Freddie Mac top executive is found dead
Troubled mortgage financing giant Freddie Mac and its employees were dealt another blow Wednesday when one of the company’s top executives was found dead in his Virginia home, an apparent suicide.
The death of David Kellermann, 41, the acting chief financial officer, adds more turmoil at Freddie Mac. Teetering near failure, the company was seized by the government in September, along with sister company Fannie Mae, and is facing investigations by the Justice Department and the Securities and Exchange Commission.
“Your heart has to go out to all the employees,” said Jaret Seiberg, a financial policy analyst at Washington Research Group. “It’s not enough that they’ve endured tremendous financial and political hits to the company they’ve helped build, but now they’ve lost a colleague.”
There was no indication that Kellermann, a longtime employee who took over his new position in September, was a focus of those investigations.
“Freddie Mac knows of no connection between this terrible personal tragedy and the ongoing regulatory inquiries,” said Doug Duvall, a spokesman for the company.
Still, the death of an experienced, high-level executive added to unrest at the top.
Since last fall, the McLean, Va., company has lost two chief executives, including David Moffett, whom federal officials installed in the takeover last fall. Moffett quit last month shortly before Freddie Mac posted a $23.9-billion quarterly loss. The government has committed as much as $200 billion to each of the nation’s two biggest owners and guarantors of mortgages.
And the pending investigations have increased pressure on Freddie Mac. Officials with the SEC and the U.S. attorney’s office in Alexandria, Va., which is conducting the Justice Department probe, would not comment.
“Freddie Mac has undergone a period of corporate chaos that may be unmatched in the financial system,” Seiberg said.
Kellermann’s body was found in the basement of his upscale home in Vienna, Va., just before 5 a.m. Wednesday, according to the Fairfax County Police Department. The cause of death had not been determined, but police said there were no signs of foul play.
News reports indicated he had hanged himself, but police would not comment.
The state medical examiner was expected to conduct an autopsy and have preliminary results by today.
Kellermann began working for Freddie Mac in 1992, rising from a financial analyst and auditor to the company’s controller and principal accounting officer before taking on the interim job last fall as part of the management shake-up.
His profile on corporate social networking website LinkedIn noted that he had “succeeded at an ever-increasing level of responsibility.”
“My definition of success is the full utilization of my experience and abilities, and those of a carefully chosen and trained team along the lines of excellence,” he wrote.
Freddie Mac’s website said Kellermann also was a volunteer board member of Coalition for the Homeless in Washington.
Kellermann was awarded a retention and performance bonus in September of as much as $850,000, to be paid in four installments through next March, according to SEC filings. He received $170,000 in December. The final payment installment of $297,500 was to be based on performance.
The payments are part of a bonus plan at Freddie Mac that paid $17.3 million to employees last year and is scheduled to pay $74.5 million this year, according to the company.
Kellermann owned 38,861 Freddie Mac shares as of April 11, but they were valued at $33,420 because the stock has been trading at less than a dollar, according to a Bloomberg analysis. A year earlier, those shares were worth about $25 each.
Treasury Secretary Timothy F. Geithner said Wednesday that he and others in the department were saddened by the news and offered his sympathies.
The Federal Housing Finance Agency, which runs Freddie Mac as the government’s conservator, described Kellermann in a statement as “a person of the utmost ethical standards who was hardworking and knowledgeable in his field.”
John Koskinen, Freddie Mac’s interim chief executive, said Kellermann would be remembered “for his affability, his personal warmth, his sense of humor and his quick wit.”
Koskinen held a town hall meeting for Freddie Mac employees Wednesday, spokesman Duvall said.
“He talked about the spectacular contributions David has made to the company in his 16 years and encouraged employees to support each other during these difficult times,” Duvall said.
The company has about 5,000 employees, most of them at the headquarters.
Because of the death, Freddie Mac postponed for at least a day a securities offering scheduled for Wednesday.
He is survived by his wife, Donna, and their 5-year-old daughter.