Monday, November 12, 2007

Freddie Mac's setbacks are translating into new pay opportunities for its chairman and chief executive, Richard F. Syron.

Syron, pictured below, took over at the end of 2003 with a mandate to clean up internal problems exposed by an accounting scandal. Under an agreement with regulators, the company was also supposed to separate the roles of chairman and chief executive "within a reasonable period of time" and put in place a succession plan for senior management.

Almost four years later, the work remains unfinished. As it repairs internal controls and systems used to track its financial performance, Freddie Mac has yet to resume filing routine quarterly reports on a timely basis. The succession plan collapsed in May when Syron's designated successor decided to leave the company. Freddie Mac now says it expects to appoint a new chief executive in mid- to late 2008.

Last week, Freddie Mac signed an amendment to Syron's contract that entitles him to what the company calls a "special extension bonus" of $3.5 million if he stays through 2009. That would be on top of a $200,000 raise, retroactive to July 1, bringing his base salary to $1.3 million.

Next year, Syron will be entitled to an equity grant of up to $9.4 million, of which he is guaranteed to receive $8.8 million.

In addition, Syron is eligible to receive a "special cash performance award" of up to $6 million through September 2009. "This opportunity is designed to provide additional incentive and recognition for the completion of a number of performance milestones," the company said in a statement Friday.

The milestones include some of the same challenges Syron inherited years ago: improving the company's information technology infrastructure, fixing material weaknesses and returning to timely financial reporting.

"This incentive award is simply designed to encourage him as he continues to lead the transformation of the company," Freddie Mac spokeswoman Sharon McHale said.

The salary increase reflects that fact that since the company's chief operating officer left, Syron has been doing that job, too.

McHale said that, under Syron, the company has made progress tackling serious problems.

"Despite what Mr. Syron has accomplished, the work is not complete," she said.

-- David S. Hilzenrath