Freddie Mac 2012 Annual Report Download - page 345

At-Risk Deferred Salary Based on Individual Performance
In addition to shared objectives on the Conservatorship Scorecard, each NEO participating in the Executive
Compensation Program had individual performance objectives for the year. The level of achievement against each NEO’s
individual performance objectives is evaluated using two considerations – business results and leadership effectiveness –
which are given equal weight.
The table below describes those individual performance objectives considered, as well as management’s and the
Compensation Committee’s assessment of the level of achievement against those objectives. Certain of the individual
performance objectives were either also corporate performance objectives or directly supported achievement of one or more
of the corporate performance objectives. Achievement against the corporate performance objectives is discussed in
“Determination of Actual 2012 Compensation – At-Risk Deferred Salary Based on Corporate Performance” and “– Second
Installment of the 2011 Target Opportunity.”
Mr. Layton is not included in the table below because none of his compensation is subject to reduction based on his
individual performance.
Table 81 — Named Executive Officer Individual Performance Summaries
Individual Performance Objectives Assessment of Performance
Mr. Kari:
• Strengthen the control and operating environment; Under Mr. Kari’s leadership, the finance organization met or exceeded its
goals for 2012. Although internal controls over financial reporting were
determined to be not effective, mitigating actions have been taken to enable us
to prepare our financial statements in conformity with GAAP. For the
assessment period, the material weakness related to our inability to effectively
manage information technology changes and maintain adequate controls over
information security monitoring was remediated by December 31, 2012 in line
with the previously agreed upon schedule. Mr. Kari and his team have worked
closely with FHFA and, where appropriate, Fannie Mae to align accounting
policies and practices as new accounting rules are adopted. In addition,
significant work has been done to improve financial disclosures and align
them with Fannie Mae’s comparable disclosures where appropriate.
Administrative expenses continued to be well managed, with 2012 expenses
coming in within budget, as adjusted for Board-approved variances. Under
Mr. Kari’s leadership, the finance organization continued to provide training
and professional development opportunities for its staff. One such program
developed in 2012 is a mid-level manager rotational program which is
providing opportunities for enhancement of manager skill sets. As a result of
this and other programs, voluntary attrition among finance employees is below
levels experienced in 2011.
• Align accounting policies, as appropriate, with Fannie Mae’s
comparable policies;
• Manage administrative expenses within approved budget;
• Expand leadership, management and professional development
opportunities for Finance employees; and
• Identify and execute on opportunities to reduce voluntary attrition in
the Finance division.
Mr. Haldeman:
• Lead the execution of the Conservatorship Scorecard; In October 2011, Mr. Haldeman announced his intent to step down as both our
CEO and a member of the Board of Directors. At the time, he committed to
remain as CEO until his successor was named and the transition was
complete. Due to the lengthy search, Mr. Haldeman continued as CEO for
over six months after his announcement. During this time, he provided the
company with needed senior executive continuity and enabled the
management team to focus on meeting the objectives in the Conservatorship
Scorecard instituted by FHFA. He also worked collaboratively with Mr.
Layton following his appointment as CEO to support a smooth leadership
transition. Partially offsetting these contributions were ongoing challenges
associated with our internal control environment and certain organizational
matters.
• Ensure continuity of operations during the CEO search process; and
• Assist with the on-boarding and integration of the new CEO.
Mr. Mullings:
• Implement initiatives to improve customer satisfaction levels and the
overall customer experience;
Mr. Mullings assumed expanded responsibilities in May 2012, when he was
named the interim leader of the single-family business. Under Mr. Mullings’
leadership, customer satisfaction improved due to faster decision-making,
seeking customer feedback on process changes and providing customer
service training to hundreds of customer-facing staff. Single-family segment
earnings improved year-over-year, driven by higher revenues and strong credit
quality on new mortgage purchases, combined with strong loss mitigation and
growing REO recovery values. Struggling borrowers were helped through the
expanded HARP initiative, loan modifications and other foreclosure
alternatives. In addition, Mr. Mullings directed the successful implementation
of several single-family deliverables named in the Conservatorship Scorecard,
most notably the UMDP, contract harmonization and the pricing and servicing
alignment initiatives.
• Increase single-family segment earnings by improving the
profitability of new business and maximizing the value of loss
mitigation efforts;
• Assist borrowers in avoiding foreclosure while optimizing servicing
performance and effectively manage the real estate owned portfolio;
and
• Implement the Single-Family related deliverables contained in the
Conservatorship Scorecard, including the Uniform Mortgage Data
Program, contract harmonization and the pricing and servicing
alignment initiative.
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