Fannie Mae 2010 Annual Report Download - page 231

Retirement Plan when they complete five years of credited service. Messrs. Williams, Hisey and Benson are
the only named executives who participate in the Retirement Plan.
Under the Retirement Plan, normal retirement benefits are computed on a single life basis using a formula
based on final average annual earnings and years of credited service. For years of service after 1988, the
pension formula is:
•1
1⁄2% multiplied by final average annual earnings, plus
• 1/2% multiplied by final average annual earnings over Social Security-covered compensation multiplied
by years of credited service.
A different formula applies for years of service after 35 years. Final average annual earnings are average
annual earnings in the participant’s highest paid 36 consecutive calendar months during his last 120 calendar
months of employment. Earnings are base salary. Provisions of the Internal Revenue Code of 1986, as
amended, limit the amount of annual compensation that may be used for calculating pension benefits and the
annual benefit that may be paid. For 2010, the statutory compensation and benefit caps were $245,000 and
$195,000, respectively. Early retirement under the Retirement Plan is generally available at age 55. For
employees who retire before age 65, benefits are reduced by stated percentages for each year that they are
younger than 65.
The table below shows the years of credited service and the present value of accumulated benefits for each
named executive under our defined benefit pension plans as of December 31, 2010.
Pension Benefits for 2010
Name Plan Name
Number of
Years
Credited
Service (#)
(1)
Present Value of
Accumulated
Benefit ($)
(2)
Michael Williams . . . . . Retirement Plan 20 496,799
Supplemental Pension Plan
(3)
20 212,562
2003 Supplemental Pension Plan
(3)
20 127,318
Executive Pension Plan 9 3,267,952
David Hisey . . . . . . . . . Retirement Plan 6 134,035
Supplemental Pension Plan 6 106,003
2003 Supplemental Pension Plan 6 127,263
David Johnson. . . . . . . . Not applicable
David Benson . . . . . . . . Retirement Plan 9 194,507
Supplemental Pension Plan 9 191,149
2003 Supplemental Pension Plan 9 203,159
Terence Edwards . . . . . . Not applicable
Timothy Mayopoulos . . . Not applicable
(1)
Mr. Williams has fewer years of credited service under the Executive Pension Plan than under the Retirement Plan
because he worked at Fannie Mae prior to becoming a participant in the Executive Pension Plan. In addition, because
benefit accruals under the Executive Pension Plan for years after 2009 were frozen, Mr. Williams’ credited service
under the Executive Pension Plan was frozen in 2009 at 9 years.
(2)
The present value for the Executive Pension Plan assumes that Mr. Williams will remain in service until age 60, the
normal retirement age under the Executive Pension Plan. The present value for the Retirement Plan, Supplemental
Pension Plan and 2003 Supplemental Pension Plan assumes that the named executives will remain in service until
age 65, the normal retirement age under those plans. The values also assume that benefits under the Executive Pension
Plan will be paid in the form of a monthly annuity for Mr. Williams’ life and that Mr. Williams’ surviving spouse and
benefits under the Retirement Plan will be paid in the form of a single life monthly annuity for Mr. Williams’ life.
The postretirement mortality assumption is based on the IRS prescribed mortality table for 2011 funding purposes.
Under the terms of the 2003 Supplemental Pension Plan, the deferred pay award for 2010 has been taken into account
for the purpose of determining present value as of December 31, 2010. For additional information regarding the
calculation of present value and the assumptions underlying these amounts, see “Note 14, Employee Retirement
Benefits” in this report.
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