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Exhibit 10.5
2009 LONG-TERM INCENTIVE AWARD
Parameters Document
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Objective
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The
long-term incentive deferred cash award (LTI) is intended to
provide a “forward looking” incentive award to eligible
officers and directors.
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Grant Date
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March 16, 2009
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Performance
Period
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LTI
awards granted in March 2009 with performance measures covering the
2009 and 2010 performance period.
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General
Eligibility
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An
employee who, as of the LTI grant date, is classified by Freddie
Mac (in its sole discretion) as either (i) an active,
full-time or part-time officer or director, or an officer or
director on short term disability and/or approved leaves of absence
or (ii) is classified by Freddie Mac as a LTI eligible
non-officer in a market-priced position. However, Senior Vice
Presidents, Executive Vice Presidents, and the Chief Executive
Officer are not eligible to participate in this program until such
time as Freddie Mac has additional guidance from the Federal
Housing Finance Agency on the application of recent announcements
by the U.S. Department of Treasury, as well the American Recovery
and Reinvestment Act’s restrictions on executive
compensation.
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Aggregate Corporate LTI
Pool
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The
corporate-wide aggregate value of the LTI grants is equal to the
sum of annualized LTI targets of employees eligible to participate
in the LTI program. Each Division’s share of the
corporate-wide pool is equal to the aggregate value of its eligible
employees’ LTI targets as a percentage of the corporate LTI
pool, less the aggregate value of the LTI targets for Division
employees who are direct reports to the Chief Executive Officer,
subject to any adjustment in the allocation by the Chief Executive
Officer.
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Individual LTI
Targets
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Officers: LTI target is the employee’s
target in effect on the date that the grant is approved.
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Directors: For non-market priced director-level
employees, the LTI target is the LTI target applicable to the
position’s salary grade. For LTI eligible employees in a
market priced position, the LTI target generally is the salary
grade target that is closest to the median of the Estimated Market
Distribution 1 of such position, subject to the
protocol established by the Human Resources Division for
market-priced positions LTI eligibility and targets.
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LTI Grant Amount
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For
LTI awards granted in 2009, an eligible employee’s grant
shall be equal to their LTI target, except (a) an employee who
receives a Business Results Rating (BRR) of 1 is not eligible to
receive a LTI grant and an employee who receives a BRR of
2 may, subject to the Division Head’s approval,
receive a LTI grant, which in most instances will be substantially
below their target, and (b) no more than 5% of the
participants can receive between 100% and 150% of their LTI target
but in no event can the aggregate amount exceed the Aggregate
Corporate LTI Pool approved by the Compensation
Committee.
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Vesting and Payment
Amount
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Management shall provide a
recommendation to the Compensation Committee of Freddie Mac’s
Board of Directors regarding the level of achievement of the
performance measure(s) described in Exhibit A (the
“Performance Multiplier”) prior
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1 Estimated Market Distribution
(EMD) is a range of market compensation (base salary and bonus)
unique to each job and is based on data representing the median pay
practice for a similar role in the comparative markets.
Page 1 of 3
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to
the first and the second anniversary of the grant date and, except
as set forth below under “Treatment of Award Upon
Termination,” upon the Compensation Committee’s
approval an employee’s right to payment of that portion of
the LTI award shall vest.
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Based on Performance Multiplier, the
LTI actual dollar amount of the LTI grant paid can range from
0% – 120% of the grant as determined on each of the
1 st and 2 nd anniversary of the grant
date.
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Performance Measure(s) and
Performance Multiplier — See
Exhibit A.
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Payment Timing
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Any
award to be paid shall be paid as soon as administratively
practicable, but no later than March 15 of the calendar year
following each calendar year performance period.
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Form of Payout
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Cash less applicable
withholding.
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Treatment of Award
Upon Termination
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Death and Long-Term
Disability: If an employee’s employment is
terminated due to either death or long-term disability, any vested
but unpaid portion of the LTI award will be paid as soon as
administratively possible. The amount paid will be based on the
Performance Multiplier.
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Any
unvested portion of the LTI award will remain outstanding until the
Compensation Committee approves the Performance Multiplier. Upon
such approval, the employee’s right to receive any such award
shall vest and the unpaid portion of the LTI award will be paid as
soon as administratively possible. The amount paid will be based
the Performance Multiplier.
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Retirement: If an employee terminates employment
due to retirement (either (i) age/years of service of 62/5 or
(ii) sum of age and years of service equal no less than 70,
with minimum age of 55) any vested but unpaid portion of the
LTI award will be paid as soon as administratively possible. The
amount paid will be based on the Performance Multiplier.
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Any
unvested portion of the LTI award will remain outstanding until the
Compensation Committee approves the Performance Multiplier. Upon
such approval, the employee’s right to receive a pro-rata
payment shall vest. The pro rata payment shall be based on the
following methodology:
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Step 1. The number of whole months
worked in the performance year
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Step 2. Divided by
twelve
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Step 3. Multiplied by the
employee’s portion of LTI grant scheduled to vest and be paid
for that performance year and the Performance
Multiplier
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Other Terminations:
If an employee’s
employment terminates for any reason other than Death, Long-Term
Disability, or Retirement, any unvested portion of the award will
be forfeited.
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Additional Forfeiture
Provision
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Upon a “Forfeiture
Event” (as defined below), any unvested or any unpaid LTI
award will be cancelled and the employee or former employee will be
required to immediately repay Freddie Mac the gross value of any
LTI award payment that was made within 12 months prior to the
Forfeiture Event
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A
Forfeiture Event shall mean the employee or former employee
directly or indirectly seeking or accepting employment with, or
providing professional services to, a “Competitor” in
violation of any non-competition covenant agreement between the
employee and Freddie Mac in effect as of the date the employee
receives an LTI grant.
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Regulatory Approval and
Reservation of Rights
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Notwithstanding the terms set forth
above, with respect to certain designated officers Freddie
Mac’s Conservator is required to approve the actual payment
of compensation, including payment of this LTI grant. As a
consequence, such officer’s right to payment of the LTI grant
set forth herein is conditioned on the Conservator’s approval
after Compensation Committee’s determination of the
Performance Multiplier.
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Amounts paid pursuant to this plan
will not be considered compensation for purposes of the tax
qualified Thrift/401(k) Savings Plan, the tax qualified
Employees’ Pension Plan and the non-qualified Supplemental
Execu
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