Freddie Mac 2015 Annual Report Download - page 360

Executive Compensation Compensation Discussion and Analysis
Freddie Mac 2015 Form 10-K 358
CHIEF EXECUTIVE OFFICER COMPENSATION
Prior to July 1, 2015, Mr. Layton’s compensation consisted solely of an annual Base Salary of $600,000, a
level established by FHFA. The Board of Directors received a communication from the Director of FHFA
on CEO compensation, authorizing the company to submit a proposal for FHFA review and consideration
on compensation for the position of CEO to address the Board’s obligation, and FHFA’s conservatorship
and supervisory objectives, of providing for: CEO retention; effective succession planning for the CEO
position; and continuity, efficiency, and stability of operations. For additional information, see our Form 10-
Q filed on May 5, 2015. In response to our subsequent proposal to FHFA, on June 29, 2015, FHFA
approved Mr. Layton’s participation in the 2015 EMCP, effective July 1, 2015. The components of Mr.
Layton’s Target TDC under the 2015 EMCP are described in “— Determination of 2015 Target TDC for
NEOs — 2015 Target TDC.” In order to participate in the 2015 EMCP, Mr. Layton entered into a
Recapture and Forfeiture Agreement as described in “— Written Agreements Relating to NEO
Employment — Recapture and Forfeiture Agreement.”
On December 1, 2015, FHFA directed Freddie Mac, pursuant to the Equity in Government Compensation
Act of 2015, to suspend Mr. Layton’s compensation package that became effective July 1, 2015 and
replace it with the compensation package that was previously in place. This change was effective as of
November 25, 2015.
Mr. Layton was previously, and continues to be, eligible to participate in all employee benefit plans offered
to Freddie Mac’s other senior executives pursuant to the terms of those plans.
DETERMINATION OF 2015 TARGET TDC FOR NEOs
ROLE OF COMPENSATION CONSULTANT
As part of the annual process to determine the Target TDC for each of the NEOs, the Compensation
Committee receives guidance from Meridian Compensation Partners, LLC (“Meridian”), its independent
compensation consultant. In addition to the annual process to determine Target TDC, Meridian provides
guidance to the Compensation Committee during the course of the year on other executive compensation
matters.
Meridian has not provided the Compensation Committee with any non-executive compensation services,
nor has the firm provided any consulting services to our management. During 2015, the Compensation
Committee reviewed Meridian’s independence based on the factors outlined in Exchange Act Rule 10C-1
(b)(4) and determined that Meridian continues to be independent.
2015 COMPARATOR GROUP COMPANIES
The Compensation Committee annually evaluates each NEO’s Target TDC in relation to the
compensation of executives in comparable positions at companies that are either in a similar line of
business or are otherwise comparable for purposes of recruiting and retaining individuals with the
necessary skills and capabilities. We refer to this group of companies as the Comparator Group.
When there is either no reasonable match or insufficient data from the Comparator Group for a position,
or if Meridian believes that additional data sources would strengthen the analysis of competitive market
compensation levels, the Compensation Committee may use alternative survey sources.