Freddie Mac 2011 Annual Report Download - page 336

Compensation Discussion and Analysis
This section contains information regarding our compensation programs and policies, as modified by direction we
received from FHFA as Conservator. These programs and policies were applicable to the following individuals, who were
determined to be our Named Executive Officers for the year ended December 31, 2011 under SEC rules.
• Charles E. Haldeman, Jr., Chief Executive Officer
• Ross J. Kari, Executive Vice President — Chief Financial Officer
• Anthony N. Renzi, Executive Vice President — Single-Family Business, Operations and Technology
• Jerry Weiss, Executive Vice President — Chief Administrative Officer
• Paige H. Wisdom, Executive Vice President — Chief Enterprise Risk Officer
Executive Management Compensation Program
Overview of Program Structure
The Executive Management Compensation Program, or the Executive Compensation Program, covers the
compensation of Freddie Mac executives in the following positions, each a Covered Officer:
• Chief Executive Officer (CEO), Chief Operating Officer (COO), and Chief Financial Officer (CFO);
• All Executive Vice Presidents (EVPs); and
• All Senior Vice Presidents (SVPs).
Each Named Executive Officer is a Covered Officer.
The Executive Compensation Program is a result of collaboration and compromise with FHFA that reflects the
principles established by Treasury’s executive compensation guidelines for companies receiving federal assistance.
Specifically, the Executive Compensation Program was designed to align executive pay with achievement of our mission
of providing liquidity, stability, and affordability to a troubled mortgage market and with certain financial, infrastructure
development and other corporate performance objectives established annually by our Board and approved by FHFA. These
objectives reflect our responsibilities both under our charter and in conservatorship as determined by the Conservator. The
Executive Compensation Program establishes strict recapture provisions that protect the interests of taxpayers. The
Executive Compensation Program attempts to balance our need to retain critical executives and attract new executive
talent while continuing to support the nation’s housing recovery amidst the uncertainties regarding our future.
One key element of the Executive Compensation Program that differs from Treasury’s executive compensation
guidelines is that all compensation is delivered exclusively in cash. We cannot provide equity-based compensation to our
employees under the terms of the Purchase Agreement with Treasury, unless such grants are approved by Treasury. In
addition, uncertainty regarding our future status makes our common stock ineffective as a vehicle for delivering incentive
compensation.
Participation in the Executive Compensation Program is contingent upon a Covered Officer agreeing to be bound by
the terms of a recapture arrangement that has been approved by both the Compensation Committee and FHFA. A further
discussion of the recapture arrangement is set forth below in “Other Executive Compensation Considerations — Recapture
Policy.”
Finally, although the Compensation Committee takes the lead role in considering and recommending executive
compensation, FHFA has become increasingly involved in the process and has limited the Compensation Committee’s
flexibility in certain respects, as previously discussed. In addition, the following circumstances limit the Compensation
Committee’s authority during conservatorship:
• FHFA issued a directive on December 16, 2010 requiring the Compensation Committee to set 2011 Target TDC at
a level that was either the same as or lower than each Named Executive Officer’s 2010 Target TDC, absent a
promotion or a significant change in responsibilities. On December 13, 2011, FHFA extended this directive for
setting 2012 Target TDC and subsequently instructed the Compensation Committee to further reduce the
compensation levels of senior management.
• When FHFA was appointed as our Conservator in September 2008, it assumed all of the rights, titles, powers, and
privileges of the company and its stockholders, directors and management, including 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.
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