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Fannie & Freddie to Pay Retention Bonues:

The WSJ reports that Fannie Mae and Freddie Mac expect to pay $210 million in retention bonuses over the next eighteen months. Even though the bonus amounts may be far less than sparked outrage at AIG -- some 7,600 employees could be eligible for bonuses, which would average out to less than $30,000 each -- they are already drawing political opposition. Here we go again.

Thoughtful (mail):
To say the money AVERAGES to less than $30K per employee certainly doesn't imply no one gets $1M bonuses. Franklin Raines, close friend of the Clinton's, got such bonuses when he headed Fannie.

If you give 5 people $3M bonuses each, it only lowers the average bonus of the remaining employees by about $2000 apiece.
4.4.2009 3:41pm
einhverfr (mail) (www):
We still need legislation to ensure that compensation to execs is properly represented. This is an honesty-of-numbers issue as it affects projections of expenses.

I would like to see it a securities law issue if a company pays any employee or officer bonuses greater than 50% of salary in any given year.
4.4.2009 9:22pm
Splunge:
I would like to see it a securities law issue if a company pays any employee or officer bonuses greater than 50% of salary in any given year.

Jealous?

Hey, I'd like it to be a securities law issue if a company pays you 50% more than my company pays me. I don't think that should be allowed.
4.4.2009 11:10pm
einhverfr (mail) (www):
Splunge:

Not really.

It is an issue over how the money affects financial forecasting, and a firm accounting conviction that one should call a spade a spade. The idea is that officers should be paid what the market will bear, but this should be reported honestly and not as "bonuses."

Doing it as bonuses skews financial forecasts, and that is my beef with the system. I see it as fraud against shareholders.
4.4.2009 11:44pm
einhverfr (mail) (www):
In short I dont have a problem with high exec financing, but report it honestly and call it what it is, so that things get forecasted properly. That is all.
4.4.2009 11:45pm
einhverfr (mail) (www):
s/financing/compensation/
4.4.2009 11:45pm
Andy Freeman (mail):
> I would like to see it a securities law issue if a company pays any employee or officer bonuses greater than 50% of salary in any given year.

Why? Back-loaded compensation has certain properties that are quite useful and appropriate in certain circumstances. (Yes, most employees would have cash-flow problems with receiving most of their salary as a year-end lump, but ....)
4.5.2009 7:19pm
D Palmer (mail):
Speaking as a banker, and knowing how incredibly weak the job market is right now in my industry, the idea that Fan/Fred, with its well protected staff, needs to pay retention bonuses is ludicrous.

95% of these employees have no reasonable expectation of funding another similar job elsewhere within a reasonable time frame.

This is worse than the AIG bonuses, which were contractually required as opposed to voluntarily awarded.
4.5.2009 10:03pm

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