Freddie Mac 2010 Annual Report Download - page 303

Compensation Program for performance-based Deferred Base Salary and therefore each Covered Officer’s payment is
equal to his or her target multiplied by the funding level. While the Executive Compensation Program allows for an
approved funding level greater than 100%, it is the current intention of the Compensation Committee not to approve a
funding level in excess of 100% while the company is in conservatorship.
• The Target Incentive Opportunity (“TIO”) is a performance-based, long-term incentive award that is designed to
provide incentives to the Covered Officers to achieve specific corporate performance measures. Each Covered
Officer’s target award is equal to one-third of his or her annual Target TDC. The award is granted annually and
earned over a two-year period based on the considerations discussed below. Half of each award is earned in the year
granted, with the other half earned in the following year. Payment may range from 0% to 150% of target, as
determined by the Compensation Committee with the approval of FHFA, and will occur no later than March 15 of the
year following the year to which the annual performance measures are applicable. Individual differentiation is
provided for under the Executive Compensation Program for TIO payments based on an assessment of division and/or
individual performance as determined by the Chief Executive Officer or, in the case of the Chief Executive Officer,
the Board of Directors.
While the Executive Compensation Program allows for a Covered Officer to receive a TIO payment greater than
100% of the target, it is the current intention of the Compensation Committee not to approve payments to the Chief
Executive Officer or Chief Financial Officer that are in excess of 100% of their individual targets while the company
is in conservatorship.
Except in the limited circumstances described below (see “Potential Payments Upon Termination of Employment or
Change-in-Control”), we will pay installments of TIO and Deferred Base Salary awards only if the Named Executive Officer
is employed by Freddie Mac on the scheduled payment date.
The Executive Compensation Program is effective for as long as Freddie Mac remains in conservatorship. The
provisions of the Executive Compensation Program may be amended by the Compensation Committee, if approved by FHFA
after consulting with Treasury.
The following diagram depicts potential total direct compensation, including the three elements of compensation, under
the Executive Compensation Program, using a covered officer with a $3,000,000 Target TDC for 2010 as an example.
Target Total Direct Compensation = $3,000,000
Portion (50%)
$750,000 $500,000 $500,000
FIXED COMPENSATION PERFORMANCE-BASED COMPENSATION
$750,000$500,000
Semi-Monthly Base Salary
Fixed Portion (50%)
Deferred Base Salary
$1,500,000
Target 1st Installment (50%) Target 2nd Installment (50%)
Target Total Incentive Opportunity = ¹/3 x TDC = $1,000,000
Base Salary = ²/3 x TDC = $2,000,000
Target Performance-Based
Performance Measures for the Performance-Based Elements of Compensation
The performance measures for the performance-based portion of Deferred Base Salary, the first installment of the 2010
TIO grant, and the second installment of the 2009 TIO grant, together with a description of the assessment of actual
performance against such measures, are presented below in “— Determination of the Performance-Based Portion of 2010
Deferred Base Salary” and “— Determination of Actual Target Incentive Opportunity.” These performance measures, which
were developed by management, the Compensation Committee, and FHFA, were chosen because we believe they reflect our
priorities under conservatorship. They also require the participation and support of employees throughout the company.
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