Fannie Mae withholds 2004 bonuses
January 24, 2005
Company's top accounting officer resigns
Fannie Mae, the home loan financing giant beleaguered by major financial misstatements, will withhold last year's cash bonuses for its top managers, according to a Securities and Exchange Commission report. Fannie Mae also reported that its principal accounting officer, Leanne G. Spencer, is stepping down as senior vice president and controller on Jan. 31.
Fannie Mae last month replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae's chief financial officer, Timothy Howard, resigned Dec. 21. The two left in the wake of an SEC directive to make accounting corrections that could knock out some $9 billion of Fannie Mae's past profit. Fannie Mae's financial accounting troubles have drawn shareholder lawsuits and investigations by the Justice Department and the Securities and Exchange Commission.
Fannie Mae's federal regulator, the Office of Federal Housing Enterprise Oversight, had asked the company to hold off paying any compensation to Raines until there was an investigation of this compensation package and Raines' retire early retirement. Raines was reportedly due to receive a pension of about $1.3 million a year for life, according to SEC documents. In the SEC documents, Fannie Mae also revealed that Raines has deferred compensation of $8.7 million to be paid through 2020 and owns more than $5.5 million in the company's stock.
On Jan. 18, Fannie Mae appointed David C. Hisey as senior vice president and controller, effective Feb. 1. Hisey, 44, has served as Fannie Mae's senior vice president of financial controls and operations since Jan. 3 of this year, and he earlier served as managing director and practice leader of the lending and leasing group and vice president of financial services consulting at BearingPoint Inc., formerly known as KPMG Consulting, Inc.
In the Jan. 21 SEC filing, Fannie Mae announced that no 2004 cash bonuses will be paid to the company's executive officers or senior vice presidents. "The Compensation Committee and the Board (of Directors) also determined to defer certain actions under Fannie Mae's performance share program until Fannie Mae has reliable financial data for prior fiscal years," the company also announced.
Also, the company announced that its board of directors approved a bylaws change that eliminates a requirement that the chairman of the Board of Directors must also be its CEO.
Since Dec. 21, Stephen Ashley as served as non-executive chairman of Fannie Mae, and Daniel Mudd has served as interim CEO.
The Washington Post reported that Fannie Mae in 2003 paid bonuses to 749 employees, averaging $86,953 per person.
Shareholder-owned Fannie Mae buys mortgages, repackages them and sells them to investors in order to keep a constant flow of funds in the nation's home loan industry.
Copyright 2005 Inman News