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62 | Th e M Rep o RT O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SECONDARY MARKET the latest local edition local edition ceOs of Fannie mae and Freddie mac to receive Pay raises After debAte And pushbAck from some in congress, the gses' ceos received pAy rAises in July. WASHINGTON, D.C. // Fannie Mae and Freddie Mac CEOs are expected to get multimillion-dol- lar increases to their paychecks approved by their regulator, the Federal Housing Finance Agency (FHFA), according to recent 8K Filings (Mayopoulos and Layton) with the U.S. Securities and Exchange Commission (SEC). On June 29, 2015, the FHFA approved changes to the com- pensation of Fannie Mae's CEO, Timothy J. Mayopoulos, and Freddie Mac's CEO, Donald H. Layton, to address recent objec- tives outlined by the FHFA. Both salary adjustments went into effect July 1, 2015. According to the SEC filing, Mayopoulos' and Layton's compensation cannot be higher than the 25th percentile of CEO compensation for their compara- tor group, as described in Fannie Mae's Form 10-Q for the quarter ended March 31, 2015. The SEC outlined that Fannie Mae and Freddie Mac CEOs' direct compensation will consist of an annual base salary of $750,000, fixed deferred salary at an annual rate of $2.05 million, and at-risk deferred salary with an annual target amount of $1.2 million, totaling $4 million. The at-risk deferred salary is based on performance and can be reduced. These amounts will be prorated for 2015, and both ex- ecutives have the same structure that applies to other executives within the GSEs. Congress attempted to fight this salary increase earlier this year, stating that the raise would not be fair to taxpayers. In May, Rep. Ed Royce (R-California) announced his plan to submit legislation by to prevent a potential pay increase for the GSEs' CEOs. The FHFA gave Freddie Mac and Fannie Mae authoriza- tion to review the salaries of their CEOs. Both CEOs made $600,000 each without bonuses in 2014. The pay reviews for the top executives at the GSEs are largely due to concerns the en- terprises will not be able to stay competitive because their CEOs make less than some lower- ranked executives. FHFA Director Mel Watt directed Freddie Mac to submit a proposed executive compensa- tion for the CEO position that could be as high as $7.26 million per year, the 25th percentile of the market in May. Royce said in a statement on his website that it is "unconscio- nable" that Freddie Mac would elevate the pay of its CEO to that level while taxpayers are still on the hook. The fact that the GSEs are still under conser- vatorship of the FHFA, where they have been since September 2008, is still a contentious one among politicians and stakehold- ers in the housing market. "At a time when American families are still struggling to find their footing financially, it is absolutely unconscionable that regulators would allow the taxpayer-bailed out Freddie Mac to pay its CEO over $7 million dollars a year," Royce said. He recalled a recent stress test that "showed the possibil- ity of a future taxpayer bailout to the tune of $150 billion, yet FHFA appears to be pursuing the pre-crisis model of private gains and public losses. We can't simply put the blinders on and say the GSEs are just like other companies. We need to move towards a model that allows the private sector to compete on a level-playing field, not one where Fannie and Freddie act like the private corporations with tax- payers on the hook for losses. In the interim, I will be introducing legislation to block this potential hike in CEO pay." SECONDARY MARKET