Fannie Mae: did he fall or was he pushed? The multi-million dollar question
Fannie Mae appears headed for a potentially explosive fight with ousted former CEO Frank Raines:
Two top executives ousted from Fannie Mae last week appear headed for a fight with the company over the size of their multimillion-dollar benefits and the circumstances of their departure.
It’s enough money over which to tussle:
Raines “has asserted” that his retirement won’t take effect for another six months, allowing him to collect an additional $600,000 in salary.
And it’s more than salary, potentially much more:
Raines’s suggestion that he had “good reason” for retiring would also mean he could keep options to purchase more than 69,000 shares at $80.95 a share until 2011. Fannie’s stock closed yesterday at $69.72, up 10 cents, on the New York Stock Exchange. As it is, Raines will walk away with options on 1,996,890 shares. His exercisable options on Dec. 21 were worth more than $5 million.
Meanwhile, as Fannie considers the matter, someone is looking over its shoulder:
OFHEO has said it will be reviewing the termination packages and seek recovery if it determined the two men “were unjustly enriched.”
Fannie’s caught between Scylla and Charybdis: on the one hand, Fannie must placate OFHEO (and behind OFHEO, Treasury and Congress) or imperil its cluster of government advantages. But if in doing so Fannie confronts Raines and Howard, could they say things that (true or not) would damage Fannie’s standing in the financial markets?
