Fannie Mae Execs to be Enriched Rather than Imprisoned
While Martha Stewart spends time in jail for lying about a "crime" for which she was never charged, recently ousted Fannie Mae executives Franklin Raines and Timothy Howard are getting serverance packages that will keep them rich for the rest of their lives.
Fannie Mae yesterday released details of the severance package for Franklin Raines and said the former chairman and chief executive would continue to receive a salary until mid-2005 despite being ousted amid an accounting scandal at the mortgage finance provider.
Mr Raines has told Fannie Mae that his retirement from the company is not effective until June 2005, entitling him to some $600,000 in salary in the next six months. He will also receive almost 2m vested stock options, $116,300 per month in pension payments for life, $8.7m in deferred compensation and lifetime medical and dental insurance. The figures were revealed in a filing to the Securities and Exchange Commission.
It is unclear whether Mr Raines, who has already left the company, will receive a cash bonus for 2004. Fannie Mae said it was considering the impact of its pending financial statement, which could be in the order of $9bn, on executive bonuses.
[…]
In a sign that Fannie Mae and its regulator could have a battle on their hands over the payment of Mr Raines’s benefits, the company yesterday said it would consider its "legal and contractual obligations" on payment of compensation and benefits to its former CEO as well as Timothy Howard, the former chief financial officer, who resigned last week.
Mr Howard has also been allowed to retire, and will get about $84,000 in pay through January 2005 as well as stock options, monthly retirement payments worth $36,071 and other benefits. He will continue on the board until the end of January.
While the SEC was vigorously pursuing Martha Stewart for a transaction that made her $40,000 and did not defraud her stockholders or anybody else, Fannie Mae was using creative accounting to hide as much as $9 billion in losses according to regulators. This allowed them to keep their shares artificially inflated and as well as the executive bonuses.
| Go to Home - Most Recent Posts
December 28th, 2004 at 3:58 pm
There’s an interesting contrast between Stewart and Raines. Stewart built her business from scratch. Indeed, she essentially built an entire market. In contrast, Raines got his Fannie Mae job principally because of his political connections with the Clinton administration. Fannie Mae is a political company, ergo it’s reasonable to expect its CEO to be more politician than businessman.