The chief financial officer of government-controlled mortgage finance company, Freddie Mac's, will start his new job with annual pay of up to $3.5 million and a nearly $2 million signing bonus, the company said in a regulatory filing late Thursday.
The salary package comes amid a taxpayer outcry and concerted efforts by some lawmakers to halt big corporate bonuses, particularly to companies getting government bailouts.
Both Freddie Mac and the even larger home finance company, Fannie Mae were put into conservatorship a year ago as delinquencies on mortgages drained their capital.
On Tuesday, Freddie Mac said it hired Ross Kari as the new CFO, effective Oct. 12, from Fifth Third Bancorp where he was CFO for less than year.
The U.S. Treasury has injected more than $51 billion of capital into Freddie Mac, which in August reported its first quarterly profit in two years.
The U.S. government bailed out Freddie Mac and Fannie Mae a year ago, but both companies this month regained NYSE exchange list compliance, though their shares remain under $2 each.
Kari replaces Freddie Mac acting Chief Financial Officer David Kellermann, who died in April.
Freddie Mac said Kari would be paid a base salary no less than $675,000 plus an added annual $1.66 million in installments and an annual target incentive of $1.16 million.
Kari gets a $1.95 million cash sign-on bonus, in recognition of the forfeited annual incentive opportunity and unvested equity at his current employer, Freddie said in the filing. The payout, in installments, would change if Kari leaves before the first year or is terminated.
In contrast, Fifth Third last November in a filing with the Securities and Exchange Commission, said Kari would get a $580,000 annual salary there and a $100,000 signing bonus.
Sharon McHale, spokeswoman for Freddie Mac, declined to comment beyond the filing.
The Federal Housing Finance Agency, which oversees the government-sponsored home funding companies, approved the agreement and consulted with Treasury, Freddie Mac said in the filing.
Freddie Mac hired Mr. Kari for a critical job at a critical time in our nation's economy and for the company, said Stefanie Mullin, FHFA spokeswoman.
FHFA approved the compensation after consultation with the Treasury Department, as Mr. Kari is well-qualified for the position and the amount is comparable to market pay, she said.
Barney Frank, who heads the U.S. House Financial Services Committee, has pushed for bonus programs at Fannie Mae and Freddie Mac to be halted amid controversy over the huge payouts to employees at companies getting taxpayer bailouts.
Companies have argued that retention bonuses are needed to keep key personnel from leaving during the financial and economic crises.
The government is relying heavily on Fannie Mae and Freddie Mac to carry out federal programs aimed to stabilize the deepest housing slump since the Great Depression.
Separately, President Barack Obama's pay czar, Kenneth Feinberg, on Friday said he will not cap compensation for top employees at companies bailed out in the Treasury's Troubled Asset Relief Program. He said his rules could be used a a model for other regulators or institutions.
(Reporting by Lynn Adler; additional reporting by Elinor Comlay)