Freddie Mac 2014 Annual Report Download - page 257

252 Freddie Mac
Executive Compensation Best Practices
We employ the following executive compensation best practices:
• No agreements that guarantee a specific amount of compensation for a specified term of employment;
• No tax “gross-ups”;
• Limited executive perquisites;
• Clawback provisions that result in a significant portion of compensation earned being subject to recapture and/or
forfeiture;
• No golden parachute payments or other change in control provisions in any of our compensation or benefit programs;
• Evaluation of company performance against multiple measures, including non-financial measures;
• Annual compensation risk assessment and best practices review;
• Engagement of an independent compensation consultant by the Board's Compensation Committee; and
• No hedging or pledging of company securities.
Chief Executive Officer Compensation
Mr. Layton’s compensation consists solely of an annual Base Salary of $600,000, a level established by FHFA. He does
not participate in the 2014 EMCP and therefore has no compensation subject to either corporate or individual performance, nor
is his compensation subject to recapture under the EMCP as discussed in "— Recapture and Forfeiture Agreement." Mr. Layton
is, however, eligible to participate in all employee benefit plans offered to Freddie Mac’s other senior executives pursuant to the
terms of those plans.
Elements of Target Total Direct Compensation (Target TDC)
Compensation under the 2014 EMCP for the NEOs other than Mr. Layton consists of salary with two components, Base
Salary and Deferred Salary.
Element of
Compensation Description Primary Compensation Objective Key Features
Base Salary Earned and paid bi-weekly To provide a fixed level of
compensation to each NEO
commensurate with the
responsibility level of his/her
position
Cannot exceed $500,000 per year,
except as approved by FHFA
Deferred Salary Fixed Deferred Salary is earned
bi-weekly. The amount earned
each quarter is paid on the last
pay date of the corresponding
quarter of the following year,
referred to as the Approved
Payment Schedule.
To encourage executive
retention Equal to Target TDC less Base Salary and At-Risk Deferred Salary
At-Risk Deferred Salary is
earned and paid in the same
manner as Fixed Deferred
Salary, but is subject to reduction
based on corporate and
individual performance
To encourage achievement of
corporate and individual
performance goals
Equal to 30% of Target TDC. Half of
At-Risk Deferred Salary is subject to
reduction based on Conservatorship
Scorecard performance, and half is
subject to reduction based on a
combination of corporate performance
against Corporate Scorecard goals and
individual performance.
The objectives against which 2014
corporate performance was measured
are described in “Determination of
Actual 2014 Compensation — At-Risk
Deferred Salary Based on
Conservatorship Scorecard
Performance” and “— At-Risk
Deferred Salary Based on Corporate
Scorecard Goals and Individual
Performance.”
The 2014 EMCP also provides for payment of interest on earned but unpaid Deferred Salary. The amount on which
interest accrues will take into account any reduction applicable to At-Risk Deferred Salary and any reduction applicable to
Fixed Deferred Salary resulting from certain terminations of employment. Interest accrues at one-half of the one-year Treasury
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