17.3 million and other forms of compensation, including restricted stock and country club dues.

He also exercised stock options valued at $48.6 million that were granted in the years since he co-founded Countrywide in 1969. As of Dec. 31, Mozilo owned exercisable options valued at $308.2 million, plus another large chunk of unvested options, including 1.4 million he was granted last year.

His rich pay puts him in the stratosphere of U.S. executives. Forbes, which uses a different method to calculate executive pay, placed him No. 9 on its list of highest-paid executives in the United States.

And how does Countrywide respond? Company officials wouldn’t comment, but the board’s compensation committee issued a statement saying that Mozilo “has a unique role in the continued evolution of the company as a worldwide diversified financial services organization.”

His 2004 compensation, the committee said, “reflects the outstanding and sustained financial performance of the company during the year,” and has a “direct relationship to the company’s financial and operational results.”

On a roll
There’s no denying that Countrywide has done very well. The stock split twice during 2004, as its adjusted price surged 52 percent amid near-record earnings and a prolonged mortgage-lending boom.

Overall value has increased by more than $7 billion since the beginning of 2004 – meaning shareholders have benefited from owning the stock with Mozilo at the helm. And earnings for 2004, while down slightly from 2003, totaled $2.3 billion.