IndyMac says: we feel your pain!
When it comes to the subprime mortgage crisis, IndyMac (IMB) may not be as large of a poster child as Countrywide Financial (CFC). After all, when Congress held a hearing earlier this month, IndyMac’s Chairman and CEO, Michael W. Perry wasn’t even on the invite list. Still, judging by their growing list of bank-owned properties, like these in Nevada, there’s clearly a lot on their plates.
In the proxy it filed yesterday morning, IndyMac addresses the problems head on:
The bottom line is that 2007 was an incredibly tough year for Indymac Bank and for you, our stockholders, and the difficult mortgage market continues today. The unprecedented crisis in the housing and mortgage industries has also been difficult for Indymac’s employees, management team and Board of Directors, and we have clearly suffered along with our stockholders as our business has eroded and our stock price has declined precipitously. At December 31, 2006, when our stock was valued at $45.83 a share, our Executive Officers and Directors owned stock and had vested options worth a total of $129 million. During 2007, no Executive Officers or Directors of Indymac sold stock or exercised options, and today, with our stock at $6.20 as of February 29, 2008, this group had lost 97% of the $129 million in value it had as of the end of 2006.
The frank letter, which goes on to say that Perry believes that IndyMac “will be a survivor and will emerge as a stronger competitor than ever once the housing and mortgage markets do recover” (whenever that is) is a follow-up to this letter to investors last month. Perhaps even more rare is that Perry has agreed to step down and forgo any severance due him if he is not re-elected as a director when shareholders meet on May 1 in Pasadena for the annual meeting.
At a time when many CEOs seem to be pointing the finger at anyone else, it’s refreshing to see this type of candor in a filing. Granted, it would have been even better a year or two ago, but given how rare this sort of thing is, it’s definitely worthy of a gold star.
One other interesting tidbit from IndyMac’s filings: by their own accounting, directors spent 335 to 365 hours in board and committee meetings or preparing for those meetings in 2007, compared with 175 to 235 hours in 2006 and 170 hours in 2005. While these sorts of numbers are clearly hard to verify, it would be nice to see more companies providing this sort of detail in their filings.