Fannie Mae 2004 Annual Report Download - page 63

dividend of $0.40 per share for the fourth quarter of 2006. Our Board of Directors will continue to assess
dividend payments for each quarter based upon the facts and conditions existing at the time.
Our payment of dividends is subject to certain restrictions, including the submission of prior notification to
OFHEO detailing the rationale and process for the proposed dividend and prior approval by the Director of
OFHEO of any dividend payment that would cause our capital to fall below specified capital levels. See
“Item 7—MD&A— Liquidity and Capital Management—Capital Management—Capital Activity—OFHEO
Oversight of Our Capital Activity” for a description of these restrictions. Payment of dividends on our
common stock is also subject to the prior payment of dividends on our 13 series of preferred stock,
representing an aggregate of 132,175,000 shares outstanding. Quarterly dividends on the shares of our
preferred stock outstanding totaled $130.7 million for the quarter ended September 30, 2006. See “Notes to
Consolidated Financial Statements—Note 17, Preferred Stock” for detailed information on our preferred stock
dividends.
Securities Authorized for Issuance under Equity Compensation Plans
The information required by Item 201(d) of Regulation S-K is provided under “Item 12—Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters,” which is incorporated herein
by reference.
Recent Sales of Unregistered Securities
Under the Stock Compensation Plan of 1993 and the Stock Compensation Plan of 2003 (the “Plans”), we
regularly provide stock compensation to our employees and members of our Board of Directors to attract,
motivate and retain these individuals and promote an identity of interests with our stockholders. During the
year ended December 31, 2004, we issued 3,262,894 shares of common stock upon the exercise of stock
options for an aggregate exercise price of approximately $129 million, almost all of which was paid in cash
and the remainder of which was paid by the delivery of 8,936 shares of common stock. Additionally, in
consideration of services rendered or to be rendered, we issued 2,594,769 options to purchase common stock
at a weighted average exercise price of $78.04 per share, 998,425 shares of restricted stock and 38,134
restricted stock units. Options granted under the Plans typically vest 25% per year beginning on the first
anniversary of the date of grant and expire ten years after the grant. Shares of restricted stock and restricted
stock units granted under the Plans typically vest in equal annual installments over three or four years
beginning on the first anniversary of the date of grant. Each restricted stock unit represents the right to receive
a share of common stock at the time of vesting. As a result, the economic consequences of restricted stock
units are generally similar to restricted stock, except that restricted stock units do not confer voting rights on
their holders.
All options and shares of restricted stock and restricted stock units were granted to persons who were
employees or members of the Board of Directors. During the year ended December 31, 2004, 236,521
restricted stock awards vested, as a result of which 155,679 shares of common stock were issued and
80,842 shares of common stock that otherwise would have been issued were withheld in lieu of requiring the
recipients to pay the withholding taxes due upon vesting to us. Additionally, during the year ended
December 31, 2004, 8,014 restricted stock units vested, as a result of which 5,252 shares of common stock
were issued and 2,762 shares of common stock that otherwise would have been issued were withheld in lieu of
requiring the recipients to pay the withholding taxes due upon vesting to us.
In January 2004, we contributed an aggregate of 104,886 shares to the Employee Stock Ownership Plan
(“ESOP”). Benefits for employees vest under the ESOP based on age or years of service. Eligible employees
become 100% vested in their ESOP accounts upon the earlier of age 65 or completion of five years of service.
During the year ended December 31, 2004, we also issued 2,568 shares under our Employee Stock Purchase
Plan for an aggregate exercise price of approximately $190,000 to former employees or the estates of former
employees.
We have a Performance Share Program that compensates senior management for meeting financial and non-
financial objectives over a three-year period. Objectives are set at the beginning of the three-year period and
58