exv10w31







Exhibit 10.31





	 	 	 
		 	CORPORATE POLICY





Subject: Severance - Officers



Policy Number: 3-254.1



Control Point: Director-Employee Relations



Approval Authority: SVP-Human Resources



Signature: Keith Green [Signature on original kept by Legal]




 





Summary of this Policy



This policy sets forth the eligibility requirements and amount of Severance Pay available to
Eligible Officers. Defined terms are italicized. Please see Appendix A for definitions. Further
details can be found in Freddie Mac’s Severance Plan Summary Plan Description.




I. Under what circumstances is Severance Pay provided?



Freddie Mac provides Severance Pay to a Severance Eligible Officer pursuant to the terms of this
Policy In addition, in the event an employee becomes a Severance Eligible Officer as a result of a
Reduction in Force, Freddie Mac also provides Notice Pay, even if the Severance Eligible Officer
does not sign an agreement and release of claims.



A Severance Eligible Officer’s employment is terminated as of the Separation Date. Such former
officer’s eligibility to receive any benefit from or to continue participation in other plans
maintained by the company is governed by the terms and provisions of those plans.



In addition, the provision of Severance Pay to a Severance Eligible Officer is subject to the
approval of Freddie Mac’s regulator.




II. What procedures are followed to determine severance eligibility?



Business-area management will submit to their respective Human Resources Business Partner (“HRBP”)
for review any proposed termination of employment (including any proposed voluntary separation that
could result in Severance Pay) or proposed offer of Comparable Employment prior to discussing the
same with the impacted officer. The Director of Employee Relations in the Human Resources Division
determines whether the employee is a Severance Eligible Officer, and interprets and applies this
policy.



Employee Relations, after consulting with the HRBP, the Legal Division, and possibly business-area
management, also determines whether a job position to be offered to an Eligible Officer is
Comparable Employment. Eligible Officers will be evaluated for Comparable Employment, if at all,
based on criteria including (but not limited to) their historical performance ratings and
management’s assessment of relative skills.



After Employee Relations determines that the employee is a Severance Eligible Officer,
business-area management provides Notice to the Severance Eligible Officer. Business-area
management will give Notice in advance of the






 









 






	 	 	 
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Separation Date, if at all, to the extent that advance notification is consistent with business
circumstances or required by law.



Business-area management, after consulting with the HRBP, also establishes the Separation Date of a
Severance Eligible Officer.




III. What is required for a Severance Eligible Officer to receive Severance Pay?



As a condition of receiving Severance Pay, a Severance Eligible Officer must sign an agreement and
release of claims. Freddie Mac has exclusive discretion to determine what terms will be included
within the agreement and release of claims. Among other things, the agreement and release of claims
may contain provisions related to the following:





	 	•	 	Full release of claims






	 	•	 	Non-participation in claims against Freddie Mac






	 	•	 	Notice of receipt of subpoenas






	 	•	 	Treatment of confidential information






	 	•	 	Non-competition






	 	•	 	Non-solicitation of Freddie Mac employees






	 	•	 	Notice of future employment






	 	•	 	Return of Freddie Mac property






	 	•	 	Non-disparagement






	 	•	 	Obligation to reasonably cooperate






	 	•	 	Damages in the event of breach






	 	•	 	Preclusion and/or restriction from future Freddie Mac employment




Business-area management may require an Eligible Officer to provide services to Freddie Mac up to
and including the Separation Date as a condition of receiving Severance Pay.



If a Severance Eligible Officer does not receive two-weeks of advance Notice of his/her Separation
Date from Freddie Mac, and does not execute an agreement and release of claims proffered by the
company, then the officer will receive Pay in Lieu of Notice for the two-week period following the
date of Notice, and will receive no Severance Pay.




IV. How long is the Severance Period of a Severance Eligible Officer?



The Severance Period of a Severance Eligible Officer is as specified in the Restrictive Covenant
and Confidentiality Agreement between the Severance Eligible Officer and Freddie Mac. If the
Severance Eligible Officer is entitled to receive Notice Pay, then his/her Severance Period shall
be the Severance Period specified in the Restrictive Covenant and Confidentiality Agreement , minus
the number of days of Notice Pay he/she is entitled to receive. In no event will a Severance
Eligible Officer receive less than four weeks of Severance Pay in addition to Notice Pay.








	 	 	 
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V. How does a Severance Eligible Officer receive his/her Severance Pay?



A Severance Eligible Officer has the option of receiving his/her Severance Pay in periodic payments
over the specified Severance Period coinciding with Freddie Mac’s standard payroll procedures.
Alternatively, the Severance Eligible Officer may receive his/her Severance Pay in a Lump Sum. If
the Severance Eligible Officer elects periodic payments, he/she may be eligible to continue his/her
participation in certain benefits plans at a reduced cost, in accordance with the terms of those
plans.



If a former officer receiving Severance Pay dies before receiving his/her entire Severance Pay,
then Freddie Mac will pay the balance to the former employee’s estate or personal representative.




VI. When does a Severance Eligible Officer have to elect Lump Sum or Periodic Payments?



A Severance Eligible Officer must elect whether to receive his/her Severance Pay in a Lump Sum or
in periodic payments by the date he/she signs the required agreement and release of claims. Failure
to make an election upon execution of the agreement and release of claims will result in the
Severance Eligible Officer receiving his/her Severance Pay in a Lump Sum.




VII. When does Severance Pay begin?



Severance Pay will be paid in accordance with the company’s standard payroll practices, and will
begin within 30 days after 1) the company’s receipt of the Severance Eligible Officer’s properly
executed agreement and release of claims, 2) if applicable, expiration of the revocation period
specified in the agreement and release of claims, and (3) (applicable only to Specified Employees)
six months has elapsed since the Separation Date.



If the consideration period noted in the agreement and release of claims extends beyond the
Separation Date and the company has not received the Severance Eligible Officer’s properly executed
agreement and release of claims as of the Separation Date, the company will place the Severance
Eligible Officer on unpaid Leave of Absence until (1) receipt of the properly signed agreement and
release of claims or (2) the end of the consideration period (whichever comes first).



Failure by a Severance Eligible Officer to submit a properly executed agreement and release of
claims within the time period specified in such agreement will result in the proffered agreement
and release of claims being withdrawn by the company.




VIII. What happens to Severance Pay if the employee becomes re-employed by Freddie Mac or renders services

          to Freddie Mac as a vendor or contract worker during the Severance Period?



If a former officer receiving Severance Pay is re-employed by Freddie Mac before the end of the
Severance Period, or renders services to Freddie Mac as a vendor or contract worker during the
Severance Period, the former officer will forfeit any remaining unpaid Severance Pay. If the
former officer received his/her Severance Pay as a Lump Sum, and becomes re-employed by Freddie Mac
or renders services to Freddie Mac as a vendor or contract worker before the end of what would have
been the Severance Period, Freddie Mac reserves the right to require that some or all of the
Severance Pay be repaid as a condition of re-employment or rendering services to Freddie Mac as a
contract worker or vendor.









	 	 	 
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IX. Restriction on Specified Employees.



If a Severance Eligible Officer is a Specified Employee, then he/she will not begin receiving
his/her Severance Pay until six (6) months following his/her Separation Date, consistent with Treas. Reg. § 1.409A-3(g)(2), or any successor thereto. If the Severance Eligible Officer elected to
receive his/her Severance Pay in periodic payments within the required election period, then he/she
shall receive six months of Severance Pay in a Lump Sum upon the expiration of the six-month wait
period, and then will receive the balance of his/her Severance Pay in periodic payments according
to the company’s standard payroll procedures.




X. Where can officers find additional information about Freddie Mac’s severance plan?



Officers may find additional information about the company’s severance plan in Freddie Mac’s
Severance Plan Summary Plan Description.




XI. Reservation of Rights



Freddie Mac reserves the right to amend or terminate this Policy or any of its provisions at any
time for any reason in its sole discretion without giving rise to legal liability. Nothing in this
Policy is intended nor shall be interpreted to create a contract of employment or alter the at-will
employment relationship that otherwise may exist between Freddie Mac and such employee, or
otherwise limit the discretion of either Freddie Mac or such employee to terminate the employment
relationship at any time for any reason.



Effective Date: January 24, 2011



☐ New



☒ Replaces Policy 3-254.1 dated July 16, 2010



☒ Reviewed by Legal or Determined that No Legal Review Necessary




Appendix A Definitions




Comparable Employment



Comparable Employment will be assessed on a case-by-case basis. Exact criteria the company will use
include each of the following, all of which must be met for the position to be deemed comparable.





	 	•	 	The content of the job to which the employee may be assigned. To be comparable, the new
position must require substantially the same skill set and technical knowledge.






	 	•	 	The commuting distance associated with the new position. To be comparable, the new
position must not increase the commuting distance for the employee by more than 50 miles
each way, or increase the commuting distance for the employee such that the total commuting
distance exceeds 90 miles each way.






	 	•	 	To be comparable, the employee’s base salary must not decrease by more than 10%.






	 	 	 
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Eligible Officer



An employee who is appointed by Freddie Mac as an officer of the company.




Gross Misconduct



The occurrence or existence of any of the following:





	 	•	 	Recurrent or flagrant insubordination related to core job duties and responsibilities;






	 	•	 	Stealing property belonging to Freddie Mac, another employee, or other theft in
connection with employment;






	 	•	 	Committing fraud, including computer fraud;






	 	•	 	Willfully destroying property;






	 	•	 	Inflicting bodily harm on another employee, threatening another employee with a weapon,
or conviction (including any plea of nolo contendere) of a crime;






	 	•	 	Committing harassment or retaliation;






	 	•	 	Engaging in discriminatory behavior or retaliation;






	 	•	 	Engaging in dishonesty, including failure to cooperate fully, promptly and truthfully in
an investigation or failure to keep an investigation appropriately confidential;






	 	•	 	Recurring or habitual tardiness or absenteeism which has resulted in a written
reprimand;






	 	•	 	Intentionally disclosing or intentionally misusing Confidential Information (as that
term is defined in Freddie Mac policy, Code of Conduct, or applicable restrictive covenant
and/or confidentiality agreement between the employee and Freddie Mac);






	 	•	 	Negligently disclosing or negligently misusing Confidential Information (as that term is
defined in Freddie Mac policy, Code of Conduct, or applicable restrictive covenant and/or
confidentiality agreement between the employee and Freddie Mac) resulting in a significant
adverse impact on Freddie Mac or on the business of Freddie Mac; or






	 	•	 	A material breach of any provision of any written policy of Freddie Mac required by law
or established to maintain compliance with applicable legal or regulatory requirements.





Loss of Confidence



Determination by senior executive management in its sole discretion that it no longer maintains a
high level of confidence in an Eligible Officer’s decisions, judgment and/or conduct.




Lump Sum



The payment to a Severance Eligible Officer of the entire amount of Severance Pay in the form of a
single payment, minus lawful deductions (rather than periodic payments over the span of the
Severance Period).




Notice



Oral or written communication from business-area management or an HRBP to a Severance Eligible
Officer about the termination of the officer’s employment, Separation Date, terms of the proffered
agreement and release of claims, and







	 	 	 
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expectations concerning his/her continued provision of services to Freddie Mac during the period
between the Notice and the Separation Date.




Notice Pay



The dollar amount of pay based on the number of days of continued pay required by applicable
federal and/or state law upon triggering events, such as group layoffs that occur within a legally
defined period of time. Laws that would trigger Notice Pay include, but are not limited to, the
federal Worker Adjustment and Retraining Notification (“WARN”) Act.




Pay in Lieu of Notice



If a Severance Eligible Officer does not receive two-weeks of advance Notice of his/her Separation
Date from Freddie Mac, and does not execute an agreement and release of claims proffered by the
company, then the employee will receive pay for the two-week period following the date of Notice,
and will receive no Severance Pay.




Position Elimination



Loss of job due to: (a) company reorganization or job abolishment; or (b) a skills gap, i.e., the
duties of an employee’s position have changed recently and so significantly that the employee is no
longer qualified to perform the redesigned job.




Reduction in Force



An elimination of a certain minimum number of jobs that occurs within a defined time-period and
triggers a requirement to pay Notice Pay. Laws that would require Notice Pay include (but are not
limited to) the federal WARN Act.




Senior Executive Officer



An employee who is appointed by Freddie Mac to be employed in the position of Senior Vice President
or above of the company.




Separation Date



The last date on which a Severance Eligible Officer is considered an active employee with Freddie
Mac; also known as the Termination Date.




Severance Eligible Officer



An Eligible Officer whose position is eliminated due to a Position Elimination, Reduction in Force,
or Loss of Confidence.



An Eligible Officer is not a Severance Eligible Officer if such employee:





	 	•	 	at the time of Notice is classified as a temporary employee pursuant to Policy 3-221,
Worker Classifications (as may be amended, replaced or redesignated from time to time);






	 	•	 	is terminated for engaging in Gross Misconduct;






	 	•	 	is regularly scheduled to work fewer than twenty (20) hours per week as of his/her
receipt of Notice;






	 	•	 	is on “Leave of Absence” status as defined in Policy 3-236, Other Excused Absences (as
may be amended, replaced or redesignated from time to time) for thirty (30) or more
calendar days as of his/her receipt of Notice unless otherwise provided by law;






	 	 	 
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	 	•	 	fails to provide services to Freddie Mac in accordance with the Notice;






	 	•	 	resigned employment as a result of a new assignment or reporting relationship;






	 	•	 	received a written offer of employment from a Successor, which is an entity that
acquires (through consolidation, reorganization, transfer, sublease, assignment or
otherwise) all or substantially all of the business or assets of any business unit of
Freddie Mac, or an entity that contracts with Freddie Mac to perform activities of the
business unit in which the employee is assigned contemporaneous with the commencement of
the contractual relationship; or






	 	•	 	received a written offer of Comparable Employment from Freddie Mac.




In addition, an Eligible Officer who serves as a Senior Executive Officer is not a Severance
Eligible Officer unless the company’s regulator approves payment of severance pay, and the amount
thereof, to such Senior Executive Officer at the time of termination.




Severance Pay



The dollar amount that will be paid to a Severance Eligible Officer pursuant to the terms of this
Policy. Severance Pay is equal to the Severance Eligible Officer’s base salary (not including
items such as overtime, bonus, retention payments, and/or commissions) as of the Separation Date
that would normally be paid over the length of time designated as the Severance Period, minus
lawful deductions. Alternatively, Severance Pay may be paid in the form of a Lump Sum.




Severance Period



The length of the Severance Period is as specified in the Restrictive Covenant and Confidentiality
Agreement between the Severance Eligible Officer and the company. The Severance Period begins the
day following the Separation Date.




Specified Employee



A Severance Eligible Officer who is identified by Freddie Mac in its sole discretion as of the
Separation Date as a “specified employee” as defined in Treas. Reg. § 1.409A-1(i), or any successor
thereto, and whose Severance Pay is determined by Freddie Mac to be subject to section 409A of the
Internal Revenue Code.






	 	 	 
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