Raines, who was forced out of Fannie Mae last week, will receive $5.8 million in stock options and $8.7 million in deferred compensation, plus $114,000 a month in pension benefits, according to Reuters.
Not surprisingly, critics were quick to condemn the large payout. “The severance payments are just outrageous,” said Elliot Schwartz, director of research at the Council of Institutional Investors, according to Reuters. “Once the guy is leaving, you don’t need to give him incentives anymore.”
Raines may be forced to pay some of the money back however, since the mortgage giant has come under Securities and Exchange Commission (SEC) scrutiny for inflating its earnings. Forced to recalculate its earning for the years 2001 to 2004, the company expects to see a $9 billion cut from its stated profits.
Timothy Howard, Fannie Mae’s CFO, also retired last week, and will receive $4.4 million in vested stock, $4 million in deferred compensation, and $36,000 a month in pension payments. The two may still be in line to collect performance bonuses, the agency said.
Raines severance package echoes that of former chairman of the New York Stock Exchange Richard Grasso, who received $139 million upon his departure (See NYSE Chairman Grasso Resigns ). New York Attorney General Eliot Spitzer has sued Grasso over the large payout (See Spitzer Slaps Former NYSE Head Grasso with Pay Suit ).