Franklin Raines To Get $1.37 Million Annual Pension Payment
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Fannie Mae, the largest source of money for the mortgage market, said its former chief executive officer, Franklin Raines, will receive benefits including an annual payment of $1.37 million after his ouster last week.
Mr. Raines would also receive deferred compensation of about $8.7 million and lifetime medical and dental coverage, according to a filing yesterday with the Securities and Exchange Commission. As of December 21, he had vested options for 1.63 million shares, and is slated to receive an additional vested options for an additional 368,819 shares for what the company called his retirement.
Mr. Raines, 55, and Fannie Mae’s chief financial officer, J. Timothy Howard, were let go after the SEC and the Washington-based, government chartered company’s federal regulator said Fannie Mae wrongly accounted for contracts designed to protect its more than $900 billion mortgage portfolio from swings in interest rates. The company has said it may have to restate earnings by as much as $9 billion.
Fannie Mae said its regulator directed it to withhold payment of compensation and benefits to Messrs. Raines and Howard. Fannie Mae is considering “legal and contractual obligations” with Messrs. Raines and Howard, whose resignation is also deemed a retirement by Fannie Mae due to his age and years at the company, according to the filing.
Messrs. Raines and Howard defended the accounting at Fannie Mae after the Office of Federal Housing Enterprise Oversight found the company broke rules in accounting for derivatives contracts, and in at least one instance deferred expenses to achieve an earnings target that triggered maximum bonuses for executives. The company remains under investigation by the SEC and the Department of Justice. Derivatives are financial contracts whose value is derived from debt, equity securities, currencies, and commodities.
Fannie Mae also said in the filing that Mr. Raines “asserted” that his retirement isn’t effective until June 22, 2005, which would result in him being entitled to receive about $600,000 in salary for the year.
