Under the government takeover plan of Fannie Mae and Freddie Mac announced Sunday, top executives and board of directors from both troubled mortgage lenders -- which hold or guarantee more than $5.2 trillion of the nation’s $12 trillion of mortgages -- are being replaced.
Curious as to how much Daniel Mudd, the outgoing CEO of Fannie Mae, and Freddie Mac’s departing CEO Richard Syron would receive in case of removal from their positions, I checked in on details of respective employment agreements.
As neither man voluntarily retired or was removed for “cause” (material breach of contract), Mudd is entitled to receive cash severance of $1.98 million (two years of base salary) and a cash bonus of $2.23 million, according to Fannie Mae’s 2008 proxy filing. Syron should get $1.10 million (one-year’s salary) and a cash bonus of $2.64 million, according to Freddie Mac’s 2008 proxy filing.
In addition, Mudd holds pension benefits with a present value of $4.92 million and Syron has pension assets worth $1.46 million, as of December 2007.
“If misery loves company,” said Henry David Thoreau, “misery has company enough.” Those who have lost their homes due to unforeseen reset increases in their adjustable rate loans, taxpayers footing the bailouts, and/or existing stakeholders in both lenders might take solace in knowing equity awards due to Mudd and Syron — worth $13.4 million and $13.8 million, respectively, on December 31 — are now worthless.
NEW YORK (Reuters) - The head of Fannie Mae, a company chartered by Congress to help more Americans own homes, reaped a 7 percent rise in pay last year, to $13.4 million, while the company lost money and the country suffered its worst housing crisis in decades.
Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) posted a $2.1 billion loss in 2007 and its shares fell 33 percent as the subprime mortgage crisis bled into all parts of the mortgage market while home prices fell nearly 9 percent.
Fannie Mae Chief Executive Daniel Mudd also received $5.4 million from stock awards that vested in 2007, according to a Securities and Exchange Commission filing by the company.
Mudd's compensation included just under $1 million in salary, $2.2 million in incentive payments, about $10 million from stock and option grants, and $153,531 in other compensation, according to the filing.
Fannie Mae and its rival Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) hold charters from the government to support homeownership. The companies, which are privately owned, do that by raising money from investors to support combined investments of $1.4 trillion, and honor guarantees on loans backing mortgage securities they issue.
Fannie Mae and Freddie Mac CEOs to get golden parachutes Daniel Mudd and Richard Syron, who are stepping down, have already made millions at the troubled mortgage giants and are expected to take away millions more.
Shareholders in Fannie Mae and Freddie Mac saw the value of their stock nearly disappear Monday after the mortgage giants had been taken over by the federal government, but the companies' chief executives will leave after banking millions and taking millions more on the way out the door.
Fannie Mae's Daniel Mudd and Freddie Mac's Richard Syron stepped down but are helping with the transition of their companies into federal conservatorship under the Federal Housing Finance Agency. The agency has not said how much they will earn in their new roles, estimates, Mudd, 49, and Syron, 64, will leave with an additional $7.3 million and $6.3 million, respectively, as part of a severance package, according to an analysis by Paul Hodgson at the Corporate Library."Had they left at the end of December, they both would have walked away with more than $20 million, but the drop in the stock price has had a dramatic impact," said Hodgson, a senior research associate. "It's still a substantial payoff for an executive who has managed a company so badly that the federal government has had to step in and save it."