CEO Reform Needed in Light of Failures, Freddie Mac, Fannie Mae
September 09, 2008
Reform to the structure and terms of CEO pay have been a long-simmering issue that has gained traction recently, especially as more and more prominent companies are failing while their executives are receiving millions and millions of dollars even as they’re being fired.
The most recent example, which instead of being a private matter amongst shareholders will affect all taxpayers, is the takeover of mortgage giants Freddie Mac and Fannie Mae by the federal government.
As the takeover occurred, the top CEOs at each organization, Daniel Mudd of Fannie Mae and Richard Syron of Freddie Mac, while not wholly to blame for the demise of their respective companies, were fired, but still are expected to receive $9.8 and $14.9 million as severance pay.
For heading companies whose failure could cripple the U.S. economy for years and getting fired from their job, these two will be set financially for life and cost U.S. taxpayers potentially billions should borrowers default on the loans provided by Freddie and Fannie while not under government control (the hope is that the takeover will calm the housing market and return the industry to profit enabling the government to pay back taxpayers for any expenses incurred).
For the record, in 2007 the CEO pay was about 344 times that of the average worker; something to consider the next time a major corporation goes belly-up.