This annual report describes FHFA's accomplishments, as well as challenges, the agency faced in meeting the strategic goals and objectives during the past fiscal year.
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As conservator, FHFA is focused on ensuring that each Enterprise builds capital and improves its safety and soundness.
1.
Operate the business in a safe and sound manner.
2.
Promote sustainable and equitable access to affordable housing.
2023 Scorecard
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Glossaries
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The Executive Compensation Rule sets forth requirements and processes with respect to compensation provided to executive officers by Fannie Mae, Freddie Mac, the FHLBanks, and the Office of Finance, consistent with the safety and soundness responsibilities of FHFA under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of 2008. The 2014 final rule is codified at 12 CFR part 1230. Link to the Executive Compensation Rule.
The Golden Parachute Payments Rule addresses prohibited golden parachute payments to affiliated parties in connection with termination from Fannie Mae, Freddie Mac, the FHLBanks, or the Office of Finance. The 2018 final rule is codified at 12 CFR part 1231. Link to the Golden Parachutes Payments Rule.
From 1999 to 2008, the annual compensation of the FHLBank directors was subject to statutory caps. Consequently, the annual maximum compensation for the chairmen of the boards of directors was set at the statutory cap. Although the annual compensation of the other directors varied by position (vice chair, audit committee chair, other committee chairs), it was similar across the FHLBanks.
With the enactment of the Housing and Economic Recovery Act of 2008 (HERA), Congress repealed the statutory caps and authorized the FHLBanks to pay reasonable compensation to their directors, subject to FHFA review.
During 2021, the total fees paid to all FHLBank directors were $22.2 million, ranging from $1.56 million for the 14-member board of the FHLBank of Atlanta to $2.51 million for the 22-member board of the FHLBank of Des Moines. The average compensation for a director (including the committee chairs) ranged from $111,134 at the FHLBank of Atlanta to $121,194 at the FHLBank of San Francisco.
For more information on annual FHLBank board of director compensation, see FHFA's Annual Report to Congress.
For FHLBank executive compensation, see documents filed with the Securities and Exchange Commission. Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system – Company Filings.
The compensation paid to senior executives of Fannie Mae and Freddie Mac (the Enterprises) is established after consideration of private sector pay comparability reviews prepared by outside pay consultants retained by the boards of directors, and in consultation by FHFA with the U.S. Department of the Treasury.
For more information on annual Fannie Mae and Freddie Mac executive compensation, see FHFA's Annual Report to Congress and the Form 10-K Filings and Reports to Congress on Compensation linked below.
In 2012, FHFA changed the compensation Fannie Mae and Freddie Mac executives are eligible to earn, and these changes remain in effect today. FHFA designed the compensation structure to provide competitive compensation and retain key managers. It includes a retention feature and reductions for missed performance.
Implementation of the new structure also included a 10 percent reduction to most executives’ total direct compensation and eliminated bonuses and incentive plans that had been in place.
Each Enterprise executive officer’s target total direct compensation is the sum of base salary and deferred salary, which are paid in cash. Base salary is earned and paid on the Enterprises’ standard payroll cycle. Base salaries of Enterprise executive officers may not exceed $600,000. Deferred salary is earned on the Enterprises’ standard payroll cycles and paid as described below.
Under the incentive compensation plans, there are two types of deferred salary—fixed and at-risk. The fixed portion is earned in each quarter and will be paid out in full at the end of the same quarter in the following year. At-risk deferred salary is equal to 30 percent of the total direct compensation of each executive and may be reduced based on performance of the company and the individual. The first portion subject to reduction (15 percent) is based upon conservatorship performance, as determined by FHFA. FHFA bases its assessment on an evaluation of performance against the Scorecard. The remaining portion subject to reduction (15 percent) is determined by the Enterprises. Fannie Mae's and Freddie Mac's assessments are based on goals established by their boards of directors.
For incentive plan participants hired after December 31, 2019, at-risk deferred salary earned in each quarter will be paid out at the end of the same quarter of the second calendar year following the quarter in which it was earned.
For incentive plan participants hired before December 31, 2019, at-risk deferred salary earned in each quarter prior to January 1, 2022 will be paid out at the end of the same quarter of the following calendar year, and at-risk deferred salary earned in each quarter after January 1, 2022 will be paid out at the end of the same quarter of the second calendar year following the quarter in which it was earned; provided, however, that as a transition period, one-half of at-risk compensation earned by these incentive plan participants during 2022 will be paid out in 2023 and the remainder will be paid out in 2024.
The plan also includes a retention tool. If an executive leaves the company or is terminated, the fixed deferred salary is reduced by 2 percent per month for each month between the date the employee leaves and January 31st of the second calendar year after the end of the performance year, subject to certain exceptions including retirement.
The compensation listed in each of Fannie Mae’s and Freddie Mac’s most recent annual reports as paid in the most recent year may include compensation earned in the most recent year and deferred compensation earned in prior years but paid in the most recent year.
Information regarding executive compensation oversight is set forth in the Enterprises’ Form 10-K SEC annual filings.
See Item 9b. Other Information (and) Item 11. Executive Compensation
Fannie Mae 2022 10-K
Freddie Mac 2022 10-K
Statement of Acting Director Edward J. DeMarco, Before the U.S. House of Representatives, Committee on Oversight and Government Reform (11/16/2011)
Date last updated: August 28, 2023
