Freddie Mac 2010 Annual Report Download - page 314

If any of these triggering events occur, the Board will determine whether more compensation was paid to the Named
Executive Officer than would otherwise have been paid had we been aware of the triggering event or events at the time the
compensation was paid or awarded. If such a determination is made, the following elements of compensation will be subject
to recapture: (a) Deferred Base Salary; (b) Target Incentive Opportunity; (c) any equity awards that vest after the adoption of
the Executive Compensation Program; and (d) any termination benefits paid. Only compensation paid up to two years prior
to the triggering event or the date of termination or compensation paid at the time of termination, as applicable, will be
subject to recapture. Additionally, the occurrence of a triggering event may result in cancellation of any future payment
obligations and/or any outstanding equity awards.
The amount of compensation recaptured will be determined by the Board, subject to the guidelines described above.
Additional details are included in the Recapture Policy, which was filed as Exhibit 10.4 to our Current Report on Form 8-K
filed on December 31, 2009. For the triggering event applicable only to Messrs. Haldeman and Kari, the compensation
subject to recapture will be determined in accordance with Section 304 of the Sarbanes-Oxley Act.
Stock Ownership and Hedging Policies
In November 2008, FHFA approved the suspension of our stock ownership guidelines because we had ceased paying our
executives stock-based compensation. Also, the Purchase Agreement prohibits us from issuing any shares of our equity
securities without the prior written consent of Treasury. The suspension of stock ownership requirements is expected to
continue through the conservatorship and until we resume granting stock-based compensation.
All employees, including our Named Executive Officers, are prohibited from purchasing and selling derivative securities
related to our equity securities, including warrants, puts and calls, or from dealing in any derivative securities other than
pursuant to our stock-based benefit plans. All directors and employees (including the Named Executive Officers) are
prohibited from transacting in options (other than options granted by us) or other hedging instruments as specified in our
Insider Trading Policy. In addition, all directors and employees (including our Named Executive Officers) are prohibited
from holding our securities in a margin account or pledging our securities as collateral for a loan.
Section 162(m) Limits on the Tax Deductibility of Our Compensation Expenses
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that a company may annually
deduct for compensation to its CEO and certain other Named Executive Officers, unless, among other things, the
compensation is “performance-based,” as defined in section 162(m). Given the conservatorship and the desire to maintain
flexibility to promote our corporate goals, awards of retention and deferred pay, and long-term incentive awards for 2010
performance are not structured to qualify as performance-based compensation under section 162(m).
Compensation Committee Interlocks and Insider Participation
None of the members of the Board of Directors who served on the Compensation Committee during fiscal year 2010
were our officers or employees or had any relationship with us that would be required to be disclosed by us under
Item 407(e)(4) of Regulation S-K.
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