Fannie Mae 2010 Annual Report Download - page 213

joined Fannie Mae. Prior to that time, Mr. Shaw was employed at JPMorgan Chase & Co., where he served as
Senior Credit Executive from 2004 to 2006, as Senior Risk Executive, Policy, Reporting, Analytics and
Finance during 2004 and as Senior Credit Executive—Consumer, Chase Financial Services from 2003 to 2004.
Prior to joining JP Morgan, Mr. Shaw held senior risk positions at GE Capital and a subsidiary from 1997 to
2003. Mr. Shaw previously served in several senior risk positions at Citigroup Inc., which he joined in 1972.
Edward G. Watson, 49, has been Executive Vice President—Operations and Technology, since April 2009,
when he joined Fannie Mae. Prior to joining Fannie Mae, Mr. Watson held a variety of positions with
Citigroup Inc., a global diversified financial services holding company. From April 2004 to April 2008, he was
Global Head, Capital Markets Operations and Institutional Clients Group Business Services. Before that, he
served in a series of senior finance positions, including as Chief Financial Officer of Citigroup International,
the European Investment Bank, and of Global Investment Management. Upon joining Citigroup in 1994,
Mr. Watson led the effort to build the infrastructure for a start-up interest rate and equity over-the-counter
derivatives business, which he ran until 1998.
Under our bylaws, each executive officer holds office until his or her successor is chosen and qualified or until
he or she dies, resigns, retires or is removed from office.
Section 16(a) Beneficial Ownership Reporting Compliance
Our directors and officers file with the SEC reports on their ownership of our stock and on changes in their
stock ownership. Based on a review of forms filed during 2010 or with respect to 2010 and on written
representations from our directors and officers, we believe that all of our directors and officers timely filed all
required reports and reported all transactions reportable during 2010.
Item 11. Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Our Board of Directors approved an executive compensation program in December 2009, which we used for
2009 and 2010 compensation actions. The program was approved by FHFA in consultation with the
Department of the Treasury.
As described in more detail below, our executive compensation structure consists of three principal elements:
base salary, deferred pay and a long-term incentive award. A key objective of our compensation program is to
tie pay to performance. Accordingly, half of the deferred pay award is based on achievement of corporate
goals and the entire long-term incentive award is based on performance against individual and corporate goals.
Another key objective of our compensation program is to attract and retain the executive talent needed to
continue to fulfill the company’s important role in providing liquidity to the mortgage market and supporting
the housing market, as well as to prudently manage our $3.2 trillion book of business and be an effective
steward of the government’s support. Our executive compensation program is also designed to follow the same
general structure of compensation arrangements approved by Treasury’s Special Master for TARP Executive
Compensation for top executives at financial institutions that have received exceptional assistance under the
Troubled Asset Relief Program (“TARP”).
As compared to 2009, our executive compensation program for 2010 includes the following changes designed
to further the objectives of the program:
• We increased the amount of the named executives’ pay that is subject to performance: half of deferred
pay is now based on corporate performance, whereas in 2009 all of deferred pay was service-based;
• We lengthened the performance period for the second installment of the 2010 long-term incentive award
to two years, whereas the performance period for the 2009 long-term incentive award was only one year;
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