Fannie Mae 2010 Annual Report Download - page 215

executive compensation for 2010 was determined. Regulatory requirements affecting our executive
compensation include:
• Our directors serve on behalf of FHFA and exercise their authority subject to the direction of FHFA.
More information about the role of our directors is described above in “Directors, Executive Officers and
Corporate Governance—Corporate Governance—Conservatorship and Delegation of Authority to Board of
Directors.”
• While we are in conservatorship, FHFA, as our conservator, retains the authority to approve and to modify
both the terms and amount of any compensation to any of our executive officers. FHFA, as our
conservator, has directed that our Board consult with and obtain FHFA’s consent before taking any actions
involving hiring, compensation or termination benefits of any officer at the executive vice president level
and above and including, regardless of title, executives who hold positions with the functions of the chief
operating officer, chief financial officer, general counsel, chief business officer, chief investment officer,
treasurer, chief compliance officer, chief risk officer and chief/general/internal auditor.
• FHFA, as our regulator, must approve any termination benefits we offer to our named executives and
certain other officers identified by FHFA.
• Under the terms of the senior preferred stock purchase agreement with Treasury, we may not enter into
any new compensation arrangements with, or increase amounts or benefits payable under existing
compensation arrangements of, any named executives or executive officers without the consent of the
Director of FHFA, in consultation with the Secretary of the Treasury.
• Under the terms of the senior preferred stock purchase agreement, we may not sell or issue any equity
securities without the prior written consent of Treasury, other than as required by the terms of any binding
agreement in effect on the date of the senior preferred stock purchase agreement. This effectively
eliminates our ability to offer stock-based compensation.
• Under the Housing and Economic Recovery Act of 2008 and related regulations issued by FHFA, the
Director of FHFA has the authority to prohibit or limit us from making any “golden parachute payment”
to specified categories of persons, including our named executives.
As a result of these requirements, the 2010 compensation determinations for our named executives discussed
in this Compensation Discussion and Analysis were approved by the Acting Director of FHFA.
2010 Executive Compensation Program
Overview of Program Objectives and Structure
Our executive compensation program is designed to fulfill two primary objectives:
•Pay for Performance. Our executive compensation program is intended to drive a pay for performance
environment through the use of performance-based long-term incentive awards and deferred pay.
•Attract and Retain Executive Talent. Our executive compensation program is also intended 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 book of
business and be an effective steward of the government’s support.
As described in our 2009 Form 10-K, in 2009, FHFA worked with our management and Board of Directors,
and sought the guidance of Treasury’s Special Master for TARP Executive Compensation, to develop an
executive compensation program that meets these objectives and also reflects evolving standards regarding
executive compensation and, to the extent appropriate, is generally consistent with the structural standards
created for firms that received exceptional TARP assistance. The views of management and the Board of
Directors in the development of this executive compensation program reflected input from management’s and
the Compensation Committee’s compensation consultants.
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