Fannie Mae 2014 Annual Report Download - page 195

190
__________
(1) Because benefit accruals under the Retirement Plan and the Supplemental Pension Plans were frozen as of June 30, 2013, Mr. Benson’s
credited service under these plans was frozen in 2013 at 11.3 years and Mr. Bon Salle’s credit service was frozen at 20.7 years.
(2) As a result of the termination of the Retirement Plan, Mr. Benson and Mr. Bon Salle will have the choice of receiving benefits under the
Retirement Plan in either in a single lump sum payment or in an annuity. Each will receive a single lump sum payment for his benefits
under the Supplemental Plans. Using the same assumptions we use for financial reporting under GAAP, the present value of the
executives’ benefits under these plans presented in this column have been calculated assuming that each will receive lump sum
payments for his benefits under the Supplemental Plans and based on the values that would result if each were to elect to receive 80%
of his benefits under the Retirement Plan in a lump sum, and the other 20% in the form of an annuity. Under the terms of the Retirement
Plan, the executives will not be able to make such an election and will be required to elect to receive all benefits under the Retirement
Plan either in a lump sum or in an annuity. Under the plans, the amount of the lump sum payments and the annuity will be calculated
using the benefit reduction factors for early retirement. We have assumed that Mr. Benson and Mr. Bon Salle would begin receiving
annuity benefits under the Retirement Plan at the later of the earliest age at which each can retire under the plan or June 30, 2015,
consistent with our assumptions used for financial reporting purposes. Even though the terms of the plans provide for a reduction in
benefit payments for those electing to receive benefits prior to the normal retirement ages, the actuarial valuations of the present value
of Mr. Benson’s and Mr. Bon Salle’s benefits are higher for retirement at age 55 than for retirement at the normal retirement ages,
because the reductions in benefit payments specified in the plans do not fully offset the value of the additional years of benefits they
would receive by electing to receive benefits earlier. The lump sum post-retirement mortality assumption for the executives is based on
the IRS prescribed mortality table for lump sums paid in 2015. The annuities post-retirement mortality assumption is based on the
RP-2000 mortality tables with generational mortality improvement projections. For additional information regarding the calculation of
present value and the assumptions underlying these amounts, see “Note 12, Employee Retirement Benefits.”
Nonqualified Deferred Compensation
We provide nonqualified deferred compensation to the named executives pursuant to our Supplemental Retirement Savings
Plan. Our Supplemental Retirement Savings Plan is an unfunded, non-tax-qualified defined contribution plan. The
Supplemental Retirement Savings Plan is intended to supplement our Retirement Savings Plan, or 401(k) plan, by providing
benefits to participants whose eligible earnings exceed the IRS annual limit on eligible compensation for 401(k) plans (for
2014, the annual limit was $260,000). All of our named executives participated in the Supplemental Retirement Savings Plan
in 2014.
We credit 8% of the eligible compensation for our named executives that exceeds the applicable IRS annual limit. Eligible
compensation in any year consists of base salary plus any eligible incentive compensation (which includes deferred salary)
earned for that year, up to a combined maximum of two times base salary. The 8% credit consists of two parts: (1) a 2%
credit that will vest after the participant has completed three years of service with us; and (2) a 6% credit that is immediately
vested. As discussed above under “Pension Benefits—Termination of Defined Benefit Pension Plans,” because Mr. Benson
satisfied the rule of 65, we made an additional credit to the Supplemental Retirement Savings Plan for Mr. Benson equal to
4% of his base salary and deferred salary paid in 2014, capped at two times his base salary for the year and reduced by the
IRS annual limit for the year. Employees who satisfied the rule of 65 are eligible to receive this type of credit each year
through June 2018.
While the Supplemental Retirement Savings Plan is not funded, amounts credited on behalf of a participant under the
Supplemental Retirement Savings Plan are deemed to be invested in mutual fund investments selected by the participant that
are similar to the investments offered under our Retirement Savings Plan.
Amounts deferred under the Supplemental Retirement Savings Plan are payable to participants in the January or July
following separation from service with us, subject to a six month delay in payment for the 50 most highly-compensated
officers. Participants may not withdraw amounts from the Supplemental Retirement Savings Plan while they are employees.
The table below provides information on the nonqualified deferred compensation of the named executives in 2014, all of
which was provided pursuant to our Supplemental Retirement Savings Plan.