I’m sure that everyone will be glad that executive compensation at
annie and Freddie (F/F) has been cut. These are public companies that exist at the whim of the taxpayers. As such, the compensation for the folks pulling the levers at F/F should conform to salaries that the president gets, right?
Well, not quite right. The President makes a cool $400 grand. Congressmen get $175K. The 2012 compensation for the senior executives at F/F tops these numbers by a wide margin:
Photo: Bruce Krasting
The F/F top brass get nice cushy salaries plus incentive compensation (annual bonuses). Given that F/F are losing money hand over fist, you would think that some of that incentive comp might not get paid. Most of it is. In 2011, 82% of incentive comp was paid.
A large portion of total compensation is paid in the form of a retention bonuses. If the top folks stay in their jobs, they get paid this amount. If they quit before their contracts are up, they still get paid most of their retention bonus. There is a formula that sets the payout that discounts the contractual amount by 2% per month for each month prior to January 2014.
Not surprisingly, both Charles Halderman Jr. and Michael Williams, the CEOs at F/F, have both announced their resignations. As a consequence, they will only be getting 60% of the combined $5.8 million of their deferred comp. amounts. Basically, they will each be getting $1.8mm for not working. A very sweet deal indeed.
Note: The 2012 total compensation package for the CEO’s at F/F is down 74% from what it was before the SHTF in 2008. So I guess we should be happy that we are paying folks to lose money at only one-quarter of the rate we once were.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.