Freddie Mac 2011 Annual Report Download - page 350

•Termination for Cause — If the Named Executive Officer’s employment is terminated for cause, as defined in the
Recapture Policy.
•Subsequent Determination of Cause — If, within two years of the termination of the Named Executive Officer’s
employment, the Board makes a determination in good faith that circumstances existed at the time of the Named
Executive Officer’s termination that would have justified a termination for cause and that actions taken by the
Named Executive Officer resulted in material business or reputational harm to us.
The additional event listed below is applicable only to Messrs. Haldeman and Kari.
•Accounting Restatement Resulting from the Executive’s Misconduct — If misconduct by the CEO and/or the CFO
necessitates the preparation of an accounting restatement due to material non-compliance with financial reporting
requirements.
If any of these triggering events occur, the Board will determine whether more compensation was paid to the Named
Executive Officer than would otherwise have been paid had we been aware of the triggering event or events at the time
the compensation was paid or awarded. If a determination is made that we paid or awarded a Named Executive Officer
more compensation than he or she otherwise would have received, the following elements of compensation will be subject
to recapture: (a) Deferred Base Salary; (b) Target Opportunity; (c) any equity awards that vest after the adoption of the
Executive Compensation Program; and (d) any termination benefits paid. Only compensation paid up to two years prior to
the triggering event or the date of termination or compensation paid at the time of termination, as applicable, will be
subject to recapture. Additionally, the occurrence of a triggering event may result in cancellation of any future payment
obligations and/or any outstanding equity awards.
The amount of compensation recaptured will be determined by the Board, subject to the guidelines described above.
Additional details are included in the Recapture Policy, which was filed as Exhibit 10.4 to our Current Report on
Form 8-K filed on December 31, 2009. For the triggering event applicable only to Messrs. Haldeman and Kari, the
compensation subject to recapture will be determined in accordance with Section 304 of the Sarbanes-Oxley Act.
Stock Ownership and Hedging Policies
In November 2008, FHFA approved the suspension of our stock ownership guidelines because we had ceased paying
our executives stock-based compensation. Also, the Purchase Agreement prohibits us from issuing any shares of our
equity securities without the prior written consent of Treasury. The suspension of stock ownership requirements is
expected to continue through the conservatorship and until we resume granting stock-based compensation.
All employees, including our Named Executive Officers, are prohibited from purchasing and selling derivative
securities related to our equity securities, including warrants, puts and calls, or from dealing in any derivative securities
other than pursuant to our stock-based benefit plans. All directors and employees (including the Named Executive
Officers) are prohibited from transacting in options (other than options granted by us) or other hedging instruments as
specified in our Insider Trading Policy. In addition, all directors and employees (including our Named Executive Officers)
are prohibited from holding our securities in a margin account or pledging our securities as collateral for a loan.
Section 162(m) Limits on the Tax Deductibility of Our Compensation Expenses
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that a company may
annually deduct for compensation to its CEO and certain other Named Executive Officers, unless, among other things, the
compensation is “performance-based,” as defined in section 162(m). Given the conservatorship and the desire to maintain
flexibility to promote our corporate goals, the performance-based element of Deferred Base Salary and the Target
Opportunity applicable to performance during 2011 are not structured to qualify as performance-based compensation
under section 162(m).
Compensation Committee Interlocks and Insider Participation
None of the members of the Board of Directors who served on the Compensation Committee during fiscal year 2011
were our officers or employees or had any relationship with us that would be required to be disclosed by us under
Item 407(e)(4) of Regulation S-K.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with
management and, based on such review and discussion, has recommended to the Board that the Compensation Discussion
and Analysis be included in this Annual Report on Form 10-K.
345 Freddie Mac