Fannie Mae Chief Got 25% Raise Last Year
Tuesday, January 30, 2007
Fannie Mae chief executive Daniel H. Mudd received salary, stock and bonuses of more than $14.4 million in 2006, an increase of about 25 percent from the year before, the government-chartered mortgage funding company disclosed.
Mudd's pay included a bonus of $3.5 million, restricted shares worth nearly $10 million and a salary of $950,000.
That was up from a bonus of $2.6 million, restricted shares worth $8 million and a salary of $908,121 in 2005.
For 2007, Mudd's salary was increased to $990,000.
Mudd was promoted to interim chief executive from chief operating officer in 2004 after an accounting scandal drove out his predecessor, former federal budget director Franklin D. Raines. Mudd's appointment was later made permanent. One of his top responsibilities is restoring the company's financial systems.
More than two years after the accounting problems came to light, Fannie Mae remains unable to file timely financial statements, and its shares continue trading on the New York Stock Exchange by special dispensation.
The company recently completed its correction of past results, revealing that it had overstated profits by $6.3 billion.
"The management team led by Dan Mudd made significant strides in 2006 in getting the company back on track by completing its restatement, focusing on its business and addressing its important affordable housing mission," Fannie Mae Chairman Stephen B. Ashley said in a statement. "The compensation decisions are reflective of the progress the company has made."
The update on executive compensation was contained in a report Fannie Mae filed with the Securities and Exchange Commission late Friday. The report did not contain all the information that publicly traded corporations are required to disclose annually about executive pay -- for example, it did not include any disclosures about the value of executive perquisites -- so the total value of Mudd's pay package could be larger.
Fannie Mae spokesman Brian Faith said the comprehensive pay disclosure will be included in Fannie Mae's annual report for 2006. The company isn't predicting when that will be issued.
Based in the District, Fannie Mae plays a major role in the nation's housing finance system, buying mortgages and funneling capital from other investors to mortgage lenders.
The biggest chunk of Mudd's pay package consisted of 176,506 restricted stock units, which vest in four annual installments beginning January 2008. Mudd is required to hold a fifth of the shares until his employment at Fannie Mae ends.
In addition to the $8 million in restricted shares included in his compensation in 2005, Mudd was given a special restricted stock award in late 2005, worth about $1.5 million, when he signed a contract to become the permanent chief executive.
Officers' bonuses and stock awards must be approved by Fannie Mae's regulator, the Office of Federal Housing Enterprise Oversight, under an agreement Fannie Mae and the agency reached at the height of the scandal. Beyond confirming that the regulator had granted such approval, spokesmen for the agency declined to comment.
In setting compensation for last year, the compensation committee of Fannie Mae's board assessed the company's performance against several goals, such as "instilling operational discipline," "renewing the company's culture," fulfilling Fannie Mae's mission of promoting affordable housing and stabilizing the company -- for example, by building relationships with regulators and restating past financial results, the company said in the SEC filing.
Under Fannie Mae's federal charter, the board is required to ensure that executive pay is reasonable and comparable with that of executives in similar businesses, Fannie Mae said in the filing. For senior executives, the board aimed for the midpoint of pay levels at a group of diversified financial services companies, Fannie Mae reported.
Mudd's pay remained below the pre-scandal compensation awarded to his predecessor. In 2003, Raines's pay package included a $4.2 million bonus, $11.6 million in payouts under a long-term incentive plan, a salary of $992,250 and stock options the company valued at $3 million.
In addition to Mudd, four top executives listed in the SEC filing received bonuses of more than $1 million. Several executives received restricted stock awards worth more than $1 million.