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No 'Golden Parachutes' for Fannie, Freddie's Ex-Chiefs
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In his announcement last weekend, Paulson said he attributed the need for the government takeover to the flawed business model of the companies and the housing correction. The companies' "managements and their boards are responsible for neither," he said at the time.
Mudd's compensation last year totaled $11.6 million, and Syron's came to $18.3 million, as measured in the companies' annual pay disclosures. However, the near-evaporation of the companies' share prices has diminished the value of the executives' stock awards, a major component of compensation and potential severance.
The parts of Mudd and Syron's compensation that might be blocked depend on what provisions of their employment contracts are considered part of the "golden parachute."
The severance packages could be worth as much as $14.9 million for Syron and $9.8 million for Mudd. In a report to shareholders this year, Freddie Mac said it had guaranteed Syron a payment of a $8.8 million in equity, an award that may be considered part of the "golden parachute."
Mudd and Syron's employment contracts specify varying severance payments depending on whether the executives were terminated with or without "cause." It is unknown whether FHFA intends to block all compensation and benefits due Mudd and Syron, or only part of them.
Staff writer David S. Hilzenrath contributed to this report.
