After talking with its regulator, Fannie Mae has amended the employee contracts of its three top officers -- including chairman/chief executive officer Franklin Raines and chief financial officer Tim Howard -- modifying the conditions under which they can be fired for "cause."The changes appear to be aimed at limiting payouts to the executives in the event they are fired. Fannie disclosed the amended contract language in a Sept. 23 filing with the Securities and Exchange Commission. Under the amended contract language, if Messrs. Raines, Howard, or vice chairman/chief operating officer Dan Mudd are fired for cause they will only be entitled to accrued "base salary." OFHEO recently lost a legal battle with former Freddie Mac chairman Leland Brendsel over $53 million in back pay/compensation owed to him after he was ousted by that company's board. The amended employee contracts at Fannie also contain language that could force the company into splitting the chairman and CEO functions. A Fannie Mae spokeswoman said the amended contracts were "already under way" prior to the accounting allegations levied against Fannie this week.

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