FHFA Reveals Plans to Cut Pay for Top GSE Executives

An FHFA executive compensation program is going to put a stop to bonuses for Fannie Mae and Freddie Mac executives, and new CEO pay will be capped at $500,000, according to FHFA ""2012 Conservatorship Scorecard"":http://www.fhfa.gov/webfiles/23438/ExecComp3912F.pdf released by Acting Director Edward J. DeMarco on Friday.

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The new $500,000 CEO cap does not apply to chief financial officers, and current CEOs won't have their salaries cut back to $500,000.

Total direct compensation for executives will be reduced by 10 percent, with a few exceptions for executives already positioned at a low percentile or for recent hires, according to the report.

So far, the GSEs have also reduced the number of senior executives by roughly one-fourth from 91 during pre-conservatorship days to the current level of 70.

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The new compensation plan includes reductions for missed performance as well.

""I believe the new compensation program strikes the balance between prudent executive pay including the elimination of bonuses, with the need to safeguard quality staffing in order to protect the taxpayers' investment and achieve the objectives in the Conservatorship Scorecard,"" said DeMarco. ""A sudden and sharp change in pay from these levels would certainly risk a substantial exodus of talent, the best leaving first in many instances. A significant increase in safety and soundness risks and in costly operational failures would, in my opinion, be highly likely.""

Even with these reductions, compensation for certain current top executives is still in the millions although Freddie Mac CEO Charles E. Haldeman and Fannie Mae CEO Michael J. Williams are expected to leave this year.

*Total direct compensation for 2012*

Freddie Mac

Charles E. Haldeman, Jr. (CEO)- $5,400,000
Ross Kari (CFO) - $3,150,000
Anthony Renzi (Executive VP of Single-Family Business and Information Technology) - $2,475,000

Fannie Mae

Michael J. Williams (CEO and president) - $5,400,000
Susan R. McFarland (Executive VP and CFO) - $2,880,000
David C. Benson (Executive VP of Capital Markets) - $2,520,000