Michael G. Winston, a former executive responsible for leadership development at the Countrywide Financial Corporation, spent three years in a legal battle against Countrywide, the once-mighty mortgage giant, and its current owner, Bank of America, contending that he was punished and pushed out for not toeing the company line. On Feb. 4, he won: a jury in California awarded him $3.8 million in damages.
Mr. Winston joined Countrywide in May 2005, when the lender was riding the mortgage wave. He was hired as an executive vice president in the leadership development area to help Countrywide grow even bigger and groom better managers. His boss, he recalled, told him that the lender wanted to become “Goldman Sachs on the Pacific.” Soon after, he was promoted to managing director and enterprise chief leadership officer.
Mr. Winston’s career experience included successful stints at Motorola, McDonnell Douglas and Lockheed. He also worked previously as the global head of worldwide leadership and organizational strategy at Merrill Lynch in New York. As a prominent executive in the field of organization development, he recommended to Drew Gissinger, chief production officer at Countrywide Home Loans, that the company management needed "to focus on customer satisfaction, on the quality of the loan portfolio and on building leaders who would focus their people on that." Mr. Winston said, "I wrote him a very comprehensive proposal on how to reward people properly."
Winston still recalls an episode from late 2005 that raised red flags for him. He found himself parked next to a man in the Countrywide lot whose car had vanity plates that read, “Fund’Em.” “I said: ‘I’m not familiar with that expression. What is this about?’ ” Mr. Winston recalled. The man replied that the term described the company’s growth strategy for 2006 — to fund all loans. “I was brand new and I said, ‘What if the person has no job?’ ” Mr. Winston said. The answer: “Fund ’em.”
“What if the person has no assets?”
Again: “Fund ’em.”
In November 2006, as he tells it, he refused to misrepresent Countrywide’s corporate governance practices in a report to analysts at Moody’s Investors Service, the ratings agency.
On Nov. 20, Mr. Winston received a copy of an unpublished report on Countrywide by Moody’s. It expressed concerns about executive pay and succession planning at the lender. “We view governance as a credit challenge that constrains future ratings improvement at Countrywide,” the report said.
Mr. Winston said that Countrywide scrambled to try to refute Moody’s take and that Mr. David Sambol, Countrywide’s former president, asked him to write a report countering the analysis and providing chapter and verse on the extensive succession planning at the company.
Trouble was, Mr. Winston had never seen that extensive succession plan. In fact, as with so many subprime loans, he never saw any documentation at all, even after he asked for it, he said. He testified that he told Mr. Sambol he could not do the report. “I’m not your guy,” he told him.
The jury in the California trial heard from an array of former Countrywide executives, including Mr. Angelo R. Mozilo, in a rare courtroom appearance. David Sambol, Countrywide’s former president, also testified.
Sam Usher, 73, was a juror on the case. A former human resources executive at General Motors, he is a program manager for addiction treatment centers at several hospitals in Los Angeles. Asked about the trial, Mr. Usher said the witnesses for Countrywide and Bank of America were unpersuasive.
“There was an air of arrogance about them,” he said. “The attorneys for the plaintiff caught most of them in little lies that cracked their credibility. Meanwhile, Mr. Winston’s witnesses had credibility and the documentation kind of supported his testimony.”
“The acquisition by Bank of America provided an opportunity to drop him off the cliff,” Mr. Usher said. When Bank of America took over in 2008, Winston was let go.
Today, Mr. Winston, 60, is hoping to go back to work. “It is the littlest of Davids beating the biggest of Goliaths and taking two of them on at once,” Mr. Winston said. “This is the story of somebody who tried to set a company right. But it was frightening to them for me to shine the light from the inside out.”
Source: The New York Times, February 20, 2011