Before the Bust, These CEOs Reaped Big Gains

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Chad Dreier, Ryland Group

R. Chad Dreier, 61, chairman and chief executive of Ryland Group Inc., a Calabasas, Calif., home builder, made $181 million over the five-year period. Specializing in mid-range homes, Ryland did well in the boom, entering into hot markets, such as Las Vegas and Ft. Myers, Fla. Most of its buyers financed homes through Ryland's in-house mortgage unit, some through controversial interest-only mortgages.

Mr. Dreier's bonuses, many tied to short-term profits, totaled $31.2 million in 2005 and 2006 alone. Ryland paid him another $20.5 million over the five years to cover some of his tax bills. He made another $85 million from stock sales, most of them regularly scheduled.

Next door to his 4,900-square-foot hilltop house in Santa Barbara, Calif., a Dreier private company owns an office building that houses Mr. Dreier's collection of baseball cards, sports memorabilia, gems, minerals and other items. State records say he owns several cars, including a 2004 Porsche coupe worth $448,000. Mr. Dreier has donated at least $6.5 million to Loyola Marymount University.

After posting huge profits during the bubble years, Ryland has reported hefty losses since last year amid plunging home sales. Its stock price is down 85% from its 2005 closing high.

Through a spokesman, Mr. Dreier declined comment. The spokesman says Mr. Dreier's pay was "very closely tied to performance." He adds that the housing business is cyclical, and the Ryland chief's pay has sharply declined with the market.

Daniel Meyers, First Marblehead

Wall Street once had a voracious appetite for student-loan debt. Ten insiders at First Marblehead Corp. seized the opening, receiving a total of about $660 million, mostly through stock sales over five years.

Based in Boston, First Marblehead specializes in "private student loans." Students take out the loans if they've exhausted the cheaper government-backed variety. As with subprime mortgages, those with poor credit histories must pay higher interest rates.

First Marblehead helped big banks, such as Bank of America and J.P. Morgan Chase & Co., put together student-loan programs. First Marblehead earned rich fees assembling and servicing packages of the debt sold to investors.

Chief Executive Daniel Meyers, a 46-year-old former arbitrage and derivatives trader, received almost $96 million in cash compensation and proceeds from stock sales over five years. Lee Jacobson, a First Marblehead spokesman, notes that Mr. Meyers co-founded the company in 1991 and didn't sell any shares until First Marblehead's October 2003 initial public offering.

In 2004, Mr. Meyers bought a Spanish-style villa in Newport, R.I., the summer retreat of industrialists a century ago. He paid $10.3 million for the estate, on 45 acres with sweeping views of the Atlantic. Mr. Meyers tore down the villa and is constructing a five-building, 38,000-square-foot compound called Seaward with a carriage house, a guest house and a caretaker's cottage. Mr. Meyers also owns a 66-foot sailing yacht, which he recently raced to a win at the famed Newport Regatta. In 2004, Mr. Meyers made a $22 million gift to the University of Virginia's Curry School of Education.

Leslie Alexander, the 65-year-old owner of the Houston Rockets and until recently a First Marblehead director, cashed out $288 million in stock over the five-year period.

In the credit crunch, First Marblehead's business ground to a halt after investors abandoned private student loans, which are experiencing rising defaults. Shares recently sold for about 75 cents apiece, down 99% from their January 2007 peak. The company's stock-market value is now roughly $75 million, about one-ninth of the amount that insiders cashed out of the company.

Mr. Jacobson notes that Mr. Alexander still owns 18.5% of First Marblehead, and Mr. Meyers retains 7%. He adds: "Both men have suffered significant losses alongside other long-term holders of the stock."

New Century Financial

Robert K. Cole, Edward Gotschall and Brad Morrice, three mortgage industry veterans, founded New Century Financial Corp. in 1995. By the peak of the boom, it was the nation's second-largest subprime lender.

The Irvine, Calif.-based company promoted mortgages that customers could apply for by merely stating their income with no documentation.

Over four years, the three executives received cash compensation and stock proceeds totaling $74 million, including estimates of their 2006 pay cited in a report by a court-appointed investigator after the company filed for bankruptcy protection. Mr. Cole, who was CEO for some of the period, lives in a 9,200-square-foot oceanfront home in Laguna Beach, Calif., that has a tax value of $30 million.

New Century Financial executives have been known as generous philanthropists in California. Mr. Gotschall's foundation gave $3 million in 2005 to a local hospital, which is naming a trauma center after his family.

In 2007, New Century filed for bankruptcy protection. New Century has said its accounting is under investigation by the Securities and Exchange Commission and the Justice Department.

In March, the court-appointed investigator filed a report in U.S. Bankruptcy Court in Delaware, alleging the company engaged in imprudent business practices and improper accounting, though he found insufficient evidence to determine earnings manipulation. Calling New Century's mortgage business "a ticking time bomb," he faulted the company for tying pay to loan volume and disregarding mortgage quality. The examiner said creditors had grounds to try to recover millions of dollars of bonuses paid in 2005 and 2006.

Manny Abascal, an attorney for Mr. Cole, said the founders' compensation was approved by outside directors and was "fully disclosed to investors." Mr. Abascal said the founders "held onto the vast majority of their stock, and collectively lost approximately $200 million" when the company failed.

Bert H. Deixler, an attorney for Mr. Morrice, said his client was "among the biggest victims of the collapse" of New Century, which he said was due to an "unforseen worldwide debt and liquidity crisis." An attorney for Mr. Gotschall declined comment.

Michael Gooch, GFI Group

Michael Gooch made a fortune from the booming trade in credit-default swaps and other complex financial instruments now being blamed for fueling the financial crisis.

Mr. Gooch, 50, is chief executive of GFI Group Inc., a leading broker of credit-default swaps. An immigrant from England, Mr. Gooch founded New York-based GFI two decades ago. It went public in 2005, and its stock nearly quintupled by late 2007.

Credit-default swaps are private contracts, similar to insurance, that pay investors when a bond or company defaults. While boosters say swaps are a valuable hedging tool, critics call them a toxic invention that fanned the flames of the mortgage meltdown. With the swaps market contracting and Congress calling for regulation, GFI's stock price has tumbled, recently closing nearly 90% below its high of last November.

Mr. Gooch, through a holding company, sold about $77 million in stock, most of it in May 2006. He says the aim was to diversify his personal investments. "In May 2006, nobody could have predicted the credit bust," he says. He also notes that his holding company still owns 43% of GFI's stock, and that trading credit derivatives is only a part of GFI's business.

Not long after GFI went public, Mr. Gooch bought a 152-foot sailing yacht that had been listed for sale at $12.9 million.

Mr. Gooch lives in a 10,000-square-foot, seven-bedroom house on the water in Rumson, N.J, with an elevator, pool and tennis court. He also owns a waterfront home in Delray Beach, Fla., and a Colorado ski condo.

Unlike some executives, who used shares in their companies as collateral to borrow money and then were forced to sell in the downturn, Mr. Gooch says his only major debt is a $1 million mortgage. "It could be paid off with the spare change in my bank account," he says.

Write to Mark Maremont at mark.maremont@wsj.com, John Hechinger at john.hechinger@wsj.com and Maurice Tamman at maurice.tamman@wsj.com

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