Release of Fannie Mae Executive Pay Information Causes Flap

Fannie Mae critic Rep. Richard H. Baker (R-La.) released executive pay information last week at a hearing that has the mortgage finance company defending bonuses and perks.


Click Here

Baker pointed to a footnote that was contained in a report filed last year with the SEC showing that Fannie paid an $80,000 initiation fee for vice chairman and chief operating officer Daniel H. Mudd to join a private club, the Washington Post reported.

The District-based Fannie defended the payment as part of the package offered to Mudd when he was recruited from G.E. Capital in Japan in 2000.

Baker said the payment seems "a little inconsistent with their overall public mission."

Fannie's payment of club fees "is extremely limited and only provided when business needs dictate," a Fannie spokeswoman told the Post.

Fannie and others saw Baker's release of the information as an invasion of privacy. Proponents say that because the organization is quasi-governmental and doesn't pay taxes, the public has a right to know the information.

Chief Executive Franklin Raines went so far as to hire former Clinton-era special prosecutor Kenneth Starr to help block the release of the compensation information.

Baker produced a chart showing that 16 Fannie executives received bonuses in 2002 that were larger than their salaries. According to a report Fannie filed with the SEC, executive bonuses in 2002 were linked to an "aggressive" earnings target that Fannie exceeded, the Post reported.

Fannie's regulator, Office of Federal Housing Enterprise Oversight, has argued that pay incentives focused primarily on short-term earnings can lead to "improper conduct," such as the earnings manipulations disclosed last year at its smaller rival, Freddie Mac, the Post reported.

OFHEO has proposed a rule to lessen the connection between earnings and pay by prohibiting compensation in excess of that which is "reasonable and appropriate" and "consistent with the long-term goals" of the company, the Post reported.

You may like these other stories...

Federal judge tosses IRS lawsuitsBernie Becker of The Hill reported that a federal judge sided with the IRS on Thursday, tossing out two lawsuits filed against the tax agency over its improper scrutiny of Tea Party groups...
SEC, Big Four Chinese affiliates make progress in talks over audit documentsMichael Rapoport of the Wall Street Journal reported that the US Securities and Exchange Commission (SEC) and the Chinese affiliates of the Big Four...
Koskinen warns filing season could be most complicated yetImplementation of the Foreign Account Tax Compliance Act and the Affordable Care Act, combined with a tight budget and the possibility of Congress passing a late...

Already a member? log in here.

Upcoming CPE Webinars

Oct 30Many Excel users have a love-hate relationship with workbook links.
Nov 5Join CPA thought leader and peer reviewer Rob Cameron and learn ways to improve the outcome of your peer reviews while maximizing the value of your engagement workflow.
Nov 12This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Nov 18In this session Excel expert David Ringstrom, CPA tackles what to do when bad things happen to good spreadsheets.