A search firm trying to find a new CEO for Fannie Mae is asking candidates this very basic question: Can you live on $500,000 a year?
According to industry advisors who have been briefed on the GSE's CEO quest, the search firm of Heidrick & Struggles is telling candidates that the salary range, at best, might be twice what the president of the United States earns.
Moreover, it appears that Fannie's overseer, the Federal Housing Finance Agency, is of the mind that eventually a bill will be passed some time this year capping GSE executive salaries at the federal maximum which is roughly $250,000.
“The offer is $500,000 maybe a little more,” said one advisor, requesting his name not be used because of the sensitivity of the situation. “The figure has nothing to do with bonuses. There will be no bonuses.”
He added that the White House is aware of the “salary problem” and thinks it can convince Congress to allow an exception for the GSEs – but nothing north of $500,000.
A spokeswoman for the Chicago-based Heidrick & Struggles could not be reached for comment.
Departing Fannie CEO Michael Williams earned $900,000 in base pay in 2011 but with bonuses and other compensation he increased his take-home pay to about $6 million, which angered many members of Congress because of the cost of the GSE bailout.
A few weeks ago two U.S. senators introduced a measure to cut any unpaid bonus money to executives of both Fannie, and Freddie Mac. Industry executives expect that Congress may very well cap GSE executive pay – and soon. “I think it will pass both the House and Senate,” said one trade group official.
But mortgage headhunters and even one former GSE executive suggested that FHFA might find a way around federal salary caps. “You can call the top guy a consultant and pay him extra – that might work,” said a retired Fannie Mae manager.
As for the Fannie job search, the process is just beginning. Current Mortgage Bankers Association Dave Stevens has been mentioned as a candidate. Stevens declined to comment on the situation, but officials close to him say he is not interested in working for Fannie Mae.
Freddie Mac is also in the hunt for a new CEO and Stevens is said to have no interest in that position as well.
