Freddie Mac 2014 Annual Report Download - page 256

251 Freddie Mac
Audit Committee Financial Expert
Our Audit Committee satisfies the definition of “audit committee” in Section 3(a)(58)(A) of the Exchange Act and the
requirements of Rule 10A-3 under the Exchange Act. Although our stock has been delisted from the NYSE, certain of the
corporate governance requirements of the NYSE Listed Company Manual, including those relating to audit committees,
continue to apply to us because they are incorporated by reference in the FHFA corporate governance regulations. Our Audit
Committee satisfies the “audit committee” requirements in Sections 303A.06 and 303A.07 of the NYSE Listed Company
Manual. The current members of the Audit Committee are Carolyn H. Byrd, Thomas M. Goldstein, Richard C. Hartnack,
Christopher S. Lynch, Sara Mathew and Anthony A. Williams, all of whom the Board has determined are independent within
the meaning of Rule 10A-3 under the Exchange Act and Section 303A.02 of the NYSE Listed Company Manual.
Ms. Byrd has been a member of the Audit Committee since December 2008 and is currently its chair. The Board has
determined that Ms. Byrd meets the definition of an “audit committee financial expert” under SEC regulations.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section contains information regarding our compensation programs and policies, which have been approved by
FHFA, and the compensation of the following individuals we determined to be our Named Executive Officers, or NEOs, for the
year ended December 31, 2014.
• Donald H. Layton, Chief Executive Officer
• James G. Mackey, Executive Vice President — Chief Financial Officer
• David B. Lowman, Executive Vice President — Single-Family Business
• William H. McDavid, Executive Vice President — General Counsel and Corporate Secretary
• Jerry Weiss, Executive Vice President — Chief Administrative Officer
For information on our primary business objectives and the progress we made during 2014 in accomplishing those
objectives, see “BUSINESS — Executive Summary.”
Executive Management Compensation Program
Overview of Program Structure
The 2014 Executive Management Compensation Program, or 2014 EMCP, replaced the executive compensation program
in place during 2013, the 2013 EMCP. The only difference between the two programs is that, under the 2014 EMCP, Covered
Officers are paid interest on earned but unpaid Deferred Salary. Termination of the 2013 EMCP was necessitated under
Internal Revenue Service (IRS) rules as a result of the termination of the pension component of the Federal Home Loan
Mortgage Corporation Supplemental Executive Retirement Plan. Additional information about the 2014 EMCP is provided
below and in our Current Report on Form 8-K filed on December 10, 2013.
The 2014 EMCP attempts to balance our need to retain and attract executive talent with the promotion of the
conservatorship objectives that are included in the Conservatorship Scorecard established by FHFA and goals established by
management related to the commercial aspects of our business and referred to as the Corporate Scorecard. All compensation
under the 2014 EMCP is delivered exclusively in cash because we cannot provide equity-based compensation to our employees
under the terms of the Purchase Agreement, unless approved by Treasury. Compensation in 2014 for each NEO other than
Mr. Layton was governed by the 2014 EMCP. Mr. Layton's compensation is discussed below in “— Chief Executive Officer
Compensation.”
Although the Compensation Committee plays a significant role in considering and recommending executive
compensation, FHFA is actively involved in determining such compensation. During conservatorship, the Compensation
Committee’s authority and flexibility have been subject to the following limitations:
• The powers of FHFA as our Conservator include the authority to set executive compensation. Under the terms of the
Purchase Agreement, FHFA is required to consult with Treasury on any increases in compensation or new
compensation arrangements for our executive officers.
• Our directors serve on behalf of FHFA and exercise their authority as directed by FHFA. More information about the
role of our directors is provided above in “DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE — Authority of the Board and Board Committees.”
• FHFA has directed us to obtain its approval before we: (i) enter into new compensation arrangements or increase
amounts or benefits payable under existing compensation arrangements for officers at the senior vice president level
and above and for other officers as FHFA may deem necessary to successfully carry out its role as Conservator; or
(ii) establish or modify performance management processes for such officers.
• FHFA retains the authority not only to approve both the terms and amount of any compensation prior to payment to
any of our executive officers, but also to modify any existing compensation arrangements.
Table of Contents