Under the government takeover plan of Fannie Mae and Freddie Mac announced Sunday, top executives and board of directors from both troubled mortgage lenders — which hold or guarantee more than $5.2 trillion of the nation’s $12 trillion of mortgages — are being replaced. Curious as to how much Daniel Mudd, the outgoing CEO of Fannie Mae, and Freddie Mac’s departing CEO Richard Syron would receive in case of removal from their positions, I checked in on details of respective employment agreements.
As neither man voluntarily retired or was removed for “cause” (material breach of contract), Mudd is entitled to receive cash severance of $1.98 million (two years of base salary) and a cash bonus of $2.23 million, according to Fannie Mae’s 2008 proxy filing. Syron should get $1.10 million (one-year’s salary) and a cash bonus of $2.64 million, according to Freddie Mac’s 2008 proxy filing.
In addition, Mudd holds pension benefits with a present value of $4.92 million and Syron has pension assets worth $1.46 million, as of December 2007.
“If misery loves company,” said Henry David Thoreau, “misery has company enough.” Those who have lost their homes due to unforeseen reset increases in their adjustable rate loans, taxpayers footing the bailouts, and/or existing stakeholders in both lenders might take solace in knowing equity awards due to Mudd and Syron — worth $13.4 million and $13.8 million, respectively, on December 31 — are now worthless.
The Washington Post reported that Mudd and Syron would remain with the companies for a time in a supporting role. Although exact decisions on exit compensation “had not been decided,” a contract is a contract indeed.
This post first appeared on BNET’s 10-Q Detective, by David Phillips.
