Fan­nie Mae CEO ’07 Pay Cut Not in Line With Stock Fall

The Washington Post - - Local - By David S. Hilzenrath

Fan­nie Mae chief ex­ec­u­tive Daniel H. Mudd re­ceived $12.2 mil­lion in com­pen­sa­tion for 2007, down 15 per­cent from $14.4 mil­lion in 2006, the com­pany said yes­ter­day.

The de­cline in Mudd’s pay was not nearly as steep as the de­cline in Fan­nie Mae’s earn­ings and share price. The gov­ern­mentspon­sored mort­gage fund­ing com­pany’s stock sank by al­most a third last year, and its earn­ings for the first nine months of 2007 were down by more than half from the com­pa­ra­ble pe­riod a year ear­lier. To con­tain costs, the Dis­trict com­pany re­duced its work­force by hun­dreds of em­ploy­ees.

Fan­nie Mae has not yet re­ported year-end re­sults for 2007, but the trend was down­ward. As the real es­tate bub­ble col­lapsed and fore­clo­sures mounted, the com­pany re­ported a loss of $1.4 bil­lion in the third quar­ter.

Mudd’s salary for 2007 to­taled $990,000, up from $950,000 in 2006. The board gave him a bonus of $2,227,500, down from $3.5 mil­lion in 2006, and a long-term in­cen­tive award of $9 mil­lion, down from $10 mil­lion.

Mudd’s $9 mil­lion award is in the form of stock that vests in four an­nual in­stall­ments be­gin­ning Jan­uary 2009. Though some com­pa­nies con­di­tion the vest­ing of stock awards on per­for­mance bench­marks, Mudd faces no such re­quire­ments.

Fan­nie Mae spokesman Brian Faith de­clined to com­ment on the rea­son­ing be­hind Mudd’s com­pen­sa­tion. The com­pany re­leased lim­ited in­for­ma­tion; it will be re­quired to make a more de­tailed dis­clo­sure in the com­ing months.

Fan­nie Mae said in a reg­u­la­tory fil­ing last year that its goals for 2007 re­lated to fac­tors such as ex­pand­ing its busi­ness, achiev­ing eco­nomic re­turns, fix­ing weak­nesses in in­ter­nal con­trols, com­plet­ing over­due fi­nan­cial re­ports for past years, and con­trol­ling ex­penses.

Daniel H. Mudd

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