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Countrywide Financial Corp – ‘DEF 14A’ for 6/16/04

On:  Thursday, 4/29/04, at 12:32pm ET   ·   Effective:  4/29/04   ·   For:  6/16/04   ·   Accession #:  950129-4-2517   ·   File #:  1-12331-01

Previous ‘DEF 14A’:  ‘DEF 14A’ on 12/10/03 for 1/9/04   ·   Next:  ‘DEF 14A’ on 7/16/04 for 8/17/04   ·   Latest:  ‘DEF 14A’ on 4/27/07 for 6/13/07

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/29/04  Countrywide Financial Corp        DEF 14A     6/16/04    1:385K                                   Bowne - Houston/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Statement                          HTML    398K 

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO.___)

Filed by the Registrant [X]

Filed by a Party other than the Registrant [   ]

Check the appropriate box:

COUNTRYWIDE FINANCIAL

Payment of Filing Fee (Check the appropriate box):

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4500 Park Granada

April 29, 2004

Dear Stockholder:

      On behalf of the Board of Directors, I cordially invite you to attend the 2004 Annual Meeting of Stockholders of Countrywide Financial Corporation (the “Company”). The meeting will be held on June 16, 2004 at 9:30 a.m., Central Time, in the Town and Country Ballroom of the Westin Stonebriar Resort located at 1549 Legacy Drive, Frisco, Texas 75034. The formal notice and proxy statement for this meeting are attached to this letter.

      It is important that you vote your shares as soon as possible. If you hold your shares as a stockholder of record, you may vote using one of the following methods:

as instructed on the enclosed proxy card, even if you currently plan to attend the Annual Meeting. You may still attend the Annual Meeting and vote in person if you desire, but voting now will assure that your vote is counted if you are unable to attend.

      If you own your shares through a brokerage account or in another nominee form, please follow the instructions provided on the enclosed vote instruction form. If you plan to attend the Annual Meeting and vote in person, you must obtain a proxy from your broker or nominee and bring that proxy to the Annual Meeting.

      Your vote is important, regardless of the number of shares you own.

      On behalf of the Board of Directors, I thank you for your participation and cooperation.

	Sincerely,
	ANGELO R. MOZILO
	Chairman of the Board

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4500 Park Granada

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders:

      The 2004 Annual Meeting of Stockholders of Countrywide Financial Corporation (the “Company”) will be held in the Town and Country Ballroom of the Westin Stonebriar Resort located at 1549 Legacy Drive, Frisco, Texas 75034, on June 16, 2004 at 9:30 a.m., Central Time, and at any adjournment or adjournments thereof, for the following purposes:

      Only stockholders of record at the close of business on April 19, 2004 are entitled to notice of, and to vote at, the Annual Meeting and any adjournment or adjournments thereof.

	By Order of the Board of Directors
	SUSAN E. BOW
	Secretary

      YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. THE COMPANY ENCOURAGES YOU TO VOTE AS SOON AS POSSIBLE USING ONE OF THREE CONVENIENT METHODS: (i) BY CALLING THE TOLL-FREE NUMBER LISTED ON THE PROXY CARD; (ii) BY ACCESSING THE INTERNET SITE LISTED ON THE PROXY CARD; OR (iii) BY SIGNING, DATING AND RETURNING THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. BY VOTING YOUR SHARES PROMPTLY, YOU WILL SAVE THE COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION.

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4500 Park Granada

ANNUAL MEETING OF STOCKHOLDERS

      This Proxy Statement is furnished to stockholders of Countrywide Financial Corporation (the “Company”) in connection with the solicitation by its Board of Directors (the “Board”) of proxies to be voted at the 2004 Annual Meeting of Stockholders (the “Meeting”) to be held in the Town and Country Ballroom of the Westin Stonebriar Resort located at 1549 Legacy Drive, Frisco, Texas 75034, on June 16, 2004 at 9:30 a.m., Central Time, and at any adjournment or adjournments thereof. The Company expects to mail its proxy soliciting materials for the Meeting on or about April 29, 2004.

What am I voting on?

      You will be entitled to vote on the following proposals at the Meeting:

Who is entitled to vote?

      The Board has set April 19, 2004 as the record date for the Meeting (the “Record Date”). If you were the owner of the Company’s Common Stock at the close of business on the Record Date, you may vote at the Meeting. Each stockholder of record on the Record Date is entitled to notice of, and to vote at, the Meeting and at any adjournment or adjournments thereof. You are entitled to one vote on each proposal for each share of Common Stock you held on the Record Date.

How many shares must be present to hold the meeting?

      On the Record Date, there were 279,156,865 shares of Common Stock outstanding, with each share entitled to one vote. The presence of a majority of the shares entitled to vote constitutes a quorum, which is required in order to hold the Meeting and conduct business. Shares are counted as present at the meeting if you:

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How many votes are required to approve each proposal?

      The election of each director requires the affirmative “FOR” vote of a plurality of the shares present at the Meeting and entitled to vote on the election of such director. Approval of any other proposal requires the affirmative “FOR” vote of a majority of the shares present at the Meeting and entitled to vote on the proposal.

How are votes counted?

      You may either vote for or withhold authority to vote for the election of directors. You may vote for, against, or abstain on the other proposals. If you withhold authority to vote for the election of one or more of the directors nominated for election, no vote will be cast for such nominee(s), but your withheld vote will be counted in determining the presence of a quorum. Abstentions from voting, which may be specified on all matters except the election of directors, will be considered shares present and entitled to vote on a matter and, accordingly, will have the same effect as a vote against a matter. If you hold your shares through a brokerage account or in another nominee form, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote under the rules of the New York Stock Exchange or the Nasdaq Stock Market (“Nasdaq”). This is called a “broker non-vote.” Broker non-votes are included in the determination of the number of shares present and voting; however, they are not considered entitled to vote on the proposal in question, thereby reducing the number of shares needed to approve the proposal. Broker non-votes are not counted as votes for or against a proposal.

How does the Board recommend that I vote?

      The Board recommends that you vote your shares as follows:

How do I vote my shares without attending the Meeting?

      If you are a stockholder of record, you may vote by one of the following methods:

as instructed on the enclosed proxy card, whether or not you plan to attend the Annual Meeting. You may still attend the Annual Meeting and vote in person if you desire, but voting now will assure that your vote is counted if you are unable to attend.

      Whether you vote (i) by telephone; (ii) via the internet; (iii) by mail; or (iv) at the Meeting, the proxies identified on the back of the enclosed proxy card will vote the shares of which you are the stockholder of record in accordance with your instructions. If no instructions are marked on the proxy card, the shares will be voted as recommended by the Board in this Proxy Statement.

      If you own your shares through a brokerage account or in another nominee form, please follow the instructions provided on the enclosed vote instruction form.

How do I vote my shares in person at the Meeting?

      If you are a stockholder of record, to vote your shares at the Meeting you should bring the enclosed proxy card or proof of identification. If you own your shares through a brokerage account or in another nominee

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      Even if you plan to attend the Meeting, we encourage you to vote by internet, telephone or proxy card so your vote will be counted even if you later decide not to attend the meeting.

What does it mean if I receive more than one proxy card?

      It means you hold shares registered in more than one account. To ensure that all of your shares are voted, sign and return each proxy card or, if you vote by internet or telephone, vote once for each proxy card you receive.

May I change my vote?

      Yes. You may revoke your proxy and change your vote before it is taken at the Meeting by (i) delivering a written notice of revocation to the attention of the Company’s Secretary at 4500 Park Granada, MSN CH-11B, Calabasas, California 91302; (ii) delivering a duly executed proxy bearing a later date (including proxy by telephone or via the internet); or (iii) attending the Meeting and voting in person. As noted above, if you own your shares through a brokerage account or in another nominee form, you cannot vote in person at the Meeting unless you obtain a proxy from the broker or nominee and bring that proxy to the Meeting.

What does it cost the Company to solicit proxy materials?

      The Company will pay the cost of the solicitation of proxies, including preparing and mailing the Notice of Annual Meeting of Stockholders, this Proxy Statement and the proxy card or vote instruction form. Following the mailing of this Proxy Statement, directors, officers and employees of the Company may solicit proxies by telephone, facsimile transmission or other personal contact, for which services such persons will receive no additional compensation. Brokerage houses and other nominees, fiduciaries and custodians who are holders of record of shares of Common Stock will be requested to forward proxy soliciting materials to the beneficial owners of such shares and will be reimbursed by the Company for their charges and expenses in connection therewith at customary and reasonable rates. In addition, the Company has retained Morrow & Co., Inc. to assist in the solicitation of proxies for an estimated fee of $11,000 plus reimbursement of expenses.

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BOARD OF DIRECTORS

      Angelo R. Mozilo is co-founder of the Company and has been Chairman of the Board of the Company since March 1999 and Chief Executive Officer of the Company since February 1998. Prior to his present position, he was President of the Company from March 2000 through December 2003 and served as Vice Chairman of the Board and Executive Vice President of the Company from the Company’s formation in March 1969 through February 1998. Mr. Mozilo was the 1991-1992 President of the Mortgage Bankers Association of America and also served on its board of directors. He currently serves on the boards of the Harvard Kennedy School Joint Center for Housing Studies and National Housing Endowment. He is also a member of the Board of Trustees at both Fordham University and Gonzaga University.

      Henry G. Cisneros is, and since August 2000 has been, the founder, Chairman and Chief Executive Officer of American CityVista, a joint venture with KB Home to build homes in metropolitan areas. From January 1997 to August 2000, he was President, Chief Operating Officer and a director of Univision Communications Inc., a Spanish language television network. From 1993 to 1997, he served as Secretary of Housing and Urban Development under President Clinton. He also served as Mayor of the City of San Antonio, Texas from 1981 to 1989. Mr. Cisneros previously served on the board of directors of KB Home, and he is currently a member of the boards of American CityVista, New America Alliance and the San Antonio Hispanic Chamber of Commerce. He is also a member of the Board of Trustees of The Enterprise Foundation and an honorary life director of the National Civic League.

      Jeffrey M. Cunningham was named Chairman and Chief Executive Officer of Navigator Holdings, LLC, an advisory firm specializing in media, conferences, and eLearning, in March 2004. From 2001 to 2004 he served as the Chairman of Cunningham Partners, Inc., a strategic advisor to multinational organizations in the media and technology sectors and, through its subsidiary, Corvida Holdings, Inc., a provider of venture capital services. In 2000 and 2001, he was Managing Director of Schroder Partners, the venture capital arm of the British asset management company, Schroders plc. From November 1998 to April 2000, he was President of the internet media group of CMGI, Inc., an Internet venture capital company. From 1993 to 1998, Mr. Cunningham was Group Publisher of Forbes, Inc., publishers of Forbes Magazine, where he was employed from 1980 to 1998. He also serves as a director of Ptek Holdings, Inc., a communications company.

      Robert J. Donato is Executive Vice President, Los Angeles Branch, of UBS Financial Services, Inc., where he has been employed since October 1997. From January 1997 through September 1997, he was the President of Freedom Advisors, Inc., an investment advisor company. Prior thereto, Mr. Donato held the position of Executive Vice President, Director of Regional Institutional Sales for PaineWebber, Incorporated. Mr. Donato previously served on the boards of directors of Countrywide Investments, Inc. (now IndyMac Bancorp, Inc.), Paine Webber Development Corp. and the Juvenile Diabetes Research Foundation. He currently serves on the Board of Visitors of the Graziadio Graduate School of Business and Management at Pepperdine University.

      Michael E. Dougherty is the founder and Chairman of Dougherty Financial Group LLC, which was formed in 1977. He also controls and operates several asset management, securities and commercial lending businesses, including Galway Bay Investments, Dougherty Management Company, Inc., Segall Bryant & Hamill, Lakeside Investment Partners LLC, The Clifton Group Investment Management Company, Turnstone, LLC, Turnstone Calhoun, LLC and Dougherty Funding LLC. Mr. Dougherty was the Chairman of Public Securities Association in 1991 and 1992, and he previously served on the board of directors of Treasury Bank, N.A., an indirect subsidiary of the Company. He currently serves as a director of Definity Health Corporation and as Chairman of Allina Hospitals and Clinics. Mr. Dougherty is also a trustee of the University of St. Thomas, St. Paul, Minnesota.

      Ben M. Enis is the founder and Chief Executive Officer of Enis Renewable Energy Systems, LLC. He is also a marketing consultant and Professor Emeritus of Marketing of the University of Southern California. He retired in 1998 as Professor of Marketing at the University of Southern California, a position he had held since 1982. Mr. Enis is also Chairman of Protection One Alarm Monitoring, Inc., a company that provides security alarm monitoring services for residential and small business subscribers.

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      Edwin Heller is an attorney and has been Of Counsel to the law firm of Fried, Frank, Harris, Shriver & Jacobson since October 1996. Prior thereto, Mr. Heller was a partner in that law firm for more than 35 years.

      Gwendolyn S. King has been President of Podium Prose, a speakers bureau and speechwriting service, since its founding in 2000. From 1992 to 1998, Ms. King was Senior Vice President of Corporate and Public Affairs for PECO Energy Company (formerly Philadelphia Electric Company), a diversified utility company. From 1989 to 1992, she served as the eleventh Commissioner of the Social Security Administration. From 1986 to 1988, Ms. King worked for The White House as Deputy Assistant to the President of the United States, Director of Intergovernmental Affairs. She currently serves as a member of the boards of directors of Lockheed Martin Corporation, Pharmacia Corporation, Monsanto Company, Marsh & McLennan Companies and the National Association of Corporate Directors. Ms. King also serves as a trustee of both the Council for Excellence in Government and the George Washington University Graduate School of Political Management, and she is an Advisory Director of the National Adoption Center.

      Stanford L. Kurland was elected to the office of President of the Company in January 2004 and has been the Chief Operating Officer of the Company since 1989. Mr. Kurland has served in a number of other executive positions at the Company, including Executive Managing Director from 2000 to 2003, Senior Managing Director from 1989 to 2000 and Chief Financial Officer from 1979 to 1989. Mr. Kurland is also the Chief Executive Officer, as well as a director, of the Company’s principal operating subsidiary, Countrywide Home Loans, Inc.

      Martin R. Melone is a recently retired partner of Ernst & Young, LLP, where he was responsible for global clients in a wide range of industries. Mr. Melone serves as a member of the boards of directors of Parsons E&C Corporation, the California Science Center Foundation and Public Counsel Law Center. Mr. Melone is also a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants.

      Oscar P. Robertson is the President and Chief Executive Officer of Orchem Corporation, a specialty chemical manufacturer he founded in 1981. He is also the President and Chief Executive Officer of Orpack-Stone Corporation, a corrugated box manufacturer, OR Document Management Services, LLC, a document management provider, and OR Group, Inc., a holding company. Mr. Robertson is also General Partner of Oscar Robertson Media Ventures, a media publications firm. Mr. Robertson serves on the National Advisory Board of the Salvation Army and the Board of Trustees of the Lupus Foundation of America, and he is an honorary spokesperson for the National Kidney Foundation. From 1960 to 1974, Mr. Robertson was a professional basketball player, and he was inducted into the National Basketball Hall of Fame in 1979.

      Keith P. Russell is the President of Russell Financial, Inc., a strategic and financial consulting firm. From 1996 to 2001, he was Chairman of Mellon West and, from 1991 to 1996, he was Vice-Chairman of Mellon Financial Corporation, where he established, expanded and oversaw Mellon’s significant West Coast operations. Prior to these positions, Mr. Russell served as Vice-Chairman and Chief Risk Officer of Mellon Bank Corporation and President and Chief Operating Officer of Glendale Federal Bank. Since August 2002, Mr. Russell has served on the board of directors of Treasury Bank, N.A., an indirect subsidiary of the Company. He is also a member of the boards of Nationwide Health Properties, Mellon West and the YMCA of Metropolitan Los Angeles. In addition, Mr. Russell serves on the Advisory Board of Forrest Binkley and Brown Capital Partners, a venture capital firm, and on the Board of Visitors of The Anderson School at UCLA.

      Harley W. Snyder has been the President of HSC, Inc., a real estate development company, since 1972, and President of S-W Corporation, a land development company, since 1978. Mr. Snyder, a consultant and private investor in real estate, is also currently a managing member of Parke & Assoc., LLC, a real estate development company, a managing partner of Reason Bell Properties, LLC, a commercial property management company, and a managing member of South Coast, LLC. From April 1997 to February 2000, he served as Senior Vice President, Real Estate, of Whiteco Industries, Inc., a company engaged in outdoor advertising, family entertainment, hotels and restaurants, land development and construction. Mr. Snyder was President of the National Association of Realtors in 1983 and has served as a director of that organization

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CORPORATE GOVERNANCE PRACTICES

      During the fiscal year ended December 31, 2003 (“Fiscal 12/31/03”), the Board continued to improve and strengthen its general corporate governance practices and to ensure the Company’s ongoing compliance with recent legislation. Among the many measures implemented during and subsequent to Fiscal 12/31/03, the Board amended the Company’s Code of Business Ethics and its Corporate Governance Guidelines, as well as the charters governing its Audit and Ethics Committee, Compensation Committee, Finance and Credit Committee, and Nominating and Governance Committee.

Board and Board Committee Independence

      Mr. Mozilo, the Company’s Chairman and Chief Executive Officer, and Mr. Kurland, the Company’s President and Chief Operating Officer, are the only Board members who also serve the Company in a management capacity. The Board has determined that each of the current Directors, except for Mr. Mozilo and Mr. Kurland, has no material relationship with the Company and is independent in accordance with the independence standards of both the New York Stock Exchange and Nasdaq, and within the meaning of the Company’s Categorical Board Independence Standards. Each of the Board’s committees is comprised entirely of independent directors. A copy of the Company’s Categorical Board Independence Standards is attached hereto as Appendix A.

Board Committee Charters

      Each of the Board’s committees has operated under its own written charter for many years. The Board recently amended the charters of the Audit and Ethics Committee, Compensation Committee, Finance and Credit Committee, and Nominating and Governance Committee in order, among other things, to reflect the requirements of the listing standards of the New York Stock Exchange and Nasdaq as well as certain current best practices in corporate governance. All committee charters are available on the Company’s website at www.countrywide.com and are available in print upon written request to the Company’s Secretary.

Code of Business Conduct

      The Company has adopted a Code of Business Conduct that applies to all of the Company’s employees, officers and directors, including its principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions. The Code of Business Conduct may be found on the Company’s website at www.countrywide.com and is available in print upon written request to the Company’s Secretary. The Company will disclose on its website if there are ever any amendments to its Code of Business Conduct or if any waivers to its Code of Business Conduct are granted to the principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions.

Corporate Governance Guidelines

      The Board is governed by Corporate Governance Guidelines, which are amended from time to time to incorporate certain current best practices in corporate governance. The Corporate Governance Guidelines may be found on the Company’s website at www.countrywide.com and are available in print upon written request to the Company’s Secretary. The Board’s corporate governance practices include the following:

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Audit and Ethics Committee

      The Audit and Ethics Committee currently consists of six members of the Board. The Board has determined that each member meets the independence requirements of applicable listing standards and Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit and Ethics Committee operates under a written charter adopted by the Company’s Board. The charter specifies the scope of the Audit and Ethics Committee’s responsibilities and how it is to carry out those responsibilities. A copy of the charter, as amended on March 10, 2004, is attached as Appendix B.

      The Board has determined that Audit and Ethics Committee members Martin R. Melone and Keith P. Russell are audit committee financial experts, as defined by Item 401 of Regulation S-K. Both of these Directors are independent. The Board has also determined that each of the Audit and Ethics Committee members is financially literate under applicable listing standards.

Compensation Committee Interlocks and Insider Participation

      During Fiscal 12/31/03, no member of the Compensation Committee was an officer or employee of the Company or any of its subsidiaries, nor was any member of the Compensation Committee formerly an officer of the Company or any of its subsidiaries. Also, during that fiscal year, no executive officer of the Company served (i) as a member of the compensation committee or board of directors of another entity, one of whose executive officers served on the Compensation Committee; or (ii) as a member of the compensation committee of another entity, one of whose executive officers served on the Board.

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NOMINATIONS PROCESS

      The Board has a Nominating and Governance Committee and has determined that each member of this Committee is independent and meets the independence requirements of applicable listing standards. The Nominating and Governance Committee operates under a written charter that is available on the Company’s website at www.countrywide.com and is available in print upon request.

Nomination of Directors

      Directors may be nominated by the Board or by stockholders in accordance with the Bylaws of the Company. As a matter of course, the Nominating and Governance Committee reviews the qualifications of potential nominees to determine whether they might make good candidates for consideration for membership on the Board. The Nominating and Governance Committee will review all proposed nominees for the Board, including those proposed by stockholders in accordance with its charter and the Company’s Corporate Governance Guidelines. This will include a review of the person’s judgment, experience, independence and understanding of the Company’s business and industry or other related industries, as well as any other factors the Nominating and Governance Committee determines are relevant to the needs of the Board and the Company. The Board believes that its nominees should reflect a diversity of experience, gender, race, ethnicity and age. The Nominating and Governance Committee will select qualified candidates and review its recommendations with the Board, which will decide whether to invite the candidate to be a nominee for election to the Board.

      The Company has not previously paid a fee to any third party to identify or assist in identifying or evaluating potential nominees.

      Except for Martin R. Melone, each nominee for election as a director is either an executive officer of the Company or is standing for reelection after being elected by the stockholders at the 2001 Annual Meeting of Stockholders. Mr. Melone was elected as a director by the Board on August 12, 2003.

      For a stockholder to submit a candidate for consideration by the Nominating and Governance Committee, a stockholder must notify the Company’s Secretary. In addition, the Company’s Bylaws permit a stockholder to nominate directors for election at a stockholder meeting, provided the stockholder notifies the Company’s Secretary not less than sixty days and not more than ninety days prior to the date scheduled for such meeting, except as otherwise set forth in the Company’s Bylaws. Notices should be sent to: Secretary, Countrywide Financial Corporation, 4500 Park Granada, MSN CH-11B, Calabasas, CA 91302. Whether submitting a candidate for consideration or nominating a director for election, in either case the stockholder must set forth the following information in the notice:

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Communicating with the Board

      Stockholders and interested parties may communicate directly with the members of the Board of Directors. All communications should be directed to the Company’s Secretary at: Secretary, Countrywide Financial Corporation, 4500 Park Granada, MSN CH-11B, Calabasas, CA 91302 and should prominently indicate on the outside of the envelope that it is intended for a member of the Board of Directors. Each communication intended for the Board and received by the Secretary will be promptly forwarded to the specified party following its clearance through normal security procedures. The communication will be opened for the purpose of ensuring that matters are handled timely and expeditiously.

Attendance by Members of the Board at the Annual Meeting of Stockholders

      The Company encourages each member of the Board to attend the annual meeting of stockholders. All directors other than Mr. Cisneros attended the 2003 Annual Meeting of Stockholders.

BOARD AND COMMITTEE MEETINGS

      During Fiscal 12/31/03, the Board held eleven meetings, six of which were telephonic. The Board maintains Audit and Ethics, Nominating and Governance, Compensation, Strategic Planning, Technology and Information Security, Finance and Credit, and Community Affairs and Fair Lending Committees, each of which holds separate committee meetings. The specific responsibilities of each committee are summarized below. Each Board member serving on committees is independent in accordance with the independence standards of both the New York Stock Exchange and Nasdaq, and each member attended 75% or more of the meetings held during Fiscal 12/31/03 by the Board and the committees on which he/she served.

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STOCK DIVIDENDS

      Please note that the Company paid stock dividends to its stockholders on December 17, 2003 and April 12, 2004. Except as otherwise expressly noted herein, for the purposes of consistency and clarity, all equity ownership information reported in this Proxy Statement, including numbers, amounts, prices and percentages, has been adjusted to give effect to both stock dividends, even to the extent such information is being reported as of an earlier date.

DIRECTOR COMPENSATION

Compensation of Directors

      Directors who are Company employees are not paid any fees for serving on the Board.

      Effective January 1, 2004, the Company modified the cash compensation paid to Non-employee Directors. The modifications were based upon the results of a review initiated by the Compensation Committee and performed by an independent outside compensation consultant. Each Non-employee Director receives an annual fee of $70,000 (payable quarterly in arrears for each month during which he/she serves as a director of the Company) for serving on the Board and any of its committees and is entitled to reimbursement for his/her expenses incurred in attending meetings of the Board and its committees. Each Non-employee Director also receives a fee of $1,500 for each Board meeting attended in person and $750 for each telephonic meeting attended. In addition, the Chairperson of each committee receives $7,500 per year for serving as Chairperson. Prior to January 1, 2004, each Non-employee Director’s cash compensation consisted of an annual fee of $58,500 and a fee of $950 per Board meeting attended in person, and each Chairperson received an additional annual fee of $5,000 for serving as Chairperson.

      As set forth in PROPOSAL TWO, the Company proposes to amend the Company’s 2000 Equity Incentive Plan to permit each Non-employee Director to become eligible to receive all types of equity awards authorized thereunder. If the stockholders approve PROPOSAL TWO, each director will receive, on an annual basis, shares of restricted stock (“Restricted Stock”) with an aggregate value equal to $220,000 (based on the fair market value at the time of grant). Restrictions on such Restricted Stock will lapse upon the earlier of (i) the business day immediately preceding the first anniversary of the grant, (ii) such director’s death or disability, (iii) a change in control of the Company, or (iv) the date such director becomes a Director Emeritus. Prior to January 1, 2004, each Non-employee Director was entitled to receive a non-discretionary stock option grant each year. The number of shares subject to the grant was determined pursuant to a formula based upon earnings per share as set forth in the applicable stock option plan. Pursuant to this formula, on April 1, 2003, each Non-employee Director received a stock option grant in respect of 35,036 shares of the Company’s Common Stock. This amount represented only 70% of the number of shares to which each such director was entitled. On June 11, 2003, the Board amended the Company’s 2000 Equity Incentive Plan to eliminate the formula and fix the number of shares subject to the non-discretionary stock option grant at 35,036, thereby eliminating any right the directors may have had with respect to the remaining 30% of the shares. The options become exercisable one year after the grant at an exercise price per share of $29.39, which was the average of the high and low sales prices of the Company’s Common Stock on the New York Stock Exchange on the date of grant. On November 12, 2003, the Company eliminated the non-discretionary stock option grant to Non-employee Directors in contemplation of its issuance of Restricted Stock to such directors. On March 19, 2003, the Company also granted 2,000 shares of Restricted Stock to each Non-employee Director serving at that time. These grants were based on the recommendation of the Compensation Committee pursuant to its discretionary authority under the Company’s 2000 Equity Incentive Plan. The shares of Restricted Stock underlying the grants are subject to transferability restrictions that lapse in approximately equal installments over a three year period.

      Prior to January 1, 2004, the Company maintained a plan whereby each Non-employee Director could elect to defer all or a part of his/her director’s fees until a predetermined date, and the Company agreed to credit interest on the amount deferred. Directors who were first elected to the Board on or after March 24, 1998 and who elected to participate in this plan have interest credited to their respective deferred fees at a rate

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      The Company now maintains a plan, effective as of January 1, 2004, whereby each Non-employee Director may elect to defer all or part of his/her director’s fees and Restricted Stock to a predetermined date in the form of cash, stock units and/or restricted stock units. Fees deferred as cash are credited with interest at a rate equal to the Moody’s Seasoned Corporate Bond Index. Directors’ fees and Restricted Stock deferred as stock units and restricted stock units earn dividend equivalents, which are paid in the form of additional stock units and restricted stock units, at the same time and in the same amount as dividends are paid on the Company’s Common Stock. Under this plan, in respect of the fiscal year ending December 31, 2004, Messrs. Donato and Robertson have elected to defer directors’ fees, Messrs. Heller and Snyder have elected to defer Restricted Stock, and Mr. Dougherty and Ms. King have elected to defer directors’ fees and Restricted Stock.

      Each director who is not an employee of the Company may elect to participate in the Company’s group health plans consisting of medical and dental benefits (the “Health Plans”). Messrs. Cisneros, Cunningham, Donato, Russell and Enis participate in the Health Plans. The annual cost to the Company for each participating director, net of premium payments made by the director, is $10,420.56 $6,691.32, $7,199.52, $7,199.52 and $7,199.52, respectively.

      Each director may participate in the Company’s Charitable Award Program (“CAP”), which is designed to recognize the value in supporting worthy, qualified charities and to enhance the Company’s ability to attract and retain directors with outstanding experience and ability. After having served five years as a director of the Company, and upon the earlier of (i) the tenth anniversary of the director’s retirement or (ii) the director’s death, the Company may contribute to a qualified charity selected by such director and approved by the Company $1,000,000 on behalf of such director and $2,000,000 on behalf of the Chairman and Founder, Angelo Mozilo, over a ten-year period. The CAP is funded by life insurance policies on directors, and the program will not result in a material cost to the Company. Directors derive no direct financial benefit from the CAP since all charitable deductions accrue solely to the Company. The Company may terminate the CAP at any time.

Director Emeritus

      Under its Director Emeritus Plan, the Company maintains the position of Director Emeritus for Non-employee Directors who have retired from the Board after a minimum of three years of service. Each such individual who agrees to provide up to five hours per month of advisory and consulting services to the Company and its subsidiaries, as the Board may determine, and to attend meetings as requested by the Board, may serve as Director Emeritus for life. Further, each Director Emeritus is required to refrain from entering into an employment or consulting agreement with, or from supplying any information or materials to, any competitor of the Company or its subsidiaries throughout his or her term.

      The Company’s Director Emeritus Plan further provides that (i) the stock options granted to the Director Emeritus during his or her tenure as a director continue to vest as provided under the Company’s applicable stock option plans; (ii) the shares of Restricted Stock granted to a Director Emeritus during his or her tenure as a director automatically vest upon such director becoming a Director Emeritus; and (iii) a Director Emeritus, who, upon request by the Board, attends a Board meeting, is entitled to a payment in an

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      Prior to August 2000, each Director Emeritus received compensation paid on a monthly basis for the life of the individual in an amount based on the number of years of service as a director and the amount of director’s fees paid to him during the last month of service as a director prior to his retirement. In August 2000, the Board adopted a resolution discontinuing payment of this monthly compensation to any person who becomes a Director Emeritus following the date of the adoption of the resolution. The Company, however, continues to make such payments in the amount of $2,246 per month to Jack L. Bruckner, who retired from the Board in July 1994, prior to the adoption of the resolution.

EXECUTIVE OFFICERS

      The executive officers of the Company, as of the date of this Proxy Statement, selected at the annual organizational meeting of the Board of Directors held on June 11, 2003, or subsequently appointed, to serve at the pleasure of the Board of Directors, are as follows:

      Angelo R. Mozilo, a co-founder of the Company, has served the Company as its Chairman of the Board since March 1999 and its Chief Executive Officer since February 1998. Mr. Mozilo was President of the Company from March 2000 through December 2003 and served as Vice Chairman of the Board and Executive Vice President from the Company’s formation in March 1969 through March 1999.

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      Stanford L. Kurland joined the Company as a Senior Vice President in 1979. He served the Company in various executive capacities until July 2000, when he was appointed Executive Managing Director and Chief Operating Officer. Mr. Kurland was promoted to President and Chief Operating Officer in January 2004. In addition, he has served on the Board of Directors of the Company since September 1999.

      Carlos M. Garcia joined the Company as Vice President, Finance and Chief Accounting Officer in 1984 and was promoted to Managing Director in 1990. Mr. Garcia has served the Company in several executive positions, including Chief Financial Officer, and he currently holds the title of Executive Managing Director, Chief of Banking and Insurance Operations.

      Thomas Keith McLaughlin joined the Company in 1986 as a Financial Analyst and later was promoted to the position of Vice President and Treasurer. After serving in several other executive positions at the Company, Mr. McLaughlin now holds the title of Executive Managing Director and Chief Financial Officer.

      David Sambol joined the Company in 1985 and became a Managing Director in July 1994. He has served the Company in a number of executive positions, including Senior Managing Director and Chief of Production. In January 2004, Mr. Sambol was elected Executive Managing Director and Chief of Mortgage Banking and Capital Markets. Mr. Sambol is also the President and Chief Operating Officer of the Company’s principal operating subsidiary, Countrywide Home Loans, Inc.

      Thomas H. Boone joined the Company as a Vice President in 1984 and became a Managing Director in 1988. Since joining the Company, his executive positions have included head of loan administration and portfolio services and Chief of Global Processing. Mr. Boone has held the title of Senior Managing Director and Chief Administrative Officer since May 2003.

      Richard DeLeo joined the Company in 1982 and served in several executive positions before being promoted to Managing Director of Loan Administration in August 1996. He has held the title of Senior Managing Director, Loan Administration since May 2003.

      Andrew Gissinger originally joined the Company in 1995 as Senior Vice President, Correspondent Lending Division, and left in 1997. After returning to the Company in January 2001, he served in a number of executive positions before being promoted to Managing Director and President of Balboa Insurance Group. He currently holds the title of Senior Managing Director, Banking and Insurance Operations.

      Nicholas Krsnich originally joined the Company in 1995 as Senior Vice President, Trader, and was promoted to Managing Director and Chief Investment Officer before leaving the Company in June 1999. He returned to the Company in July 2000 and, in January 2004, he was elected Senior Managing Director and Chief Investment Officer.

      Anne D. McCallion joined the Company in 1991 and has served in a number of executive positions. Ms. McCallion was promoted to Managing Director in September 1997 and, in May 2003, she was elected Senior Managing Director, Corporate Operations. She currently holds the title of Senior Managing Director, Finance.

      Sandor E. Samuels joined the Company in 1990 as Senior Vice President, General Counsel and Secretary. He was promoted to Managing Director, Legal, General Counsel and Secretary in May 1991. He currently holds the title of Senior Managing Director and Chief Legal Officer.

      Eric P. Sieracki joined the Company in 1988 as Senior Vice President of Countrywide Asset Management Corporation. In 1994, after holding several executive positions at the Company, he was promoted to Managing Director. Mr. Sieracki currently holds the title of Senior Managing Director, Investor Relations and Corporate Development.

      Jeffrey K. Speakes joined the Company in 1992 and was promoted to Managing Director in August 1996. He has served the Company in a number of executive positions and currently holds the title of Senior Managing Director and Chief Economist.

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      David Spector joined the Company in 1990 and, after serving in a number of executive positions, he was promoted to Managing Director in 2001. In January 2004, Mr. Spector was promoted to Senior Managing Director, Secondary Marketing.

      Laura K. Milleman joined the Company in 1989 as Budget Director. Having served in a number of executive positions, Ms. Milleman was appointed Executive Vice President and Chief Accounting Officer in July 1999. In June 2002, Ms. Milleman was promoted to Managing Director and Chief Accounting Officer.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Stockholders

      The following table shows, with respect to each person or entity known to the Company to be the beneficial owner of more than 5% of the Company’s Common Stock as of December 31, 2003, (i) the number of shares of Common Stock so owned and (ii) the percentage of all shares outstanding represented by such ownership (based upon the number of shares outstanding as of December 31, 2003).

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Stock Ownership of Management

      The following information sets forth the number of shares of the Company’s Common Stock beneficially owned as of January 31, 2004 by each of the Company’s directors, including the nominees for election as directors, the Company’s Chief Executive Officer and the four other most highly compensated executive officers (the “named executive officers”) and all directors and executive officers as a group.

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Equity Compensation Plan Information

      The following table shows aggregate information as of December 31, 2003 with respect to compensation plans under which equity securities of the Company are authorized for issuance.

EXECUTIVE COMPENSATION

      The following table sets forth the compensation paid by the Company and its subsidiaries to the named executive officers of the Company for all services in all capacities in respect of the years indicated.

Summary Compensation Table

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      The following table sets forth information on the stock options granted to the named executive officers in Fiscal 12/31/03.

Stock Option Grants in Fiscal 12/31/03

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      The following table sets forth information on stock option exercises by named executive officers during Fiscal 12/31/03 and outstanding options and their value at December 31, 2003. Value is calculated as the excess of the fair market value of the Common Stock over the exercise price of the options at the exercise date or December 31, 2003, as applicable.

Option Exercises and Fiscal 12/31/03 Option Values

Pension Plan

      The following table illustrates annual pension benefits under the Company’s Defined Benefit Pension Plan (the “Pension Plan”), assuming the participants retired in 2003 at age 65, payable in the form of a life annuity under various levels of base compensation and years of credited service. The pension benefits in the table are not subject to deduction for Social Security or other offset amounts.

Pension Plan Table

      The compensation used for Pension Plan purposes is the amount shown in the Salary column of the Summary Compensation Table, subject to the $200,000 limitation under the Tax Code. Benefits are 100% vested after five years of service. Certain provisions in the Pension Plan become effective upon a Change in Control (as defined in the Pension Plan). These provisions prevent the Pension Plan from being amended in a way that would negatively impact participants and allow a participant to become fully vested if terminated for reasons other than Cause (as defined in the Pension Plan) within two years following a Change in Control. The years of credited service under the Pension Plan for the named executive officers are: Angelo R. Mozilo, 35; Stanford L. Kurland, 24; David Sambol, 18; Carlos M. Garcia, 19; and Andrew Gissinger, 5.

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      The Company has adopted a Supplemental Executive Retirement Plan (the “SERP”), effective in the fiscal year ended February 28, 1995. The SERP provides certain executives with retirement income equal to 70% of their average annual salary, such average annual salary to be determined by averaging the five highest salaried years out of the ten years preceding retirement. In January 1999, the Compensation Committee approved an amendment to reduce the maximum benefit amount to 33.3% of such average annual salary for new participants. Benefits under the SERP are paid for fifteen years and are reduced by benefits the participant receives from (i) payments under the Pension Plan; (ii) the Company’s contributions to the participant’s deferred compensation account; and (iii) pensions of a defined benefit nature from other employers. The estimated annual benefit under the SERP for Messrs. Kurland, Sambol, Garcia and Gissinger (assuming retirement at age 65 and based on the five-year average salary of each as of December 31, 2003) would be $506,700, $761,349, $410,523 and $0, respectively.

      The SERP provides for a lump sum payment to a participant, including a named executive officer, in the event of such participant’s death or a change in control. The lump sum payment, the amount of which is to be determined as a present value in accordance with the provisions of the SERP, is to be made within 60 days after the change in control or receipt by the Compensation Committee of notice of the participant’s death, as the case may be.

      As part of Mr. Mozilo’s employment agreement with the Company, the Company agreed to provide Mr. Mozilo an enhanced retirement benefit under the SERP (the “SERP Agreement”). See “EXECUTIVE COMPENSATION — Employment Agreements” and “COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.” The SERP Agreement is generally governed by the terms of the SERP, with certain exceptions as set forth herein. In all cases other than following termination of Mr. Mozilo’s employment by the Company for cause, the SERP Agreement is designed to provide Mr. Mozilo with annual retirement income equal to 60% of the average of the three fiscal years in which he earns the highest combined annual base salary and annual bonus during the ten fiscal years preceding his termination of employment with the Company. Benefits under the SERP Agreement cannot exceed an amount equal to $3,000,000 per year less the offsets described above in the discussion of the SERP. In the event that Mr. Mozilo’s employment is terminated for cause, he will not be entitled to benefits under the SERP Agreement and his benefit will be governed by the terms of the SERP. The estimated annual benefit under the SERP Agreement for Mr. Mozilo (assuming retirement at age 67, base salary at the levels provided under his employment agreement and continuation of bonuses at the current level) will be $2,171,358.

Employment Agreements

      The Company has entered into employment agreements with Messrs. Mozilo, Kurland, Sambol, Garcia and Gissinger that provide for certain compensation, death, disability and termination benefits.

      Effective as of March 1, 2001, the Company entered into an employment agreement with Mr. Mozilo (the “Mozilo Agreement”). The annual cash bonus provisions of the Mozilo Agreement were amended and approved by the Company’s stockholders at the 2002 annual meeting.

      The Mozilo Agreement provides for a fixed employment term commencing as of March 1, 2001 and ending on February 28, 2006, unless earlier terminated in accordance with its terms. Pursuant to the Mozilo Agreement, Mr. Mozilo received a base salary at the annual rate of $2,300,000 in Fiscal 12/31/03. Each year, Mr. Mozilo’s base salary rate is to be increased by an amount not less than $200,000, as determined by the Compensation Committee. The Mozilo Agreement currently provides for additional incentive compensation in each year during the term thereof in the form of an annual cash bonus pursuant to a formula that multiplies the previous bonus by the ratio of the current year’s earnings per share over those of the year in which such previous bonus was paid. Mr. Mozilo is also entitled to an option to purchase not fewer than 700,001 shares of the Company’s Common Stock, as determined by the Compensation Committee. The Mozilo Agreement provides that all options granted to Mr. Mozilo pursuant to its terms shall vest in full in the event of a change in control or termination of Mr. Mozilo’s employment by reason of death or disability or by Mr. Mozilo for Good Reason (as such term is defined in the Mozilo Agreement) or by the Company without cause. The Mozilo Agreement further provides that, following the events triggering accelerated vesting thereunder or

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      Upon expiration of the term of the Mozilo Agreement, or Mr. Mozilo’s earlier termination by the Company without cause or by Mr. Mozilo for Good Reason, the Mozilo Agreement provides that Mr. Mozilo will enter into a five year agreement for services (the “services agreement”) with the Company that, during its term, shall provide to Mr. Mozilo payment of an annual fee of $400,000, office space, secretarial support, use of a private plane for Company business purposes for up to 100 hours per year, the continuation of financial planning services and payment of Mr. Mozilo’s country club dues. Mr. Mozilo has agreed to serve as a director of the Company during the term of the services agreement and prior to a change in control. Mr. Mozilo may terminate the services agreement following a change in control or failure by the Company to honor its obligations thereunder. All options granted to Mr. Mozilo pursuant to the terms of the Mozilo Agreement shall vest in full in the event of a change in control or by reason of his death or disability during the term of the services agreement or upon termination of the services agreement by Mr. Mozilo by reason of the Company’s failure to honor its obligations thereunder. If Mr. Mozilo terminates the services agreement by reason of the Company’s failure to honor its obligations thereunder, in addition to the acceleration of his options, Mr. Mozilo shall immediately become entitled to the full amount of the fees and the fair market value of the benefits (other than the use of the private plane) that otherwise would have been provided during the remainder of the five year term.

      The Company’s employment agreements with Stanford L. Kurland, President and Chief Operating Officer (the “Kurland Agreement”), and David Sambol, Executive Managing Director and Chief of Mortgage Banking and Capital Markets (the “Sambol Agreement”), became effective March 1, 2003 and provide for services through December 31, 2008.

      Pursuant to the Kurland Agreement and the Sambol Agreement, Mr. Kurland and Mr. Sambol received base salaries in Fiscal 12/31/03 at the annual rates of $1,140,000 and $750,000, respectively, commencing as of March 1, 2003. In each fiscal year thereafter during the terms of the Kurland Agreement and the Sambol Agreement, the base salaries of Mr. Kurland and Mr. Sambol are to be increased by an amount determined by the Compensation Committee based on the recommendation of Mr. Mozilo or the then current Chairman of the Company, in the case of Mr. Kurland, or the then current Chief Executive Officer or Chief Operating Officer, in the case of Mr. Sambol. Base salary that would not be deductible to the Company will be deferred until such time as Mr. Kurland or Mr. Sambol, as the case may be, is no longer employed by the Company. The Kurland Agreement and Sambol Agreement currently provide for base salaries at annual rates of $1,390,000 and $900,000, respectively, to reflect Mr. Kurland’s promotion to President of the Company and Mr. Sambol’s promotion to President of Countrywide Home Loans, Inc. The Kurland Agreement and the Sambol Agreement provide for incentive compensation for each fiscal year ending during the term thereof in the form of an annual cash bonus as determined in accordance with the Annual Incentive Plan, which was re-approved by the Company’s stockholders at the 2001 annual meeting and amended with stockholder approval at the 2003 annual meeting. See “EXECUTIVE COMPENSATION — Annual Incentive Plan.” In addition, the Kurland Agreement and the Sambol Agreement provide for additional incentive compensation in the form of grants of stock options, Restricted Stock or such other form as the Compensation Committee determines in respect of each fiscal year during the terms thereof. Such additional compensation for each executive takes into account the performance of such executive and the Company for the relevant fiscal year and the competitive practices then prevailing in order to position the total compensation of each executive at approximately the 75th percentile of comparable positions within comparable companies. The Kurland Agreement and the Sambol Agreement each provides that all options granted to Mr. Kurland and Mr. Sambol, respectively, shall vest in full in the event of a change in control or termination of the respective officer’s employment by reason of death or disability.

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      The Mozilo Agreement, the Kurland Agreement and the Sambol Agreement each provides that following a change in control, where the Company terminates the officer’s employment without cause or the officer terminates his employment for Good Reason (including a termination for any reason within two years after a change in control in the case of Mr. Mozilo or a termination for any reason after a change in control during the term of the Kurland Agreement or the Sambol Agreement in the case of Mr. Kurland or Mr. Sambol, as applicable), the officer shall receive a cash severance payment in lieu of any further salary and cash incentive compensation for periods subsequent to such termination equal to three times the sum of (i) the officer’s annual base salary as of the date of such termination and (ii) the greater of (x) the average of the officer’s aggregate bonus and/or cash incentive award for each of the two fiscal years preceding the fiscal year of such termination and (y) the bonus and/or incentive award paid to the officer for the fiscal year immediately preceding the date of the change in control. The Company is also required to afford the officer and each of his dependents and beneficiaries, for a period of up to three years, certain other benefits provided to the officer and such other persons prior to the officer’s termination.

      The Company entered into employment agreements with Executive Managing Director Carlos M. Garcia and Senior Managing Director Andrew Gissinger, effective as of March 1, 2003 and January 23, 2001, respectively (the “Executive Agreements”). The Executive Agreements provide for the services of each individual through December 31, 2005 in the case of Mr. Garcia and February 29, 2004 in the case of Mr. Gissinger. Pursuant to the Executive Agreements, Mr. Garcia and Mr. Gissinger received base salaries in Fiscal 12/31/03 at annual rates of $575,000 and $375,000, respectively. In addition, the Executive Agreements provide for incentive compensation, in respect of each fiscal year ending during the term thereof, in the form of an annual cash bonus as determined in accordance with a bonus plan approved by the Compensation Committee. The Executive Agreements also provide for additional incentive compensation in respect of each fiscal year in the form of stock options, Restricted Stock or such other form of compensation as the Compensation Committee shall determine, taking into account the individual performance of Mr. Garcia and Mr. Gissinger, as applicable, for the relevant fiscal year and the competitive practices then prevailing.

      Each of the Executive Agreements provides for a severance payment in the event the officer is terminated following a change in control (as defined in each of the agreements) in an amount equal to three times the sum of (i) the officer’s annual base salary as of the date of such termination and (ii) the total amount of cash incentive compensation in respect of the fiscal year immediately preceding the termination date (as defined in each of the agreements). In addition, all stock options held by the officer on the termination date shall become immediately exercisable and the Company shall continue to provide certain benefits for three years following the termination date.

      The Kurland Agreement, the Sambol Agreement and each Executive Agreement provide that, in the event of the respective officer’s termination by the Company without cause, such officer shall continue to receive his annual base salary and benefits in effect at the date of termination until twenty-four months from the date of termination or December 31, 2005, whichever is later (the “Severance Period”) and receive (i) in respect of each fiscal year ending during the Severance Period, an amount equal to the cash incentive compensation paid or payable to the officer for the fiscal year immediately preceding the fiscal year in which the termination date occurs (the “Bonus Rate”), plus (ii) in respect of any portion of the Severance Period ending on a day other than the last day of a fiscal year, the Bonus Rate calculated on a pro rata basis. The Kurland Agreement and Sambol Agreement further provide that, upon a termination without cause, all stock options and other equity incentive compensation held by each officer shall vest upon such termination.

      The Mozilo Agreement, the Kurland Agreement, the Sambol Agreement and the Executive Agreements provide that, in the event of disability, the officer shall receive annual compensation in an amount equal to (i) 50% of the officer’s then current salary, minus (ii) the amount of any cash payments to the officer under the terms of the Company’s disability insurance or other disability benefit plans, the Company’s Pension Plan, the SERP and, in the case of Mr. Mozilo, the SERP Agreement, and any compensation the officer may receive pursuant to any other employment. These payments are to be made until the earlier of the officer’s death or five years from the date of the disability. The Company is also required to afford the officer and each of his dependents and beneficiaries during the disability period certain other benefits provided to the officer and such other persons immediately prior to the officer’s disability. Under each of these agreements, in the

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      The Mozilo Agreement, the Kurland Agreement, the Sambol Agreement and each Executive Agreement further provide the respective officer with a gross-up payment intended to make the officer whole, on an after-tax basis, for any payments made thereunder that become subject to excise taxes that may be payable in the event of a change in control. These agreements also provide for certain benefits in the event of termination without cause or if the officer terminates his employment under specified conditions.

Annual Incentive Plan

      The Company has in place an Annual Incentive Plan that was re-approved by the Company’s stockholders at the 2001 annual meeting and amended with stockholder approval at the 2003 annual meeting. The purposes of the Annual Incentive Plan are to promote the profitability of the Company, provide officers an opportunity to receive incentive compensation based upon that profitability and to attract, retain and motivate such individuals. Executive officers of the Company selected by the Compensation Committee of the Board are eligible for awards under the Annual Incentive Plan. During Fiscal 12/31/03, Mr. Kurland and Mr. Sambol were the only executive officers participating in the Annual Incentive Plan.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

      The Compensation Committee is made up entirely of “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act and “outside directors” within the meaning of section 162(m) of the Tax Code. In addition, each director is independent of the Company and its management under the New York Stock Exchange and Nasdaq listing standards.

Compensation Philosophy and Objectives

      The Compensation Committee oversees the Company’s overall compensation structure, policies and programs and the incentives established for management and other employees. The Company’s executive compensation programs are designed to reward employees who make a significant contribution to the success of the Company’s business objectives. It is the belief of the Compensation Committee that these objectives can be best supported by attracting, retaining and motivating high-caliber executives. Paying for performance by linking compensation to achievement of established goals and objectives fosters profitable growth and increases stockholder value.

      The Company’s compensation programs consist of three main components: (i) base salary; (ii) cash incentive compensation; and (iii) equity compensation. Base salary is established based upon individual performance, promotions and competitive compensation levels. Cash incentive compensation is a potential cash award based on the Company’s overall performance, the employee’s individual performance and, in some cases, individual business unit performance. Equity compensation, consisting of stock options, restricted stock, restricted stock units and/or stock units, is designed to provide a significant incentive to contribute to the long-term growth of the Company from the perspective of an owner with an equity stake in the business. It is the intention of the Compensation Committee to pay senior executives at or near the highest quartile as compared to other leading diversified financial services companies in order to ensure the continued retention and best efforts of superior quality people.

      To assist it in assessing the competitiveness and efficacy of the Company’s executive compensation arrangements, the Compensation Committee works with an independent compensation consultant. The independent consultant reports only to the Compensation Committee.

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Compensation of the Chairman and Chief Executive Officer

      The Compensation Committee believes that Mr. Mozilo, as a co-founder and the Chairman and Chief Executive Officer of the Company, has played and continues to play a material and unique role in the development, growth and unparalleled success of the Company. In light of Mr. Mozilo’s importance to the success and well-being of the Company, the Compensation Committee considered it to be in the best interest of the Company to enter into a fixed-term employment contract with Mr. Mozilo and to secure his continued services through a post-retirement services agreement. The Mozilo Agreement provides for a fixed employment term that commenced on March 1, 2001 and ends on February 28, 2006, unless earlier terminated. The Mozilo Agreement was developed by the Compensation Committee after analysis of salary and incentive compensation paid to top executives across a wide range of organizations, including financial, industrial and service companies, as well as key mortgage banking related organizations. The Compensation Committee was assisted in its development of the Mozilo Agreement by a compensation consulting firm, Mercer Human Resources Consulting (“Mercer”), which advised the Committee that the compensation arrangements for Mr. Mozilo are reasonable. For a description of the terms of the Mozilo Agreement, see “EXECUTIVE COMPENSATION — Employment Agreements” and “EXECUTIVE COMPENSATION — Pension Plan.”

      In setting Mr. Mozilo’s base salary in respect of Fiscal 12/31/03, the Compensation Committee considered the Company’s financial performance, successful diversification, the compensation of other chief executive officers in the industry and Mr. Mozilo’s individual performance and contribution to the continuing success and increased value of the Company.

      The cash bonus payable to Mr. Mozilo under the terms of the Mozilo Agreement is determined based on a formula that multiplies the previous bonus by the ratio of the current year’s earnings per share over the earnings per share in the year in which such previous bonus was paid. The cash bonus paid to Mr. Mozilo in respect of Fiscal 12/31/03 reflected the record financial performance of the Company during the year. In Fiscal 12/31/03, the Company experienced significant earnings per share growth, earning $8.32 per share, or more than two and one-half times the Company’s earnings per share in Fiscal 12/31/02. The Company also achieved a record level in Fiscal 12/31/03 for net earnings, which were approximately $2.4 billion and nearly three times the net earnings in Fiscal 12/31/02. In addition, total return to stockholders in respect of Fiscal 12/31/03 was 97%, substantially exceeding that for the S&P 500 and S&P Financial indices.

      In Fiscal 12/31/03, the Compensation Committee also granted Mr. Mozilo stock options and Restricted Stock. The grant levels were based on the terms of Mr. Mozilo’s employment agreement and the Compensation Committee’s consideration of the same factors it considered in setting Mr. Mozilo’s base salary. Such factors, including the superior financial performance of the Company during Fiscal 12/31/03, are described in more detail above.

Compensation of Other Executives

      With respect to the compensation of other key executives, the Compensation Committee has historically entered into employment agreements that are consistent with the Compensation Committee’s philosophy and objectives. Base salaries for key executives are generally determined with reference to market data for comparable positions at comparable companies, the experience level and performance of the individual executive and the recommendations of senior management. The Compensation Committee also considers the performance of the executive officer in his or her particular area of responsibility, his or her contribution to the Company as a whole, as well as the anticipated future contributions the executive officer is expected to make to the Company. In the case of the employment agreement for Mr. Kurland, the Compensation Committee also obtained the advice and recommendations of Mercer.

      The cash incentive or bonus compensation payable to Mr. Kurland and Mr. Sambol is based upon the executives’ performance under the Company’s Annual Incentive Plan. The purposes of the Annual Incentive Plan are to promote the profitability of the Company, to provide officers with an opportunity to receive incentive compensation based upon that profitability and to attract, retain and motivate such individuals. The Annual Incentive Plan has also been designed to preserve the tax deductibility of payments made pursuant to

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      Cash incentive compensation payable to other key executive officers is based upon the individual executive’s performance with respect to overall Company financial targets, including criteria similar to that contained in the Annual Incentive Plan described above. In addition, the Compensation Committee approves performance objectives for each executive that are specifically tailored to provide an incentive to the person to meet goals applicable to his or her business unit or area of expertise, such as product expansion and/or market share targets.

      The Compensation Committee oversees the determination of the overall number of employee stock options and Restricted Stock (collectively, “Equity Awards”) to be granted each year and how those Equity Awards are to be distributed among the employees. The equity compensation component payable to key executives is approved by the Compensation Committee with a view to providing an incentive to executive officers to improve the long-term performance of the Company. The specific levels of stock option and/or restricted stock grants are based upon the executive’s performance, the Company’s performance and the Company’s strategy to compensate senior executives at or near the highest quartile for comparable positions at comparable companies.

      For further information in respect of the salary, incentive, long term and other compensation payable to the Chief Executive Officer and other named executive officers, see the tables following “EXECUTIVE COMPENSATION”.

Deductibility of Compensation

      Section 162(m) of the Tax Code limits the corporate deduction for compensation paid to named executive officers to $1 million unless such compensation qualifies as “performance-based compensation.” It is the policy of the Compensation Committee to develop compensation plans that provide for the payment of compensation that is tax deductible to the Company, while recognizing that the legitimate interests of the Company and its stockholders may at times be better served by compensation arrangements that are not deductible.

      It is intended that the incentive compensation arrangements for Messrs. Mozilo, Kurland and Sambol qualify as “performance-based compensation.” The Compensation Committee recognizes that payments of base salary to Mr. Mozilo will not be deductible to the extent they exceed $1 million. The Compensation Committee requested, and Mr. Mozilo agreed, that Mr. Mozilo’s base salary exceeding $1 million would not be paid until such time as it can be deductible to the Company. With respect to Mr. Kurland and Mr. Sambol, base salary in excess of $1 million that would not be deductible to the Company will be deferred until such time as Mr. Kurland or Mr. Sambol, as the case may be, is no longer employed by the Company. In addition, the Company’s equity incentive plans, as previously approved by stockholders, meet the requirements for deductibility to the extent that stock options are granted thereunder.

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AUDIT AND ETHICS COMMITTEE REPORT

      The following Audit and Ethics Committee Report does not constitute soliciting material and should not be deemed filed with the SEC or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates such report by reference therein.

      The Audit and Ethics Committee has reviewed and discussed the Company’s audited financial statements for Fiscal 12/31/03 with management and with Grant Thornton LLP (“Grant Thornton”), the Company’s independent auditor in respect of Fiscal 12/31/03. The Audit and Ethics Committee also has discussed with Grant Thornton the matters required to be discussed by Statement on Auditing Standards No. 61 (Codification of Statements on Auditing Standards). In addition, the Audit and Ethics Committee has received from Grant Thornton the written disclosures and letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with Grant Thornton its independence from the Company.

      Based on the review and discussions referred to above, the Audit and Ethics Committee recommended to the Board that audited financial statements for Fiscal 12/31/03 be included in the Company’s Annual Report on Form 10-K for the same period to be filed with the SEC.

PRINCIPAL AUDITOR FEES AND SERVICES

      Grant Thornton was the Company’s independent auditor in respect of Fiscal 12/31/03. As discussed below, the Audit and Ethics Committee engaged KPMG LLP (“KPMG”) as the Company’s independent auditor for the fiscal year commencing January 1, 2004.

Grant Thornton Fees

      The following table shows the fees billed by Grant Thornton for the audit and other services provided by Grant Thornton to the Company in respect of Fiscal 12/31/03 and Fiscal 12/31/02.

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      The Audit and Ethics Committee approved all non-audit services performed by Grant Thornton during Fiscal 12/31/03 in accordance with applicable requirements. Before the Company’s independent auditor is engaged to provide any audit or non-audit services, the engagement must be reviewed and specifically approved by the Audit and Ethics Committee. The Audit and Ethics Committee does not currently use any pre-approval policies or procedures that would permit such engagements to begin without the specific approval of the Committee.

      Representatives of Grant Thornton and KPMG will be present at the Meeting. Each of these representatives will have an opportunity to make a statement, if he or she wishes to do so, and will be available to respond to appropriate questions.

Change of Auditors for 2004

      During Fiscal 12/31/03, the Audit and Ethics Committee reviewed the proposed scope and fees of a number of alternative auditing firms qualified to perform the Company’s independent audit work and considered the appropriateness of either retaining the incumbent auditor or engaging another firm. After a review of proposals for audit services from several public accountants, the Audit and Ethics Committee determined to engage KPMG as the Company’s principal independent auditor for the fiscal year commencing January 1, 2004. The engagement of KPMG was based upon a comprehensive review of audit firms and their capabilities, qualifications and expertise relative to the Company’s current and anticipated needs, and was not the result of any disagreement between the Company and Grant Thornton LLP (“Grant Thornton”), the Company’s previous independent auditor, on any matter of accounting principles or practices, financial statement disclosure or auditing scope and procedures.

      On January 5, 2004, the Audit and Ethics Committee engaged KPMG as the Company’s new independent auditor and informed Grant Thornton of its decision. This action effectively dismissed Grant Thornton as the Company’s independent auditor for the fiscal year commencing January 1, 2004. Grant Thornton continued as the Company’s independent auditor in respect of Fiscal 12/31/03.

      The reports of Grant Thornton on the Company’s financial statements as of and in respect of Fiscal 12/31/03 and Fiscal 12/31/02 did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles.

      In connection with its audits of the Company’s financial statements in respect of Fiscal 12/31/03 and Fiscal 12/31/02 and through February 27, 2004, the date on which Grant Thornton issued its reports as to the Company’s financial statements in respect of Fiscal 12/31/03, there were no disagreements with Grant Thornton on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Grant Thornton, would have caused it to make reference thereto in its report on the Company’s financial statements as of and in respect of Fiscal 12/31/03 and Fiscal 12/31/02.

      During Fiscal 12/31/03 and Fiscal 12/31/02 and through February 27, 2004, there have been no reportable events (as defined in Regulation S-K Item 304(a)(1)(v)).

      Except as set forth below, during Fiscal 12/31/03 and Fiscal 12/31/02 and the subsequent interim period prior to engaging KPMG, the Company did not consult with KPMG regarding the application of accounting principles to a specific transaction, either proposed or completed, or the type of audit opinion that might be rendered on the Company’s financial statements, or any other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.

      On June 3, 2002, the Company engaged KPMG to assist Balboa Insurance Company (“Balboa”), a subsidiary of the Company, in evaluating accounting principles relating to two specific contracts. KPMG concurred with Balboa’s accounting treatment for these two contracts in a letter dated November 8, 2002, a

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      In addition, during the proposal process, KPMG discussed with management the Company’s classification in its income statement of certain loan origination costs. KPMG informed the Company that they believed this discussion was an important factor considered by the Company in determining that it would reclassify applicable loan origination costs against gains on the sales of mortgage loans in its financial statements for Fiscal 12/31/03. The Company has consulted its current independent auditor, Grant Thornton, with respect to such reclassification and has been informed that there is concurrence with management’s position.

      The Company requested and received from Grant Thornton and KPMG letters addressed to the SEC stating that they agreed with the foregoing statements. Copies of the letters were filed as Exhibits 16.1 and 16.2 to the related Current Report on Form 8-K filed with the SEC on January 12, 2004. The Company also requested and received a follow-up letter from Grant Thornton following the completion of the audit, and such letter was filed as Exhibit 16.1 to a Current Report on Form 8-K filed with the SEC on March 23, 2004. In addition, the Company provided Grant Thornton and KPMG a copy of this Proxy Statement prior to its filing with the SEC.

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PERFORMANCE GRAPH

      The comparison of total return on investment (change in year end stock price plus reinvested dividends) for each of the periods assumes that $100 was invested on December 31, 1998 in each of the Company, the S&P 500 Index and the S&P Financial Index. The results and comparisons shown in the graph below are based upon historical data and are not indicative of, nor intended to forecast future performance of, the Company’s Common Stock.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN

Total Return Analysis

Source: CTA Public Relations www.ctapr.com (303) 665-4200. Data from BRIDGE Information Systems, Inc.

CERTAIN TRANSACTIONS

      During Fiscal 12/31/03, Mr. Garcia had three loans outstanding under a plan maintained by the Company, which plan was ratified and approved by the stockholders, to facilitate the exercise of stock options (the “Financing Plan”). His highest aggregate indebtedness to the Company during Fiscal 12/31/03 was $122,148.35. The three loans bore interest rates of 5.54%, 5.67% and 5.54%, respectively. As of December 31, 2003, the total amount outstanding was $104, 698.59. All three of these loans were repaid in full as of April 5, 2004.

      Mr. Heller is Of Counsel to the law firm of Fried, Frank, Harris, Shriver & Jacobson. This firm performed nominal services for the Company in Fiscal 12/31/03. Mr. Heller did not receive any compensation

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      During Fiscal 12/31/03, one or more of the Company’s mortgage lending subsidiaries made, in the ordinary course of business, mortgage loans and/or home equity lines of credit to directors and executive officers and their immediate families. Such mortgage loans and/or home equity lines of credit were made on substantially the same terms, including interest rates and collateral requirements, as those prevailing at the time for comparable transactions with other persons, and they did not involve more than the normal risk of collectibility or present other unfavorable features. Generally, the Company sells these mortgage loans and/or home equity lines of credit, soon after origination, into the secondary market in its ordinary course of business. Prior to the enactment of the Sarbanes-Oxley Act of 2002, directors and executive officers were eligible to participate in a broad-based employee discount program pursuant to which they may have received reductions in discount points payable in connection with the Company’s origination of their mortgage loans. Directors and executive officers are no longer entitled to participate in this employee discount program.

PROPOSAL ONE

      The Company’s Bylaws give the Board the power to set the number of directors at no less than three nor more than fifteen, and the Board has fixed the number of directors at thirteen. The Company currently has thirteen directors. Directors serve three-year terms, which are staggered to provide for the election of approximately one-third of the Board each year. The terms of the current Class II directors, Henry G. Cisneros, Robert J. Donato, Michael E. Dougherty, Martin R. Melone and Harley W. Snyder will expire at the Meeting. Each of Messrs. Cisneros, Donato, Dougherty, Melone and Snyder has been nominated for election as a Class II director for a new term that will expire at the annual meeting to be held in 2007.

      Each director will be elected by a plurality of the votes cast at the Meeting. In the absence of contrary instructions, it is the intention of the persons named in the accompanying proxy card to vote for the nominees listed below. In the event that any nominee becomes unavailable for any reason, the proxies will be voted for the election of the person, if any, who is designated by the Board to replace the nominee. The Board does not anticipate that any nominee will become unavailable.

      The following table contains information regarding the nominees and the other incumbent directors.

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      The Board recommends that the stockholders vote FOR each of the nominees.

PROPOSAL TWO

      At the Meeting, stockholders will be asked to approve the Countrywide Financial Corporation 2000 Equity Incentive Plan, as amended (the “Plan”), as well as the proposed amendments to the Plan described below. The Plan was adopted by the Board of Directors on May 10, 2000, and approved by the Company’s stockholders on July 12, 2000.

Amendments

      On November 12, 2003, the Board approved, subject to approval by stockholders at the Meeting, an amendment to the Plan that permits Non-employee Directors to become eligible to receive all types of equity awards authorized thereunder. As proposed to be amended, the Plan would make each Non-employee Director an Eligible Person (as hereafter defined) entitled to receive equity awards authorized under the Plan to the same extent as all other Eligible Persons thereunder.

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      On March 10, 2004, the Board approved, subject to approval by stockholders at the Meeting, an amendment to the Plan that increases by 11,000,000 the number of shares of Common Stock (“Shares”) that may from time to time be made the subject of Options, Restricted Stock, Restricted Stock Units and Stock Units (collectively, “Awards”) thereunder. Of this amount, the aggregate number of Shares subject to Restricted Stock, Restricted Stock Units and Stock Units under the Plan shall not exceed 1,000,000. If this amendment to the Plan is approved, the maximum number of Shares that can be issued under the Plan will be increased from 33,500,000¹ to 44,500,000, and the aggregate number of Shares subject to Restricted Stock, Restricted Stock Units and Stock Units under the Plan will be increased from 2,000,000 to 3,000,000.

      The Plan was also recently amended to (i) permit the issuance of Restricted Stock Units and Stock Units from the Shares authorized for issuance under the Plan, and (ii) reflect stock dividends paid by the Company on December 17, 2003 and April 12, 2004, by adjusting the number of Shares authorized for issuance under the Plan and the aggregate number limitations set forth in the Plan with respect to certain grants.