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Fannie Moves Controller, Drops Bonuses

Still reeling in the wake of its $90 billion restatement, Fannie Mae transfers its controller to its e-business and holds back executive bonuses un...
Stephen TaubJanuary 25, 2005

Officials at Fannie Mae announced that principal accounting officer Leanne Spencer will resign as senior vice president and controller, effective Jan. 31 and that the company will not award 2004 bonuses to top management.

Spencer will continue working at Fannie Mae, however, taking what reportedly is a lesser position. In an assignment that could extend through Jan. 31, 2006, she will fill the non-officer slot of special advisor to Michael Williams, president of Fannie Mae’s e-Business. As special advisor, Spencer will continue to receive her salary, benefits, and plan coverage.

Spencer, a 13-year company veteran, had reported to former CFO Timothy Howard and was involved in the accounting policies that were criticized by the Securities and Exchange Commission (SEC) and the Office of Federal Housing Enterprise Oversight (OFHEO), according to the Wall Street Journal. Howard, along with former Fannie Mae Chairman and CEO Franklin Raines resigned in December after the SEC requested that the mortgage company issue a $9 billion restatement.

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A Fannie Mae representative told the paper that Spencer declined to comment. He added that Spencer “will be available to provide such counsel as [Michael Williams] may need. She has historical knowledge that will be important as we move forward.”

The company named David Hisey as its new senior vice president and controller, effective Feb. 1. Hisey, who will serve as Fannie Mae’s principal accounting officer, has been the mortgage finance company’s senior vice president, financial controls and operations since January 3. Before joining Fannie Mae, Hisey held executive positions at BearingPoint Inc. He is also a former partner with KPMG LLP.

Company officials made a point of noting that while at KPMG, Hisey was not involved in the Fannie Mae audit. Last month, Fannie Mae fired KPMG as its auditor.

The company also announced that Robert Levin, executive vice president and interim CFO, will receive a salary of $675,000 in 2005, up from $592,250 in 2004. Fannie Mae officials stressed that Levin will receive the 2005 salary rate as long as he is temporary finance chief. Hisey currently receives a base salary of $275,000 per year.

The board also announced that 2004 bonuses won’t be awarded to executive officers or senior vice presidents. In addition, officials said that the compensation committee and the board will defer its performance-share compensation program until Fannie Mae has reliable financial data for prior fiscal years.

Under the program, members of senior management can receive shares of common stock in an amount subject to whether corporate performance objectives are met over a three-year period. The objectives are based on both financial and non-financial goals.

Fannie Mae’s board also approved an amendment to the company bylaws that eliminates the requirement that the chairman also be its chief executive officer. However, Fannie Mae did not go as far as a growing number of other companies that permanently split the two positions and mandated that the chairman be a non-executive outsider. Under Fannie Mae’s revised bylaws, the chairman still can serve as CEO.

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