Freddie Mac 2014 Annual Report Download - page 267

262 Freddie Mac
prior written consent of Treasury. The suspension of stock ownership requirements is expected to continue through the
conservatorship and until such time that 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
compensation plans. All directors and employees are also 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 and employees are
prohibited from holding our securities in a margin account or pledging our securities as collateral for a loan.
Section 162(m) Limits on the Tax Deductibility of Our Compensation Expenses
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that a company may annually
deduct for compensation to its CEO and certain other NEOs, unless, among other things, the compensation is “performance-
based,” as defined in section 162(m). Given the conservatorship and the desire to maintain flexibility to promote our corporate
goals, At-Risk Deferred Salary is not structured to qualify as performance-based compensation under section 162(m).
Compensation Committee Interlocks and Insider Participation
None of the members of the Board of Directors who served on the Compensation Committee during fiscal year 2014
were officers or employees of Freddie Mac or had any relationship with us that would be required to be disclosed by us under
Item 407(e)(4) of Regulation S-K.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management
and, based on such review and discussion, has recommended to the Board that the Compensation Discussion and Analysis be
included in this Annual Report on Form 10-K.
This report is respectfully submitted by the members of the Compensation Committee of the Board.
Anthony A. Williams, Chairman
Thomas M. Goldstein
Steven W. Kohlhagen
Christopher S. Lynch
Sara Mathew
Saiyid T. Naqvi
Compensation and Risk
Our management conducted an assessment of our compensation policies and practices that were in place during 2014 and
that were applicable to employees at all levels, including those participating in the 2014 EMCP. The purpose of the assessment
was to determine whether any elements of the overall compensation program encourage inappropriate or excessive risk taking
by employees in the achievement of stated corporate objectives or pursuit of individual compensation targets. The assessment
was conducted by members of our enterprise risk management and human resources teams.
The review included an evaluation of:
• the mix of fixed and variable compensation;
• eligibility for participation in compensation programs;
• identification and evaluation of changes to Freddie Mac’s compensation plans;
• the process for establishing performance objectives and for evaluating performance against those objectives;
• the participation of our enterprise risk management team in strategic business planning and discussion to help ensure
that management develops business objectives that are aligned with the company’s risk appetite; and
• the involvement of the Compensation Committee and FHFA in the compensation process.
The assessment was discussed with the Compensation Committee in December 2014. Management’s conclusion, with
which the Compensation Committee concurred, is that Freddie Mac has taken appropriate and reasonable efforts to help ensure
that our compensation policies and practices in place during 2014 do not encourage employees to take unnecessary and
excessive risks to meet our corporate objectives, and our current compensation policies and practices are not reasonably likely
to have a material adverse effect on us.
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