Freddie Mac 2011 Annual Report Download - page 344

additional considerations and determined that these should also be included in determining the appropriate funding level
for the first installment of the 2011 TO. The Compensation Committee then developed a preliminary recommended
funding level for the 2011 TO first installment, which was then submitted to FHFA for review.
Following FHFA’s review of our achievement against the performance objectives, it instructed the Compensation
Committee to substantially reduce its recommended funding level in light of the following:
• The 2011 draw from Treasury was at the high end of the target range established at the beginning of the year; and
• As discussed above, required revisions in the affordable housing goal counting process, of which the company
received notice after management’s assessment and the Compensation Committee’s original recommendation,
resulted in our failure to meet the FHFA benchmark level for the single-family affordable purchase-money goals or
subgoals for 2011.
FHFA informed the Compensation Committee of the maximum funding level that it would approve. In accordance
with FHFA’s instruction, the Compensation Committee, without concurring, directed management to implement a funding
level for the 2011 TO first installment of 79%, the maximum funding level that FHFA indicated it would approve.
For the second installment of the 2010 TO, management concluded that we would achieve most, but not all, of the
performance objectives. The table below presents the performance measures and management’s assessment of our
achievement against those performance measures for the second installment of the 2010 TO.
Table 81 — Achievement of Performance Measures for Second Installment of 2010 Target Opportunity
Performance Measure Weighting Key Factors Impacting Achievement Assessment
Mission
Same as for performance-based
element of Deferred Base Salary.
35% Same as for the performance-based element of Deferred Base
Salary.
Controls Remediation
Strengthen the control environment,
taking into consideration progress in
remediating Significant Deficiencies,
Material Weaknesses, Internal Audit
critical and major issues and FHFA
Matters Requiring Attention scheduled
to be remediated during 2011.
20% Many planned remediation activities were completed. Indicators
of the progress made during 2011 include remediation of all
Significant Deficiencies targeted at the beginning of the
performance year, and reliance being placed on the work of our
internal audit organization by the Conservator and our external
auditors. There also were fewer repeat controls findings.
Financial Execution
Same as for the new purchase financial
execution objective applicable to the
performance-based element of
Deferred Base Salary and the
Conserve Capital objective applicable
to the first installment of the 2011 TO.
20% Same as for the new purchase financial execution objective
applicable to the performance-based element of Deferred Base
Salary and the Conserve Capital objective applicable to the first
installment of the 2011 TO.
Business Infrastructure
• Complete the 2011 elements of the
business infrastructure plan
developed in 2010; and,
• Maintain normal service and quality
standards for existing technology
and operations infrastructure.
25% • All work was completed as planned for projects involving
multifamily and finance transaction accounting. For single-
family, many projects were completed as planned, but some
were either cancelled or were not completed during 2011. The
high-cost, high-risk Single-Family Master Servicing projects
were canceled to enable resources to address the Servicing
Alignment Initiative; and,
• Performance indicators used to monitor service and quality
standards demonstrate that those standards were met
throughout 2011.
Management presented the same two additional considerations applicable to the first installment of the 2011 TO for
the Compensation Committee’s consideration when determining an appropriate funding level.
Management then proposed a funding range for the second installment of the 2010 TO that it believed reflected our
performance, taking into account the additional considerations.
After reviewing and discussing management’s final performance assessment against the specified performance
measures, the Compensation Committee concurred with management’s assessment. The Compensation Committee then
339 Freddie Mac