Fannie Mae 2009 Annual Report Download - page 215

funding for the pool for 2009 long-term incentive awards for executive officers and for the final payment of
the 2008 Retention Program awards from the level it had initially determined. Based on this guidance, the
Compensation Committee, with input from the Board, reassessed its initial funding determination and made a
determination to decrease the funding level of the pool for 2009 long-term incentive awards for executive
officers and for the final payment of the 2008 Retention Program awards from 95% to 90% of target, subject
to FHFA approval. FHFA then approved the revised funding level of 90% for the pool for 2009 long-term
incentive awards for executive officers and the adjusted amount of each named executive’s individual 2009
long-term incentive award, as well as the revised amounts of the final payment of the 2008 Retention Program
awards.
For a description of the factors the Compensation Committee and the Board considered in making
compensation decisions relating to the 2009 long-term incentive awards and 2008 Retention Program awards,
including guidance from FHFA that led to the decrease in funding level described above, see “What elements
of corporate performance and other factors did the Compensation Committee and the Board consider in
making compensation decisions relating to the 2009 long-term incentive awards and 2008 Retention Program
awards?” and “Individual Compensation Decisions for 2009” below.
How did we use compensation consultants in making 2009 compensation decisions for our named
executives?
McLagan, the outside compensation consultant retained by Fannie Mae’s management, assisted management in
proposing total compensation levels for each of the named executives. McLagan benchmarked compensation
for the named executives’ positions against the comparator group identified below using publically available
proxy data. In addition, McLagan provided feedback to management and the Compensation Committee on
financial services industry market practices. We paid approximately $458,000 to McLagan for their services in
2009 in providing advice and recommendations relating to our 2009 compensation program for executives and
other employees.
Frederic W. Cook & Co., Inc. (“FW Cook”), the independent compensation consultant retained by the
Compensation Committee, reviewed benchmark data for the Chief Executive Officer prepared by McLagan
and recommended a target compensation level for the Chief Executive Officer position for the Compensation
Committee’s, the Board’s and FHFA’s consideration. FW Cook also reviewed the recommended compensation
levels for the other named executives and provided feedback from its review to the Compensation Committee.
FW Cook also advised the Compensation Committee on other matters relating to executive compensation,
including the structure of our executive compensation program, alignment of our executive compensation
program with TARP standards, market trends in executive compensation and the selection of the new
comparator group identified below. We paid approximately $154,000 to FW Cook for their services in 2009 in
providing advice and recommendations to the Compensation Committee and the Board relating to our
executive compensation. FW Cook did not provide any additional services to the company in 2009.
Prior to FW Cook’s engagement as the independent compensation consultant to the Compensation Committee
in 2009, Semler Brossy Consulting Group, LLC (“Semler Brossy”) provided consulting services to the
Compensation Committee as an independent compensation consultant. In early 2009, the Compensation
Committee consulted with Semler Brossy on various matters relating to executive compensation, including
performance metrics for long-term incentives and draft incentive structures. We paid approximately $43,000 to
Semler Brossy for their services in 2009 in providing advice and recommendations to the Compensation
Committee relating to our executive compensation. Semler Brossy did not provide any additional services to
the company in 2009.
What was the role of benchmark data in determining 2009 compensation for our named executives?
Benchmark data from the comparator group identified below was used by management, the Compensation
Committee and FHFA to help determine overall compensation levels for the named executives. Management
worked with McLagan to benchmark changes in incentive compensation levels from 2007 to 2008 for the
named executives’ positions, as well as overall 2008 compensation levels for these positions. The benchmark
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