Fannie Mae 2013 Annual Report Download - page 193

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Other Executive Compensation Considerations
Role of Compensation Consultants
The Compensation Committee’s independent compensation consultant is Frederic W. Cook & Co., Inc. (“FW Cook”).
Management’s outside compensation consultant is McLagan. In 2013, Mercer (US) Inc. (“Mercer”) also provided consulting
services to the Compensation Committee.
In 2013, McLagan advised management and the Compensation Committee on various compensation and human resources
matters, including:
• providing guidance and feedback on the company’s 2013 executive compensation program;
• advising on market trends, competitive pay levels and various compensation proposals for new hires and
promotions; and
• providing market compensation data for senior management positions, including the named executives’ positions.
In 2013, FW Cook advised the Compensation Committee and the Board on various executive compensation matters,
including:
• assisting the Compensation Committee in its discussions with FHFA on the company’s 2013 executive
compensation program and communicating with FHFA on the Compensation Committee’s behalf;
• reviewing McLagan’s analysis of market compensation data for select senior management positions;
• reviewing various management proposals relating to compensation structures and levels, and for new hires and
promotions;
• reviewing the company’s risk assessment of its 2013 compensation program;
• assisting the Compensation Committee in its evaluation of the company’s performance against the 2013
conservatorship scorecard and communicating its views to FHFA;
• assisting the Compensation Committee in its evaluation of the company’s performance against the 2013 Board of
Directors goals;
• informing the Compensation Committee of regulatory updates and market trends in compensation and benefits;
• assisting with the preparation of executive compensation disclosure in this Annual Report on Form 10-K; and
• advising the Compensation Committee on its review of Fannie Mae’s defined benefit pension plans.
In 2013, Mercer provided independent actuarial consulting services to the Compensation Committee, working in coordination
with FW Cook, in connection with the freeze and subsequent termination of our defined benefit pension plans.
Compensation Consultant Independence Assessment
The Compensation Committee assessed the independence of FW Cook, McLagan and Mercer. Based on its assessments, the
Compensation Committee determined that FW Cook and Mercer are independent from management. FW Cook’s and
Mercer’s work for the Compensation Committee raises no material conflicts of interest.
Because McLagan was retained by and provides services to management, it is not an independent adviser.
Comparator Group and Role of Benchmark Data
Our Compensation Committee typically requests benchmark compensation data for our senior executives on an annual basis
to assess the compensation of the company’s senior executives as compared to a group of similar firms. Finding comparable
firms for purposes of benchmarking executive compensation is challenging due to our unique business, structure and mission,
and the large size of our book of business compared to other financial services firms. The only directly comparable firm to us
is Freddie Mac. In 2012, FHFA requested that we and Freddie Mac consider using the same comparator group of companies
for benchmarking executive compensation, in order to provide consistency in the market data used for compensation
decisions. In response to this request, both we and Freddie Mac made adjustments to our respective comparator groups so
that they would be consistent. Factors relevant to the selection of companies for our comparator group included their status as
U.S. public companies, the industry in which they operate (each is a commercial bank, insurance company, finance lessor or
government-sponsored enterprise) and their size (in terms of total revenues) relative to the size of Fannie Mae. In September
2012, the Compensation Committee revised our primary comparator group to consist of the following 17 companies: