Freddie Mac CFO Given $5.5M Pay Package

NEW YORK (AP) -- The pay package given to Freddie Mac's(FRE Quote) new chief financial officer should have sent a message from Washington to corporate America about how executive compensation standards must change. Instead, it did just the opposite.

The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.

The Federal Housing Finance Agency, which oversees Freddie Mac, approved the pay package. A spokeswoman pointed to a statement that justified the agency's approval of the pay, which was done in part because the amount was comparable to what others in the financial services industry make.

That way of thinking is exactly what helped feed the surge in executive pay over the last decade. Everyone wants to make at least as much, or more, than their peers.

Freddie Mac is not just another company. It's alive today, and nearly 80 percent owned by the government, only because almost $51 billion in taxpayer funds were pumped into it over the last year. More bailout money also may be needed in the quarters ahead as losses from its troubled mortgages mount.

Outside pay experts are outraged. "We are in a period when this shouldn't be acceptable," said Paul Hodgson, a senior research associate at The Corporate Library, an independent corporate governance research firm. "Even if pay is competitive to the market, that doesn't make it OK today."