Fannie Mae 2012 Annual Report Download - page 212

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of service and Retirement Plan benefits earned for years after 2009 are not taken into account in determining his benefit
under the Executive Pension Plan.
Executive Pension Plan benefits vested after ten years of participation in the plan, and Mr. Williams was 90% vested at the
time the plan was frozen. Mr. Williams’ maximum potential annual pension benefit under the Executive Pension Plan, based
on his status as 90% vested and a pension goal formula of 40%, was 36% of his average annual covered compensation earned
for the years 2007, 2008 and 2009. Covered compensation is Mr. Williams’ average annual base salary, including deferred
compensation, plus eligible incentive compensation. For this purpose, eligible incentive compensation is limited in the
aggregate to 50% of Mr. Williams’ base salary, and consists of payments made in prior years under the Annual Incentive Plan
and 2008 Retention Program. His payments under the Executive Pension Plan are reduced by his Retirement Plan benefit
determined as of December 31, 2009.
The normal retirement age under the Executive Pension Plan is age 60; however, early retirement is available under the plan
at age 55, with a reduction in the plan benefit of 2% for each year between the year in which benefit payments begin and the
year in which the participant turns 60. The benefit payment for Mr. Williams is a monthly amount equal to 1/12th of his
annual retirement benefit payable during the lives of Mr. Williams and his surviving spouse.
Mr. Williams is also eligible for early retirement under the Executive Pension Plan and elected to receive benefit payments
under this plan at age 55. His benefit payments were reduced by 10% in accordance with the early retirement reduction
provisions of the plan. Payments to Mr. Williams under this plan began in February 2013. See the “Pension Benefits for
2012” table below for more information.
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, 2012.
Pension Benefits for 2012
Name Plan Name
Number of
Years
Credited
Service (#)(1)
Present Value of
Accumulated
Benefit ($)(2)
Timothy Mayopoulos . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
Michael Williams. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retirement Plan 22 965,975
Supplemental Pension Plan(3) 22 778,316
2003 Supplemental Pension Plan(3) 22 460,627
Executive Pension Plan 9 5,659,896
Susan McFarland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
David Benson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retirement Plan 11 371,826
Supplemental Pension Plan 11 421,900
2003 Supplemental Pension Plan 11 416,348
Terence Edwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
John Nichols . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 of Mr. Benson’s benefits under the Retirement Plan, Supplemental Pension Plan and 2003 Supplemental Pension Plan
assumes that he will remain in service until age 65, the normal retirement age under those plans. Mr. Williams left the company in July
2012 and began receiving retirement benefit payments in February 2013, based on a benefit commencement date of November 1, 2012,
at age 55. Accordingly, the present value of Mr. Williams’ benefits under the Executive Pension Plan, Retirement Plan, Supplemental
Pension Plan and 2003 Supplemental Pension Plan have been calculated based on his actual benefit commencing at age 55. If Mr.
Williams had remained in service until age 60, the normal retirement age under the Executive Pension Plan, the present value of his
accumulated benefit under that plan as of December 31, 2012 would have been $4,635,890. If Mr. Williams had remained in service
until age 65, the normal retirement age under the Retirement Plan, the Supplemental Pension Plan and the 2003 Supplemental Pension
Plan, the present value of his accumulated benefit under each of these plans as of December 31, 2012 would have been $810,110,
$652,732 and $386,307, respectively. Even though the terms of the Executive Pension Plan, Retirement Plan, Supplemental Pension
Plan and 2003 Supplemental Pension Plan provide for a reduction in benefit payments for those electing to receive benefits prior to the
normal retirement age, the actuarial valuations of the present value of Mr. Williams’ benefits are higher for retirement at age 55 under
these plans than for retirement at the normal retirement ages because the reductions in benefit payments specified in the plans do not