Fannie Mae on Tuesday said it increased its chief executive’s base salary and would pay new chief financial officer, Robert Blakely, a base salary of $650,000, according to media reports.

Blakely will also receive 10,000 restricted stock units that will vest over three years, and is eligible for a bonus of 190 percent of his base salary, or $1.2 million, Reuters reported.

Fannie said its board approved a new employment agreement with President and Chief Executive Officer Daniel Mudd raising his base salary to $950,000 from $850,000, according to reports.

That base is subject to review and possible increases, but not decreases, according to reports.

The board also raised Mudd’s annual cash bonus target award to 275 percent of base salary, or $2.6 million at the new salary level, from 235 percent of base salary, reports said.

The government-sponsored housing enterprise has been rebuilding its management team since ousting the chief executive and chief financial officers last year as accounting problems surfaced.

In December 2004, Fannie Mae replaced Franklin Raines, its chairman and CEO, who announced he was taking early retirement, and Fannie Mae’s chief financial officer, Timothy Howard, resigned Dec. 21.

Fannie Mae’s financial accounting troubles have drawn shareholder lawsuits and investigations by the Justice Department and the Securities and Exchange Commission.

Fannie announced Blakely’s appointment last week and said he would join the company from MCI at the end of this year or early 2006.

Blakely helped rebuild the MCI accounting department after the WorldCom bankruptcy, accounts said.

Fannie Mae is retooling its accounting system after accounting problems came to light that could result in a profit restatement of as much as $11 billion based on accounting errors identified so far.

***

Send tips or a Letter to the Editor to janis@inman.com or call (510) 658-9252, ext. 140.

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