As Fannie Mae and Freddie Mac enter another year under government conservatorship, their regulator clamped down on executive compensation Thursday.

After consulting with the Obama administration's pay czar, the Federal Housing Finance Agency (FHFA) said average compensation at the government-sponsored enterprises would be 40% less than the paychecks issued before the September 2008 conservatorship.

Just five employees — the chief executives and chief financial officers of both firms along with Freddie's chief operating officer — will earn annual salaries exceeding $500,000, the FHFA said. Before the firms were seized by the government, 16 employees at Fannie and Freddie took home more than $500,000.

Incentive compensation will be targeted at one-third of the employee's total earnings and any remaining pay will be issued over time. Deferred compensation will not be paid to employees who leave Fannie or Freddie.

In a press release on Thursday, Edward DeMarco, the Finance Agency's acting director said the changes result in "competitive packages that benefit" from the standards imposed on firms that have received money from the Troubled Asset Relief Program.

Charles Haldeman, Freddie's chief executive, is set to receive a $6 million compensation package for 2009, including a $900,000 base salary. That is nearly half the $13.4 million Richard Syron was paid before he was forced out as Freddie's chief executive as part of the conservatorship.

Total compensation for Fannie's chief executive, Michael Williams, will be $2 million for 2009, including a $900,000 base salary. His predecessor before the conservatorship, Daniel Mudd, was paid $12.2 million in 2007 with a $990,000 salary.

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