Exhibit 10.4

2012 EXECUTIVE MANAGEMENT COMPENSATION PROGRAM

FOR VIRGINIA-BASED COVERED OFFICERS (“2012 VIRGINIA EMCP”)

Program Document

Effective January 1, 2012

 

Covered Positions    This Program Document applies to Virginia-based Covered
Officers. Freddie Mac’s Chief Executive Officer (“CEO”), Chief Operating Officer
(“COO”), all Executive Vice Presidents (“EVPs”), and all Senior Vice Presidents
(“SVPs”) are each considered a “Covered Officer,” unless an employee’s
participation as a Covered Officer is specifically excluded in a separate
agreement. A Covered Officer is considered Virginia-based if he or she is
primarily or principally assigned to provide services from a work location in
the Commonwealth of Virginia. Covered Position Participation Requirement   
Participation in the 2012 Virginia EMCP is conditioned on the Covered Officer’s
agreement to the terms and conditions set forth herein and in the 2012 EMCP
Recapture and Forfeiture Agreement (“2012 Recapture Agreement”). A Covered
Officer who does not agree to the terms of both the 2012 Virginia EMCP and the
Recapture Agreement will receive only Base Salary. The terms and conditions set
forth in the 2012 Recapture Agreement are incorporated in and made a part of
this 2012 Virginia EMCP. Target Total Direct Compensation1    A Covered
Officer’s target total direct compensation (“Target TDC”) is the sum of Base
Salary and Deferred Salary, each of which is paid in cash. Base Salary    Base
Salary is earned and paid on a semi-monthly basis and cannot exceed $500,000
without FHFA approval. Deferred Salary    The portion of Target TDC not paid in
Base Salary is Deferred Salary, which is earned on a semi-monthly basis. The
amount earned in each quarter is paid in cash on the last business day of the
corresponding quarter of the following calendar year. This payment schedule is
referred to as the Approved Payment Schedule.                   Deferred Salary
consists of the following two elements:                      At-Risk Deferred
Salary – At-Risk Deferred Salary shall be equal to 30% of the Covered Officer’s
Target TDC. The amount of At-Risk Deferred Salary earned in a calendar year is
subject to reduction based on corporate and individual performance as follows:  
                   Ø    One-half of At-Risk Deferred Salary (or 15% of Target
TDC) is subject to reduction based on corporate performance as assessed by the
Compensation Committee (the Committee) of the Board of Directors and the Federal
Housing Finance Agency (FHFA) against objectives they deem relevant for the
calendar year in which the At-Risk Deferred Salary is earned.2 The reduction can
range from 0% (no reduction) to 100% (the maximum reduction).                  
     Ø    One-half of At-Risk Deferred Salary (or 15% of Target TDC) is subject
to reduction based on individual performance. The total amount of a Covered
Officer’s At-Risk Deferred Salary that is earned based on individual performance
is subject to reduction ranging from 0% (no reduction) to 100% (the maximum
reduction).

 

 

1 

Initially expressed as an annual rate. Amount will be prorated, as appropriate,
to reflect date of hire, promotion into a Covered Position, date of termination,
or other adjustment to Target TDC.

2 

For a Covered Officer for whom a separate division scorecard is approved by
either a Board committee or FHFA, the reduction will be based on the appropriate
Board committee’s and FHFA’s assessment of performance against such separate
division scorecard.

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2012 Virginia Executive Management Compensation Program

Page 2 of 5

Effective January 1, 2012

 

Deferred Salary

(continued)

      

 

For Covered Officers other than the CEO, a Covered Officer’s performance during
the calendar year will be assessed by the CEO, in his/her sole discretion,
pursuant to the performance assessment and reduction process in effect for such
year.

 

In the case of the CEO, the Committee will evaluate the CEO’s performance and,
after considering input from other independent members of the Board, determine
the reduction, if any.

 

At-Risk Deferred Salary payments for Executive Officers (as defined in the
Committee’s charter) are subject to review and approval by the Committee and
FHFA. Payments for Non-Executive Officers will be reviewed by the Committee and
FHFA.

 

Fixed Deferred Salary – Fixed Deferred Salary shall be equal to the Covered
Officer’s Target TDC less Base Salary and less At-Risk Deferred Salary and is
not subject to reduction based on either corporate or individual performance.

 

Payment of both At-Risk and Fixed Deferred Salary is also subject, if
applicable, to the “Treatment Upon Termination” provisions set forth below.

 

 

Impact on Retirement, Executive, and Welfare Plans

      

 

The treatment of Base Salary and Deferred Salary as compensation for purposes of
Freddie Mac’s retirement and welfare benefit plans is governed by the actual
terms of those plans. The table below summarizes whether Base Salary and
Deferred Salary a Covered Officer receives while an active employee are treated
as compensation for purposes of the following Freddie Mac retirement and welfare
benefit plans. Freddie Mac retains the right to amend, revise or discontinue any
of the retirement and welfare benefit plans and the terms of each plan will
prevail in the event that there is any conflict between those terms and the
table below

      

Freddie Mac’s Retirement and Welfare

Benefit Plans

  

Base Salary

Considered

  Compensation?  

  

Deferred Salary

Considered

Compensation?

      

 

Tax-Qualified Thrift/401(k)

   Yes    Yes       

 

Tax-Qualified Employees’ Pension

   Yes    Yes       

 

Non-Qualified Supplemental Executive Retirement Plans (SERP)3

   Yes    Yes       

 

Group Term Life Insurance

   Yes    No       

 

Group Universal Life Insurance

   Yes    No       

 

Long-Term Disability Plan

   Yes    No       

 

Accidental Death and Personal Loss Insurance

   Yes    No       

 

Business Travel Accident Insurance

   Yes    No       

 

Worker’s Compensation

   Yes    No         

 

Purchase/Payout of Vacation

   Yes    No

 

 

3 

Compensation for the purposes of the Non-Qualified SERP may not exceed two times
a Covered Officer’s Base Salary.

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2012 Virginia Executive Management Compensation Program

Page 3 of 5

Effective January 1, 2012

 

Impact on Retirement, Executive, and Welfare Plans

(continued)

   Any Base Salary or Deferred Salary a Covered Officer receives after
termination of employment is NOT treated as compensation for purposes of any
Freddie Mac retirement or welfare benefit plan.

Treatment Upon Termination:

Base Salary

   Base Salary will cease upon termination of employment, regardless of the
reason for such termination.

Treatment Upon
Termination:

At-Risk Deferred Salary

  

The timing and payment of any unpaid portion of At-Risk Deferred Salary is based
on the reason for termination of employment, as follows:

 

• Forfeiture Event – All earned but unpaid At-Risk Deferred Salary is subject to
forfeiture upon the occurrence of an event or conduct described in the 2012
Recapture Agreement;

 

• Death – All earned but unpaid At-Risk Deferred Salary is paid as soon as
administratively possible, but not later than 90 calendar days after the date of
death; and

 

• Any Other Reason4 – All earned but unpaid At-Risk Deferred Salary is paid in
accordance with the Approved Payment Schedule, subject to the performance
assessment and reduction process for At-Risk Deferred Salary.

 

In cases of death or Long-Term Disability (as defined in the Long-Term
Disability Plan in effect on the date of termination), the performance
assessment and reduction process for At-Risk Deferred Salary is waived, and
there is no reduction based on either corporate or individual performance.

Treatment Upon Termination:

Fixed Deferred Salary

  

The timing and payment of any unpaid portion of Fixed Deferred Salary is based
on the reason for termination of employment, as follows:

 

• Forfeiture Event – All earned but unpaid Fixed Deferred Salary is subject to
forfeiture upon the occurrence of an event or conduct described in the 2012
Recapture Agreement;

 

• Death – All earned but unpaid Fixed Deferred Salary is paid in full as soon as
administratively possible, but not later than 90 calendar days after the date of
death; and

 

• Any Other Reason4 – All earned but unpaid Fixed Deferred Salary is paid in
accordance with the Approved Payment Schedule.

 

A Covered Officer’s unpaid Fixed Deferred Salary will be reduced by 2% for each
full or partial month by which the termination precedes:

 

• January 31, 2014 for a Covered Officer who was an employee on January 1, 2012
and who remained continuously employed through the termination date; or,

 

• The 25-month anniversary of the hire date for a Covered Officer hired after
January 1, 2012.

 

This reduction will not be applied in cases of death or Long-Term Disability.

 

 

4 

Any Other Reason includes, but is not limited to, voluntary terminations,
retirement, long-term disability, and involuntary termination for any reason
other than a Forfeiture Event.

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2012 Virginia Executive Management Compensation Program

Page 4 of 5

Effective January 1, 2012

 

Reservation of Rights

and Applicable Law

  

Each Covered Officer’s employment with Freddie Mac is “at-will,” meaning that
either the Covered Officer or Freddie Mac may terminate such employment at any
time with or without cause or notice. Nothing in this Program Document or any
other document referred to or incorporated by reference herein shall be held or
construed to change the at-will nature of any Covered Officer’s employment with
Freddie Mac.

 

Nothing in this Program Document is intended or shall be construed to abrogate
FHFA’s authority to either: (i) modify or terminate any compensation plan or
program (including the 2012 Virginia EMCP); or (ii) disapprove the actual
payment of any form of compensation to be paid pursuant to the 2012 Virginia
EMCP.

 

FHFA retains the right to modify any of the terms and conditions of your
employment, including the right to modify or rescind the terms and conditions of
the 2012 Virginia EMCP as well as the actual payment of compensation to you
pursuant thereto, without giving rise to liability on the part of Freddie Mac.

 

The 2012 Virginia EMCP is subject to and shall be construed in accordance with:
(i) any applicable law and any applicable regulation, guidance or interpretation
of FHFA and/or the United States Department of the Treasury; and (ii) 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.

 

Payment of Deferred Salary under the 2012 Virginia EMCP is intended to comply
with the requirements of Section 409A of the Internal Revenue Code of 1986
(“Section 409A”), as amended, and, specifically, with the separation pay
exemption and short term deferral exemption of Section 409A, and shall in all
respects be construed, interpreted, and administered in accordance with Section
409A. Notwithstanding anything in the 2012 Virginia EMCP to the contrary,
payments may only be made pursuant to the 2012 Virginia EMCP upon an event and
in a manner permitted by Section 409A or an applicable exemption. All payments
to be made upon a termination of employment under this Program may only be made
upon a “separation from service” under section 409A. If a Covered Officer is a
“specified employee” (within the meaning of Section 409A(a)(2)(B)(i)) at the
time of a separation from service, payments scheduled to be made during the six
months following the separation from service shall, to the extent required by
Section 409A, be deferred to and payable on the first day of the seventh month
following the separation from service.

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2012 Virginia Executive Management Compensation Program

Page 5 of 5

Effective January 1, 2012

By signing below, I acknowledge that I understand and voluntarily agree to the
terms of this 2012 Virginia EMCP, effective as of January 1, 2012:

 

            

Covered Officer’s Signature

      Date                       

Printed Name

                             Title