Fannie, OFHEO May Contest '04 Bonuses

Ousted Fannie Mae executives Franklin Raines and Timothy Howard maintain that they are entitled to their bonuses for 2004, but the company and its regulator, the Office of Federal Housing Enterprise Oversight, say they may contest such payments."We will be reviewing their termination packages," an OFHEO spokeswoman said. Mr. Raines, Fannie's former chairman and chief executive, and Mr. Howard, its former chief financial officer, argue that they relinquished their posts on Dec. 21 for "good reason" and that Fannie has to provide full retirement benefits and honor their contracts through June 22, according to a company filing with the Securities and Exchange Commission. The two executives were pressured to leave after the SEC rejected the company's hedge accounting policies and directed the company to restate it earnings. Mr. Raines officially retired and is in line to receive a $1.37 million annual pension. In 2003, the former CEO received a $4.2 million annual bonus and an $11.6 million bonus for long-term performance. "At this time, it cannot be determined whether Mr. Raines will receive a bonus for 2004," the company said in the SEC filing. Mr. Howard officially resigned and is in line to receive a $1.01 million annual pension. The former CFO, who was directly responsible for Fannie's accounting policies, received a $1.2 million annual bonus in 2003 and a $3.5 million bonus for long-term performance. Mr. Howard continues to serve on Fannie's board until Jan. 31.