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Why is it you and I never get a deal like this? 8 September, 2008

Posted by David Anderson in Uncategorized.
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The Fed has decided to avoid allowing the uncertainty in the market to devolve into a financial panic. It is has fired the executives of the federal mortgage companies Fannie Mae and Fannie Mac. There failure would have pulled the entire world into recession and the U. S. into economic turmoil. The executives who lost their jobs didn’t fare too poorly. One had the board insert into his contract last July after it was known they would need a government bailout, a nice departure clause. The bottom line is while taxpayers are at risk, pensioners have lost, and banks are undermined directly as a result of his mismanagement, he gets an extra bonus. What a deal?

Here a quote the NYTimes aticle.

But even after the government seized the mortgage finance companies on Sunday and dismissed their chief executives, the companies’ outgoing leaders could see big paydays — a prospect that angers many investors, particularly because ordinary stockholders could be virtually wiped out.

Under the terms of his employment contract, Daniel H. Mudd, the departing head of Fannie Mae, stands to collect $9.3 million in severance pay, retirement benefits and deferred compensation, provided his dismissal is deemed to be “without cause,” according to an analysis by the consulting firm James F. Reda & Associates. Mr. Mudd has already taken home $12.4 million in cash compensation and stock option gains since becoming chief executive in 2004, according to an analysis by Equilar, an executive pay research firm.

Richard F. Syron, the departing chief executive of Freddie Mac, could receive an exit package of at least $14.1 million, largely because of a clause added to his employment contract in mid-July as his company’s troubles deepened. He has taken home $17.1 million in pay and stock option gains since becoming chief executive in 2003.

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Comments»

1. Jonny Wonder - 8 September, 2008

That clause needs not be voided, but modified to re-appropriate that pay towards the bailout that’s coming at our expense. If this contract had been signed in early ’05, no big deal, but in July when the bailout was already obvious? Nauseating.

2. David Anderson - 8 September, 2008

After he had sought to get his allies to put federal money in his company, he gets a golden parachute inserted into his contract. Who was looking out for the stockholders and taxpayers? Not the man who is getting the big money.


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