Fannie Mae's chief executive officer got a raise. But his compensation deal appears to ensure he won't reach the level his predecessor reached.
Fannie's board of directors approved an employment agreement Tuesday with CEO Daniel H. Mudd that increased his annual base pay to $950,000 from $850,000, according to a filing with the Securities and Exchange Commission.
The board also approved a raise in Mudd's annual cash bonus target award to 275 percent from 235 percent of base salary, the secondary lender said in the filing.
Fannie noted that total compensation to be provided to Mudd under his new employment agreement was positioned at the lowest one-third when comparing it to that of chief executives of companies in Fannie's comparison group, which is comprised of banks, insurance companies and other diversified financial services companies.
Mudd's base salary in 2003 as vice chairman and chief operating officer was $714,063, according to a Schedule 14A proxy statement filed in 2004 with the SEC. His total compensation for 2003 was just over $2 million.
Mudd became the permanent CEO on June 1, 2005, after succeeding Franklin D. Raines as the interim CEO last December.
Raines and the Washington, D.C.-based company's former chief financial officer resigned subsequent to revelations of an accounting scandal by Fannie's regulator, the Office of Federal Housing Enterprise Oversight, and the SEC.
Raines received an annual base salary of $992,250 in 2003, the SEC filing said. But his base was just a small portion of his total 2003 compensation of $5.4 million. Raines' total compensation also topped $4 million in 2001 and 2002.
While his service terminated on Dec. 21, 2004, Raines "asserted that his retirement was not effective until June 22, 2005, which would result in him being entitled to receive approximately $600,000 in salary between December 22, 2004 and his retirement date."
OFHEO at the time reportedly issued a letter to Fannie suggesting the secondary lender not pay termination benefits to Raines until OFHEO completed a review of such benefits.
The employment agreement with Mudd provides for his employment through Dec. 31, 2009, the report said.