(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
The company will submit a $146 million "draw request" to the Treasury after $1.7 billion in quarterly dividend payments more than offset fourth quarter net income of $1.5 billion. Still, the request is a lot lower than the $6 billion Freddie requested in the third quarter. Fannie and Freddie are required to pay 10% dividends on the bailout money they receive. The housing giants were rescued in 2008 by the government. Their bailout has cost taxpayers roughly $170 billion. Related Articles 9 Oil, Gold Stocks That Rise on Bad News 10 Mid-Cap Stocks That Have Almost Doubled in 2012 10 Top Warren Buffett Dividend Stocks --Written by Shanthi Bharatwaj in New York >To contact the writer of this article, click here: Shanthi Bharatwaj. >To follow the writer on Twitter, go to http://twitter.com/shavenk.