Freddie Mac 2012 Annual Report Download - page 341

Establishing Target TDC
While we are in conservatorship, the role of the annual review to establish Target TDC has changed. First, annual Target
TDC adjustments have been limited by FHFA. For 2012, the Compensation Committee was directed by FHFA to set Target
TDC at a level that was either the same as or lower than each NEO’s 2011 Target TDC and that the company maintain
individual salaries and wage rates at 2010 levels for 2011 and 2012, absent a promotion or a significant change in
responsibilities. As a result, competitive market data is generally used only when establishing Target TDC for newly hired
senior executives or current senior executives who are promoted or experience a significant expansion in the scope of their
responsibilities. Second, FHFA’s view is that the compensation for our senior officers, in the aggregate, should be positioned
closer to the 25th percentile of the competitive market, rather than our practice prior to entering conservatorship, which
generally was to target compensation, in the aggregate, at the 50th percentile of the competitive market.
The Compensation Committee developed its 2012 Target TDC recommendations for each NEO by reviewing 2011 data
from the Comparator Group and, as appropriate, alternative survey sources. For Mr. Haldeman, our CEO at that time, as well
as our CFO and EVP-Chief Enterprise Risk Officer, the Compensation Committee reviewed competitive market data solely
from the 2012 Comparator Group. For the SVP-Single-Family Sourcing and Securitization — who subsequently assumed the
role of Interim Head-Single-Family Business — the Compensation Committee reviewed competitive market data from an
alternative survey published by McLagan, while for the EVP-Chief Administrative Officer, two alternative survey sources
were used, one from McLagan and the other from AonHewitt.
The Compensation Committee’s 2012 Target TDC recommendation for each of the NEOs other than Mr. Layton was
reviewed by FHFA. While the Target TDC recommendations for our NEOs, in the aggregate, were below the 25th percentile
of the competitive market, FHFA instructed the Compensation Committee, as part of the implementation of the Executive
Compensation Program, to reduce the Target TDC for each of the NEOs by 10%, with the exception of Ms. Wisdom. For
Ms. Wisdom, 2012 Target TDC was unchanged from 2011 in consideration of the expansion in the scope of her
responsibilities during 2011 resulting from the integration of the credit risk management function in her division.
Additionally, for Mr. Weiss and Ms. Wisdom, the Compensation Committee increased Base Salary by 10%, with an equal
decrease in Deferred Salary, to create more consistent Base Salary levels for EVPs with comparable levels of responsibility.
The following table sets forth the components of 2012 Target TDC for each of our NEOs.
Table 79 — 2012 Target TDC
2012 Target TDC (Annualized)
Named Executive Officer
Base
Salary
Fixed
Deferred
Salary
At-Risk
Deferred
Salary Target TDC
Donald H. Layton ...................................................... $600,000 $ — $ — $ 600,000
Ross J. Kari ........................................................... 675,000 1,530,000 945,000 3,150,000
Charles E. Haldeman, Jr. ................................................. 900,000 2,880,000 1,620,000 5,400,000
Paul E. Mullings ....................................................... 412,500 658,500 459,000 1,530,000
Jerry Weiss ........................................................... 495,000 891,000 594,000 1,980,000
Paige H. Wisdom ....................................................... 467,500 757,500 525,000 1,750,000
2013 Comparator Group Companies
Prior to the Compensation Committee’s review to determine the Comparator Group companies to be used to establish
2013 Target TDC, FHFA recommended that Freddie Mac and Fannie Mae align their Comparator Groups so that consistent
compensation data is used by both companies for the same or similar senior officer positions. Representatives of the two
companies and their independent compensation consultants identified a group of companies to be used by both us and Fannie
Mae as the 2013 Comparator Group. The 2013 Comparator Group includes five new companies — Ally Financial, AIG,
BB&T, Fifth Third Bancorp, and Regions Financial — and excludes the three credit card issuers — American Express,
MasterCard, and Visa — that were included in the 2012 Comparator Group. Additionally, we are included in our own
Comparator Group to ensure that both we and Fannie Mae use identical data for compensation benchmarking. As with the
2012 Comparator Group, and where appropriate for the position being benchmarked, mortgage or real estate division-level
compensation data from four diversified banking firms — Bank of America, Citigroup, JPMorgan Chase, and Wells
Fargo — may be utilized.
336 Freddie Mac