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.
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.