Fannie Mae 2009 Annual Report Download - page 220

credit losses as compared with our modeled credit losses. We met this objective by developing this new
reporting framework and reporting to the Board under the framework beginning in November 2009.
The Compensation Committee determined that we substantially achieved this performance goal. In making
its determination, the Committee balanced the operational incidents that occurred in 2009 related to our
internal processes and systems noted above against our achievements in the risk and controls and credit
areas.
In addition to the performance evaluation described above, in making its 2009 compensation decisions
regarding the 2009 long-term incentive awards and the final payment of the 2008 Retention Program awards,
the Compensation Committee considered the difficulty of achieving the multiple goals and objectives
described above and the difficult market environment in which the company operated in 2009. The Committee
also considered the importance of attracting and retaining qualified senior executives so that we can continue
to carry out our mission and current business objectives. The Committee noted that compensation target
amounts were based in part on comparator group data for 2008 compensation and expected trends in
compensation at the time the goals were established, and that the current trend in the financial services
industry is toward higher compensation. The Committee also considered management’s recommendation.
Finally, the Committee considered guidance received from FHFA on its view that, notwithstanding the
company’s achievement or substantial achievement of each of its 2009 performance goals, the level of funding
for the pool for 2009 long-term incentive awards for executive officers and for the final payment of the 2008
Retention Program awards should also take into account the level of the company’s draws under the senior
preferred stock purchase agreement with Treasury.
Based on its performance evaluation and the additional factors noted above, the Compensation Committee
determined, with input from the full Board of Directors and subject to FHFA approval, that the final
performance-based portion of the 2008 Retention Program awards would be paid at 90% of target and the pool
for 2009 long-term incentive awards for the company’s executive officers would be funded at 90% of target.
In determining the amounts of the long-term incentive awards for the named executives, the Board of
Directors also evaluated each named executive’s individual performance. Individual performance was not a
factor in determining the amounts of the final performance-based portion of the 2008 Retention Program
awards. The Board’s individual compensation decisions are described below under “Individual Compensation
Decisions for 2009.”
Individual Compensation Decisions for 2009
The amounts of the 2009 long-term incentive awards awarded to the named executives (other than
Mr. Allison) took into account not only the company’s performance against the 2009 corporate goals and
objectives described above, but also an assessment by the Board of Directors of each named executive’s
performance during the year. The Board assessed the Chief Executive Officer’s performance with input from
the Compensation Committee and assessed each other named executive’s performance with input from both
the Compensation Committee and the Chief Executive Officer. Based on these assessments, the Board used its
judgment and discretion to determine the amount of compensation it deemed appropriate for each named
executive. The Board did not evaluate the performance of Mr. Allison, who left the company in April 2009
and, at his request, did not receive a 2009 long-term incentive award.
The Board of Directors determined that each named executive achieved his individual performance goals for
2009. As the pool for 2009 long-term incentive awards for the company’s executive officers was funded at
90% of target as described above, the Board determined that, subject to FHFA approval, each named executive
would therefore receive a 2009 long-term incentive award equal to 90% of his individual target for this award,
except for Mr. Mayopoulos as described under “What elements of our other named executives’ performance
did the Board of Directors consider in determining their 2009 long-term incentive awards?” below. Each
named executive’s 2009 long-term incentive award was also approved by FHFA.
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