Freddie Mac 2011 Annual Report Download - page 339

individuals with the requisite skills and capabilities. We refer to this group of companies as the Comparator Group. In
September 2011, the Compensation Committee reviewed and discussed the composition of the Comparator Group with
Meridian and determined that the following companies should be included in the Comparator Group used to establish
target compensation levels for 2012:
Allstate The Hartford Prudential
American Express JPMorgan Chase* State Street
Bank of America* MasterCard SunTrust
Bank of New York Mellon MetLife U.S. Bancorp
Capital One Northern Trust Visa
Citigroup* PNC Wells Fargo*
Fannie Mae
* Compensation data to be used from these diversified banking firms is taken only from their mortgage or real estate divisions.
While the 2012 Comparator Group continues to include 19 companies, the Committee did make two changes to the
composition of the Comparator Group in September 2011, adding Capital One and removing BlackRock. In both cases,
these changes were made after considering several factors, including whether each company’s business is in the same or a
similar industry, whether we compete for executive talent and whether the company participates in the compensation
survey we use to benchmark competitive market data for our senior executives.
In the event there is insufficient data from the Comparator Group for any of the Named Executive Officer positions,
or if Meridian believes that additional data sources would strengthen the analysis of competitive market compensation
levels, the Compensation Committee can use alternative survey sources to make these assessments. For 2011 and 2012
compensation, the alternative survey sources used by the Compensation Committee were compensation surveys published
by McLagan and Aon Hewitt. In order to preserve confidentiality and encourage continuing participation, these consulting
firms do not attribute the data in their surveys to the companies that participate in their surveys.
Establishing Target TDC
In establishing Target TDC levels for our Named Executive Officers, the Compensation Committee used as a
guideline the market median, or 50th percentile, of the total direct compensation, consisting of base salary, annual
incentive, and long-term incentive awards, paid to comparable positions at Comparator Group companies or in the
alternative survey sources. The Compensation Committee’s authority was limited to setting 2011 Target TDC at a level
that was either the same as or lower than each Named Executive Officer’s 2010 Target TDC, based on FHFA’s directive
that the company maintain individual salaries and wage rates at 2010 levels for 2011, absent a promotion or a significant
change in responsibilities.
In establishing the Named Executive Officers’ 2011 Target TDC, the Compensation Committee reviewed 2010 data
from the Comparator Group and the alternative survey source. Specifically, for the positions of CEO, CFO and EVP —
Chief Enterprise Risk Officer, the Compensation Committee reviewed competitive market data from the Comparator
Group. For the EVP — Single-Family Business, Operations and Technology, the Compensation Committee reviewed
competitive market data from a survey published by McLagan. For the EVP — Chief Administrative Officer, no
reasonable match was available in either the Comparator Group or the alternative survey source and therefore the
competitiveness of this position’s Target TDC was evaluated by comparing the scope and breadth of the position’s
responsibilities with those of other executive-level positions within the company.
In December 2010, the Compensation Committee applied the criteria described above to either develop 2011 TDC
recommendations for each of the Named Executive Officers or review recommendations presented by senior management
and management’s compensation consultant, Aon Hewitt. For Mr. Renzi, the December 2010 review related to his role as
EVP — Single-Family Portfolio Management and the process was repeated at the time of his promotion into his current
role in June 2011, at which time the Compensation Committee reviewed 2010 data from both the Comparator Group and
a survey published by Aon Hewitt.
The 2011 Target TDC for each of the Named Executive Officers was reviewed and approved by FHFA.
The table below sets forth the approved 2011 Semi-Monthly Base Salary, Deferred Base Salary, TO, and Target TDC
for our Named Executive Officers. These amounts represent compensation targets, not the actual amount of compensation
paid for performance during 2011. As a result of FHFA’s directive to freeze Semi-Monthly Base Salary and Target TDC at
2010 levels, the aggregate Target TDC for our Named Executive Officers is in the lowest quartile of total direct
compensation paid to comparable positions at Comparator Group companies or, where applicable, in the alternative survey
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