Fannie Mae 2012 Annual Report Download - page 197

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Assessment of 2012 Individual Performance
Overview. 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 individual performance in 2012, as determined by the Board of Directors
with FHFA’s approval. In addition, the amounts of the second installment of the current named executives’ 2011 long-term
incentive awards took into account not only the company’s performance against the 2012 corporate goals and metrics
described above, but also an assessment by the Board of Directors of each named executive’s performance during the
applicable performance periods, as well as retention considerations.
The Board (excluding Mr. Mayopoulos) assessed the Chief Executive Officer’s performance with input from the
Compensation Committee and assessed each other named executive’s performance with input from both the Compensation
Committee and the Chief Executive Officer. Based on these assessments, the Board used its judgment and discretion to
determine the amount of compensation it deemed appropriate for each named executive. In each case, the Board’s
determination was consistent with the recommendations of the Chief Executive Officer and the Compensation Committee.
FHFA reviewed and approved these determinations. More information on the compensation arrangements for each of our
named executives is set forth in the “Summary Compensation Table for 2012, 2011 and 2010.”
Timothy Mayopoulos, President and Chief Executive Officer. The Board determined that the individual performance-based
portion of Mr. Mayopoulos’ 2012 at-risk deferred salary would be $398,250, which equals his target, and that the second
installment of his 2011 long-term incentive award would be $521,538, compared with a target of $490,167. Mr. Mayopoulos’
individual performance was evaluated in part based on the company’s performance against the 2012 conservatorship
scorecard and the corporate performance goals for the applicable performance periods, reflecting the fact that he has been
accountable for the success of the entire organization since he became Chief Executive Officer in June 2012. In addition,
other achievements not reflected in the 2012 conservatorship scorecard or the corporate performance goals were considered.
The Board determined that, under Mr. Mayopoulos’ leadership since he became Chief Executive Officer in June 2012, the
company has been profitable, had record annual net income for 2012, and performed substantially all of the 2012
performance goals set for the organization by FHFA and the Board. Mr. Mayopoulos’ other accomplishments in 2012
included significantly reducing the organization’s credit-related expenses while allowing the company to continue to
effectively provide liquidity to the housing market, and promoting the company’s ability to assist troubled borrowers while
further developing a high-quality book of new business. Mr. Mayopoulos also oversaw the organization’s achievement of a
substantial portion of its 2012 Operating Plan deliverables and improvement in the company’s risk and control environment.
The Board also recognized Mr. Mayopoulos’ exceptional leadership during the organization’s transition of chief executive
officers and other members of management, his development of a strong new executive management team and his effective
communications with the Board and FHFA regarding implementation of the Board’s and FHFA’s 2012 priorities for the
company. The Board also considered Mr. Mayopoulos’ performance as Chief Administrative Officer, General Counsel and
Corporate Secretary. For the portion of the year that he served in these roles, the Board considered his continued outstanding
service as chief adviser to the Chief Executive Officer, leadership of the Legal, Human Resources, Communications and
Marketing Services, and Government and Industry Relations divisions of the company, as well as his leadership on the
company’s strategic initiatives. The Board recognized that Mr. Mayopoulos successfully implemented the 2012 executive
compensation program developed by FHFA and furthered the company’s contingency planning processes, resulting in an
improved risk environment. The Board concluded that, overall, Mr. Mayopoulos’ 2012 performance was exceptionally strong
when measured against applicable goals and exceeded expectations.
Michael Williams, Former President and Chief Executive Officer. The Board determined that the individual performance-
based portion of Mr. Williams’ 2012 at-risk deferred salary would be $467,308, which equals the portion of his target that he
earned prior to his departure from the company. In recommending and determining the amount of the individual
performance-based portion of Mr. Williams’ 2012 at-risk deferred salary, the Compensation Committee and the Board
considered in part the company’s performance against the 2012 conservatorship scorecard and the corporate performance
goals for the applicable performance periods, reflecting the fact that Mr. Williams was the company’s Chief Executive Officer
until June 2012. In addition, other achievements not reflected in the 2012 conservatorship scorecard or the corporate
performance goals were considered. The Board acknowledged that under Mr. Williams’ leadership the company posted a
profitable first quarter and a profitable second quarter shortly after Mr. Williams stepped down from the position of Chief
Executive Officer, and that Mr. Williams’ performance helped make possible the company’s record 2012 annual net income.
The Board also recognized Mr. Williams’ contributions towards managing the organization’s management turnover, including
the successful transition of his role as Chief Executive Officer of the company, during the period between when he informed
the company in January 2012 that he would step down as Chief Executive Officer and his departure. Mr. Williams did not
receive the second installment of his 2011 long-term incentive award because he left the company before the payment date
for the installment.