Fannie Mae 2013 Annual Report Download - page 188

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Objectives and Weighting Summary of Performance
2. Contract the Enterprises’ dominant presence in the marketplace while simplifying and shrinking certain
operations (by lines of business)—50% weight
Scoring Note: In assessing results for these performance measures under Strategic Goal 2, FHFA will consider changes in market
and regulatory conditions, and the transactions should be:
• Economically sensible;
• Operationally well-controlled;
• Involve a meaningful transference of credit risk; and
• Be transparent to the marketplace
FHFA will assess the results against the above requirements, along with the utility of the transaction to furthering the long-term
strategic goal of risk transfer, in judging whether to award credit for individual transactions in meeting the totals set forth for each
measure.
• Single Family - Each Enterprise will demonstrate the viability of
multiple types of risk transfer transactions involving single family
mortgages with at least $30 billion of unpaid principal balances in
2013. (The threshold for credit is $10 billion. Transactions totaling
less than the threshold receive no credit. Between $10 billion and $30
billion receive partial credit.)
• The objective was achieved.
• Multi-Family - Reduce the UPB amount of new multifamily
business relative to 2012 by at least 10% by tightening underwriting,
adjusting pricing and limiting product offerings, while not increasing
the proportion of the Enterprises’ retained risk. (Reductions between
0% and 10% receive partial credit.)
• The objective was achieved.
• Retained Portfolio - Reduce the December 31, 2012 retained
portfolio balance (exclusive of agency securities) by selling 5% of
assets. (Sales between 0% and 5% receive partial credit.)
• The objective was achieved.
3. Maintain foreclosure prevention activities and credit availability for new and refinanced mortgages—20%
weight
• Adapt quickly to statutory, regulatory, and market changes through
appropriate modifications and/or enhancements to loss mitigation and
refinance options.
• The objective was achieved.
• Enhance post-delivery quality control practices and transparency
associated with new representation and warranty framework. • The objective was achieved.
• Complete representation and warranty demands for pre-
conservatorship loan activity. • The objective was achieved.
• Develop counterparty risk management standards for mortgage
insurers that include uniform master policies and eligibility
requirements.
• The objective was achieved.
• Incorporate policies related to lender placed insurance (“LPI”) within
the Servicing Alignment Initiative. • The objective was substantially achieved. However, cost saving measures and some additional issues, many of
which were outside of the company’s control, remain to
be addressed.
Assessment by Board of Directors of Company Performance
In March 2013, the Board established the 2013 Board of Directors goals, which are presented in the table below. Performance
against the 2013 Board of Directors goals was a factor the Board considered in determining the individual performance of the
named executives for purposes of the individual performance-based component of the named executives’ 2013 at-risk
deferred salary. The Board did not assign any relative weight to the goals and the Compensation Committee was permitted to,
and did, consider other factors in addition to management’s achievement of the goals in assessing performance.
In late 2013 and early 2014, the Compensation Committee reviewed performance against the 2013 Board of Directors goals
and related metrics and also considered management’s other achievements in 2013. As part of its consideration of
management’s performance against the 2013 Board of Directors goals, the Compensation Committee reviewed management’s
assessment of its performance against the goals, discussed with the Chief Executive Officer the performance of the company
and of each named executive (other than the Chief Executive Officer) and engaged in dialogue with and received input from
FHFA. The Compensation Committee also considered management’s performance against the 2013 conservatorship
scorecard. Based on its review, the Compensation Committee determined that the individual component of the 2013 at-risk
deferred salary should be funded at the 100% level. See “Assessment of 2013 Individual Performance” below for information
regarding the Board’s review of the named executives’ individual performance for purposes of determining the individual