http://www.mortgagenewsdaily.com/12292004_Fannie_Mae_Executives_Forced_Out.aspexcerpt:
Among other Fannie Mae news stories the past few days is one about the compensation former CEO Franklin Raines and former CFO J. Timothy Howard will be receiving after they were forced out of their jobs last week by Fannie Mae's Board of Directors under pressure from the Office of Federal Housing Enterprise Oversight (OFHEO).
Fannie Mae, in a Form 8-K filing with the Security and Exchange Commission on December 27, outlined the compensation packages to which the two are entitled. While referring to Mr. Raines' "retirement" the filing states that, should the company pay bonuses for 2004 under its Annual Incentive Plan, that Mr. Raines will be entitled to consideration for a pro-rata share. Mr. Howard will be entitled for consideration for both 2004 and 2005.
Mr. Raines will receive monthly payments of $114,393 from the corporation's pension plan for the rest of his and his surviving spouse's life and, if he is allowed to make his retirement effective in June, 2005 as he has requested rather than immediately, that pension amount would rise to $116,300. Mr. Howard will receive estimated monthly payments of $36,071 from the plan. In addition, both men will receive lifetime medical and dental coverage for themselves, their wives, and any dependents under age 21 and corporation paid premiums on substantial life insurance policies. Mr. Raines' medical insurance premiums will be paid; Mr. Howard will have to pay at the reduced rates provided to all retirees.
In addition, as of the date his resignation was requested, Mr. Raines held vested and exercisable options to purchase a total of 1,628,071 shares of Fannie Mae common stock. The option price was exceeded by actual stock value by $5,545,270. In addition, Mr. Raines' "retirement" triggered an addition package of options to purchase some 380,000 shares at varying prices. The options are vested and will expire between May 2008 and January 2014. He may also be entitled to receive additional shares under the corporation's Performance Share Program but no firm value figures were available.
Mr. Howard holds vested options that, if exercised immediately, would reap $4,395,864. Because Mr. Howard resigned, he will receive no further options nor will any additional options he already holds vest after January 31, 2005.
Mr. Howard is contesting the definition of his resignation and if successful, will receive his salary through June 30, 2007. This would result in additional payments of $1.7 million and continued free medical and dental coverage.
OFHEO has announced that it is reviewing the severance packages awarded to the two executives and there is a possibility that they may seek to have them formally terminated. This would prevent them from collecting any severance payments at all.
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