Fannie Mae 2002 Annual Report Download - page 111

109
FANNIE MAE 2002 ANNUAL REPORT
Restricted Stock
In 2002, we awarded, issued, and placed in escrow
85,927 shares of restricted stock under the Stock
Compensation Plan of 1993 (117,447 shares in 2001).
We released 106,062 shares in 2002 as awards vested
(105,560 shares in 2001).
Options Available for Future Issuance
At December 31, 2002, 4,727,809 and 11,569,275 shares
remained available for grant under the Employee Stock
Purchase Plan and the Stock Compensation Plan of 1993,
respectively. The Stock Compensation Plan of 1993
expires in May 2003, at which time we will ask shareholders
to approve a new plan.
9. Employee Retirement Benefits
Retirement Savings Plan
All regular employees of Fannie Mae scheduled to work
1,000 hours or more in a calendar year are eligible to
participate in our Retirement Savings Plan, which includes a
401(k) option. In 2002, employees could contribute up to the
lower of 25 percent of their base salary or the current annual
dollar cap established and revised annually by the Internal
Revenue Service. Fannie Mae matches employee
contributions up to 3 percent of base salary in cash. Under
the plan, employees may allocate investment balances to a
variety of investment options. As of December 31, 2002,
there was no option to invest directly in stock of Fannie Mae.
Expense recorded in 2002, 2001, and 2000 in connection
with the Retirement Savings Plan was $10.8 million,
$9.3 million, and $8.5 million, respectively.
Postretirement Benefit Plans
All regular employees of Fannie Mae scheduled to work
1,000 hours or more in a calendar year are covered by a
noncontributory corporate retirement plan or by the
contributory Civil Service Retirement Law. Benefits
payable under the corporate plan are based on years of
service and compensation using the average pay during the
36 consecutive highest-paid months of the last 120 months
of employment. Our policy is to contribute an amount no less
than the minimum required employer contribution under
the Employee Retirement Income Security Act of 1974.
We contribute to the corporate plan in cash based on benefits
attributed to employees’ service to date and compensation
expected to be paid in the future. A contribution of
$41 million was made to the corporate plan in 2002.
Corporate plan assets consist primarily of listed stocks,
fixed-income securities, and other liquid assets. Plan assets
do not directly include any shares of Fannie Mae stock.
At December 31, 2002 and 2001, the projected benefit
obligations for services rendered were $391 million and
$319 million, respectively, while the plan assets were
$234 million and $237 million, respectively. At December 31,
2002 and 2001, the pension liability (included on the balance
sheet under “Other liabilities”) was $51 million and
$65 million, respectively. Net periodic pension costs were
$27 million, $14 million, and $5 million for the years ended
December 31, 2002, 2001, and 2000, respectively. We use the
straight-line method of amortization for prior service costs.
Options Options
Outstanding Exercisable
Weighted-Average
Number Remaining Weighted-Average Number Weighted-Average
Range of Exercise Prices of Options1Contractual Life Exercise Price of Options1Exercise Price
$18.00 – $35.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,444 1.5 yrs. $22.96 4,444 $22.96
35.01 – $53.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,010 4.6 46.14 3,827 45.82
53.01 – $70.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,717 6.5 64.06 3,140 66.48
70.01 – $87.00 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,960 8.1 77.25 4,208 75.56
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,131 6.1 yrs. $59.16 15,619 $51.48
1Options in thousands.
The following table summarizes information about our nonqualified stock options outstanding at December 31, 2002.