Date To July 20, 2009 Charles E. Haldeman From Gene Shanks Subject Your Compensation as Chief Executive Officer
Exhibit
10.1
| Date | To | |
| July 20, 2009 | Xxxxxxx X. Xxxxxxxx | |
| From | ||
| Xxxx Xxxxxx | ||
| Subject | ||
| Your Compensation as Chief Executive Officer | ||
On behalf of the Compensation Committee (“Committee”)
of Freddie Mac’s Board of Directors (“Board”),
this memorandum sets forth Freddie Mac’s agreement to
employ you as its Chief Executive Officer, effective on the date
your employment commences, pursuant to the terms and conditions
set forth herein. The terms and conditions set forth herein
supersede any previous communications you may have had with
Freddie Mac, the Federal Housing Finance Agency
(“FHFA”), or the Department of the Treasury.
As you are aware, there is substantial uncertainty regarding
executive compensation practices in the financial services
industry as a result of numerous government actions and the
recently issued regulations. Our regulator, the FHFA, is working
diligently with the Department of the Treasury to provide us
with guidance on the impact of the new regulations on Freddie
Mac’s compensation programs. Until FHFA and the Department
of the Treasury are able to provide us with greater clarity, we
are not able to make an offer with respect to several elements
of what we would expect to comprise your total compensation
package.
Nevertheless, we want to make you the offer outlined in this
memorandum with the understanding that once FHFA provides final
guidance regarding the structure of executive compensation it is
our intention to structure a compensation package consistent
with compensation being offered to chief executive officers at
our major competitors. The terms and conditions in this letter
have been approved by the Compensation Committee (the
“Committee”) of Freddie Mac’s Board of Directors
and Xxxxx X. Xxxxxxxx, the Federal Housing Finance Agency’s
Director, who has also consulted with the Department of the
Treasury.
As Freddie Mac’s Chief Executive Officer, you shall be the
highest-ranking officer of Freddie Mac and shall have the same
status, privileges, and responsibilities normally inherent in
such capacity in corporations of similar size and character. You
shall also perform such additional duties as the Board may from
time to time reasonably assign to you. In addition, for so long
as you remain Chief Executive Officer, the Board shall nominate
you as a director of Freddie Mac.
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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During your employment as Chief Executive Officer, you agree to
devote substantially your full time, attention, and energies to
Freddie Mac’s business, and to not be engaged in any other
business activity, whether or not such business activity is
pursued for gain, profit, or other pecuniary advantage, other
than service on outside Boards as approved by the Committee.
This restriction shall not prevent you from devoting a
reasonable amount of time to charitable or public interest
activities or from making passive investments of your assets in
such form or manner as you desire, consistent with Freddie
Mac’s Personal Securities Investments Policy.
Please review and confirm that such terms and conditions conform
to your understanding by returning to Xxxx Xxxxxx, Xxxxxxx
Xxx’s Executive Vice-President of Human Resources and
Corporate Services, a signed copy of this memorandum.
| I. | Compensation |
Freddie Mac agrees to pay you the following:
A. Base Salary
Your annualized base salary shall be $900,000 and will be paid
subject to Freddie Mac’s executive compensation plans,
practices and policies in effect as of the date of payment.
Subject to approval by FHFA after consulting with the Department
of the Treasury, the Committee has the discretion to determine
whether to implement a salary adjustment.
If you terminate your employment with Freddie Mac at any time
for any reason, your salary will terminate as of the date your
employment terminates.
B. Additional Incentive Opportunity
To the extent permitted by FHFA and after we receive
clarification on the above referenced regulatory actions
impacting executive compensation, we would propose to provide
you with a short-term and long-term target incentive opportunity
that when added to your base salary would be consistent with the
level of compensation provided by our major competitors (which
are subject to the same regulations) for the equivalent position.
Once established, your short-term target incentive opportunity
for 2009 will be pro-rated based on your date of hire. Your
long-term incentive opportunity for 2009 will be pro-rated based
on the maximum number of whole months that you can work during
the long-term incentive’s performance period(s).
The actual dollar amount of the incentive opportunity you
receive shall be determined in the sole discretion of the
Committee, subject to approval by FHFA after consulting with the
Department of the Treasury, as appropriate, and may be based on
an assessment of performance against your individual objectives,
as well as company and division performance against Freddie
Mac’s annual corporate Scorecard.
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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| II. | Relocation Benefit |
You shall receive the relocation benefit consistent with the
Company’s executive relocation package.
In lieu of the
90-day
temporary living program provided under our standard executive
relocation benefits, you will be provided with no more than nine
months of temporary lodging for you and your family at a local
hotel or a comparable living arrangement and reimbursement for
reasonable commuting and necessary living expenses.
In addition to the benefits provided under our standard
executive relocation program, you and each member of your
immediate family will be provided with one commercial flight
to/from the Washington D.C. area and your current residence each
month for the first nine months of your employment. You are
permitted to aggregate the maximum permitted flights during the
nine month period and use them as you see fit for yourself or
any member of your immediate family.
The Company will not provide a
gross-up of
any relocation expenses regardless of whether the benefit is
provided on an exception basis or pursuant to the Company’s
normal executive relocation benefit.
III.
Other Benefits
You will be eligible to participate in all employee benefit
plans offered to Freddie Mac’s senior executive officers
(as may be modified or terminated from time to time by Freddie
Mac in its sole discretion) pursuant to the terms set forth in
the applicable plan. In summary, our benefit plans consist of
the following:
| • | Health and Welfare — Competitive and flexible medical benefits program for you and your eligible dependants with several options to choose from. Dental and vision coverage for you and your dependants that covers a wide variety of services. | |
| • | Thrift/401(k) Savings Plan — You will be able to contribute on a pre-tax basis and Freddie Mac will begin matching a portion of your contributions — based on years of service — up to 6% of pay. This plan also includes a Company annual discretionary contribution called the “Basic Contribution”, which is in addition to the matching contribution and is based on a defined formula with a five year vesting schedule. | |
| • | Pension Plan — Provides benefits based on a formula that takes into account your age, salary, and years of service. The formula is, in summary, 1% x Highest Average Monthly Pay for a Consecutive 36 Month Period x Years of Service. You will vest in this benefit after five-years of service. Benefits are normally paid out in the form of a monthly annuity beginning at age 65. | |
| • | Supplemental Executive Retirement Plan (SERP) — An unfunded non-qualified plan for officers intended to make up for employer provided contributions and/or benefits under |
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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| the Pension Plan and Thrift/401(k) Savings Plan that are capped due to Internal Revenue Code limitations. | ||
| • | Income Protection — Provides short-term disability and long-term disability income protection, life insurance, accidental death and personal loss insurance, and business travel accident coverage. |
Under a separate cover we are sending details of our employee
benefit plans. As a new employee, when you first become eligible
for benefits, you may select the plans that best meet your needs
and those of your family by logging on to
xxxx://xxxxxxxxxxx.xxxxxxxx.xxx.
Shortly after your start date, you will receive an email from
the “Benefits Center” instructing you to log on to
Fidelity NetBenefits to make your benefits elections.
You will not receive any information at your home address. Your
enrollment window is 30 days. During Orientation, our
flexible benefits program and information about enrollment, will
be explained in greater detail. Please visit our new hire
website, Step Inside,
xxxx://xxx.xxxxxxxxxx.xxx/xxxxxxx/xxxxxxxxxx/,
for information about working at Freddie Mac.
| IV. | Vacation |
As an officer, you are eligible to accrue up to 20 days of
core vacation during your first calendar year of employment.
This equates to 6.46 hours each pay period; you begin
accruing vacation starting your first complete pay period.
Starting in 2010 (your second calendar year of employment), you
will have the opportunity to continue to accrue 20 days
vacation during each calendar year. You will be provided more
information following your start of employment.
| V. | Compensation In the Event of Termination |
In the event that Freddie Mac terminates your employment for
reasons other than “Cause” (as defined in Attachment A
hereto), then Freddie Mac will provide you with severance pay
and other benefits in an amount equal to that provided to
Freddie Mac’s senior executive officers pursuant to the
terms of an applicable severance policy in effect as of the date
of your termination of employment.
In the event that any compensation or benefit to be provided
pursuant to the terms of this Paragraph V constitutes
nonqualified deferred compensation subject to section 409A
of the Internal Revenue Code, then any payment of such
compensation or benefit shall be delayed to the extent necessary
to comply with Internal Revenue Code
section 409A(a)(2)(B)(i) and accompanying Treasury
regulations and other applicable Treasury or Internal Revenue
Service guidance.
Your employment shall be deemed terminated within the meaning of
Paragraph V in the event you for any reason other than
“Cause” (as defined in Attachment A hereto) no longer
serve as
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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the highest-ranking officer of Freddie Mac, your
responsibilities as Chief Executive Officer are materially
diminished, you are not nominated by the Board to serve as a
Director of Freddie Mac or your base salary is reduced.
| VI. | Termination of Board Membership |
Your termination of employment for any reason (including
resignation) shall be deemed to be the termination of your
membership on the Board as of the same effective date.
VII.
Restrictive Covenant Agreement
The terms of compensation provided in this memorandum are
contingent on your agreement to be bound by the terms of the
enclosed Restrictive Covenant Agreement, which you must sign and
return together with a signed copy of this memorandum. It is
included as Attachment B.
VIII.
Recapture Agreement
The terms of compensation provided in this memorandum are
contingent on your agreement to be bound by the terms of the
enclosed Recapture Agreement, which you must sign and return
together with a signed copy of this memorandum. It is included
as Attachment C.
| IX. | Escrow Agreement |
You acknowledge that payments of compensation and benefits,
including any termination of employment payment pursuant to
Paragraph V, are subject to escrow in the event prior to
the first anniversary of the termination of your employment for
any reason FHFA files a Notice of Charges alleging misconduct by
you that was knowing and caused or would be likely to cause a
substantial loss to Freddie Mac and directs the company to
escrow compensation and benefits that otherwise may be paid to
you.
| X. | FHFA Approval |
Notwithstanding FHFA’s approval of the terms and conditions
of compensation provided herein, including compensation to be
paid to you in the event of the termination of your employment,
you acknowledge and understand that such approval is subject to
reassessment. If a severance triggering event were to occur, any
future payout would be subject to the review and approval of the
Director of the FHFA at that time.
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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| XI. | Reservation of Rights |
This memorandum is not intended, nor shall it be interpreted, to
constitute a contract of employment for a specified duration,
and each of you and Freddie Mac retain the discretion to
terminate the employment relationship at any time for any lawful
reason.
During the course of your review of this memorandum, Freddie Mac
expects that you have had the opportunity to consult and receive
assistance from appropriate advisors, including legal, tax, and
financial advisors.
This memorandum shall be construed, and the rights and
obligations herein determined, exclusively in accordance with
the substantive law of the Commonwealth of Virginia, excluding
provisions of Virginia law concerning choice-of-law that would
result in the law of any state other than Virginia being applied.
|
/s/ Xxxxxx
X. Xxxxxx, Xx.
|
July 21, 2009 | |
| Xxxxxx X. Xxxxxx, Xx. | Date | |
| Chairman, Compensation Committee |
I agree to the terms of this memorandum, which includes
Attachments A, B, and C.
|
/s/ Xxxxxxx X.
Xxxxxxxx
|
July 21, 2009 | |
| Xxxxxxx X. Xxxxxxxx | Date |
Attachments
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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ATTACHMENT
A
TO
July 20, 2009 MEMORANDUM TO XXXXXXX X. XXXXXXXX
TO
July 20, 2009 MEMORANDUM TO XXXXXXX X. XXXXXXXX
Definition
of “Cause”
For purposes of the memorandum agreement, “Cause”
shall mean the occurrence of one or more of the following:
(i) You commit a felony or any crime involving moral
turpitude;
(ii) In carrying out your duties, you engage in conduct
that constitutes gross neglect or gross misconduct or any
material violation of applicable Freddie Mac rule or policy,
including any policy relating to investment by Freddie Mac
employees in securities, the violation of which amounts to gross
neglect or gross misconduct;
(iii) You materially breach any provision of this
memorandum agreement; or
(iv) Any other willful or malicious misconduct on your part
that is substantially injurious to Freddie Mac.
In each case, “Cause” shall not exist unless and until
Freddie Mac has delivered to you a copy of a resolution duly
adopted by a majority of the entire Board of Directors
(excluding you) at a meeting of the Board of Directors called
and held for such purpose (after reasonable notice to you and an
opportunity for you, together with counsel, to be heard before
the Board of Directors), finding that in the good faith opinion
of the Board an event set forth in subclauses (i), (ii),
(iii) or (iv) has occurred. During the period
commencing on the date Freddie Mac notifies you that it intends
to call a meeting of the Board of Directors to terminate your
employment for “Cause” pursuant to this memorandum
agreement, Freddie Mac may reduce your responsibilities and
duties and any such reduction or diminishment in your
responsibilities and duties during such period shall not
constitute the termination of your employment.
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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Attachment
B
RESTRICTIVE
COVENANT AND CONFIDENTIALITY AGREEMENT
In exchange for the mutual promises and consideration set forth
below, this Restrictive Covenant and Confidentiality Agreement
(“Agreement”) is entered into by and between the
Federal Home Loan Mortgage Corporation (“Xxxxxxx Xxx”
or “Company”) and Xxxxxxx X. Xxxxxxxx
(“Executive”), effective as of July 20, 2009.
| I. | Definitions |
The following terms shall have the meanings indicated when used
in this Agreement.
A. Prohibited
Competition: Considering offers of employment from, seeking
or accepting employment with, directly or indirectly providing
professional services to, becoming a director of, or being an
investor (representing more than a five (5) percent equity
interest) in, (i) Xxxxxx Xxx (ii) all Federal Home
Loan Banks (including the Office of Finance); and
(iii) such other entities to which the Executive and the
Company may agree in writing from time-to-time.
B. Confidential
Information: Information or materials in written, oral,
magnetic, digital, computer, photographic, optical, electronic,
or other form, whether now existing or developed or created
during the period of Executive’s employment with Freddie
Mac, that constitutes trade secrets and/or proprietary or
confidential information. This information includes, but is not
limited to: (i) all information marked Proprietary or
Confidential; (ii) information concerning the components,
capabilities, and attributes of Freddie Mac’s business
plans, methods, and strategies; (iii) information relating
to tactics, plans, or strategies concerning shareholders,
investors, pricing, investment, marketing, sales, trading,
funding, hedging, modeling, sales and risk management;
(iv) financial or tax information and analyses, including
but not limited to, information concerning Freddie Mac’s
capital structure and tax or financial planning;
(v) confidential information about Freddie Mac’s
customers, borrowers, employees, or others; (vi) pricing
and quoting information, policies, procedures, and practices;
(vii) confidential customer lists; (viii) proprietary
algorithms; (ix) confidential contract terms;
(x) confidential information concerning Freddie Mac’s
policies, procedures, and practices or the way in which Freddie
Mac does business; (xi) proprietary or confidential data
bases, including their structure and content;
(xii) proprietary Freddie Mac business software, including
its design, specifications and documentation;
(xiii) information about Freddie Mac products, programs,
and services which has not yet been made public;
(xiv) confidential information about Freddie Mac’s
dealings with third parties, including dealers, customers,
vendors, and regulators; and/or (xv) confidential
information belonging to third parties to which Executive
received access in connection with Executive’s employment
with Freddie Mac. Confidential Information does not include
general skills, experience, or knowledge acquired in connection
with Executive’s employment with Freddie Mac that otherwise
are generally known to the public or within the industry or
trade in which Freddie Mac operates.
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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X. Xxxxxxxxx: Cash
compensation paid pursuant to Freddie Mac’s Xxxxxxxxx
Policy.
X. Xxxxxxxxx Policy:
Freddie Mac Policy 3-254.1 (Severance — Officers), or
any subsequent and superceding severance policy.
II. Non-Competition
Executive recognizes that as a result of Executive’s
employment with Freddie Mac, Executive has access to and
knowledge of critically sensitive Confidential Information, the
improper disclosure or use of which would result in grave
competitive harm to Freddie Mac. Therefore, Executive agrees
that during Executive’s employment with Freddie Mac and for
twenty-four (24) months immediately following termination
of Executive’s employment for any reason, Executive shall
not engage in Prohibited Competition. Executive acknowledges and
agrees that this covenant has unique, substantial and
immeasurable value to Freddie Mac, that Executive has sufficient
skills to provide a livelihood for Executive while this covenant
remains in force, and that this covenant will not interfere with
Executive’s ability to work consistent with
Executive’s experience, training and education. This
non-competition covenant applies regardless of whether
Executive’s employment is terminated by Executive, by
Freddie Mac, or by a joint decision.
III. Non-Solicitation
and Non-Recruitment
During Executive’s employment with Freddie Mac and for a
period of twelve (12) months after Executive’s
termination of employment for any reason, Executive shall not
directly or indirectly, on his own behalf of or on behalf of any
other person, corporation, partnership, firm, financial
institution or other business entity, recruit or solicit or
attempt to recruit or solicit or assist another to recruit or
solicit any person (who at such time is employed as a Freddie
Mac officer (or equivalent) to cease their employment
relationship with Freddie Mac for the purpose of their being
employed by or providing professional services to any other
entity or person; provided that this section shall not be
construed as a prohibition on the ability of Executive to
provide a reference to any person or entity with which Executive
has no affiliation provide the Freddie Mac employee has notified
Freddie Mac of their intent to terminated their employment with
Freddie Mac.
| IV. | Treatment of Confidential Information |
A. Non-Disclosure.
Executive recognizes that Freddie Mac is engaged in an extremely
competitive business and that, in the course of performing
Executive’s job duties, Executive will have access to and
gain knowledge about Confidential Information. Executive further
recognizes the importance of carefully protecting this
Confidential Information in order for Freddie Mac to compete
successfully. Therefore, Executive agrees that Executive will
neither divulge Confidential Information to any persons,
including to other Freddie Mac employees who do not have a
Freddie Mac business-related need to know, nor make use of the
Confidential Information for the Executive’s own benefit or
for the benefit of anyone else other
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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than Freddie Mac. Executive further agrees to take all
reasonable precautions to prevent the disclosure of Confidential
Information to unauthorized persons or entities, and to comply
with all Company policies, procedures, and instructions
regarding the treatment of such information.
B. Return of
Materials. Executive agrees that upon termination of
Executive’s employment with Freddie Mac for any reason
whatsoever, Executive will deliver to Executive’s immediate
supervisor all tangible materials embodying Confidential
Information, including, but not limited to, any documentation,
records, listings, notes, files, data, sketches, memoranda,
models, accounts, reference materials, samples, machine-readable
media, computer disks, tapes, and equipment which in any way
relate to Confidential Information, whether developed by
Executive or not. Executive further agrees not to retain any
copies of any materials embodying Confidential Information.
C. Post-Termination
Obligations. Executive agrees that after the termination of
Executive’s employment for any reason, Executive will not
use in any way whatsoever, nor disclose any Confidential
Information learned or obtained in connection with
Executive’s employment with Freddie Mac without first
obtaining the written permission of the Executive Vice President
of Human Resources of Freddie Mac. Executive further agrees
that, in order to assure the continued confidentiality of the
Confidential Information, Freddie Mac may correspond with
Executive’s future employers to advise them generally of
Executive’s exposure to and knowledge of Confidential
Information, and Executive’s obligations and
responsibilities regarding the Confidential Information.
Executive understands and agrees that any such contact may
include a request for assurance and confirmation from such
employer(s) that Executive will not disclose Confidential
Information to such employer(s), nor will such employer(s)
permit any use whatsoever of the Confidential Information. To
enable Freddie Mac to monitor compliance with the obligations
imposed by this Agreement, Executive further agrees to inform in
writing Freddie Mac’s Executive Vice President of Human
Resources of the identity of Executive’s subsequent
employer(s) and Executive’s prospective job title and
responsibilities prior to beginning employment. Executive agrees
that this notice requirement shall remain in effect for twelve
(12) months following the termination of Executive’s
Freddie Mac employment.
D. Ability to Enforce
Agreement and Assist Government Investigations. Nothing in
this Agreement prohibits or otherwise restricts you from:
(1) making any disclosure of information required by law;
(2) assisting any regulatory or law enforcement agency or
legislative body to the extent you maintain a legal right to do
so notwithstanding this Agreement; (3) filing, testifying,
participating in or otherwise assisting in a proceeding relating
to the alleged violation of any federal, state, or local law,
regulation, or rule, to the extent you maintain a legal right to
do so notwithstanding this Agreement; or (4) filing,
testifying, participating in or otherwise assisting the
Securities and Exchange Commission or any other proper authority
in a proceeding relating to allegations of fraud.
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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| V. | Consideration Given to Executive |
In exchange for agreeing to be bound by the terms, conditions,
and restrictions stated in this Agreement, Freddie Mac will
provide the Executive with the following consideration, each of
which itself is adequate consideration for Executive’s
agreement to be bound by the provisions of this Agreement:
A. Compensation Agreement.
Freddie Mac has agreed to compensate Executive as Chief
Executive Officer pursuant to the terms and conditions set forth
in the July 20, 2009 memorandum agreement between Executive
and Freddie Mac.
X. Xxxxxxxxx. In the
event the Executive’s employment is terminated pursuant to
circumstances that qualify the Executive for Severance, then the
Executive shall receive Severance and other benefits in an
amount equal to that provided to Freddie Mac’s senior
executive officers pursuant to the terms of an applicable
severance policy in effect as of the date of Executive’s
termination of employment. Executive’s receipt of Severance
is contingent on any legally required approval from the Director
of the Federal Housing Finance Agency.
| VI. | Compliance with the Code of Conduct and Corporate Policies |
As a Freddie Mac employee, Executive will be subject to Freddie
Mac’s Code of Conduct (“Code”) and to Corporate
Policy 3-206, Personal Securities Investments Policy
(“Policy”) that, among other things, limit the
investment activities of Freddie Mac employees. Executive agrees
to fully comply with the Code and the Policy.
VII. Absence
of Any Conflict of Interest
Executive represents that Executive does not have any
confidential information, trade secrets or other proprietary
information that Executive obtained as the result of
Executive’s employment with another employer that Executive
will be using in Executive’s position at Freddie Mac.
Executive also represents that Executive is not subject to any
employment, confidentiality or stock grant agreements, or any
other restrictions or limitations imposed by a prior employer,
which would affect Executive’s ability to perform the
duties and responsibilities of Chief Executive Officer of
Freddie Mac and that Executive has provided Freddie Mac with
copies of any such agreements or limitations so that Freddie Mac
can make an independent judgment that Executive’s
employment with Freddie Mac is not inconsistent with any of its
terms.
VIII. Affect
of Termination of Employment
In the event that your employment terminates for any reason, you
agree that you shall be deemed to have resigned, effective as of
the date of such termination of employment with Freddie Mac, as
a member of Freddie Mac’s Board of Directors and from all
positions, titles, duties, authorities and responsibilities
arising out of or relating to your employment or such
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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Board membership, including any directorships or fiduciary
positions to which your were serving at the request of, or
appointment by, Freddie Mac. You also agree that you will
execute any such documents and take any such further steps as
Freddie Mac’s Board of Directors reasonably may ask of you
to effectuate such resignations.
| IX. | Reservation of Rights |
Executive agrees that nothing in this Agreement constitutes a
contract or commitment by Freddie Mac to continue
Executive’s employment in any job position for any period
of time, nor does anything in this Agreement limit in any way
Freddie Mac’s right to terminate Executive’s
employment at any time for any reason.
| X. | Enforcement |
A. Executive acknowledges
that Executive may be subject to discipline, up to and including
termination of employment, for Executive’s breach or threat
of breach of any provision of this Agreement.
B. Executive agrees that
irreparable injury will result to Freddie Mac’s business
interests in the event of breach or threatened breach of this
Agreement, the full extent of Freddie Mac’s damages will be
impossible to ascertain, and monetary damages will not be an
adequate remedy for Freddie Mac. Therefore, Executive agrees
that in the event of a breach or threat of breach of any
provision(s) of this Agreement, Freddie Mac, in addition to any
other relief available, shall be entitled to temporary,
preliminary, and permanent equitable relief to restrain any such
breach or threat of breach by Executive and all persons acting
for and/or
in concert with Executive, without the necessity of posting bond
or security, which Executive expressly waives.
C. Executive agrees that each
of Executive’s obligations specified in this Agreement is a
separate and independent covenant, and that all of
Executive’s obligations set forth herein shall survive any
termination, for any reason, of Executive’s Freddie Mac
employment. To the extent that any provision of this Agreement
is determined by a court of competent jurisdiction to be
unenforceable because it is overbroad, that provision shall be
limited and enforced to the extent permitted by applicable law.
Should any provision of this Agreement be declared or determined
by any court of competent jurisdiction to be unenforceable or
invalid under applicable law, the validity of the remaining
obligations will not be affected thereby and only the
unenforceable or invalid obligation will be deemed not to be a
part of this Agreement.
D. This Agreement is governed
by, and will be construed in accordance with, the laws of the
Commonwealth of Virginia, without regard to its or any other
jurisdiction’s conflict-of-law provisions. Executive agrees
that any action related to or arising out of this Agreement
shall be brought exclusively in the United States District Court
for the Eastern District of Virginia, and Executive hereby
irrevocably consents to personal jurisdiction and venue in such
court and to service of process by United States Mail or express
courier service in any such action.
Compensation Terms — Xxxxxxx X.
Xxxxxxxx — July 20, 2009
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E. If any dispute(s) arise(s)
between Freddie Mac and Executive with respect to any matter
which is the subject of this Agreement, the prevailing party in
such dispute(s) shall be entitled to recover from the other
party all of its costs and expenses, including its reasonable
attorneys’ fees.
Executive has been advised to discuss all aspects of this
Agreement with Executive’s private attorney. Executive
acknowledges that Executive has carefully read and understands
the terms and provisions of this Agreement and that they are
reasonable. Executive signs this Agreement voluntarily and
accepts all obligations contained in this Agreement in exchange
for the consideration to be given to Executive as outlined
above, which Executive acknowledges is adequate and
satisfactory, and which Executive further acknowledges Freddie
Mac is not otherwise obligated to provide to Executive. Neither
Freddie Mac nor its agents, representatives, directors, officers
or employees have made any representations to Executive
concerning the terms or effects of this Agreement, other than
those contained in this Agreement.
| By: |
|
Date: | ||||
| Xxxxxxx X. Xxxxxxxx |
Attachment C
Recapture Agreement
| Triggering Event | The recapture will be triggered if, at any time during the executive’s employment with Freddie Mac (or, under certain circumstances after termination of the executive’s employment, as described below), the Board determines and notifies you in writing that any of the following (“Triggering Events”) occurred: | |||
| 1. | The executive has obtained a legally binding right to bonus or incentive payment based on materially inaccurate financial statements (which includes, but is not limited to, statements of earnings, revenues, or gains) or any other materially inaccurate performance metric criteria. | |||
| 2. | As a result of misconduct, Freddie Mac is required to prepare an accounting restatement due to the material noncompliance of Freddie Mac with any financial reporting requirements under the federal securities laws. | |||
| 3. | The executive’s employment with Freddie Mac is terminated for “cause” under subclauses (i) or (iv) as defined below or, within two years of the termination of the executive’s employment at Freddie Mac, the Board makes a determination that circumstances existed at the time of the executive’s termination that would have justified termination for cause under subclauses (i) or (iv) or the executive was later convicted of or pleaded nolo contendere to a felony committed before the termination date and such felony resulted in material business or reputational harm to Xxxxxxx Mac. | |||
| 4. | The executive’s employment with Freddie Mac is terminated for “cause” under subclauses (ii) or (iii) as defined below, or within two years of the termination of the executive’s employment at Freddie Mac, the Board makes a determination that circumstances existed at the time of the executive’s termination that would have justified a termination for cause under subclauses (ii) or (iii) as defined below and that actions of the executive resulted in material business or reputational harm to Freddie Mac. | |||
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| Definition of Cause | For purposes of this Recapture Agreement, “cause” shall mean the occurrence of one or more of the following: | |||
| (i) The executive is convicted of or pleads nolo contendere to a charge of a felony or any crime involving moral turpitude; | ||||
| (ii) In carrying out his duties, the executive engages in conduct that constitutes gross neglect or gross misconduct or any material violation of applicable Freddie Mac rule or policy, including any policy relating to investment by Freddie Mac employees in securities, the violation of which amounts to gross neglect or gross misconduct; | ||||
| (iii) The executive materially breaches any provision of the Memorandum Agreement dated July 20, 2009 from Xxxx Xxxxxx to the executive; or | ||||
| (iv) Any other willful or malicious misconduct on the executive's part that is substantially injurious to Freddie Mac. | ||||
| • | In each case, “cause” shall not exist unless and until Freddie Mac shall have provided: (i) reasonable notice to the executive setting forth Freddie Mac’s intention to make a determination that an event set forth in subclauses (i), (ii), (iii) or (iv) has occurred; (ii) where remedial action is appropriate and feasible, a reasonable opportunity for the executive to take such action; (iii) an opportunity for the executive, together with the executive’s counsel, to be heard before the Board; and (iv) executive with a copy of a resolution duly adopted by a majority of the entire Board of Directors (excluding the executive) at a meeting of the Board of Directors called and held for such purpose finding that in the good faith opinion of the Board an event set forth in subclauses (i), (ii), (iii) or (iv) has occurred. No act or failure to act by the executive will be considered “willful” unless it is done, or omitted to be done, by the executive in bad faith or without reasonable belief that the executive’s action or omission was in the best interests of Freddie Mac. | |||
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| Recapture Period | 1. | In the case of the first Triggering Event, compensation subject to recapture may include Recapture Eligible Compensation (as defined below) paid to the Executive for up to two years prior to the Triggering Event. | ||
| 2. | In the case of the second Triggering Event, compensation is subject to recapture consistent with Section 304 of the Xxxxxxxx-Xxxxx Act of 2002. | |||
| 3. | In the case of the third Triggering Event, compensation subject to recapture may include Recapture Eligible Compensation paid to the Executive for up to two years prior to the date that the executive is terminated or subsequent to the termination of employment. | |||
| 4. | In the case of the fourth Triggering Event, compensation subject to recapture may include Recapture Eligible Compensation paid to the Executive at the time of termination of employment or subsequent to the date of termination. | |||
| Compensation
Subject to Recapture |
For purposes of this Recapture Agreement, “Recapture Eligible Compensation” shall consist of the following: | |||
| 1. | In the case of the first Triggering Event, Recapture Eligible Compensation consists of the annual short-term incentive (“STI”) (i.e., the annual bonus) and the annual long-term incentives (“LTI”). | |||
| 2. | In the case of the second Triggering Event, Recapture Eligible Compensation consists of bonuses and profits described in section 304 of the Xxxxxxxx-Xxxxx Act of 2002. | |||
| 3. | In the case of the third and fourth Triggering Events, Recapture Eligible Compensation consists of the annual STI, the annual LTI and any severance benefits paid. | |||
| In the event that the executive is terminated for cause under any of the subclauses (i), (ii), (iii) or (iv) specified in the Definition of Cause above, the executive forfeits rights to any future payment of annual | ||||
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| STI, LTI or severance benefits that might otherwise have been due pursuant to the terms of applicable plans or awards from the date of executive’s termination forward. | ||||
| With respect to any recapture of compensation: | ||||
| • | A recapture of STI or other cash paid, for such compensation that the Board determines is subject to repayment, would require the executive to repay the gross amount of the compensation previously paid. Additionally, any further obligation of Freddie Mac to make payments under such plans could be cancelled. | |||
| • | A recapture of LTI or other stock-based award granted, for such awards that the Board determines, would require the executive to repay Freddie Mac the full fair market value of the award(s) based upon vesting date. Additionally, any unvested and/or unexercised stock-based awards could be cancelled. | |||
| • | Base salary paid prior to the date of the Triggering Event is not subject to recapture. | |||
| • | The executive’s assets acquired prior to employment by Freddie Mac or acquired from sources other than Freddie Mac directly are not subject to recapture under this agreement. The right to recapture is not retroactive prior to the date of employment. | |||
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| Amount to
be Recaptured |
The Board has discretion to determine the appropriate amount required to be recaptured, if any, upon a Triggering Event, which is intended to be the compensation in excess of what Freddie Mac would have paid the executive had Freddie Mac taken into consideration the impact of the Triggering Event at the time such compensation was awarded. | |||
| Any disputes between the executive and Freddie Mac concerning the occurrence of a Triggering Event or the amount subject to recapture shall be determined exclusively in accordance with the substantive laws of the Commonwealth of Virginia, excluding provisions of the Virginia law concerning choice-of-law that would result in the law of any state other than Virginia being applied. | ||||
I agree to the terms of this Recapture Agreement
| By: | Date: | ||||||
| Xxxxxxx X. Xxxxxxxx |
