Sallie Mae Pays Price To Hire New CFO

$1 Million Salary Is Double Median Amount

Sallie Mae, reeling from a series of setbacks, paid heavily to recruit a new chief financial officer last week.

The Reston-based student loan company agreed to pay John F. "Jack" Remondi an annual salary of $1 million. Remondi also was given a form of stock award that would deliver $2 million for every $1 increase in the company's share price, subject to certain conditions.

Remondi, 45, could earn an annual cash bonus of up to $3 million. His perks include up to two years of housing in Reston and $100,000 a year for personal use of corporate aircraft. If he is fired without cause within a year, he would receive at least $1.5 million in severance pay, according to a company filing with the Securities and Exchange Commission.

Remondi's $1 million salary was higher than any other chief financial officer's in a survey by the research firm SNL Financial of 2006 compensation at banks, thrifts and specialty lending companies with stock market valuations of more than $5 billion. It was more than double the $465,000 median base salary for the 23 CFOs in that group -- and 150 percent more than the $400,000 salary Remondi's predecessor at Sallie Mae received in 2006.

"Given the opportunities and challenges facing the company, it was important to offer a package that attracted the right talent," Sallie Mae spokeswoman Martha Holler said.

The size of the package raised some eyebrows.

"I think he's getting paid too much upfront on salary, and I think his severance is excessive, too," said SNL analyst Will Retzer.

"He must be in the miracle department," said executive compensation consultant Brian Foley. "He seems to be getting the best in every column in the menu."

In the SEC filing, Sallie Mae also reported that it is paying its new chairman, Anthony P. Terracciano, $600,000 annually, plus 500,000 stock options and 200,000 shares of restricted stock that vest over three years. The restricted stock was worth about $3.6 million when granted.

High executive compensation at Sallie Mae over the years has helped make federally subsidized student lenders a target for politicians.

Remondi, a former Sallie Mae executive vice president, rejoins the company from a Boston investment firm. He will have the additional title of vice chairman. Terracciano, 68, has held senior positions at several major banks.

The two were hired last week when Sallie Mae's share price was less than $18 and near its lowest point in the past several years -- $16.67 on Jan. 4. They were brought aboard as the company seeks to recover from several problems: the collapse of a planned buyout by private investors at $60 a share, cuts in federal subsidies to student loan companies and tightening of the credit Sallie Mae relies upon to fund its business.