Freddie Mac 2010 Annual Report Download - page 308

In order to receive the Deferred Base Salary that was earned during 2010, the Covered Officer must be employed by us
on the payment date, subject to certain exceptions. If a Covered Officer is involuntarily terminated, any unpaid Deferred
Base Salary will be forfeited unless the Compensation Committee recommends that the Covered Officer receive either all or
a portion of the unpaid Deferred Base Salary and the Compensation Committee’s recommendation is approved by FHFA
after consulting with Treasury, as appropriate. Further, if a Covered Officer voluntarily terminates employment, any unpaid
Deferred Base Salary will be forfeited. Accordingly, Mr. Bisenius will forfeit the second, third and fourth quarterly
installments of his Deferred Base Salary if he leaves the company as planned on April 1, 2011.
Determination of Actual Target Incentive Opportunity
Over the course of 2010, the Compensation Committee received updates from management on our achievement against
the performance objectives used to determine the funding level for the two TIO installments. In the fourth quarter of 2010,
management presented the Compensation Committee with a final achievement assessment against the performance objectives
used in determining the funding level for the two installments for which payment is based on performance during 2010.
For the first installment of the 2010 TIO, management concluded that we would achieve most, but not all, of the
performance objectives. The table below presents the performance measures and management’s assessment of our
achievement against those performance measures for the first installment of the 2010 TIO.
Table 74 — Achievement of Performance Measures for First Installment of 2010 Target Incentive Opportunity
Performance Measure Weighting Key Factors Impacting Achievement Assessment
Mission
Same as for the performance-based
element of Deferred Base Salary.
35% Same as for the performance-based element of Deferred Base
Salary.
Financial Execution
Achieve the Financial Execution
objectives related to 2010 new
purchases and conservation of assets
for the performance-based element of
Deferred Base Salary.
20% As discussed further in “Table 72 — Achievement of Performance
Measures for the Performance — Based Portion of Deferred Base
Salary”, we achieved the 2010 new purchases and conservation of
assets objectives.
Accounting and Controls
Strengthen the control environment
and submit a plan to the Audit
Committee to assure more efficient
and effective processes are in place to
maintain Sarbanes-Oxley compliance.
20% Controls environment strengthened, but less than expected. Of the
four significant deficiencies scheduled for remediation during 2010:
• One was fully remediated;
• Two had their scopes expanded and target remediation dates
extended into 2011; and
• One did not meet its target remediation date.
Business Infrastructure
• Complete the 2010 elements of our
business infrastructure plan; and
• Operate the existing technology and
operations infrastructure in an
efficient fashion, while maintaining
service and quality standards.
25% Achieved milestones for nine of the 10 business infrastructure
workstreams:
• Revised the timetable for one of the multifamily infrastructure
workstreams; and
• Based on performance indicators for key applications and
processes, our business infrastructure operated efficiently and
service and quality standards were met.
After reviewing and discussing management’s final performance assessment against the specific performance measures,
the Compensation Committee concurred with management’s assessment. The Compensation Committee then identified and
discussed one additional factor that it believed should be taken into consideration in determining the appropriate funding
level for the first installment of the 2010 TIO. The additional factor considered by the Committee was the overall upgrade in
the talent and capability in senior-level roles and how this improvement strengthens our position for the future. After
considering both our achievement against the performance objectives as well as the additional factor, which had the overall
effect of increasing the funding level, the Compensation Committee developed a preliminary recommended funding level for
the 2010 TIO first installment of approximately 95%. The Compensation Committee’s preliminary recommendation was
submitted to FHFA for review. Following this review, management informed the Committee that there were no material
changes to the assessment that was presented during the fourth quarter of 2010 and this funding level was then formally
approved by the Compensation Committee and FHFA.
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