(Updated with additional information on comparable CEOs compensation.)
NEW YORK ( TheStreet) -- The Federal Housing Finance Agency (FHFA) said it will slash executive compensation at Fannie Mae (FNMA) and Freddie Mac (FMCC) by eliminating bonuses from the executive compensation program and capping base salaries for top executives including new CEOs at $500,000 per year.
The new compensation program for 2012 will result in total reductions of roughly 75% in the pay of the top five positions at the GSEs compared to the pre-conservatorship level. The total target pay for the top 15 executives will drop 63% in 2012 from the pay received prior to conservatorship.
"I believe the new compensation program strikes the balance between prudent executive pay including the elimination of bonuses, with the need to safeguard quality staffing in order to protect the taxpayers' investment and achieve the objectives in the Conservatorship Scorecard," said FHFA Acting Director Edward DeMarco."A sudden and sharp change in pay from these levels would certainly risk a substantial exodus of talent, the best leaving first in many instances. A significant increase in safety and soundness risks and in costly operational failures would, in my opinion, be highly likely," he said. Millions of dollars in bonuses were paid out in 2011 to the CEOs at the housing finance giants, even as the companies continued to request additional bailouts from the government. That created a furor in Washington, with Senator John McCain
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