2003 Compensation Charter: FNMCompensation Committee Charter
1. Members. The Committee shall consist of at least three independent directors, including a chair and such other independent directors as the Board shall appoint. An "independent director" is a director who meets the New York Stock Exchange definition of "independence," as determined by the Board.
2. Purpose, duties and responsibilities. The purpose of the Committee shall be to discharge the responsibilities of the Board relating to compensation of Fannie Mae's executives; to oversee and advise the Board on the adoption of policies that govern Fannie Mae's annual compensation and stock ownership plans; and to produce the annual report on executive compensation for inclusion in the company's annual proxy statement.
The Committee's duties and responsibilities shall be to:
Oversee compensation policies and plans for officers and employees of Fannie Mae. The Committee shall support the compensation philosophy, as set forth in the Charter Act and adopted by the Board, designed to help the corporation compete with similar businesses (including publicly held financial institutions or major financial services companies) for the talent that Fannie Mae needs. The core of the corporation's compensation philosophy shall be pay for performance and comparability.
Reflect Fannie Mae's pay for performance philosophy in structuring the corporation's compensation programs. The Committee shall make recommendations to the Board with respect to Fannie Mae's incentive-compensation plans and stock-based plans. The corporation's use of stock-based compensation shall align the interests of employees and directors to those of Fannie Mae stockholders.
Approve the compensation of Fannie Mae's senior officers. The Committee shall review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO's performance in light of those goals and objectives, and set the CEO's compensation level based on this evaluation, consistent with the company's compensation philosophy.
Advise the Board on the adoption of policies that govern Fannie Mae's annual compensation and stock ownership plans through regular meetings with management and consultants using information and analyses collected both internally and through the use of established independent sources.
Review and advise Fannie Mae on the process used for gathering information on the compensation paid by other similar businesses (including publicly held financial institutions and major financial services companies) for positions involving similar duties and responsibilities as those at Fannie Mae.
Annually review the corporation's compensation practices and compare them, relative to corporate performance, with those of other similar businesses (including publicly held financial institutions and major financial services companies) from annual and multi-year perspectives.
Make recommendations to the Board for whatever adjustments are necessary to maintain adherence to Fannie Mae's philosophy, competitive position, and obligations under the Charter Act.
Perform the administrative functions assigned to it under the corporation's stock ownership plans and by the Board.
Review the corporation's succession plans relating to the CEO and other senior management.
Review periodic reports from management on matters relating to the corporation's personnel appointments and practices.
Annually evaluate its performance and the adequacy of its charter.
3. Outside advisors. The Committee shall have the authority to retain such outside counsel, experts, and other advisors as it determines appropriate to assist it in the full performance of its functions.
4. Meetings. The Committee shall meet as often as may be deemed necessary or appropriate in its judgment, either in person or telephonically, and at such times and places as the Committee shall determine. The Committee shall make regular reports to the Board on its activities. These reports will generally occur after each Committee meeting or at such other times as the Committee deems appropriate.