Taxpayer funded signing bonus at Freddie Mac?

Last we checked, Freddie Mac (FRE) was still operating under a conservatorship, having received over $51 billion in taxpayer money. And, we seem to recall lots of chest-beating last year about sharply lower salaries and fewer perks for the new group of top executives charged with setting Freddie (and Fannie Mae) back on the path to prosperity.

So you can imagine our surprise when we came across this employment contract yesterday for Freddie’s newly named CFO, Ross J. Kari. Here’s a few key bullets:

  • annual compensation of $3.5 million (this includes $675K in salary, $1.6 million in something called “additional annual salary” and $1.1 million in a target incentive
  • a $1.95 million signing bonus
  • immediate buyout of Kari’s house (or perhaps houses)
  • reimbursement for travel between Washington D.C. and Kari’s residences in Ohio, Washington and Oregon

Needless to say, none of this — and certainly not the ridiculous sounding additional annual salary — was included in the press release that Freddie put out earlier this week. But Freddie CEO Charles Haldeman Jr. did say this: “Ross will be leading a proven group of finance executives who continue to strengthen our financial controls. When I came to Freddie Mac I said that building out our senior executive team was near the top of my agenda, and with a new CFO and COO both now on board, we’ve met that goal.”

No doubt that Kari is a talented executive — one who clearly gets around. He spent the past 10 months at Fifth Third Bancorp (FITB) where he was paid substantially less working for the private sector: $580K plus a $100K signing bonus when he joined the bank last November. Before that, he was at insurance giant Safeco, which was bought by Liberty Mutual last year.

Still, you don’t have to be a tea-bagger to wonder why something like Freddie, which is being propped up by the government to the tune of billions of dollars, is able to hand out such a generous welcome package to a new executive.