Fannie Mae 2012 Annual Report Download - page 190

185
(3) Effective May 18, 2012, Mr. Nichols’ annual base salary rate increased from $400,000 to $450,000, his fixed deferred salary increased
from an annual rate of $720,000 to an annual rate of $950,000, and his at-risk deferred salary target increased from an annual target of
$480,000 to an annual target of $600,000. Mr. Nichols’ total target direct compensation was increased in connection with his
promotion to Chief Risk Officer in August 2011. The base salary and deferred salary target amounts provided in this table represent
the sum of: (1) his annual base salary rate and annual deferred salary target for the period from January 1, 2012 through May 17, 2012,
prorated based on the number of pay periods in this period; and (2) his annual base salary rate and annual deferred salary target for the
period from May 18, 2012 through December 31, 2012, prorated based on the number of pay periods in this period.
Prior Executive Compensation Program
In addition to the above compensation under the 2012 executive compensation program, the current named executives also
received the second and final installment of their 2011 long-term incentive award in February 2013. The long-term incentive
awards, which allowed for payments above or below target, were a component of the company’s 2011 executive
compensation program, but were eliminated from the 2012 executive compensation program. The table below displays the
target amount of the second and final installment of each named executive’s 2011 long-term incentive award compared to the
actual payment received by the named executive. The amount of this payment was based on both corporate and individual
performance. See “Assessment of Corporate Performance of 2011 Long-Term Incentive Award Goals (Second Installment)”
for a description of the company’s performance against the 2012 goals relating to this installment of the 2011 long-term
incentive award and “Assessment of 2012 Individual Performance” for a description of the individual performance of the
named executives.
Second
Installment of 2011 Long-
Term Incentive Award
Named Executive Target Actual
Timothy Mayopoulos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 490,167 $ 521,538
Michael Williams(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 —
Susan McFarland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254,246 181,150
David Benson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,167 465,000
Terence Edwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,167 465,000
John Nichols. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198,904 187,069
__________
(1) Mr. Williams did not receive the second installment of his 2011 long-term incentive award because he was not employed by Fannie
Mae on the payment date for that installment.
Although long-term incentive awards are not a component of the company’s 2012 executive compensation program, the
second installment of the 2011 long-term incentive award is required to be reported as 2012 compensation for purposes of the
“Summary Compensation Table for 2012, 2011 and 2010” because payment of this installment was based on performance in
both 2011 and 2012.
Assessment of Corporate Performance on 2012 Conservatorship Scorecard
Overview
In March 2012, FHFA developed a set of corporate performance objectives and related targets for 2012, referred to as the
2012 conservatorship scorecard, and directed the company to implement them. The 2012 conservatorship scorecard is shown
below under “FHFA Assessment.” The 2012 conservatorship scorecard provides the implementation roadmap for FHFA’s
strategic plan for Fannie Mae and Freddie Mac. See “Executive Summary—Our Business Objectives and Strategy” for a
description of FHFA’s strategic goals for the GSEs. FHFA developed these objectives and related targets with input from
management, the Compensation Committee and the Board of Directors. Half of the named executives’ 2012 at-risk deferred
salary, or 15% of their overall 2012 total target direct compensation, was subject to reduction based on the company’s
performance against the 2012 conservatorship scorecard. As described below under “FHFA Assessment,” FHFA determined
that the corporate-performance based portion of 2012 at-risk deferred salary would be paid at 95% of target.
Compensation Committee Assessment
In late 2012 and early 2013, the Compensation Committee reviewed the company’s performance against the 2012
conservatorship scorecard and, following its review, provided FHFA with its assessment of management’s performance
against the 2012 conservatorship scorecard. As part of its review, the Compensation Committee reviewed management’s
assessment of the company’s performance against the scorecard objectives and targets, and discussed the company’s
performance with the Chief Executive Officer. The Compensation Committee also reviewed management reports regarding