Fannie Mae CEO '07 Pay Cut Not in Line With Stock Fall

Fannie Mae chief executive Daniel H. Mudd received $12.2 million in compensation for 2007, down 15 percent from $14.4 million in 2006, the company said yesterday.

The decline in Mudd's pay was not nearly as steep as the decline in Fannie Mae's earnings and share price. The government-sponsored mortgage funding company's stock sank by almost a third last year, and its earnings for the first nine months of 2007 were down by more than half from the comparable period a year earlier. To contain costs, the District company reduced its workforce by hundreds of employees.

Fannie Mae has not yet reported year-end results for 2007, but the trend was downward. As the real estate bubble collapsed and foreclosures mounted, the company reported a loss of $1.4 billion in the third quarter.

Mudd's salary for 2007 totaled $990,000, up from $950,000 in 2006. The board gave him a bonus of $2,227,500, down from $3.5 million in 2006, and a long-term incentive award of $9 million, down from $10 million.

Mudd's $9 million award is in the form of stock that vests in four annual installments beginning January 2009. Though some companies condition the vesting of stock awards on performance benchmarks, Mudd faces no such requirements.

Fannie Mae spokesman Brian Faith declined to comment on the reasoning behind Mudd's compensation. The company released limited information; it will be required to make a more detailed disclosure in the coming months.

Fannie Mae said in a regulatory filing last year that its goals for 2007 related to factors such as expanding its business, achieving economic returns, fixing weaknesses in internal controls, completing overdue financial reports for past years, and controlling expenses.