Freddie Mac

In a 5/1/09 WSJ article, James Hagerty reported that Freddie Mac, the quasi-governmental mortgage giant, has designated a $1.3M retention bonus for its human resources director, Paul George. This is equal to the bonus that Fannie Mae, the other mortgage giant, is paying its new CEO, Michael Williams. In 2008, Mr. George’s compensation package was $2.3M.

As I noted in an earlier blog, the majority of employees at Freddie Mac and Fannie Mae have been offered retention bonuses. Presumably, the Federal Housing Finance Administration (FHFA) regulator that oversees these two companies feels that such a retention policy is needed to keep many employees from abandoning ship. Why was Mr. George paid so highly?

“Freddie has had a spotty record of executive recruitment in the recent years,” Hagerty notes. Freddie tried for several years to find a replacement for their CEO and has been looking for a CFO since September of last year.

On April 22nd, David Kellerman (bio), the acting CFO, committed suicide. After working for 16 years at Freddie Mac and rising to the position of corporate controller, Mr. Kellerman became the 4th CFO at Freddie Mac in six years. He earned $1.2M last year and was scheduled for a retention bonus of $850K. Although Congress is conducting an investigation into the company, Mr. Kellerman was not the subject of any inquiry.

Freddie Mac is unable to recruit executive talent. A long time employee commits suicide for no obvious reason, leaving a wife and young daughter behind. The majority of employees are offered retention bonuses to stay with the company. Congress is conducting an investigation into the company’s finances. Taxpayer money continues to be shoveled into this hole.

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