exv10w51







 




    Exhibit
    10.51



 




    [Freddie
    Mac letterhead]



 




    November 1,
    2004
    



 



    Mr. Joseph A. Smialowski



 


 



    Dear Mr. Smialowski:



 



    I am pleased to offer to you the position of Freddie Mac’s
    Executive Vice President, Technology and Operations, reporting
    to Eugene McQuade, Freddie Mac’s President and Chief
    Operating Officer. Should you accept this offer, you will begin
    your employment with Freddie Mac on December 1, 2004.



 



    This offer of employment is expressly contingent upon:



 


			
	 	    • 
	
    Your execution of the enclosed “Restrictive Covenant and
    Confidentiality Agreement”;

	 
	 	    • 
	
    Your demonstration of compliance on your employment date with
    the work eligibility requirements of the Immigration Reform and
    Control Act; and

	 
	 	    • 
	
    Freddie Mac’s complete satisfaction with the results of
    your credit and criminal background check, to which you have
    already consented.




 



    The terms and conditions set forth in this letter supersede any
    previous communication you have had with Freddie Mac
    and/or its
    agents concerning the terms and conditions of your employment
    with Freddie Mac. Freddie Mac agrees to employ you pursuant to,
    and you agree to accept as conditions of employment, the terms
    and conditions set forth in this Letter Agreement
    (“Agreement” or “Letter Agreement”), the
    enclosed Restrictive Covenant Agreement and the enclosed Code of
    Conduct.



 




    I.  Base
    Salary



 



    Your annualized base salary will be $500,000 (which is
    approximately $41,667 per month).













 







    Mr. Joseph
    A. Smialowski

    November 1, 2004

    Page 2
    



 




    II.  Short-Term
    and Long-Term Performance-Based Incentives



 



    You will be eligible for consideration for a discretionary
    short-term performance-based incentive bonus subject to
    corporate executive compensation plans, practices and policies
    in effect as of the date of payment. However, assuming continued
    employment in the above-specified position through the bonus
    payment date, your target and actual bonus for the 2005
    performance period (payable in 2006) will be no less than
    one hundred twenty-five percent (125%) of your bonus eligible
    earnings and the maximum short-term incentive bonus payable will
    be 200% of your target incentive. Freddie Mac currently pays
    such bonuses in cash.



 



    You also will be eligible for consideration for a discretionary
    long-term performance-based incentive award. Assuming continued
    employment in the above-specified position through the actual
    grant date, the amount of your initial long-term incentive award
    will be 300% of your base salary or $1,500,000. All other
    aspects of the award, including the number of units
    and/or
    shares subject to the grants, vesting schedule and other
    details, shall be made pursuant to the corporate long-term
    incentive plans, practices and policies in effect at that time,
    which currently provide that awards are paid fifty percent (50%)
    in the form of restricted stock units and fifty percent (50%) in
    the form of stock options.



 




    III.  One-Time
    Sign-On Cash Bonus



 



    Subject to your beginning employment with Freddie Mac, you will
    receive a one-time sign-on cash bonus of $400,000. This cash
    bonus will be paid to you in your first full semi-monthly
    paycheck, and will be subject to such withholdings as Freddie
    Mac determines are required by law. This sign-on bonus is
    subject to repayment in full in the event that, prior to the
    second anniversary of your Employment Date, you terminate your
    employment with Freddie Mac for any reason or Freddie Mac
    terminates your employment for a “Loss of Confidence”
    (as such term is defined in Corporate
    Policy 3-254.1 —
    Officer Severance) or for violating any standard of conduct,
    attendance or behavior embodied in Exhibit A to Freddie Mac
    Policy 3-214
    (as may be modified from time to time). The most recent copy of
    each Policy is enclosed herewith.



 




    IV.  One-Time
    Sign-On Grant of Restricted Stock Units



 



    Subject to your beginning employment with Freddie Mac, you also
    will receive a one-time long-term incentive grant with a total
    dollar value of $750,000, which will be paid in the form of
    restricted stock units. The number of restricted stock units
    subject to this grant will be calculated by dividing $750,000 by
    the Economic Value (as defined in the Plan), of a share of
    Freddie Mac common stock on the date the Committee designates as
    the grant date, which will not be later than thirty
    (30) days after your Employment Date (the “Grant
    Date”).













 







    Mr. Joseph
    A. Smialowski

    November 1, 2004

    Page 3
    



 


		
	
    IV.  
	
    One-Time
    Sign-On Grant of Restricted Stock Units and Award of Stock
    Options (continued)




 



    The restrictions on the restricted stock units subject to this
    one-time grant will lapse pursuant to the following schedule:
    thirty-three percent (33%) on the first anniversary of the Grant
    Date; thirty-three percent (33%) on the second anniversary of
    the Grant Date; thirty-four percent (34%) on the third
    anniversary of the Grant Date. In the event that your employment
    with Freddie Mac terminates for any reason (other than
    Disability or Death as defined in the Plan) prior to the lapse
    of restrictions on the restricted stock units, you will forfeit
    all the unvested units.



 


		
	
    V.  
	
    Employment-At-Will;
    Termination of Employment Payment




 



    Except as set forth in Paragraph II with respect to your
    target short-term incentive award for 2005 performance and
    long-term incentive award for 2005, in Paragraph III
    regarding the terms and conditions of your one-time sign-on cash
    bonus and in Paragraph IV regarding the terms of your
    one-time sign-on grant of restricted stock units, nothing in
    this Letter Agreement sets forth any express or implied
    contractual obligation on the part of either Freddie Mac or you
    to continue employment for a specified or
    agreed-upon
    duration and Freddie Mac retains the right to change any other
    terms and conditions of your employment, including any benefits
    offered, at any time in its sole discretion. Freddie Mac and you
    each retain the right to terminate your employment at any time
    for any reason with or without cause. In the event you terminate
    your employment with Freddie Mac at any time for any reason,
    your salary will terminate as of the date of your termination.
    If Freddie Mac terminates your employment, your salary will
    cease as of the date of your termination and you will be
    entitled to cash severance (if any) in accordance with the terms
    of the attached “Restrictive Covenant
    Agreement/Section (V)(B).”



 




    VI.  Other
    Benefits



 



    You will be eligible to participate in all employee benefit
    plans pursuant to the terms of those plans (as may be modified
    or terminated from time to time).



 



    In your first calendar year of employment you will accrue
    vacation at a rate of fifteen days annually, which will be
    prorated based on your Employment Date. We currently provide
    10 days of vacation to full-time employees in their second
    calendar year of employment, with an option to purchase up to
    15 additional days on a pre-tax basis through our cafeteria
    plan, for a combined maximum of 25 days starting in your
    second calendar year of employment. Freddie Mac provides pre-tax
    dollars to subsidize the purchase of five of these additional
    days in the second year of employment. Of course, Freddie
    Mac’s vacation policy and cafeteria plan may change from
    time to time.













 







    Mr. Joseph
    A. Smialowski

    November 1, 2004

    Page 4
    



 




    VII.  Relocation
    Assistance



 



    Your relocation information will follow under separate cover
    from Emily Stover, Relocation Program Manager. Should you have
    any questions regarding those benefits, please call Emily at
    (703) 918-5776.



 




    VIII.  Confidentiality



 



    Subject to Paragraph IV (D) of the enclosed
    “Restrictive Covenant and Confidentiality Agreement,”
    you agree that prior to, during and after the cessation of your
    employment for any reason, you will not disclose either the
    existence of or any information about this letter to any person
    other than your attorney, accountant, tax advisor or members of
    your immediate family, and then only if they agree to keep such
    information confidential. Please also note that your continuing
    obligation to treat as confidential certain information that you
    use, receive or access during the course of your employment is
    covered in the attached “Restrictive Covenant and
    Confidentiality Agreement.”



 




    IX.  Code
    of Conduct and Investment Limitations Policy



 



    As a Freddie Mac employee you will be subject to Freddie
    Mac’s Code of Conduct (“Code”) and to Corporate
    Policy 1-906,
    Investment Limitations Policy (“Policy”) that, among
    other things, limit the investment activities of Freddie Mac
    employees. We expect that you will fully comply with the Code
    and the Policy, copies of which are enclosed for your review.



 



    You should consult with Freddie Mac’s Chief Compliance
    Officer as soon as possible about any investments that you or a
    “covered household member,” as that term is defined in
    the Policy, may have that may be prohibited by the Policy. You
    also should disclose any other matter or situation that may
    create a conflict of interest as such term is defined in the
    Code.



 



    In addition, please provide copies of any employment,
    confidentiality or stock grant agreements to which you may be
    currently subject so that we can ensure that your employment by
    Freddie Mac and conduct as a Freddie Mac employee, are not
    inconsistent with any of their terms.













 







    Mr. Joseph
    A. Smialowski

    November 1, 2004

    Page 5
    



 




    X.  Other
    Matters



 



    This letter will be governed by and construed in accordance with
    the laws of the Commonwealth of Virginia, without regard to its
    conflict-of-laws provisions.



 



    By signing and returning a copy of this Letter Agreement and the
    enclosed “Restrictive Covenant and Confidentiality
    Agreement,” you acknowledge that you have read, understand
    and agree to be bound by its terms, that you have been given an
    opportunity for your legal, tax
    and/or
    financial advisors to review this Letter Agreement and enclosed
    Restrictive Covenant Agreement, and that the provisions are
    reasonable.



 



    We are delighted that you have decided to join Freddie Mac and
    look forward to your becoming a valuable member of the team.



 




    Sincerely,
    



 


	 	 	 	 	 
	

    /s/  Eugene
    M. McQuade



	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	

    Eugene M. McQuade


	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	

    Signed and Agreed to:


	
 
	
    /s/  Joseph
    A. Smialowski

	
 
	
    November 3, 2004

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
    Joseph A. Smialowski
	
 
	
    November 3, 2004









 




    Enclosures
    



 


		
	
    cc:  
    
	
    Michael W.
    Hager, SVP - Human Resources