The Wall Street Journal reported that the Federal Housing Finance Agency (FHFA) is considering a pay hike for the chief executives of Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Federal Home Loan Mortgage Corporation (OTCBB:FMCC). The regulator’s move comes amid the objections raised by the U.S. Treasury Department and other Obama administrators.
However, FHFA is clearly focused more on retaining the top hands of the two housing companies over listening to the conflicting opinions. The CEOs of both Fannie and Freddie earned a fixed pay of $600,000 without bonus. The proposed pay hike could not include a bonus or could be higher than the 25th percentile of the equivalent companies, the FHFA clarified in its statement. The regulator has already signalled the boards of Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie to submit proposals in this regard.
Reversing the cut
The chief executives of the two companies suffered a pay cut in 2012 following the concerns raised by the lawmakers’ then. Before the pay cut, Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) CEO’s salary amounted $5.3 million while Freddie’s CEO took home $3.8 million. Hence, the FHFA aims to reverse the significant portion of the pay cut. The regulator has already stated that its decision is driven by the agenda of CEO retention, succession planning, and continuity. It wants to fill in the gap that exists in between the pay of the company’s CEO and those of others in private industry or companies.
In response to the FHFA’s statement, the Treasury Department has already recorded its objection, calling the pay hike as inappropriate. Similarly, a White House representative Josh Earnest said that the existing compensations of the chief executives are significant if not in line and its legitimate to continue compensation limits.
The stock of Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) was down by almost 0.70% to $2.89 during the previous day as 4.46 million shares changed hands.
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