Freddie Mac 2012 Annual Report Download - page 352

c) The NEO’s employment is terminated because, or within two years of the NEO’s termination of employment, the
Board of Directors determines in good faith that, the NEO engaged in any willful (as defined in the Recapture and
Forfeiture Agreement) misconduct in the performance of his or her duties with Freddie Mac that is materially
harmful to the business or reputation of Freddie Mac.
Compensation Subject to Recapture and/or Forfeiture: Any Deferred Salary earned by the NEO during the two
years prior to the date that the NEO is terminated, any Deferred Salary that is scheduled to be paid to the NEO
within two years after termination of employment and any cash payment made or to be made to the NEO as
consideration for any release of claims agreement between the NEO and Freddie Mac.
3) Forfeiture Event: The NEO’s employment is terminated because, in carrying out his or her duties, the NEO engages
in conduct that constitutes gross neglect or gross misconduct that is materially harmful to Freddie Mac, or within two
years after the NEO’s termination of employment, the Board of Directors determines in good faith that the NEO,
prior to his or her termination of employment, engaged in conduct that constitutes gross neglect or gross misconduct
and that such actions resulted in material harm to Freddie Mac.
Compensation Subject to Recapture and/or Forfeiture: Any Deferred Salary paid to the NEO at the time of
termination or subsequent to the date of termination, including any cash payment made to the NEO as
consideration for any release of claims agreement between the NEO and Freddie Mac.
4) Forfeiture Event: The NEO has violated a post-termination non-competition covenant set forth in the Restrictive
Covenant and Confidentiality Agreement between the NEO and Freddie Mac in effect when a payment of Deferred
Salary is scheduled to be made.
Compensation Subject to Recapture and/or Forfeiture: 50% of the Deferred Salary paid to the NEO during the
12 months immediately preceding the violation and 100% of all Deferred Salary unpaid at the time of such
violation.
Under the Recapture and Forfeiture Agreement, the Board of Directors has discretion to determine the appropriate dollar
amount to be recaptured from and/or forfeited by the NEO, if any, which is intended to be the gross amount of compensation
in excess of what Freddie Mac would have paid the NEO had Freddie Mac taken the Forfeiture Event into consideration at
the time such compensation decision was made.
A copy of the form of the Recapture and Forfeiture Agreement was filed as Exhibit 10.3 to our quarterly report on Form
10-Q filed on November 6, 2012. The Recapture Policy applicable to compensation earned in 2011 and 2010 was filed as
Exhibit 10.4 to our Current Report on Form 8-K filed on December 24, 2009.
The additional event listed below is applicable only to the CEO and the CFO, to the extent they have compensation
subject to recapture.
•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.
For this triggering event, 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 NEOs, 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 NEOs) 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
347 Freddie Mac