WASHINGTON - FANNIE Mae plans to pay retention bonuses of at least US$1 million (S$1.51 million) to four key executives as part of a plan to keep hundreds of employees from leaving the government-controlled company.
Rival mortgage finance company Freddie Mac is planning similar awards, but has not yet reported on which executives will benefit.
BIG PAYOUTS
MICHAEL Williams, Washington-based Fannie Mae's executive vice-president and chief operating officer, is due to receive a US$611,000 retention award this year on top of his US$676,000 base salary.
Mr Williams received a US$260,000 retention bonus last year and is in line for another US$429,000 next February, for an expected total of US$1.3 million, according to the SEC filing.
The two companies, which together own or back more than half of the home mortgages in the country, have been hobbled by skyrocketing loan defaults. Fannie recently requested US$15 billion in federal aid, while Freddie has sought a total of almost US$45 billion.
Fannie Mae disclosed its 'broad-based' retention programme in a recent regulatory filing with the Securities and Exchange Commission. The company was only required to disclose the amounts for the top-paid executives, who will pocket at least US$470,000 on top of their base salaries.
The bonuses are more than double last year's, which ranged from US$200,000 to US$260,000. Another round of bonuses ranging from US$330,000 to US$429,000 are planned for next February.
A company spokesman declined further comment.
Fannie Mae said regulators determined that the bonuses were needed because keeping key employees 'was essential to ensure our viability through 2010, which would allow Congress, the administration and other parties involved time to determine what the form and function of the company will be in future years'.
The bonuses were authorised last year by the Federal Housing Finance Agency, which seized control of Fannie and Freddie in September and ousted the companies' former CEOs.
'It was critical to retain their most important asset - their employees - who are being asked to play a vital role in the nation's economic recovery,' James Lockhart, the agency's director, said in a statement.
'As the previous senior management teams left, it would have been catastrophic to lose the next layers down and other highly experienced employees.' But the generous salaries could prove politically touchy amid outrage over roughly US$165 million in bonuses paid out over the weekend by bailed-out insurance giant AIG. -- AP
