Freddie Mac 2012 Annual Report Download - page 361

include certain items available to all employees generally upon a termination event. As of December 31, 2012, Messrs.
Mullings and Weiss and Ms. Wisdom had vested in their benefits under the Thrift/401(k) SERP Benefit and the Pension
SERP Benefit, while Mr. Kari has not. Mr. Layton is not eligible for the Pension SERP Benefit and has not satisfied the one
year service requirement for matching and discretionary contributions available under the Thrift/401(k) SERP Benefit.
There were no outstanding RSUs held by NEOs as of December 31, 2012 and no value is included in the tables for stock
options because the exercise prices for all such options outstanding are substantially higher than the closing price of our
common stock on December 31, 2012.
Potential Payments Under the Executive Compensation Program
The Executive Compensation Program addresses the treatment of Base Salary and Deferred Salary and the prior
executive compensation program addresses the treatment of the Target Opportunity upon various termination events.
Base Salary ceases upon an NEO’s termination of employment, regardless of the termination reason. An NEO generally
does not need to be employed by us on the payment date to receive payments of Fixed and At-Risk Deferred Salary that is
unpaid at the time of termination of employment. The discussion that follows describes the termination benefits, if any,
provided upon the following types of termination events.
•Death. All earned but unpaid Deferred Salary and TO will be paid as soon as administratively possible in the event of
death. For At-Risk Deferred Salary, the corporate and individual performance assessment and reduction process is
waived and there is no reduction. For the Target Opportunity, if the funding level has not been determined at the time
of death, the award will remain outstanding until such determination is made, with payment occurring as soon as
administratively possible following the determination of the funding level.
•Disability. Treatment upon a Long-Term Disability (as defined in the Executive Compensation Program) is the same
as upon death, except that payment of any earned but unpaid Deferred Salary will occur in accordance with the
Approved Payment Schedule and not as soon as administratively possible following termination of employment. The
treatment of a TO upon a Long-Term Disability (as defined in the prior executive compensation program) is the same
as upon death.
•Forfeiture Event (i.e. – For Cause). All earned but unpaid Deferred Salary or Target Opportunity is subject to
forfeiture upon the occurrence of any of the events or conduct described in the Recapture and Forfeiture Agreement.
•Any Other Reason.
Deferred Salary
All earned but unpaid Deferred Salary is paid in accordance with the Approved Payment Schedule. The amount
paid for At-Risk Deferred Salary continues to be subject to the corporate and individual performance assessment
process. Additionally, the amount of unpaid Fixed Deferred Salary will be reduced by 2% for each full or partial
month by which the termination precedes:
• January 31, 2014 for an NEO who was an employee on January 1, 2012 and who remained continuously
employed through the termination date; or,
• The 25-month anniversary of the hire date for an NEO hired after January 1, 2012.
Each of the NEOs other than Mr. Layton, who does not receive Deferred Salary, was employed by us on January 1,
2012.
Target Opportunity
The unpaid portion of any outstanding TO award is forfeited upon a voluntary termination.
While the prior executive compensation program, which governs the TO, included a definition of retirement, none
of the NEOs were retirement-eligible as of December 31, 2012. Accordingly, no information is provided in the
table below for TO awards with respect to a termination of employment on account of retirement.
NEOs are not entitled to any payment of the unpaid portion of any outstanding TO upon an involuntary without
cause termination unless the Compensation Committee recommends that they receive payment in part or in full and
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