Fannie Mae 2005 Annual Report Download - page 213

second anniversary of the termination of his employment and the date on which Mr. Mudd obtains
comparable coverage through another employer.
•Termination due to serious illness or disability. With the exception of the continued medical and dental
coverage, the same benefits described above would be payable in the event Mr. Mudd’s employment were
to terminate by reason of serious illness or disability, subject to an offset against salary continuation for
any employer-provided disability benefits.
•Termination due to acceptance of senior position in U.S. federal government. If Mr. Mudd terminates his
employment by reason of his acceptance of an appointment to a senior position in the U.S. federal
government, he will receive his accrued but unpaid base salary, all amounts payable (but unpaid) under
our annual incentive plan with respect to any year ended on or prior to the date of termination of his
employment, a prorated annual incentive plan payment for the year of termination, all amounts payable
(but unpaid) under any performance share award with respect to a performance cycle that had ended as of
the date of termination of his employment, a prorated performance share program payment for any
performance cycle as to which at least 18 months had elapsed as of the date of termination, and full
vesting of any unvested restricted stock.
•Termination due to death. In the event of Mr. Mudd’s death during the employment term, his estate or
beneficiary, as applicable, would be entitled to his accrued but unpaid base salary, all amounts payable
(but unpaid) under the annual incentive plan for any year ended on or prior to his death, a prorated annual
incentive plan payment for the year of death, all amounts payable (but unpaid) under any performance
share award with respect to a performance cycle that had ended on or prior to the date of death, a
prorated performance share program payment for any performance cycle as to which at least 18 months
had elapsed prior to the date of death, full vesting of any unvested restricted stock and stock options, and
for his stock options granted on or after the date of the employment agreement an exercise period of three
years (or if earlier, until the expiration date of the stock options).
•Termination due to retirement. In the event Mr. Mudd retires at or after age 65, or at an earlier age in
certain situations, he would be entitled to receive his accrued but unpaid base salary, all amounts payable
(but unpaid) under any performance share award with respect to a performance cycle that had ended as of
the date of his retirement, a prorated performance share program payment for any performance cycle as to
which at least 18 months had elapsed as of the date of his retirement, full vesting of any unvested stock
options, for his stock options granted on or after the date of the employment agreement an exercise period
of three years (or if earlier, until the expiration date of the stock options), and, in the case of retirement at
or after age 65, full vesting of any unvested restricted stock and, in the case of retirement at an earlier
age, the Board may, in its discretion, fully vest any unvested restricted stock.
•Voluntary termination and termination for Cause. If Mr. Mudd is terminated for “Cause” or if Mr. Mudd
terminates his employment voluntarily (other than a voluntary termination with “Good Reason” as defined
in his agreement or a voluntary termination to accept an appointment to a senior position in the
U.S. federal government), he would be entitled only to accrued but unpaid base salary plus such vested
benefits or awards, if any, which have vested prior to such date; provided, however, that if he is
terminated for “Cause,” he would not be entitled to any amounts payable (but unpaid) of any bonus or
under any performance share award with respect to a performance cycle if the reason for such termination
for “Cause” is substantially related to the earning of such bonus or to the performance over the
performance cycle upon which the payment was based.
Mr. Mudd’s employment agreement defines “Good Reason” as any of the following circumstances that remains
uncured after 30 days notice: (a) a material reduction of his authority or a material change in his functions,
duties or responsibilities that in any material way would cause his position to become less important, (b) a
reduction in his base salary, (c) a requirement that he report to anyone other than the Chairman of the Board
of Directors, (d) a requirement that he relocate his office outside of the Washington, D.C. area, or (e) our
breach of any material obligation we have under the agreement. Under the agreement, we would have “Cause”
if Mr. Mudd (A) materially harmed us by, in connection with his service under his employment agreement,
engaging in dishonest or fraudulent actions or willful misconduct, or performing his duties in a grossly
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