Freddie Mac 2011 Annual Report Download - page 338

Except in the limited circumstances described below (see “Potential Payments Upon Termination of Employment or
Change-in-Control”), we will pay installments of TO and Deferred Base Salary awards only if the Named Executive
Officer is employed by Freddie Mac on the scheduled payment date.
Effective January 1, 2012, FHFA approved a new compensation structure for our executives, the 2012 Executive
Compensation Program. See “OTHER INFORMATION — 2012 Executive Management Compensation Program” above
for additional information. It may be amended or replaced by FHFA or the Compensation Committee, subject to approval
by FHFA after consulting with Treasury.
The following diagram depicts Target TDC, including each of the three elements of compensation, under the
Executive Compensation Program in effect for 2011.
FIXED COMPENSATION PERFORMANCE-BASED COMPENSATION
(All percentages reflect compensation targets)
Target Total Direct Compensation (TDC) = 100%
Cannot exceed
$500,000 without
FHFA approval
Semi-Monthly Base Salary
Fixed
Portion
(50%)
Deferred Base Salary =
Base Salary – Semi-Monthly Base Salary
1st Installment (50%) 2nd Installment (50%)
Target Opportunity = ¹/3 x TDC = 33.3%
Base Salary = ²/3 x TDC = 66.7%
Performance-Based
Portion
(50%)
Performance Measures for the Performance-Based Elements of Compensation
The performance measures for the performance-based portion of Deferred Base Salary, the first installment of the
2011 TO grant, and the second installment of the 2010 TO grant, together with a description of the assessment of actual
performance against such measures, are presented below in ‘‘— Determination of the Performance-Based Portion of 2011
Deferred Base Salary” and “— Determination of Actual Target Opportunity.” These performance measures, which were
developed by management, the Compensation Committee, and FHFA, were chosen because we believe they reflect our
priorities under conservatorship. They also generally require the participation and support of employees throughout the
company.
Determination of 2011 Target TDC for Named Executive Officers
Role of Compensation Consultants
As part of the annual process to determine the Target TDC for each of the Named Executive Officers, the
Compensation Committee receives guidance from an independent compensation consultant that is selected by the
Compensation Committee. In addition to the annual process to determine the Target TDC, the compensation consultant
provides guidance during the course of the year on executive compensation matters and can be engaged for special
projects, as needed, by either the Compensation Committee or the full Board.
The Compensation Committee has engaged Meridian Compensation Partners, LLC (Meridian) as its consultant since
September 2010. Meridian was selected by the Compensation Committee without any recommendation by management.
Meridian has not provided the Compensation Committee with any non-executive compensation services, nor has the firm
provided any consulting services to our management.
Gathering Comparative Market Compensation Data
As part of its process to establish each Named Executive Officer’s Target TDC under the Executive Compensation
Program, the Compensation Committee reviewed the compensation of executives in comparable positions at companies
that are either in a similar line of business or are otherwise comparable for purposes of recruiting and retaining
333 Freddie Mac