Freddie Mac 2014 Annual Report Download - page 265

260 Freddie Mac
Agreement. We did not enter into a Recapture Agreement with Mr. Layton because he only receives Base Salary, which is not
subject to recapture.
The Recapture Agreement provides for the recapture and/or forfeiture of Deferred Salary (including related interest)
earned, paid or to be paid pursuant to the terms of the 2014 EMCP if, after providing the required notice, our Board of
Directors, in the good faith exercise of its sole discretion, determines that a Forfeiture Event has occurred. The Forfeiture
Events and the Deferred Salary subject to recapture and/or forfeiture are described below.
• Materially Inaccurate Information
Forfeiture Event: The NEO has earned or obtained the legally binding right to a payment of Deferred Salary based
on materially inaccurate financial statements or any other materially inaccurate performance measure.
Compensation Subject to Recapture and/or Forfeiture: Any Deferred Salary in excess of the amount that the
Board of Directors determines would likely have been otherwise earned using accurate measures during the two
years prior to the Forfeiture Event.
• Termination for Felony Conviction or Willful Misconduct
Forfeiture Event: The NEO’s employment is terminated in any of the following circumstances:
Termination of employment because the NEO is convicted of, or pleads guilty or nolo contendere to, a
felony;
Subsequent to termination of employment, the NEO is convicted of, or pleads guilty or nolo contendere to, a
felony, based on conduct occurring prior to termination, and within one year of such conviction or plea, the
Board of Directors determines that such conduct is materially harmful to Freddie Mac.
Termination of employment because, or within two years of termination, the Board of Directors determines
that, the NEO engaged in willful misconduct in the performance of his or her duties that was materially
harmful to Freddie Mac.
Compensation Subject to Recapture and/or Forfeiture: Any Deferred Salary earned during the two years prior to
the date that the NEO is terminated, any Deferred Salary scheduled to be paid within two years after termination
and any cash payment made or to be made as consideration for any release of claims agreement.
• Gross Neglect or Gross Misconduct
Forfeiture Event: The NEO’s employment is terminated because, in carrying out his or her duties, the NEO
engages in conduct that constitutes gross neglect or gross misconduct that is materially harmful to Freddie Mac,
or within two years after the NEO’s termination of employment, the Board of Directors determines that the NEO,
prior to his or her termination, engaged in such conduct.
Compensation Subject to Recapture and/or Forfeiture: Any Deferred Salary paid at the time of termination or
subsequent to the date of termination, including any cash payment made as consideration for any release of claims
agreement.
• Violation of a Post-Termination Non-Competition Covenant
• Forfeiture Event: The NEO violates a post-termination non-competition covenant set forth in the restrictive
covenant and confidentiality agreement in effect when a payment of Deferred Salary is scheduled to be made.
• Compensation Subject to Recapture and/or Forfeiture: 50% of the Deferred Salary paid during the twelve months
immediately preceding the violation and 100% of any unpaid Deferred Salary.
Under the Recapture Agreement, the Board of Directors has discretion to determine the appropriate dollar amount, if any,
to be recaptured from and/or forfeited by the NEO, which is intended to be the gross amount of compensation in excess of what
Freddie Mac would have paid the NEO had Freddie Mac taken the Forfeiture Event into consideration at the time such
compensation decision was made.
A copy of the form of the Recapture Agreement was filed as Exhibit 10.3 to our Current Report on Form 8-K filed on
June 12, 2013. The Recapture Agreement applicable to compensation earned in 2012 was filed as Exhibit 10.3 to our quarterly
report on Form 10-Q filed on November 6, 2012.
The following additional event is applicable only to the CEO and CFO, to the extent they have compensation subject to
reimbursement in accordance with Section 304 of the Sarbanes-Oxley Act.
• Accounting Restatement Resulting from Misconduct - If, as a result of misconduct, we are required to prepare an
accounting restatement due to material non-compliance with financial reporting requirements, the CEO and CFO are
required to reimburse us for amounts determined in accordance with Section 304.
Indemnification Agreements
We have also entered into indemnification agreements with certain of our current and former directors and executive
officers, each an indemnitee, including each of our NEOs. For indemnification agreements entered into with executive officers
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