Fannie Mae 2009 Annual Report Download - page 222

The Board also considered Mr. Mayopoulos’ outstanding performance in handling the company’s litigation
matters and as Secretary of the Board. In addition, the Board considered his role in successfully working with
FHFA to finalize a new executive compensation program. In addition to considering his performance, the
Board determined that Mr. Mayopoulos should receive an additional amount in recognition of the termination
of his temporary living benefit in December 2009. Accordingly, the Board determined that Mr. Mayopoulos’
long-term incentive award would equal 90% of his target long-term incentive award plus an additional
$75,000. See footnote 1 to the “Components of ‘All Other Compensation’ for 2009” table below for a
description of Mr. Mayopoulos’ temporary living benefit that was terminated in December 2009.
What compensation arrangements did we have with Mr. Allison, our previous Chief Executive Officer?
At his request, Mr. Allison, who was our Chief Executive Officer from September 2008 to April 2009, did not
receive any salary, deferred pay or long-term incentive award for his service to the company.
As set forth in the “Components of ‘All Other Compensation’ for 2009” table below, Mr. Allison participated
in our executive life insurance program in 2009 and therefore we paid the premium for his life insurance
coverage. We also paid an amount to cover the withholding tax that resulted from our payment of this
premium. In 2009, Mr. Allison reimbursed us our incremental cost for his use of a company car and driver for
commuting and certain other personal travel and for meals from our corporate dining service. We paid an
amount to cover the withholding tax relating to his use of a company car and driver for commuting and
certain other personal travel.
Other Considerations
Do our compensation policies and practices create risks that are reasonably likely to have a material
adverse effect on the company?
We conducted a risk assessment of our employee compensation policies and practices, including those relating
to our named executives. In conducting this risk assessment, we reviewed, among other things, our
compensation plans, pay profiles, performance goals, payout curves and performance appraisal management
process. Based on the results of our risk assessment, we concluded that our employee compensation policies
and practices, including those relating to our named executives, do not create risks that are reasonably likely
to have a material adverse effect on the company.
We recognize that the objective of helping homeowners avoid foreclosure, which was one of the 2009
corporate performance objectives on which long-term incentive awards were based, is likely to have a
detrimental effect, at least in the short term, on our results of operations, financial condition and net worth.
However, we believe that any potential material risk created by this objective has been mitigated by our other
2009 corporate performance objectives, including those relating to protecting taxpayers, achieving our mission,
building a more streamlined, high-performing company and measuring, managing and reducing enterprise risk
more effectively.
What is our compensation recoupment policy with respect to executive officer compensation?
Beginning with compensation for the 2009 performance year, our executive officers’ compensation is subject
to the following forfeiture and repayment provisions, also known as “clawback” provisions:
•Materially Inaccurate Information. If an executive officer has been granted deferred pay or incentive
payments (including long-term incentive awards) based on materially inaccurate financial statements or
any other materially inaccurate performance metric criteria, he or she will forfeit or must repay amounts
granted in excess of the amounts the Board of Directors determines would likely have been granted using
accurate metrics.
•Termination for Cause. If we terminate an executive officer’s employment for cause, he or she will
immediately forfeit all deferred pay, long-term incentive awards and any other incentive payments that
have not yet been paid. We may terminate an executive officer’s employment for cause if we determine
that the officer has: (a) materially harmed the company by, in connection with the officer’s performance
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