Freddie Mac 2012 Annual Report Download - page 338

As Acting FHFA Director Edward DeMarco said, “[T]he new compensation program strikes the balance between
prudent executive pay — including the elimination of bonuses — with the need to safeguard quality staffing in order to
protect the taxpayers’ investment and achieve the objectives in the Conservatorship Scorecard.”
As discussed more fully below in the Compensation Discussion and Analysis, the Compensation Committee and FHFA
considered our achievements in pursuing our primary business objectives, as well as other factors, in determining the funding
levels for the following elements of compensation in 2012.
Table 78 — Funding Levels for 2012 Performance-Based Compensation
2012 At-Risk Deferred Salary
(Portion Based on
Corporate Performance)
2011 Target Opportunity
(2nd Installment)
Funding Level Percent .................................................... 95% 95%
Compensation Discussion and Analysis
This section contains information regarding our compensation programs and policies, which reflect direction we
received from FHFA as Conservator. These programs and policies were applicable to the following individuals, who were
determined, pursuant to SEC rules, to be our Named Executive Officers, or NEOs, for the year ended December 31, 2012.
• Donald H. Layton, Chief Executive Officer
• Ross J. Kari, Executive Vice President — Chief Financial Officer
• Charles E. Haldeman, Jr., Former Chief Executive Officer
• Paul E. Mullings, Senior Vice President — Single-Family Sourcing and Securitization (Interim Head — Single-
Family Business)
• Jerry Weiss, Executive Vice President — Chief Administrative Officer
• Paige H. Wisdom, Executive Vice President — Chief Enterprise Risk Officer
Executive Management Compensation Program
Overview of Program Structure
The 2012 Executive Management Compensation Program, or the Executive Compensation Program, was adopted
effective January 1, 2012. It attempts to balance our need to retain critical executives and attract new executive talent with
promotion of the goals of conservatorship and the interests of taxpayers. It contains a number of significant changes from the
prior executive compensation program, including: (i) a further reduction in the target pay levels of senior officers; (ii) the
elimination of bonuses; and (iii) the elimination of any potential upside in the deferred pay element, which now can only be
reduced — not increased — based on both company and individual performance.
Compensation for each NEO other than Mr. Layton is governed by the Executive Compensation Program. A further
discussion of Mr. Layton’s compensation is set forth below in “— Chief Executive Officer Compensation.” All compensation
under the Executive Compensation Program is delivered exclusively in cash because we cannot provide equity-based
compensation to our employees under the terms of the Purchase Agreement, unless such grants are approved by Treasury.
Although the Compensation Committee plays a significant role in considering and recommending executive
compensation, FHFA continues to be actively involved in determining such compensation. During conservatorship, the
Compensation Committee’s authority and flexibility have been exercised while recognizing the following circumstances:
• When FHFA was appointed as our Conservator in September 2008, it assumed all of the rights, titles, powers, and
privileges of the company and its stockholders, directors and management, including the authority to set executive
compensation. Under the terms of the Purchase Agreement, FHFA is required to consult with Treasury on any
increases in compensation or new compensation arrangements for our executive officers.
• Our directors serve on behalf of FHFA and exercise their authority as directed by FHFA. More information about the
role of our directors is provided above in “DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE — Authority of the Board and Board Committees.”
333 Freddie Mac