How to Get Rich Through Failure

Fannie Mae and Freddie Mac's former CEO's may get very nice departing gifts:

Over the years, Fannie Mae and Freddie Mac showered riches on many winners: their executives, Wall Street bankers and Washington lobbyists. Now the foundering mortgage giants are leaving some losers in their wake, notably their shareholders, rank-and-file employees and, in the worst case, American taxpayers.

But even after the government seized the mortgage finance companies on Sunday and dismissed their chief executives, the companies’ outgoing leaders could see big paydays — a prospect that angers many investors, particularly because ordinary stockholders could be virtually wiped out.

Under the terms of his employment contract, Daniel H. Mudd, the departing head of Fannie Mae, stands to collect $9.3 million in severance pay, retirement benefits and deferred compensation, provided his dismissal is deemed to be “without cause,” according to an analysis by the consulting firm James F. Reda & Associates. Mr. Mudd has already taken home $12.4 million in cash compensation and stock option gains since becoming chief executive in 2004, according to an analysis by Equilar, an executive pay research firm.

Richard F. Syron, the departing chief executive of Freddie Mac, could receive an exit package of at least $14.1 million, largely because of a clause added to his employment contract in mid-July as his company’s troubles deepened. He has taken home $17.1 million in pay and stock option gains since becoming chief executive in 2003.

Both executives stood to make millions more from restricted stock grants and options, but those awards are now worthless because of the plunge in the companies’ share prices. Even so, their past pay — and the idea that they might receive more — irks some investors. ...

Whether Mr. Mudd and Mr. Syron will collect their severance package is unclear. A spokeswoman for the Federal Housing Finance Agency, the companies’ primary regulator, declined to provide details about their exit packages. F.H.F.A. officials said the compensation of their successors, Herbert M. Allison Jr. and David M. Moffett, both longtime financial industry executives, would be “significantly lower” than that of the departing chief executives.