$2-Million Bonus for Franklin Resources CEO

Charles B. Johnson, chairman and chief executive of mutual fund company Franklin Resources Inc., one of the companies entangled in the fund industry scandal, received a $2-million bonus in its fiscal year that ended in September.

The San Mateo, Calif.-based company, which operates as Franklin Templeton Investments, also paid its two co-presidents, Martin L. Flanagan and Gregory E. Johnson, about $2.18 million in bonuses and other performance-based awards, according to a filing Wednesday with the Securities and Exchange Commission.

As reported, Flanagan and Johnson will become co-CEOs effective Jan. 1. Johnson will remain chairman.

Johnson’s bonus brought his 2003 compensation to $2.7 million, including his $594,330 base salary and $75,222 worth of personal use of the company’s aircraft. He received no bonuses in the two previous years.

Franklin also said William J. Lippman had resigned as senior vice president of the company to focus on portfolio management. He remains president of Franklin Advisory Services.

Lippman’s decision to resign was made in May and was unrelated to current mutual fund investigations, Franklin spokeswoman Lisa Gallegos said.

Franklin has received subpoenas from federal investigators in connection with the mutual fund trading probes. On Monday, it said it had found some instances of frequent trading by a few employees in their personal 401(k) accounts.

Rapid trades are part of the strategy known as market timing, which takes advantage of brief discrepancies between a fund’s share price and its underlying holdings.

Such trading isn’t necessarily illegal, but regulators say that if mutual fund companies with stated policies against timing permitted such trades while profiting from them, that could be a violation of securities laws.

Franklin said the rapid-trading employees included one trader and one officer of the funds. It did not identify them further.

Both have been placed on administrative leave, and the officer has resigned.

Franklin shares closed Wednesday at $51.14, down 19 cents, on the New York Stock Exchange.