Fannie Mae 2008 Annual Report Download - page 240

size of a retention program, based on its experience and familiarity with programs at other firms in related
circumstances. In reaching this amount FHFA sought to balance the goal of retaining critical executives with
the need to limit compensation to an appropriate level given our current circumstances.
The size of individual retention awards was based on the criticality to the company of the position that each
officer holds, the expertise of the individual and future potential of the individual. Individual awards for
named executives under the 2008 Retention Program were permitted to range from 0% to 150% of the target
Annual Incentive Plan bonus for the executive’s position, based on the criticality, expertise and future potential
factors mentioned above. Based on these factors, the retention awards granted to Mr. Hisey, Mr. Bacon,
Mr. Lund and Mr. Williams represented approximately 81%, 102%, 99% and 87%, respectively, of target
Annual Incentive Plan bonuses for their positions.
The size of named executives’ individual retention awards was approved by FHFA in October 2008. In
approving these awards, FHFA considered the recommendations of management, which followed guidelines
provided by FHFA regarding appropriate ranges for awards as a percentage of target Annual Incentive Plan
bonuses. FHFA also considered the consistency of the awards with the overall retention program FHFA had
established in consultation with HayGroup.
Direct Compensation Paid or Granted to our Continuing Named Executives in 2008.
The following table illustrates the direct compensation paid or granted to our continuing named executives in
2008. No amounts are shown in this table for stock awards because, as discussed above and unlike in previous
years, our named executives received no stock-based awards for 2008 performance. This table is not intended
to replace the summary compensation table, required under applicable SEC rules, which is included below
under “Compensation Tables—Summary Compensation Table.”
Direct Compensation Paid or Granted to our Continuing Named Executives in 2008
(1)
Continuing
Named Executive
Base Salary as of
December 31,
2008
(2)
Cash Bonus
(3)
Portion of Cash
Retention
Award Granted in
2008 and Paid in
2008
(4)
Portion of Cash
Retention
Award Granted in
2008 and Payable
in 2009
(4)
Herbert Allison . . . . . . . . . . . . . . . . . . . . . . — — — —
David Johnson . . . . . . . . . . . . . . . . . . . . . . $625,000 — — —
Kenneth Bacon . . . . . . . . . . . . . . . . . . . . . . 530,400 — $200,000 $470,000
David Hisey . . . . . . . . . . . . . . . . . . . . . . . . 385,017 $160,000 220,000 517,000
Thomas Lund . . . . . . . . . . . . . . . . . . . . . . . 543,920 — 200,000 470,000
Michael Williams . . . . . . . . . . . . . . . . . . . . 676,000 — 260,000 611,000
(1)
This table includes only some of the components of 2008 compensation that are reported in the Summary
Compensation Table, below. Specifically, the following components of compensation reported in that table are not
included in this table: amounts we recognized for financial statement reporting purposes during 2008 for the fair value
of stock and option awards held by our named executives, changes in our executives’ pension values, the value of
perquisites, company contributions to 401(k) plans, life insurance premiums, tax gross-ups, and charitable award
program amounts. More information on these amounts appears in the summary compensation table below and its
accompanying footnotes.
(2)
This amount represents annual base salary as of December 31, 2008, not amounts actually received by the named
executives. Actual salary amounts received during 2008 are presented in our summary compensation table below under
“Compensation Tables—Summary Compensation Table.”
(3)
No named executive received a cash bonus for 2008 under our Annual Incentive Plan. In 2008, Mr. Hisey received a
cash bonus he was awarded in 2007 payable upon our timely filing in February 2008 of our 2007 Annual Report on
Form 10-K with the SEC.
(4)
As discussed above in “Impact of the Conservatorship on Executive Compensation—Conservator’s determination
relating to 2008 Incentive Compensation and Establishment of 2008 Retention Program,” 20% of the retention awards
made to our named executives under our 2008 Retention Program was paid to the executives in 2008. This portion of
the retention awards is shown above in the “Portion of Cash Retention Award Granted in 2008 and Paid in 2008”
column. Forty-seven percent of the awards, which is shown above in the “Portion of Cash Retention Award Granted in
2008 and Payable in 2009” column, is payable as follows: 20% in April 2009 and 27% in November 2009. The final
33% of each award, or $330,000 for Mr. Bacon, $363,000 for Mr. Hisey, $330,000 for Mr. Lund, and $429,000 for
Mr. Williams, is “performance-based” and is payable, in whole or in part, in February 2010. The amount of the
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