Hey, guess who else has an executive retention bonus plan?

posted at 11:48 am on March 18, 2009 by Ed Morrissey

While everyone assails AIG for using less than 0.1% of the taxpayer-bailout money it received to meet contractual obligations in compensation through retention bonuses, another recipient of government largesse has its own bonus program in operation.  According to their annual report, Freddie Mac has a generous retention bonus plan built into its operation for the next year.  Eligibility includes all of the senior and executive VPs.  It comes in four payouts, and only the last has any connection to company performance.

Exhibit 10-4 on page 414-5 lays out the program:

Objective To retain as many people as possible for 18 months (through March, 2010) in order to:

  • Maintain maximum operational stability
  • Allow time to evaluate the fundamental business model
  • Fulfill Freddie Mac’s goal of re-establishing stability and liquidity to the mortgage market

Retention Period Retention Period runs from September 2008 through March 2010.

General Eligibility All Senior Vice Presidents and Executive Vice Presidents who are employees of Freddie Mac on or after September 1, 2008 are eligible to participate in the program.

Freddie Mac pays the bonus on a quarterly basis for simply sticking around, at least until the final quarter:

Payout Timing The aggregate retention award for each individual will be paid in the regular payroll cycle occurring immediately after the following dates …

  • 1     20%     December 15, 2008
  • 2     20%     August 1, 2009
  • 3     25%     December 15, 2009
  • 4     35%     March 15, 2010

Payment Numbers 1, 2, and 3 will be based solely in the individual’s continued employment with Freddie Mac the through the indicated payment dates.

Performance Requirements Payment Number 4 will be conditioned upon achievement of specific performance objective(s) that will be determined during the upcoming businessplanning process.

That sounds a lot like the AIG retention bonus plan, although Freddie Mac does have a disclaimer stating that they can modify or end the program at their discretion.  Since Freddie Mac and her sister Fannie Mae got over $200 billion in a pre-TARP bailout, more than the private AIG got (at least in the aggregate), one might ask why Freddie Mac built in retention bonuses in this November filing — two months after the taxpayer bailout.

If AIG’s retention bonuses are a problem, why aren’t Freddie Mac’s?

Update: The Wall Street Journal is also on the case:

Fannie Mae is due to pay retention bonuses of as much $470,000 to $611,000 this year to some executives despite enormous losses at the government-backed mortgage company. Fannie’s main rival, Freddie Mac, also plans to pay such bonuses but hasn’t yet provided details.

Fannie’s bonuses are smaller than ones paid by American International Group Inc. that have caused a political firestorm for that company. Many AIG executives got retention payments of more than $1 million recently.

But the Fannie bonuses are still considerable and come at a time when Fannie and Freddie are receiving increasing amounts of funding from the Treasury. For 2008, Fannie and Freddie reported combined losses of about $108 billion, largely stemming from a surge in home-mortgage defaults. The U.S. Treasury has agreed to provide as much as $200 billion of capital apiece to Fannie and Freddie in exchange for senior preferred stock. The two companies already have said they will need a combined $60 billion of that money to cover their losses so far.

Looks like James Hagerty was working on this independently, and did a good job of digging up the actual size of the bonuses.

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Comment pages: 1 2

Defending, directly or by indirection, or making light of, the AIG bonuses is a good way for Republicans to wander in the desert even longer, maybe permanently. God has sent Republicans a detonator and instead of connecting it to the explosives to blow the dims up many of them are putting it in their mouths and sucking on it. Democrats may be corrupt, but S-T-U-P-I-D is perhaps even more abominable.

MB4 on March 18, 2009 at 12:59 PM

What a PI$$ POOR reflection on Boston that they continue to elect that POS Barney Frank. He belongs in jail with his co-conspiritor and fellow liar Christopher Dodd.

If these turds represent a reflection of their constituants, then the country is too far gone with fools and idiots to salvage.

saiga on March 18, 2009 at 1:01 PM

“If AIG’s retention bonuses are a problem, why aren’t Freddie Mac’s?” – exactly…

I think that the trend is becoming quite clear – it’s called diversionary politics. Create a firestorm in one hand while the other hand steals, spends, and procures greater power.

The question now is – how long will this tactic last?

splatshot on March 18, 2009 at 1:04 PM

That photo shows Carter’s too incompetent to find his own nostril.

Attila (Pillage Idiot) on March 18, 2009 at 12:56 PM

Somebody needs to remind him about his propensity to TOUCH HIS FACE all the time….
His recent pro-Palestinian book “whateverthehellitwas” had him touching his face like the goof he… wait… ok… he can’t help it… STUPID IS AS STUPID DOES>

CynicalOptimist on March 18, 2009 at 1:04 PM

MB4 on March 18, 2009 at 12:59 PM

sooo… its your position that for partisan political reasons, the Republicans should now advocate government intervention in private contracts between a Company, and its Employees?

That in order to have a popular talking point, they should advocate MORE Federal Government power?

This is the EXACT type of behaviour which led many, like myself, to leave the party. If you do not act on your philosophy… if you do the OPPOSITE of your supposed stated beliefs… then you cannot be trusted, and thus, not supported.

The Republican party has many “Positions”, but I sure don’t see any coherent philosophy….

Romeo13 on March 18, 2009 at 1:06 PM

That photo shows Carter’s too incompetent to find his own nostril.

Attila (Pillage Idiot) on March 18, 2009 at 12:56 PM

Oh yeah… you can add incontinent with your incompetent….

CynicalOptimist on March 18, 2009 at 1:09 PM

Barney Frank, Chris Dodd and Sheriff Joe Biden will get right on this!

Just you wait….soon….any time now……just you wait and see…….

GarandFan on March 18, 2009 at 1:17 PM

sooo… its your position that for partisan political reasons

For the good of the nation.

the Republicans should now advocate government intervention in private contracts between a Company, and its Employees?

Romeo13 on March 18, 2009 at 1:06 PM

The government owns 80% of AIG.

Clark Howard is now “going off” on the bonuses. He’s got a clue and is “looking out for you”. Rush hasn’t and isn’t.

A contract with an employee was signed?

There’s nothing to be done?

Goodness.

Does AIG think the American public is a bunch of rubes?

A legion of lawyers makes its living challenging such contracts, under a variety of legal theories, including fraud.

Walk into any civil courthouse across the country and just watch.

There is also no shortage of theories from financial analysts on how to give AIG leverage to renegotiate those contracts, including making the AIG business unit that cut those bad deals into a separate company and threatening to put it into bankruptcy and end its obligation to pay the bonuses.
- Chicago Sun-Times

MB4 on March 18, 2009 at 1:20 PM

THANK YOU ED for mentioned the Freddie Mac scandal.

I still say, where are the scoldings and investigations of the $90 million to Raines and other millions to Johnston and Gorelick?

Get the money back!! Republicans, this is your issue. Use it.

PattyJ on March 18, 2009 at 1:22 PM

That in order to have a popular talking point, they should advocate MORE Federal Government power?

Romeo13 on March 18, 2009 at 1:06 PM

Think chess, my friend, chess, not checkers.

MB4 on March 18, 2009 at 1:23 PM

Oh, but it’s the sacred cow, Freddie Mac!!! It’s not the same thing, man!

ladyingray on March 18, 2009 at 1:23 PM

Question: If Obama starts attacking Freddy and Fannie’s bonuses, will HA and Rush defend or make light of them?

MB4 on March 18, 2009 at 1:25 PM

Question: If Obama had defended, or was still defending, AIG’s bonuses, would HA and Rush have attack them?

MB4 on March 18, 2009 at 1:27 PM

Obama may be a tail but he is wagging the dog.

MB4 on March 18, 2009 at 1:28 PM

Time for the $#!+ to hit Freddie in the Fannie.

Steve Z on March 18, 2009 at 1:40 PM

Think chess, my friend, chess, not checkers.

MB4 on March 18, 2009 at 1:23 PM

IF the Government owns 80% of the stock of AIG, then they control the board, and should have, BEFORE the fact, taken control of the company.

They did not. They left the same crooks in charge. They screwed up.

BUT, if you allow the Fed to now go back and get involved in past business decisions that they had the power to change at the time, you destroy the very basis of the idea of contract law in this country.

One of the biggest problems with the economy IMO, is the fact that investors have no idea what the Gov is going to do. The Gov keeps changing the rules… and if they can now go back and change the Contract rules in the past?

Constitution, not checkers. They will have to change LAW to do this, and Congress shall pass no Ex Post Facto Law.

When people can no longer trust the Government to make and abide by its own laws???

The breakdown of law and order, as explicitly announced by Pelosi (immigration law unamerican), should be the battle cry of the Republican party… NOT destroying the very basis of our economy, which is contract law.

Romeo13 on March 18, 2009 at 1:42 PM

http://www.beatcanvas.com/pics/king_barney_touch_debt.jpg

King Barney – everything he touches turns to debt.

beatcanvas on March 18, 2009 at 1:46 PM

Let us hope that America has awaken and begin to boot these morons out of office.
if not. we are screwed in the southland!…(a**)

hawkman on March 18, 2009 at 1:52 PM

“The breakdown of law and order”

Now they(Congress) are wasting more money on revenge by government and theater courtesy of government which is all the AIG hearings amount to. The break down of law an order, as I see it, is primarily with our elected officials and that includes obama and co. Agree that stressing this should be a generous premise of the 2010 election cycle. The open, and unrepentant dishonesty and manipulation by the Hill needs to be constantly repeated and exampled. There is certainly enough damaging material out there to do this.

jeanie on March 18, 2009 at 1:53 PM

Obama may be a tail but he is wagging the dog.

MB4 on March 18, 2009 at 1:28 PM

Heh, but that DOG DON’T HUNT and the only thing it’s good for is eating waffles, licking itself, and crapping out money we DON’T HAVE and giving it to the likes of ACORN!

Oh and that DOG HAS ABSOLUTELY NO BITE WHEN IT COMES TO KEEPING OUR ENEMIES AT BAY, in fact our pit-bull enemies are licking their chops and laughing at our POTUS ankle-biter while planning their next strike against the US…and it’s just a matter of time…count on it!

Liberty or Death on March 18, 2009 at 1:59 PM

No surprise at all. Congress is outraged about something that businesses do all the time. Why? Because they DON’T WORK FOR A LIVING.

They can’t understand executive compensation, because most would never be an executive on the basis of merit.

hawksruleva on March 18, 2009 at 2:03 PM

Listening to the Head of AIG…

The only bonuses paid were to people who were given those bonuses to STAY ON and CLOSE those business units.

Those business unit heads could have left when the decision was made to close those units… and the chaos would have been even worse, with worse losses.

This is a normal business practice… and was in the contracts… these are not PERFORMANCE bonuses per say… but compensation for ensuring that business unit does not implode while shutting down.

Romeo13 on March 18, 2009 at 2:05 PM

Question: If Obama had defended, or was still defending, AIG’s bonuses, would HA and Rush have attack them?

MB4 on March 18, 2009 at 1:27 PM

Simple enough. If Obama defended the bonuses, would contracts still be valid? Yes? Then HA and Rush would defend them, as well.

There’s this term you hear on Rush all the time, it’s “the rule of law”. What it means is, you make decisions based on the law, not on “this pisses me off”.

Of course, Obama wouldn’t defend people’s unlimited right to earn money. Sure, he’ll defend the right of people to be GIVEN money, but being compensated by an employer according to the value you provide? nah – he’s against that, because it’s so… arbitrary.

hawksruleva on March 18, 2009 at 2:09 PM

Thank you, Ed. This was well worth the look.

unclesmrgol on March 18, 2009 at 2:26 PM

Can we just IMPEACH Obama & CO. and start over again?

CynicalOptimist on March 18, 2009 at 2:29 PM

Incidentally, has anybody asked Team Obama why it is more than willing to break mortgage contracts with a bankruptcy-judge cram-down, but won’t cram-down compensation agreements for AIG, despite the fact that the U.S. government owns the company? Kind of odd, don’t you think?
- Lawrence Kudlow

MB4 on March 18, 2009 at 2:31 PM

Mr. Morrissey,

In view of the current testimony in the hearing with Liddy, THIS IS RED MEAT DRIPPING WITH GOVERNMENT HYPOCRISY

Rovin on March 18, 2009 at 2:32 PM

Listening to the Head of AIG…

The only bonuses paid were to people who were given those bonuses to STAY ON and CLOSE those business units.

Those business unit heads could have left when the decision was made to close those units… and the chaos would have been even worse, with worse losses.

This is a normal business practice… and was in the contracts… these are not PERFORMANCE bonuses per say… but compensation for ensuring that business unit does not implode while shutting down.

Romeo13 on March 18, 2009 at 2:05 PM

To call it an “outrage” doesn’t begin to describe the disgraced insurance giant’s payment of $165 million in bonuses to securities traders in the very division whose dealings in so-called credit default swaps was at the root of Wall Street’s current meltdown.

All this for the guys who pushed over the first boulder in the current financial avalanche. And for what? So that American International Group Inc. can “unwind” its disastrous investments. It’s a bit like a bank robber insisting he’s entitled to a finder’s fee for telling you where he buried the loot.

AIG insists (and the Obama administration can’t seem to make up its mind whether it agrees) that the company is “contractually obligated” to follow through with the bonuses. The last time the right of contract was draped in as much sanctimony was when lawyers representing the robber barons of our first Gilded Age argued that the inviolability of contracts precluded the adoption of child labor laws.
- Tim Rutten

MB4 on March 18, 2009 at 2:36 PM

but compensation for ensuring that business unit does not implode while shutting down.

Romeo13 on March 18, 2009 at 2:05 PM

“Business unit” is a real stretch and it already had “imploded”, more like gone Black Hole.

MB4 on March 18, 2009 at 2:38 PM

Listening to the Head Capo of AIG the Mafia

Romeo13 on March 18, 2009 at 2:05 PM

MB4 on March 18, 2009 at 2:41 PM

MB4 on March 18, 2009 at 2:36 PM

MB4,

Playing the devils advocate, and retaining the right to agree with you, Liddy is saying that (in weighing the worst case scenero), AIG could have very well imploded with defaulting on the current contracts and the spiral down would have been a total loss of the current 80+ billion that the taxpayers have already committed to AIG,

That said, how much do you advocate to pay for that “black hole” that may or may not yet be missing?

Rovin on March 18, 2009 at 2:48 PM

I’m still reeling from Barney Frank’s questioning of the head of AIG. Frank is such a colossally gigantic bonehead pr**k m*therf***er….

CarolynM on March 18, 2009 at 2:49 PM

Listening to the Head Capo of AIG the Mafia…

Romeo13 on March 18, 2009 at 2:05 PM
MB4 on March 18, 2009 at 2:41 PM

Nope Reid isn’t there…. but his “boy” Fwank is…

You do realize that the guy testifying came in WAY AFTER all this stuff happened, in order to try to fix it? That he is working for $1 Dollar a year?

And you Dis him?

Romeo13 on March 18, 2009 at 2:50 PM

Democrats are stunningly indignified….this is too funny.

Rovin on March 18, 2009 at 3:02 PM

Great story. It is the hottest thing on Twitter. Job well done.

sybilll on March 18, 2009 at 3:32 PM

Anyone watching Fox? Shep is just LIVID over this whole thing today. Especially about the Dodd Amendment.

hawksruleva on March 18, 2009 at 3:39 PM

Where in the hell are these excutives going to go if they leave Fannie and Freddie? Believe me, I am looking for work in the mortgage business right now and so are about 50,000 other executives who would be happy to work at Fannie or Freddie for any salary with no bonus at all. I would be pissed about these bonuses even if Fan and Fred had not been taken over by the government. It’s ridiculous.

rockmom on March 18, 2009 at 3:46 PM

That he is working for $1 Dollar a year?

And you Dis him?

Romeo13 on March 18, 2009 at 2:50 PM

If he wants to pay bonuses to a pack of thieves, then yes indeed.

MB4 on March 18, 2009 at 4:01 PM

After the whole Jon Stewart vs. Jim Cramer bout, I have to agree with Bill O’Reilly — it would be great to see Frank, Dodd, et al, appear on the “Daily Show.”

Time to “go to the mattresses,” so to speak.

rockmycar on March 18, 2009 at 4:08 PM

Playing the devils advocate, and retaining the right to agree with you, Liddy is saying that (in weighing the worst case scenero), AIG could have very well imploded with defaulting on the current contracts and the spiral down would have been a total loss of the current 80+ billion that the taxpayers have already committed to AIG,

Al Gore has the same chicken little schtick. Besides the 80+ billion (I seem to recall, but am not sure, that it’s a lot more than that) is mostly/all lost in all likelihood anyway. Like sinking repair money into a lemon GM car. Those who took out these “contracts” with AIG should have had better sense.

That said, how much do you advocate to pay for that “black hole” that may or may not yet be missing?

Rovin on March 18, 2009 at 2:48 PM

Zip. Put them into bankruptcy where they belong. Better late than never.

MB4 on March 18, 2009 at 4:08 PM

While everyone assails AIG for using less than 0.1% of the taxpayer-bailout money it received to meet contractual obligations in compensation through retention bonuses,

Why do you keep refering to these as retention bonuses???……11 of the top 73 bonus receipients have previously left the company BEFORE they received their bonuses????

sirpatrick on March 18, 2009 at 4:14 PM

Why do you keep refering to these as retention bonuses???……11 of the top 73 bonus receipients have previously left the company BEFORE they received their bonuses????

sirpatrick on March 18, 2009 at 4:14 PM

Actualy, the problem is calling the bonuses at all…

These Execs knew their business units were going away… so they were contractualy offered compensation, a bonus, to stay and perform an orderly shut down of that business unit.

Basicly, if you are able to get rid of this problem for us, by this date, we’ll pay you this “bonus”.

Romeo13 on March 18, 2009 at 4:37 PM

Vote me king and I’ll have Frank and Dodd burned at the stake on live TV. Seriously.

marklmail on March 18, 2009 at 4:38 PM

Pitchforks and Torches………!

Seven Percent Solution on March 18, 2009 at 4:40 PM

I still say, where are the scoldings and investigations of the $90 million to Raines and other millions to Johnston and Gorelick?

PattyJ on March 18, 2009 at 1:22 PM

Yes, let’s have Barney Frank, Maxine Waters, etc., get under oath in front of some cameras and explain to the American public why they were loudly defending the “stellar” performance of that fraud and thief Franklin Raines a few years ago when he was cooking FM’s books so he could pay himself $90 million of taxpayer money — most of which he got to keep, despite the evidence of his criminal fraud.

And while Barney’s under oath, he can also explain why it was not a conflict of interest for him to be presiding over a Congressional committee that regulated FM/FM while Barney was screwing an FM executive.

There are a whole lot of investigations that should be going on into this mess, but Frank belongs on the hot seat, not in the questioner’s chair.

AZCoyote on March 18, 2009 at 4:50 PM

Cool down. It´s not as if AIG is giving 900 million to Hamas.

el gordo on March 18, 2009 at 4:51 PM

The “Boss” just got thru on Beck’s program along with Jonah Goldberg. Both did a great job.

If I was a staffer working for either Barney Frank or Chris Dodd, I’d be updating my resume. It’s just unfortunate that the top heads won’t roll. And “brownie-Geithner” is toast.

Rovin on March 18, 2009 at 5:18 PM

Bloody Congress also voted itself a bonus.

$93K if I’m not mistaken.

drjohn on March 18, 2009 at 5:24 PM

Time for the towns people to form hearings,, send letters to Washington demanding Barney Frank and certain other members of congress attend the hearings to testify about their involvement in the failings of Fannie Mae and Freddie Mac, come and testify at the hearing and demand they give answer to the peoples questions! What did they know and when did they know it!
I think after Tea Parties, time to hold our own hearings! if they don’t come,, send subpoenas. If they still don’t come,, hold mock hearings!!

JellyToast on March 18, 2009 at 6:24 PM

one might ask why Freddie Mac built in retention bonuses in this November filing

The reason why Freddie Mac got it and AIG shouldn’t is simple…Barney Frank is not sleeping with the president of AIG.

right2bright on March 18, 2009 at 6:25 PM

Charles Krauthammer: “Democrat’s claiming executive compensation in bill was immaculately conceived.

Rovin on March 18, 2009 at 6:50 PM

Hey,, lets not forget Barney and O Reilly!
http://www.youtube.com/watch?v=RAuOEdttjZQ

JellyToast on March 18, 2009 at 7:14 PM

JUSTICE for Barney Frank!

petefrt on March 18, 2009 at 8:40 PM

Is that an ANAL weeetention bonus pwan, do you say, Barney?

seejanemom on March 18, 2009 at 8:41 PM

There are a whole lot of investigations that should be going on into this mess, but Frank belongs on the hot seat, not in the questioner’s chair.”

Amen, AZCoyote!

PattyJ on March 18, 2009 at 9:29 PM

- Tim Rutten

MB4 on March 18, 2009 at 2:36 PM

Again, AIG is a victim of Obama Waters Franks LLC, and every executive who stayed there through closeouts deserves every penny of what they earned.

The whole mortgage market and its verious derivatives were invented by the people at Freddie Mac and Fannie Mae. The bundling of loans in particular, with the supposed full faith of the federal government behind each bundle. Of course, there was rotten fruit in each bundle, but what the hey?

Closeouts are the pits — you don’t have the leisure to plan your departure — one day you have a job, and the next day you don’t. These “retention bonuses” are designed to make it worthwhile for those who do this to assume the risk of no job for some period after the closeout ends.

I know; I’ve done closeout on government contracts, and you get to watch all your friends leave for plum jobs on new contracts and you get to assure that every last i is dotted and t crossed on what the government expects from you.

unclesmrgol on March 19, 2009 at 1:28 AM

man don’t make me throw a tea bag.

oh and this 90% tax on these things? Thats to shut people up. They’ll squirm and not have to pay a dime. These guys are pro’s. bye bye bailout money, hello new yacht.

johnnyU on March 19, 2009 at 8:31 AM

I’ll say it again. The terrorists hit the wrong building.

mr1216 on March 19, 2009 at 10:13 AM

We should demand that the paychecks be withheld on those that took the language out of the bill that prevented bonus payouts until the money is fully refunded. Perhaps that would make these morons do their jobs in Washington.

workingforpigs on March 19, 2009 at 10:24 AM

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