Freddie Mac 2011 Annual Report Download - page 349

proposing an amendment to FHFA’s interim final golden parachute payments regulation to address prohibited and
permissible indemnification payments. In January 2009, FHFA issued final regulations relating to golden parachute
payments. Under those final regulations, FHFA may limit golden parachute payments, and the regulations set forth factors
to be considered by the Director of FHFA in acting upon his authority to limit these payments. A proposed rule was
published by FHFA in June 2009 that has not yet been adopted in final form. In general, this proposal would give FHFA
the authority to prohibit indemnification payments in cases involving administrative proceedings before FHFA or civil
actions initiated by FHFA.
Other Executive Compensation Considerations
Perquisites
We believe that perquisites should be a minimal part of the compensation package for our Named Executive Officers.
We provide certain perquisites because we believe there is a business-related benefit, including that the perquisites assist
in attracting and retaining executive talent. None of the perquisites offered provide for a gross-up to cover the taxes due
on the perquisite itself. Accordingly, the only perquisite provided to the Named Executive Officers during 2011 was
reimbursement for assistance with personal financial planning, tax planning, and/or estate planning, up to an annual
maximum benefit that varies by position.
Although available, none of the Named Executive Officers received the following perquisites during 2011:
•Physical Examination. Reimbursement of up to $700 of expenses associated with a comprehensive annual
physical exam that are not otherwise covered by the Named Executive Officer’s medical insurance;
•Relocation Benefits. Under our relocation program, we provide assistance in finding and moving into a new home
and selling an existing home, temporary lodging, reimbursement of certain travel expenses, and a one-time
payment to cover miscellaneous expenses; and,
•Spousal Travel Expenses. Reimbursement of business-related spousal travel expenses.
Additionally, total annual perquisites for any Named Executive Officer cannot exceed $25,000 without FHFA
approval.
Supplemental Executive Retirement Plan
Our Named Executive Officers are eligible to participate in our Supplemental Executive Retirement Plan, or SERP.
The SERP is designed to provide participants with the full amount of benefits to which they would have been entitled
under our Pension Plan and Thrift/401(k) Savings Plan if those plans: (a) were not subject to certain limits on
compensation that can be taken into account under the Internal Revenue Code; and (b) did not exclude from
“compensation” amounts deferred under our Executive Deferred Compensation Plan and the Mandatory Executive
Deferred Base Salary Plan.
On June 27, 2011, the SERP was amended, with the approval of FHFA. Under this amendment, which became
effective January 1, 2012, eligibility for the “Pension SERP Benefit” (as defined in the SERP) will be limited, and
Executives (as defined in the SERP) whose employment with the company commences after December 31, 2011 (or who
are rehired after that date) will not be eligible for the Pension SERP Benefit. However, non-Executives employed as of
December 31, 2011 who are subsequently promoted to Executive positions will be eligible for the Pension SERP Benefit.
The 2011 amendment also revises the “Thrift/401(k) SERP Benefit” (as defined in the SERP). A copy of this amendment,
which provides additional information about the changes made to the Thrift/401(k) SERP Benefit, was filed as
Exhibit 10.1 to our current report on Form 8-K filed on June 28, 2011.
We provide a SERP because it helps us to remain competitive with the companies with which we compete for talent
and thereby assists in attracting and retaining executive talent. For additional information regarding this benefit see
“Compensation Tables” below.
Recapture Policy
The Recapture Policy provides that certain compensation paid under the Executive Compensation Program will be
subject to recapture if any of the following events occur subsequent to the date that the Named Executive Officer agreed
to the terms of the Recapture Policy.
•Payment Based on Materially Inaccurate Information — If the Named Executive Officer obtains a bonus or
incentive payment based on materially inaccurate financial statements or performance metrics.
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