Fannie Mae 2004 Annual Report Download - page 237

Each director who served on the Board between the 2001 Annual Meeting and May 2006 received a grant of
restricted common stock under the Fannie Mae Stock Compensation Plan of 1993. In May 2001, we granted
871 shares of restricted common stock for the 2001-2006 cycle to each non-management director who was a
member of the Board at that time. These shares of restricted common stock vest over a five-year period at the
rate of 20% per year. Each director who joined the Board during the cycle received a pro rata portion of the
grant for the cycle, based on the time remaining in the cycle.
Stock Option Awards
Each non-management director is granted an annual nonqualified stock option to purchase 4,000 shares of
common stock immediately following the annual meeting of stockholders at the fair market value on the date
of grant. A non-management director appointed or elected as a mid-term replacement receives a nonqualified
stock option to purchase at the fair market value on the date of grant a pro rata number of shares equal to the
fraction of the remainder of the term. Each option will expire ten years after the date of grant and vests in
four equal annual installments beginning on the first anniversary of the grant. Non-management directors will
have one year to exercise the options when they leave the Board. No annual stock option awards have yet
been made with respect to annual meetings that would have been held in 2005 or 2006.
Fannie Mae Director’s Charitable Award Program
In 1992, we established our Director’s Charitable Award Program. The purpose of the program is to
acknowledge the service of our directors, recognize our own interest and that of our directors in supporting
worthy institutions, and enhance our director benefit program to enable us to continue to attract and retain
directors of the highest caliber. Under the program, we make donations upon the death of a director to up to
five charitable organizations or educational institutions of the director’s choice. We donate $100,000 for every
year of service by a director up to a maximum of $1,000,000. To be eligible to receive a donation, a
recommended organization must be an educational institution or charitable organization and must qualify to
receive tax-deductible donations under the Internal Revenue Code of 1986. The program is generally funded
by life insurance contracts on the lives of participating directors. The Board of Directors may elect to amend,
suspend or terminate the program at any time.
Matching Gifts
To further our support for charitable giving, non-employee directors are able to participate in the Matching
Gifts Program of the Fannie Mae Foundation on the same terms as our employees. Under this program, the
Fannie Mae Foundation will match gifts made by employees and directors to 501(c)(3) charities, up to an
aggregate total of $10,000 in any calendar year, including up to $500 which may be matched on a 2-for-1
basis.
Deferred Compensation
We have a deferred compensation plan in which non-management directors can participate. Non-management
directors may irrevocably elect to defer up to 100% of their annual retainer and all fees payable to them in their
capacity as a member of the Board in any calendar year into the deferred compensation plan. Plan participants
receive an investment return on the deferred funds as if the funds were invested in a hypothetical portfolio
chosen by the participant from among the investment options our chief financial officer designates as available
under the plan. Prior to the deferral, plan participants must elect to receive the deferred funds either in a lump
sum, in approximately equal annual installments, or in an initial payment followed by approximately equal
annual installments, with a maximum of 15 installments. Deferral elections generally must be made prior to the
year in which the compensation otherwise would have been paid, and payments will be made as specified in the
deferral election. Participants in the plan will be unsecured creditors of the company and will be paid from our
general assets.
On November 16, 2004, our Board of Directors authorized a new deferred compensation plan to ensure that
our plans comply with new requirements under the Internal Revenue Code of 1986, specifically Section 409A
and we disclosed the plan in a Form 8-K filed on November 22, 2004. The new elective deferred compensation
plan applies to compensation that is deferred after December 31, 2004. The terms described under the prior
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