Fannie Mae 2014 Annual Report Download - page 188

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has been approved by the shareholders. Compensation the company pays the named executives does not qualify as
performance-based compensation under section 162(m). We have not adopted a policy requiring all compensation to be
deductible under section 162(m). This approach allows us flexibility in light of the conservatorship.
Retirement Provisions for the 2015 Executive Compensation Program
The Board approved a change to the retirement age for the executive compensation program for 2015 and future years. FHFA
approved this change on February 17, 2015. The 2014 executive compensation program, which is not affected by this
change, provides that the reduction provisions applicable to payments of earned but unpaid fixed deferred salary do not apply
if an officer retires from Fannie Mae at or after reaching age 65. As amended, the 2015 executive compensation program
provides that the reduction provisions applicable to payments of earned but unpaid fixed deferred salary do not apply if the
officer retires from Fannie Mae at or after: age 62; or age 55 with 10 years of service with Fannie Mae.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of Fannie Mae has reviewed and discussed the Compensation
Discussion and Analysis included in this Form 10-K with management. Based on such review and discussions, the
Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be
included in this Form 10-K.
Compensation Committee:
Brenda J. Gaines, Chair
Diane C. Nordin
Jonathan Plutzik
David H. Sidwell
COMPENSATION RISK ASSESSMENT
Our Enterprise Risk Management division conducted a risk assessment of our 2014 employee compensation policies and
practices. In conducting this risk assessment, the division reviewed, among other things, our performance goals, pay mix and
compensation structure, variable compensation plans applicable to some employees who support our credit portfolio
management division, an incentive plan targeted to employees working on one of our strategic initiatives, our severance
arrangements and compensation recoupment policy, oversight of aspects of our compensation by FHFA, the Compensation
Committee and the Board of Directors, our corporate culture with regard to risk, and our performance appraisal management
process. The division also assessed whether policies, procedures or other mitigating controls existed that would reduce the
opportunity for excessive or inappropriate risk-taking within our compensation policies and practices.
Based on the results of this risk assessment, management concluded that our 2014 employee compensation policies and
practices do not create risks that are reasonably likely to have a material adverse effect on the company. Several factors
contributed to this conclusion, including:
• Payment of performance-based compensation for achievement of the 2014 conservatorship scorecard objectives and the
2014 Board of Directors’ goals is based on the achievement of goals that we have concluded do not encourage
unnecessary or excessive risk-taking.
• Our extensive performance appraisal process is designed to ensure achievement of goals without encouraging
executives or employees to take excessive risks.
• Deferred salary for our SEC executive officers is subject to the terms of the recoupment policy.
• We have no pre-arranged severance arrangements for our executive officers that would guarantee additional
compensation upon termination of employment.
Our Chief Risk Officer discussed the risk assessment of the company’s 2014 compensation policies and practices with the
Compensation Committee of the Board of Directors.
Despite the determination that our 2014 employee compensation policies and practices do not create risks that are reasonably
likely to have a material adverse effect on the company, we believe that we face an elevated risk of executive officer attrition
due in part to the level of our senior executives’ compensation as compared to comparable firms. As described in