Fannie Mae 2012 Annual Report Download - page 186

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Elements of 2012 Executive Compensation Program
Direct Compensation
The table below summarizes the principal elements, objectives and key features of our 2012 executive compensation program
for our named executives. All elements of our named executives’ direct compensation are paid in cash because we are
prohibited from paying new stock-based compensation under the senior preferred stock purchase agreement without
Treasury’s consent.
Compensation
Element Form
Primary
Compensation
Objectives Key Features
Base Salary Fixed cash payments, which
are paid during the year on a
bi-weekly basis.
Attract and retain
named executives by
providing a fixed level
of current cash
compensation.
Base salary reflects the named executive’s
level of responsibility and experience, as
well as individual performance over time.
Base salary is capped at $500,000 for all of
our executive officers, including the named
executives, other than our Chief Executive
Officer and Chief Financial Officer.
Deferred Salary Deferred salary is earned in bi-
weekly installments over the
course of the performance year,
and is paid in quarterly
installments in March, June,
September and December of
the following year.
There are two elements of
deferred salary:
• a fixed portion that is subject
to reduction if an executive
leaves the company before
January 31, 2014; and
• an at-risk portion that is
subject to reduction based on
corporate and individual
performance.
Fixed Deferred Salary
Retain named
executives. Earned but unpaid fixed deferred salary is subject to reduction if a named executive
leaves the company prior to January 31,
2014. If he or she leaves the company prior
to this date, the amount of earned but
unpaid fixed deferred salary received by the
named executive will be reduced by 2% for
each full or partial month by which the
executive’s separation date preceded
January 31, 2014.*
At-Risk Deferred Salary
Retain named
executives and
encourage named
executives to achieve
corporate and individual
performance objectives.
Equal to 30% of the named executive’s total
target direct compensation. Half of at-risk
deferred salary is subject to reduction based
on corporate performance as determined by
FHFA. The remaining half of at-risk
deferred salary is subject to reduction based
on individual performance as determined by
the Board of Directors with FHFA’s
approval.
There is no potential for at-risk deferred
salary to be higher than 100% of target
based on performance; at-risk deferred
salary is only subject to reduction based on
performance.
The 2012 conservatorship scorecard against
which corporate performance was measured
for the named executives’ 2012 at-risk
deferred salary is described below under
“Determination of 2012 Compensation—
Assessment of Corporate Performance on
2012 Conservatorship Scorecard.”
* The forfeiture provisions applicable to earned but unpaid fixed deferred salary have been modified for 2013 and subsequent
performance years. See “2013 Compensation Changes—Change to Fixed Deferred Salary Forfeiture Provisions” for more
information.