FANNIE MAE ANNUAL INCENTIVE PLAN,
AS AMENDED AND RESTATED JANUARY 1, 2007
The purpose of the Fannie Mae Annual Incentive Plan (the “Plan”) is to encourage greater focus on
performance among the Management Group of Fannie Mae by relating a significant portion of their
total compensation to the achievement of annual financial, strategic or operational objectives.
The Participant will not be deemed to have been terminated for Cause following an event
described in (a) above unless Fannie Mae has provided (i) reasonable notice to the
Participant setting forth Fannie Mae’s intention to terminate for Cause, (ii) where remedial
action is appropriate and feasible, a reasonable opportunity for such action, (iii) an
opportunity for the Participant, together with the Participant’s counsel, to be heard before the
Committee or its designee, and (iv) the Participant with a notice of termination stating that the
Participant was guilty of the conduct set forth in (a) above and specifying the particulars
thereof in detail. No act or failure to act by the Participant will be considered “willful” unless it
is done, or omitted to be done, by the Participant in bad faith or without reasonable belief that
the Participant’s action or omission was in the best interests of Fannie Mae.
2.1. “AWARD” means a cash bonus awarded pursuant to the Plan.
2.2. “BOARD OF DIRECTORS” means the Board of Directors of the Company.
2.3. “CAUSE” means, unless provided otherwise in an applicable employment agreement, that
Fannie Mae determines that the Participant has:
(a) materially harmed Fannie Mae by, in connection with the Participant’s performance of the
Participant’s duties for Fannie Mae, engaging in dishonest or fraudulent actions or willful
misconduct, or performing the Participant’s duties in a grossly negligent manner, or
(b) been convicted of, or pleaded nolo contendere with respect to, a felony.
2.4. “COMMITTEE” means the Compensa