Freddie Mac 2015 Annual Report Download - page 372

Executive Compensation Compensation Discussion and Analysis
Freddie Mac 2015 Form 10-K 370
planning, up to an annual maximum benefit of $4,500, with an additional $2,500 allowance provided in the
first year in which an NEO utilizes the benefit.
SERP
Our NEOs are eligible to participate in our SERP. The SERP is designed to provide participants with the
full amount of benefits to which they would have been entitled under our Thrift/401(k) Plan if that plan was
not subject to certain dollar limits under the Internal Revenue Code. This is referred to as the “SERP
Benefit.” For participants in the 2015 EMCP (or prior executive compensation programs), benefits under
the SERP Benefit are limited in any calendar year to two times a participant’s Base Salary.
For additional information regarding these benefits, see “— 2015 Compensation Information for NEOs”
and “— Nonqualified Deferred Compensation.”
STOCK OWNERSHIP, HEDGING, AND PLEDGING POLICIES
Our stock ownership guidelines were suspended when conservatorship began because we ceased
paying our executives stock-based compensation. 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 such time that we
resume granting stock-based compensation.
Pursuant to our company policy, all employees, including our NEOs, are prohibited from:
• Engaging in all transactions (including purchasing and selling equity and non-equity securities)
involving our securities (except selling company securities owned prior to the implementation of the
policy and then only with pre-clearance);
• Purchasing or selling derivative securities related to our equity securities or dealing in any derivative
securities related to our equity securities;
• Transacting in options (other than options granted by us, and then only with pre-clearance) or other
hedging instruments related to our securities; and
• Holding our securities in a margin account or pledging our securities as collateral for a loan.
FHFA’S ROLE IN SETTING 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, Corporate Governance,
and Executive Officers — Board and Committee Information — 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