Freddie Mac (NYSE:FRE) Offers New CFO Huge Pay Package

Now that Freddie Mac (NYSE:FRE) has offered a huge pay package to incoming CFO Ross Kari, where he could end up making about $3.5 million while also getting a signing bonus close to $2 million, lawmakers can drop the faux outrage over executive pay and financial institutions, as the hypocrisy is deafening, now that this news has come out; which was blessed by the Federal Housing Finance Agency after getting advice from the Treasury Department. The FHFA oversees the government-backed Freddie Mac.

According to Freddie Mac, Kari will receive a base salary of not less than $675,000, with annual installments adding up to $1.66 million on top of that. Other incentives, if goals are reached, could go as high as $1.16 million. Oh yeah, along with all of this he gets a signing bonus of $1.95 million “in recognition of the forfeited annual incentive opportunity and unvested equity at his current employer,” according to a regulatory filing. Kari was hired away from Fifth Third Bancorp (NASDAQ:FITB), after serving there under a year. He will assume his new duties on October 12th at Freddie Mac.

Comparing that to his salary at Fifth Third, he received an annual salary of $580,000 while getting a $100,000 bonus for signing.

While I’m a free market advocate through and through, and the pay offered to Kari doesn’t bother me per se, it’s the outrageous hypocrisy of the government and some of its pretenders that sickens me. After this, let’s not hear another word for lawmakers about the amount of pay banking executives get in the private sector, as Freddie Mac, as most people know, was bailed out with $51 billion in taxpayers dollars, but because of its government ties is able to hire Kari at what is being called an amount that “is comparable to market pay.” Amazing how the market is now cited as what determines pay when it’s related to Freddie Mac.

FHFA spokeswoman Stefanie Mullin said concerning Kari’s pay package that “Freddie Mac hired Mr. Kari for a critical job at a critical time in our nation’s economy and for the company..

“FHFA approved the compensation after consultation with the Treasury Department, as Kari is well-qualified for the position and the amount is comparable to market pay.”

So now we can all stop playing pretend with all of this and focus on irrelevant things like executive pay which in reality had nothing to directly do with the banking problems, although bonuses could have indirectly resulted in more risky behavior than should have been tolerated. But the pay numbers themselves didn’t contribute to the problem, the behavior did.

Now that the government has led with this, we probably won’t be hearing from politicians on this issue much more, as it has obviously sent a signal that compensation isn’t going to be considered part of the alleged solution to banking woes going forward.