Freddie Mac 2015 Annual Report Download - page 371

Executive Compensation Compensation Discussion and Analysis
Freddie Mac 2015 Form 10-K 369
• 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 each of our current executive officers
(including each of our NEOs) and directors, each an indemnitee. For indemnification agreements entered
into with executive officers in or after August 2011, the form of agreement has been revised to provide
that indemnification rights under the agreement would terminate if and when the executive officer
remained with Freddie Mac after ceasing to report directly to the CEO with respect to any claims arising
from matters occurring after the officer was no longer a direct CEO report. Similar indemnification rights
would continue to be available to such executive officers under the Bylaws going forward. The
indemnification agreements provide that we will indemnify the indemnitee to the fullest extent permitted
by our Bylaws and Virginia law. This obligation includes, subject to certain terms and conditions,
indemnification against all liabilities and expenses (including attorneys’ fees) actually and reasonably
incurred by the indemnitee in connection with any threatened or pending action, suit or proceeding,
except such liabilities and expenses as are incurred because of the indemnitee’s willful misconduct or
knowing violation of criminal law. The indemnification agreements provide that if requested by the
indemnitee, we will advance expenses, subject to repayment by the indemnitee of any funds advanced if
it is ultimately determined that the indemnitee is not entitled to indemnification. The rights to
indemnification under the indemnification agreements are not exclusive of any other right the indemnitee
may have under any statute, agreement, or otherwise. Our obligations under the indemnification
agreements will continue after the indemnitee is no longer a director or officer of the company with
respect to any possible claims based on the fact that the indemnitee was a director or officer, and the
indemnification agreements will remain in effect in the event the conservatorship is terminated. The
indemnification agreements also provide that indemnification for actions instituted by FHFA will be
governed by the standards set forth in FHFA’s Notice of Proposed Rulemaking, published in the Federal
Register on November 14, 2008, implementing 12 U.S.C. 4518. That proposed rulemaking has not yet
been finalized. In the preamble to FHFA’s final rule on Golden Parachute Payments, published in the
Federal Register on January 28, 2014, FHFA indicated that a final rule on indemnification payment
provisions remains under review.
OTHER EXECUTIVE COMPENSATION CONSIDERATIONS
EFFECT OF TERMINATION OF EMPLOYMENT
The timing and payment of any unpaid portion of Deferred Salary and related interest is based upon the
reason for termination, as discussed in “— Potential Payments Upon Termination of Employment.”
PERQUISITES
We believe that perquisites should be a minimal part of the compensation package for our NEOs. Total
annual perquisites for any NEO cannot exceed $25,000 without FHFA approval, and we do not provide a
gross-up to cover any taxes due on the perquisite itself. The only perquisite provided to our NEOs during
2015 was reimbursement for assistance with personal financial planning, tax planning, and/or estate