Freddie Mac 2012 Annual Report Download - page 346

Individual Performance Objectives Assessment of Performance
Mr. Weiss:
• Serve as the senior executive liaison to FHFA and Treasury, and
oversee the company’s execution of effective regulatory affairs;
During 2012, Mr. Weiss continued to provide steady leadership during a
period of great change. His knowledge of the company, industry and the
regulatory environment, along with his ability to manage multiple business
and staff functions led to a further expansion in his operating responsibilities
in 2012. In support of the company’s focus on execution of key
conservatorship and corporate goals, Mr. Weiss successfully established two
new teams – one responsible for conservatorship and corporate initiatives and
another for enterprise-wide project management – to more effectively manage
cross-divisional strategic initiatives. This involved overseeing the company’s
launch of a multiyear effort to establish a common securitization platform for
the GSEs and the broader housing finance system. Mr. Weiss also developed a
comprehensive orientation and integration plan as part of the onboarding of
Mr. Layton, which identified key business and organizational challenges that
would present opportunities for his focus. Mr. Weiss also oversaw the
successful restructuring of the company’s compensation programs in a manner
that balances conservatorship goals, taxpayer interests, and employee retention
concerns. Under Mr. Weiss, the MHA-C function continued to perform
services for Treasury in a highly effective manner. In addition, throughout the
year, Mr. Weiss successfully guided and enhanced the company’s
collaborative relationship with FHFA on many forward-looking industry
objectives.
• Oversee the company’s execution of corporate and conservatorship
initiatives and strategies;
• Execute a comprehensive on-boarding, integration, and
communication process for the CEO transition;
• Restructure the compensation program for non-senior executive
employees at all levels;
• Oversee the company’s execution of the Making Home Affordable-
Compliance (MHA-C) function in support of the Administration’s
Home Affordable Modification Program; and
• Reorganize the company’s project management function to ensure
standardization in the execution of significant initiatives and instill
greater accountability for delivery of business and operational
benefits.
Ms. Wisdom:
• Integrate the credit management function into the enterprise risk
management organization;
Ms. Wisdom continued to demonstrate an ability to drive for results across a
wide range of activities. During 2012, Ms. Wisdom merged the credit
management function into enterprise risk management, resulting in a more
efficient and effective organization, primarily by establishing separate single-
family and multifamily credit functions, eliminating duplicative processes, and
establishing a streamlined and clearer governance structure. Within the
counterparty credit and operational risk areas, Ms. Wisdom’s team completed
a comprehensive review of the functions, reprioritized deliverables based on
an impact assessment, and redesigned processes. Ms. Wisdom led the effort to
strengthen the internal control environment within her organization, through
the remediation of control weaknesses, and within the enterprise by leading
the effort to remediate a long-outstanding Significant Deficiency related to
model and model application governance. Ms. Wisdom established the
financial instrument fraud unit in accordance with guidance provided by
FHFA, which also supported the contract harmonization effort. Finally, Ms.
Wisdom strengthened her organization’s relationship with FHFA through
interaction on multiple Conservatorship Scorecard objectives, involvement in
the analysis of various homeowner relief efforts, and proposals to address
outstanding issues related to mortgage insurers.
• Strengthen the company’s risk management capabilities, which
includes a redesign of the counterparty credit and external operational
risk management functions;
• Strengthen the internal control environment within the enterprise risk
management organization and continue to enhance model governance
within the company;
• Establish the Financial Instrument Fraud Unit; and
• Identify additional opportunities to collaborate with FHFA on
business issues.
Each NEO’s level of achievement was used to determine the recommended reduction, if any, to this component for the
portion of At-Risk Deferred Salary based on individual performance. A two-step process was employed by Mr. Layton to
achieve appropriate and consistent levels of differentiation among all senior vice presidents and above, including the NEOs.
For Mr. Haldeman, these steps were completed by the Compensation Committee. The first step was the completion of the
individual performance assessment. The second step was the recommended reductions, which were made taking into
consideration the factors listed below.
• Each officer’s performance against his/her individual 2012 performance objectives in terms of both business results
and leadership effectiveness;
• The relative contributions of each officer in relation to the contributions of the other officers; and
• The combined accomplishments of the entire senior officer team during 2012.
Based on these factors and their individual performance, Mr. Layton recommended no reduction of this component for
Messrs. Kari and Weiss and Ms. Wisdom and a 5% reduction of this component for Mr. Mullings. The Compensation
Committee concurred with Mr. Layton’s recommendations. The Compensation Committee also determined that a 10%
reduction should be applied to this component for Mr. Haldeman. The relatively narrow spread of the individual
differentiation between the largest and smallest reductions for the portion of At-Risk Deferred Salary based on individual
performance (expressed as a percentage of each NEO’s target) supports our continued emphasis of the need for highly
coordinated, cross-functional collaboration.
The following chart compares the target and actual amounts of 2012 Deferred Salary for each NEO other than
Mr. Layton. The actual amount earned is scheduled to be paid in equal quarterly installments on the last business day of each
calendar quarter of 2013, except in the case of Mr. Haldeman, who is scheduled to receive quarterly installments on the last
business days of March and June, 2013.
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