Fannie Mae 2004 Annual Report Download - page 227

(2)
“Value of Unexercised In-the-Money Options” is the aggregate, calculated on a grant-by-grant basis, of the product of
the number of unexercised options at the end of 2004 multiplied by the difference between the exercise price for the
grant and the December 31, 2004 closing price per share of Fannie Mae common stock of $71.21, excluding grants for
which the exercise price equaled or exceeded $71.21. As of November 30, 2006, the closing price per share of Fannie
Mae common stock was $57.03.
Retirement Plans
Fannie Mae Retirement Plan
The Federal National Mortgage Association Retirement Plan for Employees Not Covered Under Civil Service
Retirement Law, which we refer to as the Retirement Plan, provides benefits for those eligible employees who
are not covered by the federal Civil Service retirement law. Normal retirement benefits are computed on a
single life basis using a formula based on final average annual earnings and years of credited service.
Participants are fully vested when they complete five years of credited service. Since 1989, provisions of the
Internal Revenue Code of 1986, as amended, have limited the amount of annual compensation that may be
used for calculating pension benefits and the annual benefit that may be paid. For 2004, the statutory
compensation and benefit caps were $205,000 and $165,000, respectively. Before 1989, some employees
accrued benefits based on higher income levels. For employees who retire before age 65, benefits are reduced
by stated percentages for each year that they are younger than 65.
The covered executives had approximately the following years of credited service as of December 31, 2004:
Mr. Levin, 24 years; Mr. Mudd, 5 years; Ms. St. John, 14 years; Mr. Williams, 14 years. At the effective time
of his retirement, Mr. Raines had approximately 13 years of credited service. Upon his resignation, Mr. Donilon
had approximately 5 years of credited service.
Because the Retirement Plan is coordinated with Social Security Covered Compensation as defined in Internal
Revenue Service regulations, the benefits under the Retirement Plan are not subject to deductions for social
security benefits or other offset amounts.
Supplemental Pension Plans
We adopted the Supplemental Pension Plan to provide supplemental retirement benefits to employees who do
not participate in or are not fully vested in the Executive Pension Plan and whose salary exceeds the statutory
compensation cap applicable to the Retirement Plan or whose benefit under the Retirement Plan is limited by
the statutory benefit cap applicable to the Retirement Plan. Separately, we adopted the 2003 Supplemental
Pension Plan to provide additional benefits to our officers based on the annual cash bonuses received by our
officers. For purposes of determining benefits under the 2003 Supplemental Pension Plan, the amount of an
officer’s annual cash bonus taken into account is limited to 50% of the officer’s salary.
The benefits under the Fannie Mae supplemental pension plans are not subject to deductions for social security
benefits or other offset amounts.
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