Fannie Mae 2010 Annual Report Download - page 224

2011 Compensation
The Board and the Compensation Committee reviewed the current compensation arrangements for our named
executives in January 2011 and determined that the named executives’ base salary, deferred pay targets and
long-term incentive targets will not change in 2011. As of February 24, 2011, the Board of Directors had not
established 2011 corporate performance goals for purposes of determining the first installment of the 2011
long-term incentive awards.
The continuing two-year (2010 and 2011) performance goals against which the company’s performance will
be measured for purposes of the second installment of the 2010 long-term incentive awards (which are payable
in the first quarter of 2012) are to: reduce fixed general and administrative expenses; achieve our target
relating to the reduction of credit-related expenses; achieve risk-adjusted return on economic capital targets;
meet deliverables on business process and technology improvements; address all matters requiring attention
identified by our regulator; and make progress on certain strategic projects.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of Fannie Mae has reviewed and discussed the
Compensation Discussion and Analysis included in this Form 10-K with management. Based on such review
and discussions, the Compensation Committee has recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this Form 10-K.
Compensation Committee:
Brenda J. Gaines, Chair
Dennis R. Beresford
Charlynn Goins (member since January 2011)
Jonathan Plutzik
David H. Sidwell
COMPENSATION RISK ASSESSMENT
We conducted a risk assessment of our employee compensation policies and practices. In conducting this risk
assessment, we reviewed, among other things, our compensation plans, pay profiles, performance goals and
performance appraisal management process. We also assessed whether policies, procedures or other mitigating
controls existed that would reduce the opportunity for excessive or inappropriate risk-taking within our
compensation policies and practices.
Based on the results of our risk assessment, we concluded that our employee compensation policies and
practices do not create risks that are reasonably likely to have a material adverse effect on the company.
Several factors contributed to our conclusion, including:
• Payment of incentive compensation is based on the achievement of performance metrics that we have
concluded do not encourage unnecessary or excessive risk-taking. Our mix of multiple qualitative and
quantitative performance metrics without undue emphasis on any one metric provides an appropriate
balance of incentives.
• Our extensive performance appraisal process ensures achievement of goals without encouraging executives
or employees to take inappropriate risks.
• Although we have an all cash compensation program while under conservatorship, FHFA approval of our
executive compensation arrangements and our payment of most incentive payments over time, with a
portion based on future performance, encourages appropriate decision-making.
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