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There's Always Mrs. Davis To Look Out for Shareholders

Monday, December 17, 2007

The gathering at the Washington Hilton on Friday was billed as the annual shareholders meeting of Fannie Mae, the first in more than three years, but it could be described more aptly as the Evelyn Y. Davis show.

Davis -- shareholder activist and scourge of corporate managers -- stepped up to the microphone to berate and buttonhole Fannie Mae's leadership, and she barely relinquished the floor.

"I am dressed in black today . . . to mourn the demise of Fannie Mae," she said, "a once-great company now being in shambles."

Before the meeting adjourned, Davis excoriated the District mortgage-funding company for paying chief executive Daniel H. Mudd $14 million, cutting the dividend it pays investors and selling billions of dollars of preferred stock that has the potential to undermine holders of common shares.

She lectured the gathering on the price of her clothes (she never pays retail) and her marital history.

That's "Mrs. Davis," she said, correcting chairman Stephen B. Ashley when he addressed her as "Miss Davis."

"I've had four husbands," she said. "Some women, particularly those who are jealous of me, can't even get one."

With the velvet fist of a boss dismissing an underling, Davis urged Mudd to take a walk. "I'm sorry, Dan. I know you tried, but you're just not working out."

In fact, Davis urged all the directors to resign -- all except for former FBI director Louis Freeh, whom she praised lavishly and championed for the job of chief executive.

"If anybody can do it, Louis can do it," she said.

When a company's stock is trading at less than half its 52-week high and its losses are mounting, investor anger might be expected to bubble up. All the more so in Fannie Mae's case: Though shareholder meetings are supposed to occur annually, Fannie Mae last convened such an event in 2004, before it became embroiled in one of the worst accounting debacles since Enron.

But no more than 60 or so shareholders showed up for the meeting Friday, and only a handful ventured a question or comment. The role of outraged investor fell to Davis, and she pursued it with practiced zeal.

The 78-year-old investor, who lives in Washington's Watergate complex, is famous for holding forth at shareholder meetings. She said she owns stock in 80 companies.

"I have quite a bit of influence," she told the gathering. "Don't ever underestimate Evelyn Y. Davis."

In repeated trips to the microphone, Davis demanded that Fannie Mae disclose how much it has spent on legal representation ($143 million in 2006), charity ($60 million) and politics (the company's political action committee spent $700,000).

Davis argued unsuccessfully for a change in voting procedures that would make it easier for dissident investors to secure representation on the board. Ashley, who was presiding over the meeting, said politely at one point that he had to move on, but Davis protested "No, no, no," and he got out of the way.

Toward the meeting's end, when it seemed that the company wasn't going to disclose vote totals from the election of directors, Davis managed to extract some numbers.

The day before, Davis held center stage at a meeting in New York, where Dow Jones shareholders ratified the sale of their company to Rupert Murdoch's News Corp.

"Of course I was the star of the event," Davis said in an interview Friday. "I'm always the star of the event, my dear."

-- David S. Hilzenrath

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