SM

Freddie Mac

8200 Jones Branch Drive

McLean, Virginia 22102

TO THE STOCKHOLDERS OF FREDDIE MAC

May 7, 2007

Dear Freddie Mac Stockholder:

We are pleased to invite you to attend Freddie Mac's annual stockholders' meeting to be held

on Friday, June 8, 2007, at 9:00 a.m. at the Freddie Mac campus, 8000 Jones Branch Drive,

McLean, Virginia 22102. The Proxy Statement and Notice of Annual Meeting of Stockholders

accompanying this letter describes the business to be transacted at the meeting. This Proxy

Statement and the accompanying proxy card are Ñrst being mailed to stockholders on May 7, 2007.

We hope you will be able to attend the annual meeting and urge you to read the enclosed Proxy

Statement and Notice, as well as the accompanying Information Statement and Annual Report to

Stockholders and the audited Ñnancial statements included in the Annual Report, for information

about Freddie Mac and the annual meeting. Please complete, sign and return the enclosed proxy

card, or vote by Internet or by telephone, at your earliest convenience. Sending your proxy card, or

voting by Internet or by telephone, will not aÅect your right to vote your shares personally if you do

attend the meeting. Please indicate whether you plan to attend the meeting on the proxy card.

Sincerely,

Richard F. Syron

Chairman of the Board and Chief Executive OÇcer
FEDERAL HOME LOAN MORTGAGE CORPORATION

PROXY STATEMENT AND NOTICE OF

ANNUAL MEETING OF STOCKHOLDERS

Our annual meeting of stockholders will be held on June 8, 2007, at 9:00 a.m. at the Freddie

Mac oÇce located at 8000 Jones Branch Drive, McLean, Virginia 22102, for the purposes of:

(1) electing 13 members to our Board of Directors, each for a term ending on the date of our

next annual meeting;

(2) ratifying the appointment by the Audit Committee of our Board of Directors of

PricewaterhouseCoopers LLP as our independent auditors for the Ñscal year ending

December 31, 2007;

(3) approving the amendment and restatement of the 1995 Directors' Stock Compensation

Plan; and

(4) transacting any other business that may properly come before the meeting or any

adjournment thereof.

RECORD DATE

March 30, 2007 is the record date for the annual meeting. This means that owners of Freddie Mac common stock at the

close of business on that date are entitled to receive notice of the meeting, and vote at the meeting or any meeting

adjournment.

Stockholders of record on the record date will be admitted to the meeting with photo identiÑcation and veriÑcation of stock

ownership (as described in ""Annual Meeting Admission'' below).

WHO MAY ATTEND THE MEETING

Attendance is limited to stockholders, including persons holding proxies from stockholders, and one guest each. Invited

representatives of the media may attend the meeting.

ANNUAL MEETING ADMISSION

Registration begins at 8:00 a.m. A valid photo identiÑcation and proof of stock ownership must be presented in order to

attend the meeting.

If your shares are registered in your name, you should bring the bottom half of the proxy card, which is your admission

ticket. If you hold Freddie Mac stock in the name of a broker, trust, bank or other nominee (""street name''), you must

bring a copy of an account statement reÖecting your stock ownership as of the record date. If you plan to attend as the

proxy of a stockholder, you must present valid proof of proxy. Cameras, recording devices and other electronic devices are

not permitted at the meeting.

WEBCAST OF THE MEETING

If you are not able to attend the meeting in person, you may listen to a live webcast of the meeting on the Internet by

visiting http://www.freddiemac.com/investors at 9:00 a.m. on June 8, 2007. You will not be able to ask questions unless

you attend the meeting in person.

SECURITY AND PARKING AT THE MEETING

The annual meeting will be held at the Freddie Mac campus. The campus consists of several buildings, so please take note

that 8000 Jones Branch Drive is the address of the building where the meeting will be held.

Reserved parking will be available for annual meeting attendees. Security measures will require that photo identiÑcation

and your admission ticket or proof of stock ownership (as described in ""Annual Meeting Admission'' above) be presented

to the security guard in order to access the reserved parking area.
Our Board of Directors recommends that you vote ""FOR'' the election of directors, the

ratiÑcation of the appointment of our independent auditors and the amendment and restatement of

the 1995 Directors' Stock Compensation Plan.

Your vote is important. Please vote your proxy promptly so your shares can be represented at

the annual meeting, even if you plan to attend the annual meeting. You can vote by Internet, by

telephone, or by using the enclosed proxy card. Please see your proxy card for speciÑc instructions

on how to vote.

Our proxy tabulator, Computershare Trust Company N.A., must receive any proxy that will

not be delivered in person to the annual meeting by 11:59 p.m., eastern time, on Thursday, June 7,

2007.

You have the power to revoke a proxy at any time before its exercise by giving the Corporate

Secretary of Freddie Mac written notice of your revocation, by submitting a later dated proxy or

by voting your shares in person at the annual meeting.

The accompanying Proxy Statement contains information describing each matter we expect to

be presented for action at the annual meeting.

By Order of the Board of Directors,

Robert E. Bostrom

Executive Vice President, General Counsel and

Corporate Secretary

Dated: May 7, 2007

McLean, Virginia
TABLE OF CONTENTS

About the Meeting ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1

Corporate Governance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5

Corporate Governance Guidelines ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5

Director IndependenceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5

Director QualiÑcations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6

Audit Committee Financial Expert ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7

Codes of ConductÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7

Lead Director ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7

Contacting the Board ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8

Stock Ownership by Directors, Executive OÇcers and Greater than 5% Holders ÏÏÏÏÏ 8

Proposal 1: Election of Directors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11

Director Nomination Process ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11

Nominees for Election ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11

Meetings of the Board and Committees ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19

Interaction with Compensation Consultants ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22

Board Compensation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24

Transactions with Institutions Related to Directors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29

Audit Committee ReportÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29

Executive OÇcersÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 32

Report of the CHRC ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35

Compensation Discussion and Analysis ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35

Executive Compensation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 52

Compensation Tables ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 52

Potential Payments Upon Termination or Change in ControlÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 63

Employment and Separation Agreements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 74

Proposal 2: RatiÑcation of Appointment of Independent Auditors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 79

Description of FeesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 79

Approval of Independent Auditor Services and Fees ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 80

Proposal 3: Approval of Amendment and Restatement of the 1995 Directors' Stock

Compensation PlanÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 81

Other Proposed ActionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 88

Availability of Annual Report ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 88

Section 16(a) BeneÑcial Ownership ReportingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 88

Stockholder Proposals and Nominations for Next Annual Meeting of Stockholders ÏÏÏÏÏÏÏ 88

Solicitation by Board; Expenses of SolicitationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89

Appendix A: 1995 Directors' Stock Compensation Plan, as amended and restated ÏÏÏÏÏÏÏÏ A-1
ABOUT THE MEETING

Who is soliciting my vote?

The Board of Directors of Freddie Mac is soliciting your vote on proposals being submitted to our

annual meeting of stockholders to be held on June 8, 2007.

What am I voting on?

You will be voting on the following three items:

‚ election of 13 members to the Board;

‚ ratiÑcation of the appointment of PricewaterhouseCoopers LLP, or PricewaterhouseCoopers,

by the Audit Committee of our Board of Directors as our independent auditors for the Ñscal

year ending December 31, 2007; and

‚ approval of the amendment and restatement of the 1995 Directors' Stock Compensation

Plan, or the Directors' Plan.

The Board is not aware of any other matters to be presented for a vote at the annual meeting.

Who is entitled to vote?

Holders of record of our common stock, par value $0.21 per share, as of the close of business on

March 30, 2007, the record date, are entitled to vote at the annual meeting. As of the record date,

there were 661,540,276 votes that could be cast at the annual meeting by all stockholders,

consisting of one vote for each share of Freddie Mac common stock outstanding as of such date. We

have no other outstanding classes of stock that are entitled to vote at the annual meeting.

How many votes do I have?

Stockholders entitled to vote have one vote for each share of Freddie Mac common stock they

owned on the record date for each matter presented to the stockholders for a vote. There is no

cumulative voting. For purposes of determining the number of votes cast with respect to any voting

matter, only those votes cast ""for'' or ""against'' are counted; ""votes withheld'' and ""abstentions'' are

not counted as votes cast.

How do I vote by proxy?

Stockholders can vote by proxy in three ways: by Internet; by telephone; or by mail (using the

enclosed proxy card). Please see your proxy card or the information provided to you by your bank,

trust, broker or other holder of record for more information on how to vote by proxy. If you vote by

proxy, your shares will be voted at the annual meeting in the manner you indicate.

What if I hold shares indirectly?

If you hold shares in a stock brokerage account or through a bank, trust or other nominee, you are

considered to be the beneÑcial owner of shares held in ""street name'' and these proxy materials are

being forwarded to you by your broker or nominee. You may not vote directly any shares held in

""street name''; however, as the beneÑcial owner you have the right to direct your broker or nominee

on how to vote your shares.

About the Meeting

1
If you hold shares in ""street name'' and you want to attend the annual meeting, you must bring to

the meeting proof of stock ownership, such as an account statement from your broker or nominee

which conÑrms that you are the beneÑcial owner of those shares.

If you want to vote in person at the annual meeting and you hold your shares in ""street name,'' you

must bring a proxy letter issued by your broker or bank to vote your shares in person at the meeting.

Can I change my vote after voting by proxy?

Yes. You can change or revoke your proxy at any time before the polls are declared open at the

annual meeting, regardless of the method by which you previously cast your vote.

Can I vote in person at the annual meeting?

Yes. However, we encourage you to vote by Internet, by telephone, or by completing and returning

the enclosed proxy card to ensure that your shares are represented and voted.

How many votes must be present to hold the annual meeting?

Your shares are counted as present at the annual meeting if you attend the meeting or if you

properly return a proxy by mail, by telephone or by Internet. To conduct the meeting, a majority of

our outstanding shares of common stock as of March 30, 2007 must be present in person or by

proxy at the meeting. This is referred to as a quorum. Abstentions and broker or nominee non-votes

will be counted for purposes of establishing a quorum at the annual meeting. See ""Will my shares

be voted if I do not return my proxy or attend the annual meeting?'' below for more information on

voting by brokers and nominees. If a quorum is not present, the meeting will be adjourned until a

quorum is present. We urge you to vote by proxy even if you plan to attend the annual meeting so

that we will know as soon as possible that enough votes will be present for us to hold the meeting.

How many votes are needed to approve Freddie Mac's proposals?

The 13 nominees for director who receive the greatest number of ""for'' votes will be elected as

directors. This number is called a plurality. Shares not voted will have no impact on the election of

directors. If you properly return a proxy, your proxy will be voted ""for'' each of the nominees for

director unless your proxy is marked ""vote withheld'' as to a particular nominee or nominees for

director.

The ratiÑcation of the appointment of PricewaterhouseCoopers as our independent auditors for the

Ñscal year ending December 31, 2007 and the approval of the amendment and restatement of the

Directors' Plan require a majority of the votes cast at the meeting to be voted ""for'' such proposals.

A properly executed proxy marked ""abstain'' with respect to either proposal will not be counted as a

vote cast for such proposal.

Does any stockholder control as much as 5% of any class of Freddie Mac's voting

stock?

Yes. Based on a review of beneÑcial ownership reports as of December 31, 2006 that are Ñled with

us and that are the equivalent of reports on Schedule 13G and 13D Ñled with the Securities and

Exchange Commission, or the SEC, and in reliance on updates to those reports based on a review

of Form 13F Ñlings with the SEC, as of December 29, 2006, Capital Research and Management

About the Meeting

2
Company, 333 South Hope Street, 55th Floor, Los Angeles, CA 90071-1447, beneÑcially owned

74,960,000 shares, or 11.3%, of our outstanding common stock based on the number of shares

outstanding on December 31, 2006. Additionally, as of December 31, 2006, AXA Financial, Inc.,

1290 Avenue of the Americas, New York, New York 10104, beneÑcially owned 41,855,638 shares,

or 6.3%, of our outstanding common stock. We are unaware of any other stockholders beneÑcially

owning more than 5% of our outstanding common stock.

How will voting on any other business be conducted?

We currently do not know of any business to be considered at the annual meeting other than the

proposals described in this Proxy Statement. If any other business is properly presented at the

annual meeting, your signed proxy gives authority to the named proxies to vote your shares on such

matters at their discretion.

Is my vote conÑdential?

Yes. Proxy cards, ballots, telephone votes, Internet votes and voting tabulations that identify

individual stockholders are conÑdential. Only certain employees who collect the proxy cards and

ballots at the annual meeting, or who receive and review telephone and Internet votes, and the

inspectors of election who process proxy cards, ballots, telephone votes and Internet votes, and count

the votes will have access to your proxy card, ballot, telephone vote or Internet vote.

Who will count the vote?

Representatives of Computershare Trust Company, N.A., our transfer agent, will count the votes

and act as inspectors of election.

Will my shares be voted if I do not return my proxy or attend the annual meeting?

Your shares may be voted on certain types of proposals if they are held in the name of a brokerage

Ñrm or nominee, even if you do not provide the brokerage Ñrm or nominee with voting instructions.

Brokerage Ñrms and nominees have the authority under the rules of the New York Stock

Exchange, or NYSE, to vote shares for which their customers do not provide voting instructions on

certain ""routine'' matters. The election of directors and the ratiÑcation of PricewaterhouseCoopers

as our independent auditors for Ñscal year 2007 currently are considered routine matters for which

brokerage Ñrms and nominees may vote shares for which they have not received voting instructions.

This is called a ""broker vote.''

Under NYSE rules, your broker or nominee may not vote on the proposal relating to the

amendment and restatement of the Directors' Plan without your speciÑc instructions.

If your broker or nominee does not have discretion to vote your shares held in the name of the

brokerage Ñrm or other nominee on a particular proposal because it is not considered to be a routine

matter, and you do not give your broker or nominee instructions on how to vote your shares on such

a proposal, the votes will be ""broker non-votes.'' We count broker non-votes for quorum purposes,

About the Meeting

3
but we do not count broker non-votes (or abstentions) as votes ""for'' or ""against'' the proposals to

be acted on at the annual meeting.

If you do not vote shares registered in your name, your shares will not be voted.

What if I return my proxy card but do not provide voting instructions?

Proxy cards that are signed and returned but do not contain instructions on how you want your

shares voted will be voted:

‚ ""for'' the election of each of the 13 nominees for director;

‚ ""for'' the ratiÑcation of the appointment of PricewaterhouseCoopers as our independent

auditors for the Ñscal year ending December 31, 2007;

‚ ""for'' the approval of the amendment and restatement of the Directors' Plan; and

‚ in accordance with the best judgment of the named proxies on any other matters properly

brought before the meeting.

Can I have Freddie Mac's proxy materials delivered to me electronically next year?

Yes. If you vote electronically via the Internet, and hold your shares in street name, you may

consent to electronic delivery of future Freddie Mac proxy statements, proxy cards and annual

reports by responding aÇrmatively to the request for your consent when prompted. See ""How do I

sign up to receive proxy materials electronically?'' below for additional information.

We encourage you to consent to electronic delivery because it will reduce the costs associated with

printing and mailing our proxy materials and annual reports. If you consent and Freddie Mac

delivers some or all of its future annual meeting materials to you by electronic mail or by posting

materials to the Internet, you will not receive paper copies of these materials through the mail

unless you request them from Freddie Mac.

How do I sign up to receive proxy materials electronically?

If you hold shares in street name, you may submit your consent to electronic delivery at

www.freddiemac.com/investors/ar/edelivery.html. Your consent will be effective until you revoke it.

By consenting to electronic delivery, you are stating to Freddie Mac that you currently have access

to the Internet and expect to have access in the future. If you do not have access to the Internet, or

do not expect to have access in the future, please do not consent to electronic delivery, because

Freddie Mac may rely on your consent and not deliver paper copies of future annual meeting

materials. In addition, if you consent to electronic delivery, you will be responsible for any Internet

charges (e.g., online fees) that you incur in connection with the electronic delivery of the proxy

materials and annual report.

What if I vote ""abstain''?

Abstentions will be treated as shares present and entitled to vote for purposes of determining the

presence of a quorum. Abstentions do not constitute a vote ""for'' or ""against'' any matters and thus

will have no eÅect on the outcome of a vote on a proposal.

About the Meeting

4
What happens if the meeting is postponed or adjourned?

Your proxy will still be valid and may be voted at the postponed or adjourned meeting. You will still

be able to change or revoke your proxy at any time before the polls are declared open at the annual

meeting.

Does Freddie Mac provide for ""householding'' of proxy materials?

Yes. We have adopted a procedure for stockholders whose shares are held in street name called

""householding,'' pursuant to which stockholders of record who have the same address and the same

last name and do not participate in electronic delivery of proxy materials will receive only one copy

of our Proxy Statement and our Information Statement and Annual Report to Stockholders, or

Annual Report, unless one or more of these stockholders notiÑes us that they wish to continue

receiving multiple copies. This procedure provides extra convenience for stockholders and a cost

savings for us. Currently, we are not providing householding to stockholders whose shares are

registered in their name.

If at any time you no longer wish to participate in householding and would prefer to receive a

separate Proxy Statement and Annual Report, or if your shares are held in street name and you are

receiving multiple copies of our Proxy Statement and Annual Report and wish to receive only one,

please notify your bank, broker, trust or other holder of record. For more information, call or write

to Freddie Mac at the contact information provided under ""Availability of Annual Report'' below.

Stockholders who participate in householding will continue to receive separate proxy cards.

Householding will not in any way aÅect the mailing of dividend checks.

CORPORATE GOVERNANCE

We are committed to excellence in corporate governance and have taken measures to achieve

this goal, as well as to meet the corporate governance requirements of the Sarbanes-Oxley Act of

2002, or the Sarbanes-Oxley Act, the corporate governance regulations of the OÇce of Federal

Housing Enterprise Oversight, or OFHEO, and the listing standards of the exchanges on which our

securities are listed, including the NYSE.

Corporate Governance Guidelines

In March 2007, the Board adopted revised Corporate Governance Guidelines, or the Guidelines,

which are available on our website at www.freddiemac.com/governance/pdf/gov guidelines.pdf.

Printed copies of the Guidelines also are available to any stockholder upon request to the Corporate

Secretary, at the address speciÑed below under ""Contacting the Board.''

Director Independence

The non-employee members of the Board have determined that:

‚ With the exception of Richard F. Syron and Eugene M. McQuade, no member of the Board

who served as a director in 2006 nor any nominee has a material relationship with Freddie

Mac and all such members of the Board and nominees are independent within the meaning

of both Section 303A.02 of the NYSE Listed Company Manual and the independence

criteria set forth in Section 5 of our Guidelines.

Corporate Governance

5
‚ All current members of the Audit Committee, the Compensation and Human Resources

Committee, or the CHRC, and the Governance, Nominating and Risk Oversight

Committee, or the GNROC, are, and members of the Board to be appointed to those

committees eÅective June 8, 2007 will be, independent within the meaning of

Section 303A.02 of the NYSE Listed Company Manual and Sections 4 and 5 of our

Guidelines. All current members of the Audit Committee also are, and members of the

Board to be appointed to the Audit Committee eÅective June 8, 2007 also will be,

independent within the meaning of Rule 10A-3 promulgated under the Securities Exchange

Act of 1934, as amended, or the Exchange Act, and Section 303A.06 of the NYSE Listed

Company Manual.

In making the foregoing independence determinations, as required under our Guidelines, the

non-employee directors considered the relationship between Freddie Mac and the National

Housing Conference, or NHC, where Mr. Retsinas is a member of the board of trustees and the

board of governors. Freddie Mac's contributions to this organization in 2006 exceeded the greater of

$100,000 or two percent of NHC's gross revenues. Because Freddie Mac's relationship with NHC

preceded the Board's consideration of Mr. Retsinas as a director candidate, and given the nature of

Freddie Mac's relationship with NHC and the nature of Mr. Retsinas' aÇliation with NHC,

including the fact that he does not hold an executive position at NHC, the non-employee directors

determined that the relationship was not material and would not impair Mr. Retsinas' independence.

The non-employee directors were also aware of other relationships arising from (1) contributions

by Freddie Mac to charitable organizations with which directors or director nominees or members

of their immediate families are aÇliated, (2) ordinary business relationships between Freddie Mac

and entities on whose boards of directors our directors or director nominees serve, and (3) ordinary

business relationships between Freddie Mac and entities where directors are or were executives.

None of these other relationships exceeded the thresholds set forth in the independence standards in

our Guidelines.

Mr. Syron is Chief Executive OÇcer of Freddie Mac as well as Chairman of the Board, and

Mr. McQuade is President and Chief Operating OÇcer of Freddie Mac, as well as a member of the

Board. Because Messrs. Syron and McQuade are both employees of Freddie Mac, neither of them

is independent under the Guidelines or the NYSE Listed Company Manual.

We recently extended an oÅer to Mr. McQuade to succeed Mr. Syron as Chief Executive

OÇcer. Mr. McQuade has informed us that he does not wish to accept this oÅer and that he has

decided to leave Freddie Mac at the conclusion of his current employment agreement on

September 1, 2007 to pursue a position guiding a more traditional Ñnancial institution.

Mr. McQuade will continue as President and Chief Operating OÇcer of Freddie Mac until that

date.

Director QualiÑcations

OFHEO's corporate governance regulations and the Guidelines impose a term limit of ten

years and a retirement age of 72 for directors. Ronald F. Poe, who has served on the Board for more

than ten years pursuant to a waiver granted by OFHEO, will retire from the Board eÅective as of

the end of his current term.

Corporate Governance

6
Audit Committee Financial Expert

We have a standing Audit Committee that satisÑes the ""audit committee'' deÑnition under

Section 3(a)(58)(A) of the Exchange Act, the requirements of Rule 10A-3 promulgated under the

Exchange Act and Sections 303A.06 and 303A.07 of the NYSE Listed Company Manual. The

current members of the Audit Committee are Robert R. Glauber, Richard Karl Goeltz, Thomas S.

Johnson, Shaun F. O'Malley and Stephen A. Ross.

Mr. Goeltz has been a member of the Audit Committee since March 31, 2004, and is currently

its chairman. The Board has determined that Mr. Goeltz is independent within the meaning of

Rule 10A-3 promulgated under the Exchange Act, and that he is an ""audit committee Ñnancial

expert'' under SEC regulations. However, Mr. Goeltz is not an auditor or accountant for Freddie

Mac, does not perform Ñeld work and is not an employee of Freddie Mac. In accordance with the

SEC's safe harbor relating to audit committee Ñnancial experts, a person designated or identiÑed as

an audit committee Ñnancial expert will not be deemed an ""expert'' for purposes of the federal

securities laws. In addition, such designation or identiÑcation does not impose on such person any

duties, obligations or liabilities that are greater than those imposed on such person as a member of

the Audit Committee and Board of Directors in the absence of such designation or identiÑcation,

and does not aÅect the duties, obligations or liabilities of any other member of the Audit Committee

or Board of Directors.

Codes of Conduct

We have separate codes of conduct applicable to employees and to Board members that outline

the principles, policies and laws governing their activities. The employee and Board codes were last

revised in June 2005. Upon joining Freddie Mac or its Board, all employees and directors,

respectively, are required to sign acknowledgements that they have read the applicable code and

agree to abide by it. In addition, all employees and directors must respond to an annual

questionnaire concerning code compliance. The employee code also serves as the code of ethics for

senior executives and Ñnancial oÇcers required by the Sarbanes-Oxley Act and SEC regulations.

Copies of our employee and director codes of conduct are available, and any amendments or

waivers that would be required to be disclosed are posted, on our website at www.freddiemac.com.

Printed copies of the codes of conduct also are available to any stockholder upon request to the

Corporate Secretary, at the address speciÑed below under ""Contacting the Board.''

Lead Director

The bylaws provide for the position of Lead Director, whose responsibilities include assisting

the Chairman of the Board in developing the agenda for Board meetings; reviewing the Board's

governance procedures and policies, including working with the Chairman to develop and monitor

committee charters and assignments; and chairing meetings of the Board held among the nonemployee directors. The Lead Director is elected annually by a majority of the non-employee

directors at the Board meeting following the annual meeting. Mr. O'Malley is currently the Lead

Director, and his term as Lead Director expires at the Board meeting following this annual

meeting. If the Chairman is an independent director, the non-employee directors may nominate

another independent director to serve as Lead Director. If they do not do so, the Chairman will serve

as Lead Director. We will announce the results of the election of the Lead Director following his or

her election.

Corporate Governance

7
Contacting the Board

To contact our Board, please send your comments in writing to Corporate Secretary, Freddie

Mac, 8200 Jones Branch Drive, McLean, Virginia 22102. All comments or complaints relating to

our accounting, internal accounting controls or auditing matters will be forwarded to the Chair of

the Audit Committee, for treatment in a manner consistent with the Audit Committee's complaint

policy for such matters, and to the Lead Director. All other comments will be forwarded to the

Lead Director. Comments indicating that they are to be submitted to the Lead Director or to the

Audit Committee Chair anonymously or conÑdentially will be treated accordingly. You will receive

a written acknowledgement from the Corporate Secretary upon receipt of your comment, unless it

is anonymous. Please refer to our website at www.freddiemac.com for more information on our

Board and how to contact our Board members.

Stock Ownership by Directors, Executive OÇcers and Greater than 5% Holders

We expect our directors and oÇcers to own our common stock. A signiÑcant portion of director

and executive compensation is paid in common stock, as described in greater detail in

""Proposal 1: Election of Directors Ì Board Compensation'' and ""Compensation Discussion and

Analysis'' below. We believe that stock ownership by our directors and executive oÇcers aligns their

interests with the long-term interests of our stockholders.

BeneÑcial Ownership. Our only class of voting stock is our common stock. The following table

shows the beneÑcial ownership of our common stock as of April 2, 2007 by our current directors,

director nominees, all named executive oÇcers (as that term is deÑned in ""Executive

Compensation Ì Compensation Tables Ì Summary Compensation Table'' below), all of our

directors and executive oÇcers as a group, and holders of more than 5% of our common stock.

BeneÑcial ownership is determined in accordance with SEC rules for computing the number of

shares of common stock beneÑcially owned by a person and the percentage ownership of that person.

As of April 2, 2007, each director, director nominee and named executive oÇcer, and all of our

directors and executive oÇcers as a group, owned less than 1% of our outstanding common stock.

The information presented below is based on information provided to us by the individuals or

entities speciÑed in the table.

Corporate Governance

8
As of April 2, 2007

Common Stock Stock Options Total Common

BeneÑcially Exercisable Stock

Owned Excluding Within 60 Days of BeneÑcially

Name Position Stock Options* April 2, 2007 Owned*

Barbara T. Alexander Director 813 1,815 2,628

Martin F. Baumann Former EVP, Finance and 8,892(1) 0 8,892

Chief Financial OÇcer

GeoÅrey T. Boisi Director 2,284 1,815 4,099

Patricia L. Cook EVP, Investments & 9,122(2) 28,085 37,207

Capital Markets

Michelle Engler Director 8,546(3) 6,777 15,323

Robert R. Glauber Director 0 0 0

Richard Karl Goeltz Director 7,480(4) 5,816 13,296

Thomas S. Johnson Director 8,743(5) 3,618 12,361

William M. Lewis, Jr. Director 4,180(6) 1,815 5,995

Eugene M. McQuade President and Chief 55,761(7) 56,385 112,146

Operating OÇcer; Director

Shaun F. O'Malley Lead Director 7,210(8) 7,102 14,312

JeÅrey M. Peek Director 3,257(9) 430 3,687

Anthony S. Piszel EVP and Chief Financial 0 0 0

OÇcer

Ronald F. Poe** Director 65,332(10) 23,515 88,847

Nicholas P. Retsinas Director nominee 0 0 0

Stephen A. Ross Director 21,059(11) 13,010 34,069

Joseph A. Smialowski EVP, Operations and 10,538(12) 14,100 24,638

Technology

Richard F. Syron Chairman of the Board and 156,440(13) 207,630 364,070

Chief Executive OÇcer

All directors and executive officers 422,089(15) 466,588 888,677

as a group (28 persons)(14)

Common Stock Percent

5% Holder*** BeneÑcially Owned of Class

Capital Research & Management Company 74,960,000(16) 11.3%

333 South Hope Street, 55th Floor

Los Angeles, CA 90071-1447

AXA Financial, Inc. 41,855,638(17) 6.3%

1290 Avenue of the Americas

New York, NY 10104

* Includes shares of stock beneÑcially owned as of April 2, 2007. Also includes restricted stock units, or RSUs, vesting

within 60 days of April 2, 2007. An RSU represents a conditional contractual right to receive one share of Freddie

Mac common stock at a speciÑed future date. See ""Board Compensation Ì Equity Compensation'' and

""Compensation Discussion and Analysis'' below for more information.

** Mr. Poe will retire from the Board eÅective as of the end of his current term.

*** We require that beneÑcial owners of more than 5% of our common stock report the amount of their ownership

interest and certain other information to us. All persons who have Ñled such a report to date are identiÑed in this

table. To enforce compliance with the reporting requirement, we may deny beneÑcial owners who have failed to Ñle

the required report the right to vote any shares in excess of the 5% threshold. Any shares as to which voting rights

are denied will not be counted as outstanding shares for determining whether a quorum exists or whether a majority

of shares has been voted for or against any proposal.

Corporate Governance

9
(1) Figures are based on our records as of April 2, 2007. Includes 3,530 RSUs.

(2) Includes 4,413 RSUs.

(3) Includes 2,213 RSUs and 267 dividend equivalents on RSUs.

(4) Includes 2,520 RSUs and 120 dividend equivalents on RSUs.

(5) Includes 1,567 RSUs and 59 dividend equivalents on RSUs.

(6) Includes 786 RSUs and 29 dividend equivalents on RSUs.

(7) Includes 13,238 RSUs.

(8) Includes 1,295 RSUs and 49 dividend equivalents on RSUs.

(9) Includes 336 RSUs and 5 dividend equivalents on RSUs.

(10) Includes 1,295 RSUs and 49 dividend equivalents on RSUs. Also includes 9,071 shares held by Mr. Poe's spouse, as

to which Mr. Poe disclaims beneÑcial ownership, and 6,000 shares pledged as partial collateral securing a line of

credit.

(11) Includes 4,918 RSUs and 546 dividend equivalents on RSUs.

(12) Includes 3,310 RSUs.

(13) Includes 19,413 RSUs.

(14) In addition to the persons shown in the table, this group includes our Executive Vice President, General Counsel and

Corporate Secretary; our Executive Vice President, Community Relations; our Executive Vice President, Human

Resources and Corporate Services; our Senior Vice President, General Auditor; our Senior Vice President,

Corporate Controller and Principal Accounting OÇcer; and any Senior Vice Presidents designated by the CHRC as

executive oÇcers.

(15) Includes 68,735 RSUs and 1,124 dividend equivalents on RSUs.

(16) Based on a review of beneÑcial ownership reports as of December 31, 2006 that are Ñled with us and that are the

equivalent of reports on Schedule 13G and 13D Ñled with the SEC, and in reliance on updates to those reports

based on a review of Form 13F Ñlings with the SEC, as of December 29, 2006, Capital Research & Management

Company beneÑcially owned 74,960,000 shares, with sole voting power as to zero shares and sole dispositive power

as to 74,960,000 shares.

(17) Based on a review of beneÑcial ownership reports as of December 31, 2006 that are Ñled with us and that are the

equivalent of reports on Schedule 13G and 13D Ñled with the SEC, AXA Financial, Inc. beneÑcially owned

41,855,638 shares, with sole voting power as to 28,075,283 shares, shared voting power as to 4,735,945 shares, sole

dispositive power as to 41,837,616 shares and shared dispositive power as to 18,022 shares.

Corporate Governance

10
PROPOSAL 1: ELECTION OF DIRECTORS

Director Nomination Process

Under its charter, the Governance, Nominating and Risk Oversight Committee of the Board,

or the GNROC, is responsible for recommending to the Board the slate of nominees to be proposed

for election by the stockholders at our annual meeting and for reviewing proposals for nominations

from stockholders that are submitted in accordance with the procedures summarized below. The

GNROC is composed of the following Ñve directors, each of whom is independent under the

Guidelines and the NYSE Listed Company Manual: Messrs. Boisi, Goeltz, O'Malley (Chair), Poe

and Ross.

The GNROC has the authority to employ a variety of methods for identifying and evaluating

potential Board nominees. Candidates for vacancies on the Board may come to the attention of the

GNROC through several diÅerent means, including recommendations from Board members,

senior management or professional search Ñrms, stockholder nominations and other sources.

The GNROC considers all nominations submitted by stockholders that meet the eligibility

requirements outlined in our bylaws. As required by our bylaws, stockholder nominations of

candidates for election as directors must be submitted in writing to the Corporate Secretary, Freddie

Mac, 8200 Jones Branch Drive, McLean, Virginia 22102 not less than 50 days or more than 75 days

prior to the date of the annual meeting. Due to the timing of this annual meeting, and as

announced in our press release dated February 2, 2007, the deadline for stockholder nominations of

candidates for election as directors was April 19, 2007. We have not received any stockholder

nominations of candidates for election as directors for this annual meeting. For information on what

must be included in the written notice to nominate a candidate for election at the next annual

meeting of stockholders, see ""Stockholder Proposals and Nominations for Next Annual Meeting of

Stockholders'' below.

As stated in the Guidelines, our Board seeks candidates for election to the Board who have

achieved a high level of stature, success and respect in their principal occupations. Directors must

exemplify high standards of integrity and be committed both to our public mission and to the

interests of our stockholders. We seek to have a diversity of talent on the Board. Candidates are

selected for their character, judgment, experience and expertise. In addition, candidates must have

the ability and time to commit to Board service. In selecting candidates for election to the Board,

the Board also considers a director's independence under the independence standards that are a

part of the Guidelines. These independence standards incorporate the independence standards set

forth in the NYSE Listed Company Manual. See ""Corporate Governance Ì Corporate

Governance Guidelines'' above.

Stockholder nominees for election to the Board will be evaluated by the GNROC based on the

criteria speciÑed above in the same way as is a nominee recommended by the Board or

management.

Nominees for Election

Our enabling legislation establishes the membership of our Board at 18 directors: 13 directors

elected by the stockholders and Ñve directors appointed by the President of the United States. All

directors have the same duties and responsibilities and serve for a term ending on the date of the

next annual meeting of stockholders. Thirteen directors are to be elected by stockholders at this

Proposal 1: Election of Directors

11
meeting. Prior to our March 31, 2004 annual meeting, the OÇce of Counsel to the President

informed us that the President did not intend to reappoint any of his then-current Presidential

appointees. Consequently, each of their terms as Presidential appointees ended on the date of that

annual meeting. No new appointees have been named by the President as of the date of this Proxy

Statement.

The Board has nominated the persons named below for election at this annual meeting to serve

until the next annual meeting. Each of the persons named below is nominated for reelection at this

meeting, except for Nicolas P. Retsinas, who is being nominated for election to the Board for the

Ñrst time at this meeting. Mr. Retsinas was identiÑed as a potential candidate by a third-party

search Ñrm retained to assist the GNROC in its search for possible director candidates. The

evaluation of the suitability of Mr. Retsinas as a director of Freddie Mac was performed by the

GNROC.

The Board expects each of its current members and each nominee, and any future Presidential

appointee, to attend any Freddie Mac annual stockholders' meeting at which such person is

standing for election or reelection or will begin a term as a Presidential appointee to the Board.

Each of the 12 nominees for reelection to the Board attended the September 8, 2006 annual

meeting. If any of the 13 nominees is unable or unwilling to serve as a director on the date of the

annual meeting or any adjournment of the meeting, the proxies received on behalf of that nominee

will be voted for a substitute nominee. The Board has no reason to believe that any of the nominees

will be unable or unwilling to serve if elected.

Unless stockholders specify otherwise in their proxies, proxies solicited by the Board will be

voted ""for'' each of the 13 nominees for election named in this Proxy Statement. The 13 nominees

who receive the greatest number of votes will be elected. No stockholder is entitled to cumulate his

or her votes in the election of directors. Your proxy may not be voted for a greater number of

persons than the 13 nominees named.

We recommend that you vote for each of the 13 nominees.

The nominees have provided the following information about their principal occupations,

business experience and other matters.

Proposal 1: Election of Directors

12
BARBARA T. ALEXANDER Director since 2004

Age 58

Ms. Alexander has been an independent consultant since January 2004.

Prior to that, she was a Senior Advisor to UBS Warburg LLC and

predecessor Ñrms (UBS) from October 1999 to January 2004 and

Managing Director of the North American Construction and

Furnishings Group in the Corporate Finance Department of UBS from

1992 to October 1999. From 1987 to 1992, Ms. Alexander was a

Managing Director in the Corporate Finance Department of Salomon

Brothers Inc. From 1972 to 1987, she held various positions at

Salomon Brothers, Smith Barney, Investors DiversiÑed Services, and

Wachovia Bank and Trust Company. Ms. Alexander is a member of

the board of directors of Centex Corporation, Harrah's Entertainment,

Inc., where she is chair of the Audit Committee and Qualcomm

Incorporated, where she is a member of the Audit Committee. She

also is a member of the board of directors of HomeAid America and

an Executive Fellow at the Joint Center for Housing Studies at

Harvard University, where Mr. Retsinas is the Director.

GEOFFREY T. BOISI Director since 2004

Age 59

Mr. Boisi has been Chairman and Senior Partner of Roundtable

Investment Partners LLC, a private investment management Ñrm, since

March 2005. From 2000 to May 2002, Mr. Boisi was Vice Chairman

of JP Morgan Chase, where he served as Co-Chief Executive OÇcer of

JP Morgan, the Ñrm's investment bank, and was a member of

JP Morgan Chase's executive and management committees. From 1993

to 2000, he was the founding Chairman and Senior Partner of The

Beacon Group, a merger and acquisition advisory and private

investment Ñrm. From 1971 to 1993, Mr. Boisi held various positions at

Goldman Sachs & Company, including senior general partner, member

of the Ñrm's management committee and head of the investment

banking business.

Proposal 1: Election of Directors

13
MICHELLE ENGLER Director since 2001

Age 49

Ms. Engler is an attorney and is Trustee of the JNL Series Trust and

the JNL Investor Series Trust, each an investment company, and has

been a member of the board of managers of each of the JNL/NY

Variable Funds since 2000. From 1992 to 2000, she was of counsel to

the law Ñrm of Varnum, Riddering, Schmidt & Howlett, a Grand

Rapids, Michigan-based law Ñrm. Prior to that, she was a partner in

the Houston law Ñrm of Nathan, Wood & Sommers. Ms. Engler served

on our Board as a Presidential appointee from 2001 through March 31,

2004, when she was elected to our Board by the stockholders.

ROBERT R. GLAUBER Director since 2006

Age 68

Mr. Glauber is a Visiting Professor at the Harvard Law School in the

spring semester 2007 and a Lecturer at Harvard's Kennedy School of

Government. Prior to that, he served as Chairman and Chief Executive

OÇcer of the National Association of Securities Dealers, or NASD,

from September 2001 to September 2006, after becoming NASD's

CEO and President in November 2000 and a member of NASD's

board in 1996. Prior to becoming an oÇcer at NASD, he was a

Lecturer at the Kennedy School from 1992 until 2000, Under Secretary

of the Treasury for Finance from 1989 to 1992 and, previous to that, a

Professor of Finance at the Harvard Business School. Mr. Glauber

served as Executive Director of the Task Force appointed by President

Reagan to report on the 1987 stock market break (""Brady

Commission''). He has served on the board of the Federal Reserve

Bank of Boston, a number of Dreyfus mutual funds, the Investment

Company Institute, and as president of the Boston Economic Club.

Mr. Glauber also is a director of Moody's Corporation, where he is a

member of the Audit Committee, a director of Quadra Realty Trust,

Inc., where he is a member of the Audit Committee, and lead director

of XL Capital Ltd., where Mr. McQuade, our President and Chief

Operating OÇcer, also is a director. Mr. Glauber has been a Senior

Advisor at Peter J. Solomon Co., an investment bank, since November

2006.

Proposal 1: Election of Directors

14
RICHARD KARL GOELTZ Director since 2003

Age 64

Mr. Goeltz was Vice Chairman, Chief Financial OÇcer and Member

of the OÇce of the Chief Executive of American Express Company

from 1996 to 2000. Prior to that, he was Group Chief Financial OÇcer

and a member of the Board of NatWest Group from 1992 to 1996.

Mr. Goeltz also held various Ñnance positions at The Seagram

Company Ltd., including Executive Vice President-Finance and Chief

Financial OÇcer, and at Exxon Corporation. He is a director of Delta

Air Lines, Inc.; a director of Warnaco Group, Inc., where he is Chair

of the Audit Committee and a member of the Nominating and

Corporate Governance Committee; a director of the New Germany

Fund; and a director of Aviva plc, where he is a member of the Audit

Committee and Chair of the Remuneration Committee. He also is a

member of the Court of Governors and the Council of the London

School of Economics and Political Science.

THOMAS S. JOHNSON Director since 2004

Age 66

Mr. Johnson retired in September 2004 as Chairman and Chief

Executive OÇcer of GreenPoint Financial Corporation, a national

specialty mortgage lender and New York consumer banking company,

following the acquisition of GreenPoint Financial by North Fork

Bancorporation, Inc., with whom Mr. Johnson remained employed in a

non-management capacity until December 31, 2004. Mr. Johnson had

held the oÇces of Chairman and Chief Executive OÇcer of

GreenPoint since 1993. He also was President of GreenPoint through

1997. Prior to that, he served as President and a director of Chemical

Bank and Chemical Banking Corporation and then of Manufacturers

Hanover Trust Company and Manufacturers Hanover Corporation.

Mr. Johnson also is a director of Alleghany Corporation, where he is a

member of the Audit Committee; RR Donnelley & Sons, Inc.; and the

Phoenix Companies, where he is Chairman of the Audit Committee.

Proposal 1: Election of Directors

15
WILLIAM M. LEWIS, JR. Director since 2004

Age 50

Mr. Lewis is a Managing Director and Co-Chairman of Investment

Banking at Lazard Ltd., a position he has held since April 2004. From

1978 to 1980 and from 1982 to April 2004, he held various positions at

Morgan Stanley, most recently serving as Managing Director and CoHead of the Global Banking Department from 1999 to 2004.

Mr. Lewis also is a director of Darden Restaurants, Inc.

EUGENE M. McQUADE Director since 2004

Age 58

Mr. McQuade was appointed President and Chief Operating OÇcer of

Freddie Mac eÅective September 1, 2004. Prior to joining Freddie

Mac, Mr. McQuade was President of Bank of America Corporation.

He also served as President and Chief Operating OÇcer of FleetBoston

Financial Corp., which merged with Bank of America on April 1, 2004.

Mr. McQuade joined Fleet in 1992 and became Chief Financial OÇcer

in 1993, Vice Chairman in 1997, and President and Chief Operating

OÇcer in 2002. Prior to joining Fleet, Mr. McQuade was Executive

Vice President and Controller of Manufacturers Hanover Corp.

Mr. McQuade is a director of XL Capital Ltd., where Mr. Glauber

also is a director.

Proposal 1: Election of Directors

16
SHAUN F. O'MALLEY Director since 2001

Lead Director since 2003

Age 71

Mr. O'Malley served as Non-executive Chairman of Freddie Mac from

June to December 2003. Upon the appointment of Mr. Syron as

Chairman and Chief Executive OÇcer of Freddie Mac in December

2003, Mr. O'Malley resigned his position as Non-executive Chairman

and became the Lead Director. Mr. O'Malley retired from Price

Waterhouse LLP in 1995, where he was Chairman and Senior Partner

from 1988 to 1995. He also was president of the Financial Accounting

Foundation from 1990 to 1992. Mr. O'Malley also serves on the Board

of Directors of Horace Mann Educators Corporation, where he is chair

of its Audit Committee, on the Board of Directors of Philadelphia

Consolidated Holding Corp., which does business as Philadelphia

Insurance Companies, where he is a member of the Governance and

Nominating Committee and the Compensation Committee, and on the

Board of Directors of PolyMedix, Inc., where he is Chair of the Audit

Committee.

JEFFREY M. PEEK Director since 2006

Age 60

Mr. Peek is Chairman and Chief Executive OÇcer of CIT Group Inc.,

a global commercial and consumer Ñnance company. Mr. Peek has

served as Chief Executive OÇcer of CIT since July 2004 and as

Chairman since January 2005. He has served as a director of CIT since

September 2003, and previously served as President of CIT from

September 2003 until January 2005 and Chief Operating OÇcer of

CIT from September 2003 until July 2004. Prior to that, he served as

Vice Chairman of Credit Suisse First Boston LLC from 2002 to 2003.

Mr. Peek spent a large part of his career at Merrill Lynch & Co., Inc.

from 1983 until 2001. He served in a variety of leadership positions at

Merrill Lynch, including Executive Vice President of Merrill Lynch,

co-head of Investment Banking, and President of Merrill Lynch

Investment Managers.

Proposal 1: Election of Directors

17
NICOLAS P. RETSINAS Director Nominee

Age 60

Since 1998, Mr. Retsinas has been Director of Harvard University's

Joint Center for Housing Studies, where Ms. Alexander is an Executive

Fellow. He also is a lecturer in Housing Studies at the Graduate

School of Design and the Kennedy School of Government, and is a

lecturer in Real Estate at the Harvard Business School. Prior to his

Harvard appointment, Mr. Retsinas served as Assistant Secretary for

Housing Ì Federal Housing Commissioner at the United States

Department of Housing and Urban Development from 1993 to 1998

and as Director of the OÇce of Thrift Supervision from 1996 to 1997.

He served on the Board of the Federal Deposit Insurance Corporation

from 1996 to 1997, the Federal Housing Finance Board from 1993 to

1998 and the Neighborhood Reinvestment Corporation from 1993 to

1998. Mr. Retsinas is Chairman of the Board of Directors of Habitat

for Humanity International and serves on the Board of Trustees for the

National Housing Endowment, Enterprise Community Partners and the

National Housing Conference.

STEPHEN A. ROSS Director since 1998

Age 63

Mr. Ross has been the Franco Modigliani Professor of Financial

Economics at the Massachusetts Institute of Technology since 1998

and has been, and continues to be, a consultant to a number of

investment banks and major corporations. He also has been Chairman

and Chief Executive OÇcer of Compensation Valuation, Inc., a

company specializing in the valuation of complex option contracts and

option valuation services, since April 2003; a member of the Advisory

Council of Taconic Capital Partners LLC, an event-driven hedge fund,

since January 2004; a director of IV Capital Ltd., a London-based

investment company, since May 1998; and Chairman of the Investment

Advisory Board of IVC International since July 2004. Mr. Ross also

was Co-Chairman of Roll and Ross Asset Management Corporation,

an investment management company, from 1986 to July 2004. He

previously was the Sterling Professor of Economics and Finance at

Yale University from 1976 to 1998, and a Professor of Economics and

Finance at the Wharton School of the University of Pennsylvania.

Mr. Ross is a member of the Board of Trustees of the California

Institute of Technology. He served as a CREF trustee from 1991 to

2004 and as a director of General Re Corporation from 1993 to 1998.

Proposal 1: Election of Directors

18
RICHARD F. SYRON Director since 2003

Age 63

Mr. Syron was appointed Chairman of the Board and Chief Executive

OÇcer of Freddie Mac in December 2003. Prior to joining Freddie

Mac, Mr. Syron was the Executive Chairman of Thermo Electron

Corporation from November 2002 to December 2003. Mr. Syron was

named to the Board of Thermo Electron in 1997. He became

Chairman in January 2000 and was Chief Executive OÇcer from June

1999 to November 2002. He also served as President of

Thermo Electron from June 1999 to July 2000. Prior to joining

Thermo Electron, he served as Chairman and Chief Executive OÇcer

of the American Stock Exchange from 1994 to May 1999, President of

the Federal Reserve Bank of Boston from 1989 to 1994, and President

of the Federal Home Loan Bank of Boston from 1986 to 1989.

Mr. Syron also is a director of Genzyme Corporation.

Meetings of the Board and Committees

The Board met 11 times in 2006 and three times during the period from January 1, 2007

through April 2, 2007. During 2006, each of the current directors attended at least 75% of the

meetings of the Board and committees on which he or she served, and the non-employee directors

met regularly in executive session without management.

The Ñve current standing Board committees are the Audit Committee, the Compensation and

Human Resources Committee, or the CHRC, the Finance and Capital Deployment Committee,

the GNROC and the Mission, Sourcing and Technology Committee. Except for the charter of the

Finance and Capital Deployment Committee, which was last revised in June 2006, the charters of

each of the current standing committees were revised in March 2007. All the charters of the

standing committees are available on our website at www.freddiemac.com. Printed copies also are

available to any stockholder upon request to the Corporate Secretary, at the address speciÑed above

under ""Contacting the Board.''

In addition to these standing committees, a Special Derivative Litigation Committee, or the

SDLC was created by the Board in December 2003 to investigate allegations and claims made in

stockholder derivative litigation on behalf of stockholders against certain current and former

executive oÇcers and directors. The SDLC was dissolved by the Board of Directors in April 2007

because the stockholder derivative litigation for which it was responsible had been resolved. For

more information about this litigation, see Note 13: Legal Contingencies to the consolidated

Ñnancial statements in the accompanying Annual Report.

Proposal 1: Election of Directors

19
The membership of current Board members on each committee, along with the number of

times each committee met in 2006 and during the period January 1, 2007 through April 2, 2007, is

shown in the table below.

Mission,

Finance and Sourcing and

Director Audit CHRC Capital Deployment GNROC Technology SDLC

B. Alexander É É

G. Boisi Chair É É

M. Engler É É Chair

R. Glauber É É

R. Goeltz Chair É É

T. Johnson ÉÉ É

W. Lewis É É

E. McQuade(1)

S. O'Malley É É Chair

J. Peek É É

R. Poe É É Chair

S. Ross É Chair É É

R. Syron(1)

2006 Meetings(2) 11 7 6 9 7 2

2007 Meetings(3) 43 2 2 2 0

(1) Messrs. Syron and McQuade are not members of any committee.

(2) Includes one joint meeting of the Audit Committee and the GNROC, Ñve joint meetings of the CHRC and GNROC

and one joint meeting of the Finance and Capital Deployment Committee and the Mission, Sourcing and

Technology Committee.

(3) January 1, 2007 through April 2, 2007.

The following is a description of the standing Board committees and their responsibilities:

The Audit Committee's primary responsibility is to assist the Board in discharging its oversight

responsibilities with respect to Ñnancial matters and compliance with laws and regulations. The

committee's speciÑc responsibilities with respect to its oversight of Ñnancial matters are: to appoint,

evaluate, monitor the independence of, determine the compensation of, and, as the committee may

deem it appropriate, terminate and replace our independent auditors; to review the independent

auditors' report on the independent auditors' internal quality control procedures; to pre-approve any

audit services, and any non-audit services permitted under applicable law, to be performed by our

independent auditors; to review management's policies and guidelines governing the processes for

assessing and managing Freddie Mac's risks; to meet in joint session with the Finance and Capital

Deployment Committee to review Freddie Mac's major Ñnancial risk exposures and the steps

management has taken to monitor and control such exposures; to oversee the integrity of our

Ñnancial reporting processes and disclosure, including systems of control regarding Ñnance,

accounting, compliance with legal and regulatory requirements and programs for the detection and

prevention of fraud; to hire, determine the compensation of, evaluate the performance of and decide

whether to retain our Senior Vice President Ì General Auditor; to approve and evaluate the

annual plan, budget, organization and staÇng for the internal auditors, including amendments to

Proposal 1: Election of Directors

20
such plan or budget; and to assess, at least annually, the eÅectiveness of the internal auditors. The

committee also conducts an annual evaluation of the committee's performance, including its

oversight responsibilities described above.

The Audit Committee's purposes, duties and responsibilities under its charter include those

speciÑed in the NYSE Listed Company Manual for audit committees.

The CHRC's primary responsibility is to oversee our executive compensation program. The

executive oÇcers for whom the CHRC has compensation-setting authority include our Chief

Executive OÇcer, President and Chief Operating OÇcer, Chief Financial OÇcer, principal

accounting oÇcer, any oÇcer in charge of a principal business unit, division, or function, any other

oÇcer who performs a signiÑcant policy-making function, as determined by the CHRC, and any

other oÇcer at the level of Senior Vice President or above whose target total compensation exceeds

$2 million.

The CHRC's speciÑc responsibilities include: in consultation with senior management, to

approve our executive compensation philosophy; to approve the compensation of our executive

oÇcers, including approving the goals and objectives relevant to determining the compensation of

the Chief Executive OÇcer, evaluating the Chief Executive OÇcer's performance in light of those

goals and objectives and such other factors as the CHRC deems relevant, and using that

evaluation for purposes of determining the Chief Executive OÇcer's compensation; to approve cash

incentive plans for non-executive oÇcers; to review, approve, amend and/or terminate any stockbased compensation or beneÑt plan and any retirement plan, including our pension plan and thrift

plan; to review the management of our human resources; to review plans, policies and procedures for

management succession; and to conduct an annual evaluation of the CHRC's performance.

The CHRC, with input from other non-employee directors, annually reviews and approves the

compensation of our Chief Executive OÇcer and President and Chief Operating OÇcer. The

CHRC also annually reviews and approves the compensation of all other executive oÇcers. When

possible, including in 2006, management provides competitive market data and otherwise begins

discussions concerning executive compensation with the CHRC at least one meeting in advance of

the meeting at which the CHRC makes its annual executive compensation decisions. For executive

oÇcers other than the Chief Executive OÇcer, the Chief Executive OÇcer, working with the

President and Chief Operating OÇcer and the Executive Vice President, Human Resources and

Corporate Services, make recommendations to the CHRC regarding executive compensation

actions. The CHRC Chair, with the support of Hewitt Associates LLC (""Hewitt''), the

compensation consultant retained by the CHRC, and the Executive Vice President, Human

Resources and Corporate Services, as appropriate, prepares a recommendation regarding

compensation of the Chief Executive OÇcer for the CHRC's approval. The CHRC approves salary

adjustments, annual bonus payments and targets, and long-term equity awards and targets after

reviewing these recommendations.

The CHRC also has the authority to award a sign-on grant and sign-on cash incentive of up to

$1,500,000 in the aggregate to any non-executive oÇcer. In addition, under the CHRC's charter,

the CHRC Chair may approve any executive compensation action where competitive

circumstances preclude delaying approval to the next CHRC meeting, provided that the Chair

reports to the CHRC on such action at its next regularly scheduled meeting.

Proposal 1: Election of Directors

21
The CHRC's purposes, duties and responsibilities under its charter include those speciÑed in

the NYSE Listed Company Manual for compensation committees.

The Finance and Capital Deployment Committee's primary functions are: to review our capital

requirements, management, allocation and plan; to recommend dividends on, and issuances and

repurchases of, our common and preferred stock for approval by the Board; to monitor our debt and

mortgage-related securities activities; to monitor our investment, funding, liquidity and hedging

strategies and activities; to monitor our asset/liability management techniques; to monitor enterprise

risk metrics and limits; to meet in joint session with the Audit Committee to review Freddie Mac's

major Ñnancial risk exposures and the steps management has taken to monitor and control such

exposures; and to conduct an annual evaluation of the committee's performance.

The GNROC's members are the chairs of each of the other standing committees and, if the

Lead Director is not one of the committee chairs, the Lead Director, and any other directors

designated by the Board. Its primary functions are: to oversee corporate governance matters

generally, including reviewing and recommending changes in our bylaws, our Guidelines, and the

independence standards and qualiÑcations for Board membership set forth in the Guidelines; to

conduct an annual evaluation of the committee's performance and to oversee the annual evaluation

of the performance of the Board and each of its other committees; to identify individuals qualiÑed

to be members of the Board and to recommend Board nominees; to review and make

recommendations concerning the independence of Board members and to review the application to

Board members of membership qualiÑcations under the Guidelines; to review and make

recommendations concerning membership on Board committees and on committee structure and

responsibilities; to recommend non-employee director compensation; to oversee enterprise-wide risk

management strategies and governance, to review major enterprise risk exposures and to review the

capabilities for and adequacy of resources allocated to enterprise risk management; to review

management's proposed response to stockholder proposals submitted for inclusion in our Proxy

Statement and make recommendations to the Board regarding responses to any such proposals; to

oversee management of legislative and related matters; to review the activities of our political action

committee; and to oversee our compliance with the consent order we have entered into with

OFHEO.

The GNROC's purposes, duties and responsibilities under its charter include those speciÑed in

the NYSE Listed Company Manual for governance and nominating committees.

The Mission, Sourcing and Technology Committee's primary functions are: to review our

mission-related activities; to review our mortgage purchase activities, including relationships with

customers; to review signiÑcant mortgage purchase transactions; to review the management of risks

associated with our mortgage purchase activities; to review the implementation of OFHEO's

Mortgage Fraud Policy Guidance; to review enterprise-wide technology; and to conduct an annual

evaluation of the committee's performance.

Interaction with Compensation Consultants

The CHRC has retained and is assisted by Hewitt, a global human resources consulting Ñrm

that provides executive compensation consulting to many Fortune 100 companies and has advised

our Board on compensation matters since 1990. Hewitt may provide services directly to the CHRC

or, depending on the project, work with the Executive Vice President Ì Human Resources and

Corporate Services and his staÅ to provide information and materials to the CHRC with respect to

Proposal 1: Election of Directors

22
its executive compensation responsibilities. The Executive Vice President Ì Human Resources and

Corporate Services is management's primary contact with Hewitt and is responsible for assisting

Hewitt in carrying out its assignments for the CHRC, but, as necessary and appropriate, Hewitt

may communicate with other executive oÇcers and with governance attorneys in the Legal

Division in carrying out executive compensation projects.

Hewitt's role is to assist the CHRC in discharging its responsibilities with respect to its

oversight of compensation and beneÑts, which includes apprising the CHRC of best practices as well

as emerging compensation trends and issues, including compensation governance. SpeciÑcally,

Hewitt is responsible for:

‚ providing advice and market data to CHRC members on executive compensation matters

covered by the CHRC charter to ensure alignment with our business and strategic objectives,

our pay philosophy, and prevailing market and governance practices;

‚ at the discretion of the CHRC Chair or the GNROC Chair (for non-employee director

compensation), reviewing the materials prepared for meetings of these committees and

attending committee meetings to respond to questions;

‚ reviewing the portions of our draft annual proxy statement relating to executive

compensation, including the Compensation Discussion and Analysis; and

‚ providing advice and market data to the GNROC (in 2006, the CHRC) on non-employee

director compensation.

In addition, on an ad-hoc basis, the CHRC or the Board may engage Hewitt on special

projects. Hewitt also is expected to attend meetings the CHRC deems appropriate throughout the

course of the year and to remain available for consultation with the CHRC Chair and management.

During 2006, Hewitt's primary consultant for Freddie Mac attended (either in person or via

telephone) or made himself available to participate in every CHRC meeting. Additionally, the

CHRC has set aside time at its quarterly meetings for the CHRC to meet with Hewitt without

management present in order to discuss any executive compensation questions, comments or

concerns.

Prior to November 2005, Hewitt was engaged directly by management and provided consulting

services to both the CHRC and management. In response to our executive compensation best

practices review in November 2005, the CHRC engaged Hewitt directly and required management

to disclose annually to the CHRC the work performed by and fees paid to Hewitt, including any

work Hewitt performed for management. More recently, the Board of Directors adopted a new

policy on the selection and retention of outside advisors to the Board. This new policy includes a

process by which the CHRC must annually review and pre-approve any services that Hewitt will

provide to management so that the CHRC can determine that Hewitt's acceptance of engagements

and remuneration from management has not impaired the Ñrm's ability to provide independent

advice regarding management compensation to the CHRC.

During 2006 Hewitt advised the CHRC on senior management and non-employee director

compensation and various other compensation and beneÑt related matters including the following:

stock ownership guidelines for executive oÇcers and non-employee directors; 2006 proxy statement

review; executive compensation best practices; Comparator Group review (see ""Compensation

Proposal 1: Election of Directors

23
Discussion and Analysis'' for a discussion of the Comparator Group); and review of all CHRC

meeting materials.

Hewitt also provided consulting services to management during 2006 in the general areas of

compensation, beneÑts, communication, organizational eÅectiveness, and process improvement.

However, the involvement of the CHRC's primary consultant at Hewitt in services to management

was limited to providing advice on regulatory proposals regarding executive compensation and

matters with respect to executive oÇcer compensation and incentive plan design.

Board Compensation

Each year, the Board reviews compensation for our non-employee directors. The components of

our non-employee director compensation are cash fees and stock awards. The Board believes that

appropriate compensation levels help attract and retain superior candidates for Board service and

that director compensation should be weighted toward stock-based compensation to enhance

alignment with the interests of our stockholders. Consistent with our Guidelines, stock-based

compensation currently constitutes approximately 50% of director compensation. EÅective March 3,

2007, all stock-based compensation for directors will be in the form of grants of RSUs. Prior to

March 3, 2007, including grants made in 2006, the annual equity grant consisted of a mix of stock

options and RSUs.

Our non-employee director stock ownership guidelines, which are discussed in greater detail

below, also are designed to align the interests of our non-employee directors with those of our

stockholders.

We do not have any pension or retirement plans for our non-employee directors. Employee

directors do not receive any compensation for their Board service.

EÅective January 1, 2007, the Board approved increases in the cash fees paid to members of

our Audit Committee to recognize the high level and complexity of the work required of them. The

following table shows the cash and equity compensation levels currently in eÅect and the levels

that were in eÅect in 2006.

Proposal 1: Election of Directors

24
Non-Employee Director Compensation

2007 2006

Board Service

Cash Compensation

Annual RetainerÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 60,000 $ 60,000

Annual Supplemental Retainer for Lead Director ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100,000 100,000

Per Meeting Fee ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,500 1,500

Initial and Annual Equity Compensation(1)

Stock Options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì $115,000

RSUsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $120,000 90,000

Committee Service (Cash)

Annual Retainer for Committee Chair (other than Audit) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 10,000 $ 10,000

Annual Retainer for Audit Committee ChairÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30,000 20,000

Per Meeting Fee (other than Audit)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,500 1,500

Per Meeting Fee for Audit Committee Members ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,000 2,500

Per Interview Fee for Director Recruiting ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,500 1,500

Per Interview Fee for SDLC Litigation-related InterviewsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 1,500

(1) For 2006, newly elected and newly appointed non-employee directors during their Ñrst term received initial grants of

options to purchase our common stock with a fair market value of approximately $115,000 and RSUs with a fair

market value of approximately $90,000 on the date of the annual stockholders' meeting or, if the election or

appointment occurs midterm, on the date of the Ñrst Board meeting following the director's election or appointment.

For 2007, newly elected and newly appointed non-employee directors during their Ñrst term receive initial grants of

RSUs with a fair market value of approximately $120,000 on the date of the annual stockholders' meeting or, if the

election or appointment occurs midterm, on the date of such director's election or appointment prorated based on the

number of whole months from the date of election or appointment until the next expected stockholders' meeting.

Cash Compensation. Cash compensation consists of annual retainers and meeting fees.

Annual retainers are paid in quarterly installments. The retainer paid to non-employee directors who

are elected or appointed after the most recent annual stockholders' meeting is prorated based on the

quarter in which they join the Board. Non-employee directors also are reimbursed for reasonable

out-of-pocket costs of attending each meeting of the Board or any Board committee of which they

are a member.

Under the Directors' Plan and the Directors' Deferred Compensation Plan, an unfunded, nonqualiÑed plan, directors may elect to defer receipt of cash fees and stock awards as well as elect to

convert cash fees into stock. Cash deferred is credited to a director's account as of the date the

amounts would have otherwise been paid to the director. For 2006, four directors elected to defer all

or a portion of their 2006 cash fees into deferred stock.

Deferred compensation to be settled in stock is credited with additional deferred stock, the

number of shares of which is determined as if dividend equivalents on the deferred compensation to

be settled in stock had been reinvested in shares of Freddie Mac common stock, as dividends are

declared and paid on our common stock.

Subject to earlier payment in the event of hardship withdrawals and terminations of Board

membership (including disability or death), deferred compensation distributions are payable at the

end of the deferral period in lump sums. Distributions may not be deferred beyond the earlier of a

director's termination of membership on the Board, disability or death.

Equity Compensation. Non-employee directors receive stock-based compensation under the

Directors' Plan, the amendment and restatement of which is being submitted to stockholders at this

annual stockholders' meeting for approval. See ""Proposal 3: Approval of Amendment and

Proposal 1: Election of Directors

25
Restatement of the 1995 Directors' Stock Compensation Plan'' below for more information on the

Directors' Plan.

The exercise price of stock options granted to our non-employee directors is equal to the fair

market value of a share of our common stock on the date of the grant. The number of RSUs and

shares subject to a stock option is calculated by dividing the dollar amount of the award by the fair

market value of our common stock on the grant date. During 2006, fair market value was deÑned

under the Directors' Plan as the average of the high and the low trading prices of a share of our

common stock reported for such date or, if no such prices were reported for such date, on the most

recent trading day prior to such date for which such prices were reported. In March 2007, the

deÑnition of fair market value under the Directors' Plan was modiÑed to be the closing sales price,

rather than the average of the high and low sales prices of a share of our common stock. As of

March 3, 2007, non-employee director equity compensation no longer includes stock options. For

RSU grants made on or after March 3, 2007, vesting occurs in four equal increments with 25%

vesting on each anniversary date of the grant, unless vesting is accelerated under certain

circumstances, including death, disability or retirement from the Board. For equity grants

outstanding as of March 3, 2007, vesting with respect to both stock options and RSUs occurs in

equal increments over four terms on the Board, with 25% vesting at the end of every term of oÇce,

unless vesting is accelerated under certain circumstances, including death, disability or retirement

from the Board.

Prior to January 1, 2006, stock options granted to our non-employee directors had dividend

equivalent rights on each share underlying the option equal to the dividend per share declared and

paid on our outstanding common stock. For stock options vested as of December 31, 2004, dividend

equivalents are accrued and are payable in cash upon exercise or expiration of the option. In

response to Internal Revenue Code Section 409A, the Board approved a modiÑcation of the terms

of certain outstanding stock options granted under the Directors' Plan. In particular, the terms of

any stock option grant or portion thereof outstanding as of December 31, 2005 that was not vested

as of December 31, 2004 were modiÑed to eliminate the accrual of dividend equivalents. Dividend

equivalents accrued through December 31, 2005 with respect to these stock options were

distributed in a lump sum in 2006. Thereafter, dividend equivalents with respect to these stock

options will not accrue, but will be distributed as soon as practicable after dividends on our common

stock have been declared. As of January 1, 2006, dividend equivalents are no longer granted in

connection with awards of stock options to non-employee directors.

Dividend equivalents on RSUs granted to our non-employee directors are accrued as additional

RSUs and are generally settled at the same time as the underlying RSUs. However, unlike the

underlying RSUs, the dividend equivalents on RSUs are not subject to a vesting schedule and are

settled upon termination irrespective of whether the underlying RSUs vest. A director will forfeit

unvested RSUs upon a termination other than for death, disability or retirement. Retirement for

purposes of the Directors' Plan is a termination resulting from the director's attaining 72 years of

age or ten consecutive terms in oÇce.

Non-Employee Director Stock Ownership Guidelines. Under the Guidelines, non-employee

directors generally are expected to hold an investment of at least Ñve times the annual Board

retainer in our common stock within Ñve years after joining the Board, unless the GNROC

determines that it is unduly burdensome for a director to make such an investment. Because the

current Board retainer is $60,000, non-employee directors are expected to hold an investment of at

Proposal 1: Election of Directors

26
least $300,000. This requirement may be satisÑed by holding common stock received upon exercise

of stock options or lapsing of restrictions on RSUs.

The following table summarizes the 2006 compensation provided to all persons who served as

non-employee directors during 2006.

2006 Non-Employee Director Compensation

Change in Pension

Fees Value and

Earned or NonqualiÑed Deferred

Paid in Stock Option Compensation All Other

Name Cash(1) Awards(2)(3) Awards(2)(4)(11) Earnings(5) Compensation(6) Total

B. Alexander $ 94,500 $ 34,339 $30,364 $ 0 $ 0 $159,203

G. Boisi 113,500 34,339 30,364 0 0 178,203

M. Engler 112,000 53,513 59,902 0 0 225,415

R. Glauber(7) 57,500 10,902 3,765 0 0 72,167

R. Goeltz 150,500 60,719 62,396 4,550 0 278,165

T. Johnson 114,500 60,755 48,529 0 0 223,784

W. Lewis, Jr. 91,500 34,339 30,364 0 0 156,203

S. O'Malley 236,500 59,751 59,445 0 0 355,696

J. Peek(8) 93,000 44,211 15,752 0 0 152,963

R. Poe(9) 119,500 145,384 97,397 0 0 362,281

S. Ross 135,500 66,291 70,094 0 0 271,885

W. Turner(10) 62,500 153,111 66,329 0 5,000 286,940

(1) For Mr. Boisi, includes $56,750 paid in the form of common stock pursuant to his election to convert 50% of his

retainer and meeting fees into common stock. For Ms. Engler, includes $56,000 paid in the form of common stock

pursuant to her election to convert 50% of her retainer and meeting fees into common stock. For Mr. Goeltz,

includes $150,500 paid in the form of deferred stock pursuant to his election to convert 100% of his retainer and

meeting fees into deferred stock. For Mr. Johnson, includes $114,500 paid in the form of common stock pursuant to

his election to convert 100% of his retainer and meeting fees into common stock. For Mr. Lewis, includes $91,500

paid in the form of deferred stock pursuant to his election to convert 100% of his retainer and meeting fees into

deferred stock. For Mr. O'Malley, includes $153,725 paid in the form of deferred stock pursuant to his election to

convert 65% of his retainer and meeting fees into deferred stock. For Mr. Peek, includes $93,000 paid in the form of

deferred stock pursuant to his election to convert 100% of his retainer and meeting fees into deferred stock. For

Mr. Ross, includes $135,500 paid in the form of common stock pursuant to his election to convert 100% of his

retainer and meeting fees into common stock.

(2) Represents the compensation cost for the year of all of the directors' stock awards (all of which were RSUs)

and stock option awards, respectively, outstanding in 2006, as determined under Statement of Financial

Accounting Standards No. 123(R) (""SFAS 123(R)''), rather than an amount paid to or realized by the

directors. See NOTE 11 to the consolidated Ñnancial statements included in the accompanying Annual Report

for a discussion of the assumptions made in determining the SFAS 123(R) values. The amounts reported

disregard estimates of forfeitures for awards with service-based vesting conditions. There can

Proposal 1: Election of Directors

27
be no assurance that the SFAS 123(R) amounts will ever be realized. The grant date fair values of the RSU awards

and stock option awards made to each non-employee director in 2006 were as follows:

Grant Date Grant Date

Fair Value of Fair Value of

RSU Awards Option Awards Total

B. Alexander ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 89,995 $31,068 $121,063

G. Boisi ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89,995 31,068 121,063

M. EnglerÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89,995 31,068 121,063

R. Glauber ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89,995 31,068 121,063

R. Goeltz ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89,995 31,068 121,063

T. Johnson ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89,995 31,068 121,063

W. Lewis ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89,995 31,068 121,063

S. O'Malley ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89,995 31,068 121,063

J. Peek(8) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 179,948 63,411 243,359

R. PoeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89,995 31,068 121,063

S. Ross ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 89,995 31,068 121,063

W. Turner(10) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì

(3) At December 31, 2006, the aggregate number of common shares underlying the outstanding RSU awards held by

each director was: Ms. Alexander Ì 2,606 shares; Mr. Boisi Ì 2,606 shares; Ms. Engler Ì 3,848 shares;

Mr. Glauber Ì 1,426 shares; Mr. Goeltz Ì 3,221 shares; Mr. Johnson Ì 3,043 shares; Mr. Lewis Ì 2,606 shares;

Mr. O'Malley Ì 5,328 shares; Mr. Peek Ì 2,437 shares; Mr. Poe Ì 4,182 shares; Mr. Ross Ì 3,389 shares; and

Mr. Turner Ì 0 shares.

(4) At December 31, 2006, the aggregate number of common shares underlying the outstanding stock option awards

held by each director was: Ms. Alexander Ì 6,360 shares; Mr. Boisi Ì 6,360 shares; Ms. Engler Ì 12,669 shares;

Mr. Glauber Ì 1,822 shares; Mr. Goeltz Ì 11,781 shares; Mr. Johnson Ì 9,171 shares; Mr. Lewis Ì

6,360 shares; Mr. O'Malley Ì 12,994 shares; Mr. Peek Ì 3,544 shares; Mr. Poe Ì 29,865 shares; Mr. Ross Ì

19,360 shares; and Mr. Turner Ì 15,461 shares.

(5) We do not have any pension or retirement plans for our non-employee directors. For Mr. Goeltz, includes $4,550 in

above-market deferred compensation earnings received in 2006 relating to his 2005 election to receive deferred cash.

Deferred compensation to be settled in cash is credited with interest compounded quarterly at the rate of: (i) 1% per

annum in excess of the prime rate as reported by The Wall Street Journal on the first business day of each calendar

year during the deferral period; or (ii) such other rate as is determined by the CHRC. In 2006, interest was credited

at a rate of 8.25% based on the prime rate on January 3, 2006 of 7.25% plus 1%. In 2007, interest is being credited at

a rate of 9.25% based on the prime rate on January 2, 2007 of 8.25% plus 1%. Disclosure of nonqualified deferred

compensation earnings for Mr. Goeltz consisted of the above-market portion of interest paid in 2006, which was

2.67%, equal to the 8.25% interest credited minus 120% of the applicable federal long-term rate, or 5.58%.

(6) For Mr. Turner, includes a $5,000 donation made by us to the charity of Mr. Turner's choice in recognition of his

service on the Board.

(7) Mr. Glauber joined the Board on September 8, 2006.

(8) Mr. Peek received two equity grants in 2006: one upon his mid-term appointment to the Board in February and

another upon his re-election in June.

(9) Mr. Poe will retire from the Board eÅective as of the end of his current term.

(10) Mr. Turner served as a director until September 8, 2006. All of Mr. Turner's 3,024 RSUs and 152 related dividend

equivalents (a total of 3,176 shares) outstanding and unvested as of September 8, 2006, were accelerated and

delivered to Mr. Turner in shares of common stock as of that date. Mr. Turner's option awards continue to vest and

become exercisable according to the schedule that currently applies to those options. Because Mr. Turner was not

nominated for reelection at the last stockholders' meeting, he did not receive the September 8, 2006 equity grant to

our non-employee directors.

Proposal 1: Election of Directors

28
(11) The value of dividend equivalents is recognized in the compensation expense of the stock option awards shown in the

2006 Non-Employee Director Compensation table. The following presents the actual amounts of cash dividend

equivalents paid in 2006 to non-employee directors on the portions of their outstanding stock option awards that

were not vested and exercisable before January 1, 2005: Ms. Alexander, $16,927; Mr. Boisi, $16,927; Ms. Engler,

$34,241; Mr. Glauber, $0; Mr. Goeltz, $30,569; Mr. Johnson, $23,800; Mr. Lewis, $16,927; Mr. O'Malley,

$34,842; Mr. Peek, $0; Mr. Poe, $42,291; Mr. Ross, $42,291; and Mr. Turner, $42,291. In addition, Mr. Poe

received $79,992 in cash dividend equivalents pursuant to his stock option exercise on April 26, 2006. This exercise

was made on a stock option grant from 1996 that was not subject to Internal Revenue Code Section 409A. Dividend

equivalents on RSUs granted to our non-employee directors are not paid out in cash but are accrued as additional

RSUs and are generally settled at the same time as the underlying RSUs.

Transactions with Institutions Related to Directors

In the ordinary course of business, we were a party during 2006, and expect to continue to be a

party during 2007, to certain business transactions with institutions aÇliated with members of our

Board. Management believes that the terms and conditions of the transactions were no more and

no less favorable to us than the terms of similar transactions with unaÇliated institutions to which

we are, or expect to be, a party. We had no transactions that are required to be disclosed by SEC

registrants under rules promulgated by the SEC.

Our current written policies and procedures for the review, approval or ratiÑcation of related

person transactions and other conÖict of interest matters are based on our Corporate Governance

Guidelines, our Codes of Conduct for directors and other employees and our processes for

gathering and disclosing information about such transactions. Among other things, the Codes of

Conduct provide that when performing their Freddie Mac duties, our directors and employees act at

all times in our best interests. Under the employee Code, employees and their immediate families

are not permitted to engage in business with us unless they have consulted with our Chief

Compliance OÇcer or the compliance division. If a director wishes to obtain a waiver of any Code

provision (including those dealing with conÖicts of interest), the waiver must be approved by the

Board of Directors and disclosed to shareholders.

AUDIT COMMITTEE REPORT

The Audit Committee operates under a written charter most recently revised and approved by

the Board in March 2007. As stated in the charter, the Audit Committee's primary responsibility is

to assist the Board in discharging its oversight responsibilities with respect to Ñnancial matters and

compliance with laws and regulations. The Audit Committee's speciÑc responsibilities are

summarized under ""Proposal 1: Election of Directors Ì Meetings of the Board and Committees''

above. A copy of the charter is available on our website at www.freddiemac.com.

The Audit Committee currently comprises the following Ñve directors: Messrs. Glauber,

Goeltz, Johnson, O'Malley and Ross. The Board has determined that each of these directors meets

the independence requirements of the NYSE Listed Company Manual and our Guidelines. During

the year ended December 31, 2006, the Audit Committee met 11 times. During the period

January 1, 2007 through April 2, 2007 the Audit Committee met four times.

Mr. Goeltz is currently the Chairman of the Audit Committee and has been a member of the

Audit Committee since March 31, 2004. The Board has determined that Mr. Goeltz has the

requisite experience to qualify as an ""audit committee Ñnancial expert'' under the rules and

regulations of the SEC and has designated him as such. However, Mr. Goeltz is not an auditor or

Audit Committee Report

29
accountant for Freddie Mac, does not perform Ñeld work and is not an employee of Freddie Mac.

In accordance with the SEC's safe harbor relating to audit committee Ñnancial experts, a person

designated or identiÑed as an audit committee Ñnancial expert will not be deemed an ""expert'' for

purposes of the federal securities laws. In addition, such designation or identiÑcation does not

impose on such person any duties, obligations or liabilities that are greater than those imposed on

such person as a member of the Audit Committee and Board of Directors in the absence of such

designation or identiÑcation and does not aÅect the duties, obligations or liabilities of any other

member of the Audit Committee or Board of Directors.

Management is responsible for the eÅectiveness of our internal control over Ñnancial reporting

and the preparation of our consolidated Ñnancial statements in accordance with U.S. Generally

Accepted Accounting Principles, or GAAP. Our independent auditors are responsible for

performing an independent audit of our consolidated Ñnancial statements and for expressing an

opinion, based on the results of their audit, whether the consolidated Ñnancial statements are fairly

presented, in all material respects, in conformity with GAAP. The Audit Committee is responsible

for overseeing the conduct of these activities and, subject to stockholder ratiÑcation, appointing our

independent auditors. As stated above and in its charter, the Audit Committee's role in this process

is one of oversight. While the Audit Committee has the responsibilities and powers set forth in its

charter, it is not the responsibility of the Audit Committee to prepare Ñnancial statements, or to

determine that our Ñnancial statements and disclosures are complete and accurate and prepared in

accordance with GAAP and applicable rules and regulations. These are the responsibilities of

management. It is also not the responsibility of the Audit Committee to plan or conduct an

independent audit of the Ñnancial statements. These are the responsibilities of our independent

auditors. In carrying out its oversight responsibilities, the Audit Committee is not providing any

expert, professional or special assurance as to our Ñnancial statements or any professional

certiÑcation. The Audit Committee relies on the information provided and representations made to

it by management, and also on the report on our consolidated Ñnancial statements that it receives

from our independent auditors.

In discharging its responsibilities relating to our internal controls, accounting and Ñnancial

reporting policies and auditing practices, the Audit Committee discussed and reviewed with our

independent auditors, PricewaterhouseCoopers, the overall scope and process for their audit. The

Audit Committee regularly meets with PricewaterhouseCoopers, with and without management

present, to discuss the results of their examination, their observations about our internal controls and

the overall quality of our Ñnancial reporting.

The Audit Committee has discussed with PricewaterhouseCoopers the matters required to be

discussed by Statement on Auditing Standards No. 61, as amended, Communication with Audit

Committees or Others with Equivalent Authority and Responsibility. The Audit Committee also has

received the written disclosures and the letter from PricewaterhouseCoopers that are required by

Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees,

and has discussed with PricewaterhouseCoopers their independence from Freddie Mac and our

management. At the direction of the Audit Committee, PricewaterhouseCoopers did not provide

any non-audit services to Freddie Mac in 2006.

The Audit Committee has reviewed and discussed with management our audited consolidated

Ñnancial statements as of and for the Ñscal year ended December 31, 2006.

Audit Committee Report

30
The Audit Committee has also met with members of senior management and compliance,

enterprise risk oversight, internal tax, Ñnance, legal and internal audit personnel to discuss and

review, among other things, the results of internal audit examinations, the scope and resources for

the internal audit function, management's development and implementation of systems and

programs for the detection and prevention of fraud, management's policies, guidelines and processes

regarding the assessment and management of our risk exposures, OFHEO's annual report of

examination regarding our safety and soundness, the status of litigation and investigations in which

we are involved, our compliance with legal and regulatory requirements, and directors' and

employees' compliance with our Codes of Conduct.

Based on the reviews, reports and discussions referred to above, the Audit Committee

recommended to the Board that the audited Ñnancial statements referred to above be included in

our Annual Report for the year ended December 31, 2006.

In addition, the Audit Committee has approved the appointment of PricewaterhouseCoopers as

our independent auditors for the Ñscal year ending December 31, 2007, and has submitted the

appointment to the stockholders for ratiÑcation at this annual meeting. The Audit Committee preapproved the terms of the audit services expected to be provided by our independent auditors for

the Ñscal year ending December 31, 2007.

This report is respectfully submitted by the members of the Audit Committee of the Board.

Richard Karl Goeltz, Chairman

Robert R. Glauber

Thomas S. Johnson

Shaun F. O'Malley

Stephen A. Ross

Audit Committee Report

31
EXECUTIVE OFFICERS

As of April 2, 2007, our executive oÇcers are as follows:

Year of

Name Age AÇliation Position

Richard F. Syron ÏÏÏÏÏÏÏ 63 2003 Chairman and Chief Executive OÇcer

Eugene M. McQuadeÏÏÏÏ 58 2004 President and Chief Operating OÇcer

Robert E. Bostrom ÏÏÏÏÏÏ 54 2006 Executive Vice President, General Counsel and Corporate

Secretary

Ralph F. Boyd, Jr. ÏÏÏÏÏÏ 50 2004 Executive Vice President, Community Relations

Patricia L. Cook ÏÏÏÏÏÏÏÏ 54 2004 Executive Vice President, Investments and Capital Markets

Paul G. George ÏÏÏÏÏÏÏÏÏ 55 2005 Executive Vice President, Human Resources and Corporate

Services

Anthony S. Piszel ÏÏÏÏÏÏÏ 52 2006 Executive Vice President and Chief Financial OÇcer

Joseph A. SmialowskiÏÏÏÏ 58 2004 Executive Vice President, Operations and Technology

Kirk DieÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 49 2006 Senior Vice President and General Auditor

James R. Egan ÏÏÏÏÏÏÏÏÏ 54 2006 Senior Vice President Ì Corporate Controller and Principal

Accounting OÇcer

Michael C. May ÏÏÏÏÏÏÏÏ 48 1983 Senior Vice President, Multifamily Sourcing

Hollis S. McLoughlinÏÏÏÏ 56 2004 Senior Vice President, External Relations

Paul E. Mullings ÏÏÏÏÏÏÏÏ 56 2005 Senior Vice President, Single Family Sourcing

Anurag Saksena ÏÏÏÏÏÏÏÏ 46 2005 Senior Vice President and Chief Enterprise Risk OÇcer

Robert Y. Tsien ÏÏÏÏÏÏÏÏ 54 2000 Senior Vice President, Mission Oversight and Development

Jerry Weiss ÏÏÏÏÏÏÏÏÏÏÏÏ 49 2003 Senior Vice President and Chief Compliance OÇcer

The following is a brief biographical description of each of our executive oÇcers who are not

also nominees for election to our Board of Directors.

Robert E. Bostrom was appointed Executive Vice President, General Counsel and Corporate

Secretary in February 2006. Prior to joining us, Mr. Bostrom was the managing partner of the New

York oÇce of Winston & Strawn LLP, a member of that Ñrm's executive committee and head of

its Ñnancial institutions practice. Mr. Bostrom originally joined Winston & Strawn in 1990. From

1992 until 1996, Mr. Bostrom served as Executive Vice President of Legal, Regulatory and

Compliance and General Counsel of National Westminster Bancorp.

Ralph F. Boyd, Jr. was appointed Executive Vice President, Community Relations in February

2005. Prior to holding his current position, he served as our Executive Vice President, General

Counsel and Corporate Secretary. Prior to joining us, Mr. Boyd was a senior partner with the law

Ñrm Alston & Bird LLP from August 2003 and was U.S. Assistant Attorney General and head of

the Justice Department's Civil Rights Division from July 2001 through July 2003. From 1997 to

2001, Mr. Boyd was counsel and subsequently a litigation and trial partner with Goodwin

Procter LLP, and before that, he served for six years as an Assistant U.S. Attorney in Boston. He

also was an associate at the law Ñrm of Ropes & Gray in Boston from 1987 to 1991.

Patricia L. Cook was appointed Executive Vice President, Investments and Capital Markets in

February 2005. Prior to holding her current position, she served as our Executive Vice President,

Investments beginning in August 2004. Prior to joining us, Ms. Cook was Managing Director and

Chief Investment OÇcer, Global Fixed Income at JPMorgan Fleming Asset Management from

May 2003. Prior to joining JP Morgan Fleming, she was Managing Director and Chief Investment

OÇcer, Fixed Income at Prudential Investment Management. From June 1991 to July 2001,

Executive OÇcers

32
Ms. Cook was Managing Director at Fisher Francis Trees and Watts. Prior to that, she worked in

various management positions at Salomon Brothers, Inc from January 1979 to June 1991.

Paul G. George was appointed Executive Vice President, Human Resources and Corporate

Services in December 2006. He joined us in August 2005 as Executive Vice President, Human

Resources. Prior to joining us, Mr. George was Senior Executive Vice President of Human

Resources and Corporate Services at Wachovia Corp. from July 1999 through December 2004.

Prior to that, he was a member of Waste Management Inc.'s interim management team from 1998

to 1999. He also served for approximately 9 years as Senior Vice President of Human Resources

and Corporate Services at United Airlines. Between 1985 and 1988 he was Vice President of

Human Resources and Corporate Services at PaciÑc Southwest Airlines. Prior to that he was a

partner at Meserve, Mumper & Hughes, the second oldest law Ñrm in Los Angeles.

Anthony S. Piszel was appointed Executive Vice President and Chief Financial OÇcer in

November 2006. Prior to joining us, Mr. Piszel was Chief Financial OÇcer at HealthNet, one of the

nation's largest publicly traded managed health care companies, from August 2004 to November

2006. Prior to that, he held a number of Ñnancial positions at Prudential Financial from 1998 to

2004, most recently as Senior Vice President and Corporate Controller. Prior to joining Prudential,

Mr. Piszel was an audit partner at Deloitte and Touche.

Joseph A. Smialowski was appointed Executive Vice President, Operations and Technology in

December 2004. Prior to joining us, Mr. Smialowski was Executive Vice President at Fleet Boston

Financial from December 1998. Prior to that, he was Chief Information OÇcer at Sears, Roebuck

and Co. from September 1993. Mr. Smialowski was also a partner at Price Waterhouse LLP (now

PricewaterhouseCoopers) during his tenure at the Ñrm between 1984 and 1993. Early in his career,

Mr. Smialowski held increasingly responsible management, technology and operations positions at

Dennison Manufacturing, Xerox and The Hartford.

Kirk Die was appointed Senior Vice President and General Auditor in April 2006. Mr. Die

joined us from MBNA Corp., where he served in a series of increasingly responsible roles from

1993. Most recently, as a result of MBNA's merger with Bank of America, he was the audit

executive responsible for the combined Card Services Division. Prior to the merger, he was Senior

Executive Vice President and Corporate General Auditor of MBNA. Prior to becoming Corporate

General Auditor, Mr. Die managed the Operational, Business Development and Financial Audit

Departments of MBNA. Prior to that, Mr. Die was a manager with Coopers & Lybrand (now

PricewaterhouseCoopers).

James R. Egan was appointed Senior Vice President Ì Corporate Controller and Principal

Accounting OÇcer in April 2006. Prior to joining us, Mr. Egan was Executive Vice President and

Controller for MBNA America Bank from February 2003. Prior to his time at MBNA, Mr. Egan

was Senior Vice President, Finance at U.S. Bancorp from 1996 until being appointed as Senior

Vice President and Director of Tax in 1999, a position he held until leaving U.S. Bancorp in January

2003. From 1988 to 1996, Mr. Egan held various accounting and Ñnancial management positions at

First Chicago NBD Corporation. Mr. Egan was an accountant with Price Waterhouse LLP (now

PricewaterhouseCoopers) from 1980 until 1988 and with Grant Thornton from 1976 until 1980.

Michael C. May was appointed Senior Vice President, Multifamily Sourcing in August 2005.

Immediately prior to his appointment, Mr. May had served as our Senior Vice President,

Operations starting in February 2005. He also served as Senior Vice President, Mortgage Sourcing,

Executive OÇcers

33
Operations & Funding from October 2003 to February 2005. Prior to that, Mr. May held the

positions of Senior Vice President, Single Family Operations from July 2002 to October 2003 and

Senior Vice President, Project Enterprise from January 2001 to July 2002. Mr. May also held

various positions at our company since joining us in 1983, including Senior Vice President,

Customer Services and Control, Vice President of Loan Prospector and Vice President of

Structured Finance.

Hollis S. McLoughlin was appointed Senior Vice President, External Relations in January

2006. Prior to that, Mr. McLoughlin served as Senior Vice President and Chief of StaÅ from April

2004 to January 2006. From 1998, Mr. McLoughlin was Chief Operating OÇcer of two private

equity-backed operating companies. Before that, he was one of the founding partners of Darby

Overseas, a private equity partnership based in Washington, D.C. He has also been a senior

executive at Purolator Courier, an overnight delivery company, and a privately held transportation

company. From 1989 through 1992, Mr. McLoughlin served as Assistant Secretary of the Treasury

under former President George H. W. Bush. He served as Chief of StaÅ to Sen. Nicholas Brady,

R-N.J., in 1982 and to Rep. Millicent Fenwick, R-N.J., from 1975 to 1979.

Paul E. Mullings was appointed Senior Vice President, Single Family Sourcing in July 2005.

Before joining us, Mr. Mullings was Senior Vice President of JPMorgan Chase and Mortgage

Finance and Fair Lending Executive at Chase Home Finance. Prior to joining Chase Home

Finance in 1997, Mr. Mullings was President and Chief Executive OÇcer of Mortgage Electronic

Registration Systems, Inc. Mr. Mullings was also President and Chief Executive OÇcer of the

residential mortgage division of First Interstate Bank, Los Angeles. Prior to First Interstate, he held

a series of increasingly responsible senior management positions at Glendale Federal Bank,

Glendale, California.

Anurag Saksena was appointed Senior Vice President and Chief Enterprise Risk OÇcer in

August 2005. Prior to joining us, Mr. Saksena led Enterprise Risk Management at General Motors

Acceptance Corporation from July 1999 to December 2004. In addition, Mr. Saksena founded

Enterprise Risk Advisors, LLC. He has also held risk and portfolio management positions of

increasing responsibility at Societπ e Gπ enπ erale in New York, Royal Bank Financial Group in Toronto π

and Great-West Life Assurance Company in Winnipeg.

Robert Y. Tsien was appointed Senior Vice President, Mission Oversight and Development in

April 2004. Prior to that, he served as Senior Vice President, Production in the Multifamily

Division from October 2003, and as our Chief Credit OÇcer from September 2001 to October

2003. Mr. Tsien joined us as Vice President of Multifamily Risk Management in April 2000. Prior

to joining us, Mr. Tsien was director of risk management and securitization pricing at Titanium

Investment Company.

Jerry Weiss was appointed Senior Vice President and Chief Compliance OÇcer in October

2003. Prior to joining us, Mr. Weiss worked from 1990 at Merrill Lynch Investment Managers, most

recently as First Vice President and Global Head of Compliance. From 1982 to 1990, Mr. Weiss

was with a national law practice in Washington, D.C., where he specialized in securities regulation

and corporate Ñnance matters.

Executive OÇcers

34
REPORT OF THE CHRC

The CHRC has reviewed and discussed the Compensation Discussion and Analysis with

management and, based on such review and discussion, has recommended that the Compensation

Discussion and Analysis be included in this Proxy Statement.

This report is respectfully submitted by the members of the Compensation and Human

Resources Committee of the Board.

GeoÅrey T. Boisi, Chairman

Michelle Engler

Thomas S. Johnson

Shaun F. O'Malley

Ronald F. Poe

COMPENSATION DISCUSSION AND ANALYSIS

This discussion addresses our compensation objectives and policies applicable to the executive

oÇcers named in the Summary Compensation Table appearing under ""Executive Compensation Ì

Compensation Tables'' below, otherwise referred to as our ""named executive oÇcers.'' To the

extent that we may modify these objectives and policies in the future to reÖect changing

circumstances, the information contained in this discussion may change accordingly. The following

discussion and analysis contains statements regarding future individual and company performance

targets and goals. These targets and goals are disclosed in the limited context of Freddie Mac's

compensation programs and should not be construed as statements of management's expectations or

estimates of results or other guidance. Freddie Mac cautions investors not to apply these statements

to other contexts.

Compensation Philosophy and Objectives

The overall objectives of our compensation program for our named executive oÇcers are to

attract and retain high caliber executives, to motivate the executives to work eÅectively to achieve

annual and long-term corporate and individual objectives that are aligned with the interests of our

stockholders and other critical constituencies and, based on our pay-for-performance philosophy, to

reward the executives when those objectives are met or exceeded.

In addition to individual performance and a review of compensation against the market, in

determining named executive oÇcer compensation we consider the following:

‚ Potential Ì The named executive oÇcer's ability to assume greater responsibility and

leadership roles

‚ Ease of Replacement/Retention Risk Ì The availability of qualiÑed candidates inside the

company and the strength of the external labor pool and the risk that competitors may target

the named executive oÇcer

‚ Strategic Impact Ì The named executive oÇcer's short-, medium-, and long-term

contributions and strategic impact on our performance

Compensation Discussion and Analysis

35
Achieving our overall compensation objectives requires the CHRC and management to

exercise signiÑcant judgment. As a basis for this judgment, we generally establish a target total

direct compensation level for each named executive oÇcer. For these purposes, ""total direct

compensation'' consists of base salary, annual bonus, and long-term equity awards. In setting the

target total direct compensation for each named executive oÇcer, the CHRC considers a number of

factors, including the median level of comparable compensation for comparable positions at the

companies in our Comparator Group (deÑned below) or alternative sources, as appropriate. The

competitive market analysis process we use to obtain market data is described below under

""Evaluating and Targeting Executive Compensation.''

While the majority of our oÇcers are not covered by employment agreements, certain of the

employment agreements applicable to the named executive oÇcers provide contractually

guaranteed minimum amounts in certain situations. We consider these guaranteed minimum

amounts necessary to achieve our goal of recruiting and retaining exceptional leaders. Since 2003,

when we announced the need to restate our Ñnancial results for 2000 through 2002, we have been

engaged in a continuous process of restructuring through changes aÅecting, among other things,

governance, corporate culture, internal controls, accounting practices and disclosure. All of our

named executive oÇcers have been hired since the commencement of that process. As is typical in

such periods of transition, uncertainties amongst executive oÇcers are greater than they otherwise

would be. We believe the protections provided by these employment agreements (such as

guaranteed incentives and special termination beneÑts) are necessary to our ability to recruit and

retain the talent we need for the restructuring process.

Evaluating and Targeting Executive Compensation

A number of factors are taken into consideration during the annual process to evaluate and set

target compensation for the named executive oÇcers, including: the individual's current

compensation versus the competitive market; the individual's historical compensation progression

from the perspective of both target compensation for a speciÑc year and actual compensation

received; the individual's historical performance and potential; the individual's contributions and

strategic impact on our performance; the availability of qualiÑed candidates in both the external and

internal labor pools; and the risk that competitors may target the named executive oÇcer.

To evaluate the named executive oÇcer's current compensation versus the competitive market,

we review the compensation of executives in comparable positions at companies that are either in a

similar line of business or are otherwise comparable for purposes of recruiting and retaining

individuals with the requisite skills and capabilities. We refer to this group of companies as the

Comparator Group.

We review and discuss the composition of the Comparator Group on an annual basis with the

CHRC and Hewitt, the CHRC's compensation consultant. In determining which companies to

include in the Comparator Group, we examine several criteria, including the relevant labor market

for talent and those companies with which we compete for investment capital. To reÖect the

investment capital criterion, we examine those companies competing in the mortgage-backed

securities sector. To reÖect the relevant labor market, we examine industry segments and companies

from which we have recruited and to which we have lost oÇcer talent. For a more detailed

discussion of the CHRC's role in the annual process of evaluating, recommending and approving

Compensation Discussion and Analysis

36
compensation for the named executive oÇcers and the role of Hewitt, see ""Corporate

Governance Ì Interaction with Compensation Consultants.''

A signiÑcant secondary factor that we take into account in determining the composition of the

Comparator Group is organization scope. This factor focuses on companies in the relevant industry

sectors that are comparable in asset/revenue size, operational scope, market capitalization, and

proÑtability. Also relevant is the selection of companies from which we have the ability to obtain

high quality, reliable, and consistent compensation data.

After considering these criteria, the CHRC selected the following companies in November

2005 as the Comparator Group for purposes of competitive compensation market analysis in 2006:

American Express J.P. Morgan Chase

American International Group Lehman Brothers

Bank of America MBNA Corp.

Capital One Financial Corporation MetLife

Citigroup SLM (formerly known as Sallie Mae)

Countrywide State Street

Fannie Mae Suntrust Banks

Fifth Third Bancorp U.S. Bancorp

Ford Motor Credit Wachovia

Hartford Financial Services Group Wells Fargo

We are not able to use the Comparator Group to benchmark compensation for all named

executive oÇcers. For example, we do not use the Comparator Group when comparable executive

positions do not exist in the Comparator Group or when available data are incomplete. In those

instances, we use data from alternative widely used survey sources for Ñnancial services companies.

In those cases in which the alternative survey sources do not identify executive positions

comparable to our positions, we set compensation targets based on our best estimate of the relative

scope and responsibilities of the position as compared to the scope and responsibilities of

comparable positions within Freddie Mac for which survey data exist. For Ms. Cook's position,

Executive Vice President, Investments and Capital Markets, a reasonable match and/or suÇcient

data are not available in the Comparator Group.

The CHRC applied the compensation philosophy and criteria described above at its May 31 Ó

June 1, 2006 meeting to set 2006 target total direct compensation for the named executive oÇcers

other than Mr. Piszel, who had not yet joined the company. This target-setting process usually

occurs at the CHRC's meeting during the Ñrst quarter of the year. However, the target-setting

process for 2006 was delayed until after we released our 2005 Ñnancial results. The following table

shows the named executive oÇcers' target total direct compensation for 2006.

Compensation Discussion and Analysis

37
Target Bonus

Expressed as

Percentage of Target Long-Term 2006 Target

Annualized 2006 Target Equity Award for Total Direct

Base Salary Base Salary Bonus(1) 2006 Performance(2) Compensation

Mr. Syron ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,100,000 240% $2,640,000 $8,800,000 $12,540,000

Mr. McQuade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 900,000 180% $1,620,000 $6,000,000 $ 8,520,000

Mr. Piszel(3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 650,000 n.a. $1,007,500 $3,000,000 $ 4,657,500

Ms. Cook ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 600,000 333% $2,000,000 $2,400,000 $ 5,000,000

Mr. Smialowski ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 550,000 155% $ 850,000 $1,800,000 $ 3,200,000

Mr. Baumann(4) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ n.a. n.a. n.a. n.a. n.a.

(1) Actual 2006 bonus payouts, paid in March 2007, for each named executive oÇcer are shown in the Summary Compensation Table

under ""Bonus'' and are discussed further under ""2006 Annual Bonus Compensation'' below.

(2) Actual long-term equity incentives awarded in respect of performance during 2006, granted in March 2007, will be reported in our

2008 proxy statement and are shown below under ""2006 Long-Term Equity Awards.''

(3) Mr. Piszel joined Freddie Mac on November 13, 2006 and his base salary reÖects an annualized amount, as provided in his

employment agreement. Mr. Piszel's target bonus is a Ñxed dollar amount and would not change in the event his base salary is

changed.

(4) Mr. Baumann resigned his position as Executive Vice President, Finance and Chief Financial OÇcer eÅective March 21, 2006.

At the May 31 Ó June 1, 2006 meeting, at which the 2006 total direct compensation targets

were approved, the CHRC requested that management eliminate the economic discount used in

converting the approved dollar value of long-term equity awards into a speciÑc number of RSUs. To

oÅset the elimination of the economic discount, the CHRC adjusted upward the long-term

incentive targets. This change did not result in additional cost to the company and did not provide

employees with greater value. See ""RSUs Ì Valuation of RSUs'' below for more information

concerning the elimination of the economic discount.

After considering a number of factors, including those set forth under ""Compensation

Philosophy and Objectives,'' the CHRC set 2006 target total compensation for four of the named

executive oÇcers who are currently employed by Freddie Mac generally below, and for one

modestly above, the median level of total direct compensation for comparable executives

throughout the Comparator Group, or, in the case of Ms. Cook, the alternate survey source.

Consistent with our compensation objective of rewarding good performance, for any individual

executive oÇcer, the CHRC also considers the executive's performance and those factors discussed

under ""Compensation Structure'' below when setting target total direct compensation. In setting

2006 target total direct target compensation for our named executive oÇcers, in addition to

reviewing competitive compensation data, the CHRC reviewed, discussed, and considered an

assessment of the named executive oÇcer's performance during the prior year, Freddie Mac's

beneÑt obligations to the named executive oÇcer (both current and estimated values upon

retirement), the named executive oÇcer's beneÑcial ownership levels of Freddie Mac common

stock, and the value of the named executive oÇcer's outstanding long-term equity awards. In the

process of setting 2006 target total direct compensation for the Chief Executive OÇcer and the

President and Chief Operating OÇcer, the CHRC also reviewed the treatment of compensation

elements in the event of various termination scenarios.

In December 2006, prior to the determination of bonus payouts and equity awards for 2006, the

CHRC again reviewed the major components of each named executive oÇcer's compensation,

including base salary, annual bonus opportunity and long-term incentive targets, retirement

Compensation Discussion and Analysis

38
programs, health and welfare beneÑts, and perquisites. The information presented to the CHRC in

December 2006 included, but was not limited to, the following:

‚ A ""tally sheet'' of total 2005 and 2006 compensation and beneÑts paid to, or accrued for,

each of the named executive oÇcers

‚ The grant date value of all stock options and RSUs awarded in 2005 and 2006

‚ The estimated year-over-year (2005 and 2006) actuarial increase in qualiÑed and nonqualiÑed pension beneÑts

‚ The value of all outstanding equity awards, which includes all unvested RSUs, unvested

stock options and unexercised vested stock options

‚ Freddie Mac's annual cost of providing life insurance, disability insurance, and medical

insurance to each named executive oÇcer

‚ The annual interest accrual for participants in the Executive Deferred Compensation Plan

‚ The estimated value and summary of various perquisites received

‚ The estimated potential value of compensation due if a named executive oÇcer had been

terminated by Freddie Mac on December 31, 2006 for reasons other than ""for cause''

Management's presentation of the value of outstanding equity awards was intended to provide

the CHRC with a perspective on the ""at risk'' pay that a named executive oÇcer would forfeit if he

or she were to voluntarily terminate his or her employment with Freddie Mac. This value also

provides the CHRC with a perspective of a competitor's potential cost if it were successful in an

attempt to recruit one of our named executive oÇcers and compensate such oÇcer for forfeited

equity. We consider each of these perspectives important when evaluating the retention risk for a

named executive oÇcer, setting target compensation, and recommending actual awards.

Executive pay and beneÑts are not increased because the value of previously granted stock

awards has declined and are not decreased because the value of such awards has increased.

Compensation Structure

Our pay-for-performance philosophy is implemented by oÅering the named executive oÇcers

competitive base salaries, annual bonus opportunities, and long-term equity incentive opportunities.

The named executive oÇcers may also receive certain perquisites and other beneÑts and are

required to maintain an ownership stake in Freddie Mac.

Base Salary

As discussed under ""Evaluating and Targeting Executive Compensation'' above, the base

salaries of our named executive oÇcers, including the Chairman and Chief Executive OÇcer and

the President and Chief Operating OÇcer, are broadly based on salaries for comparable positions in

the market. Base salaries take into consideration base salaries of comparable positions in the

Comparator Group or the alternate survey source, as applicable, and also reÖect the named

executive oÇcer's job performance, future potential, scope of responsibilities and experience. For

each of the named executive oÇcers, base salaries are consistent with the terms of his or her

respective employment or letter agreement and are reviewed annually.

Compensation Discussion and Analysis

39
The base salaries of Messrs. Syron, McQuade and Piszel and Ms. Cook are the amounts that

were negotiated as part of their original employment arrangements. Mr. Smialowski's base salary

was increased by the CHRC on June 1, 2006 (eÅective March 1, 2006), after a review of his

individual performance and positioning of his target total direct compensation against competitive

market data.

Annual Bonuses

Our annual cash bonus program seeks to motivate our named executive oÇcers, including the

Chief Executive OÇcer and the President and Chief Operating OÇcer, to work eÅectively to

achieve both our annual corporate performance objectives and their individual performance

objectives and to reward them based on achievement against such objectives.

The determination of the actual bonus payable to our named executive oÇcers occurs at the

end of an annual cycle that consists of several stages. For 2006, the Ñrst stage occurred at the

March 2006 CHRC meeting where, based upon recommendations from management, the CHRC

both approved the 2006 Bonus Funding Scorecard and concurred with an aggregate amount of

funding to be made available for 2006 bonuses if all objectives on the 2006 Bonus Funding

Scorecard were achieved. The 2006 Bonus Funding Scorecard contained a balanced set of

performance measures that integrate Freddie Mac's perennial and annual objectives.

The 2006 Bonus Funding Scorecard included the following performance areas and related

objectives:

‚ Mission. This objective consisted of speciÑc U.S. Department of Housing and Urban

Development goals and subgoals for the percentage of mortgages purchased by Freddie Mac

that fall into the categories of low/moderate income, underserved areas, and special

aÅordable housing. See ""Regulation and Supervision Ì Department of Housing and Urban

Development Ì Housing Goals'' in our Annual Report for a more detailed discussion of

these goals and subgoals. All of the Mission goals for 2006 were extremely challenging to

achieve.

‚ Shareholder Value. This objective consisted of accomplishing a number of speciÑc

Ñnancial goals. In developing the performance thresholds and/or targets, management made

aggressive assumptions regarding portfolio growth and proÑtability, knowing that these

would be very challenging to achieve due to signiÑcant external pressures and internal

infrastructure challenges. These measures were established prior to our voluntary adoption of

limits on the growth of our retained portfolio. This section of the 2006 Bonus Funding

Scorecard was referred to as the ""Stretch Financial Plan'' and contained speciÑc

performance thresholds and/or ranges, including:

‚ Growth of adjusted fair value. Adjusted fair value is an internal measure used to assess

performance with respect to those drivers of fair value results that we actively seek to

manage. See our Annual Report under ""Management's Discussion and Analysis of

Financial Condition and Results of Operations Ì Consolidated Fair Value Balance

Sheets Analysis'' for more information.

‚ Change in fair value. During the year ended December 31, 2006, the fair value of net

assets attributable to common stockholders increased by $2.6 billion. Our Annual

Report discusses the changes in fair value and management's expectations concerning

Compensation Discussion and Analysis

40
long-term fair value growth under ""Management's Discussion and Analysis of

Financial Condition and Results of Operations Ì Consolidated Fair Value Balance

Sheets Analysis.''

‚ Return on equity for new business in both the guarantee and retained portfolios.

‚ Achieving a speciÑc market share in the government-sponsored enterprise market.

‚ Achieving a speciÑc market share in the conventional conforming mortgage market.

‚ Accomplishing a speciÑc growth goal for our guarantee portfolio.

‚ Accomplishing a speciÑc growth goal for our retained portfolio.

‚ Deploying Freddie Mac's economic capital in an amount greater than or equal to the

regulatory minimum capital on new business. Economic capital represents the estimate

of capital required to withstand severe business, economic and operational conditions

based on management's assessment of risk.

‚ Financial Reporting. This objective consisted of Ñling an unqualiÑed minimum capital

report with OFHEO and returning to timely Ñnancial reporting.

‚ Employee Engagement. This objective focused on our ability to recruit and retain strong

performers and improving our retention of critical talent.

‚ Risk Management and Controls. This objective consisted of improvements in our

operational controls and risk management processes.

‚ Touch More Loans. This objective included enhancing our retention and disposition

capabilities for non-standard mortgage products.

Management designed the 2006 Bonus Funding Scorecard objectives with the understanding

that achieving the performance goals would require not only signiÑcant Ñnancial performance by

the company, but also the achievement of a number of other goals that would be quite diÇcult to

accomplish. Some of these goals were stretch objectives that would require substantial creativity

and innovation in order to be successful. Management acknowledged that there was a signiÑcant

possibility that several of the objectives would not be achieved, in some cases for reasons beyond the

control of the company. Nonetheless, management wanted to establish very aggressive goals. See

""Ì 2006 Annual Bonus Compensation'' below for more information regarding our assessment of

performance under the 2006 Bonus Funding Scorecard.

Some of the performance criteria in the 2006 Bonus Funding Scorecard cannot be precisely

quantiÑed. Furthermore, to some extent the achievement of one particular corporate goal can aÅect

the company's ability to achieve one or more other goal(s), depending on Ñnancial market

conditions. For example, maximizing some of the shareholder value metrics can, at least in some

cases, be inconsistent with achieving some of the Mission goals (such as increasing the percentages

of mortgages purchased in certain HUD-deÑned categories) that we are mandated to achieve as part

of our federal charter or by our regulators.

Management recommended to the CHRC at its March 2006 meeting that an aggregate

amount of funding for the 2006 bonus pool be established, which was based on a total dollar amount

available for funding bonuses to all employees eligible for bonuses, including the named executive

oÇcers. The CHRC concurred with this funding level and with guidelines for adjusting the funding

Compensation Discussion and Analysis

41
level based on changes in employee demographics, such as additional employees becoming eligible

for annual bonuses.

The next stage in setting 2006 bonuses for the named executive oÇcers consisted of setting

speciÑc target bonuses, expressed as a percentage of base salary. The process of setting bonus targets

for 2006 occurred at the CHRC meeting on May 31 and June 1, 2006. At this same meeting,

annual bonus payouts and long-term equity awards for performance during 2005 were determined,

base salaries for 2006 were established, and long-term incentive targets for performance during

2006 were set. Accordingly, the setting of annual bonus targets for 2006 was part of an integrated

discussion by the CHRC, which took into account an evaluation of 2005 performance and the other

key elements of compensation that applied to 2006.

The CHRC determined to increase the annual bonus target percentages for Messrs. Syron,

McQuade, and Smialowski and Ms. Cook from the respective 2005 annual bonus target levels based

on an evaluation of their performance for 2005 and the positioning of their target total direct

compensation versus competitive market levels. The increases in Messrs. Syron's and McQuade's

2006 bonus targets were conditioned on their executing waivers to their employment agreements so

that their potential payments upon termination of employment (which, in some cases, take into

account target bonuses) would be calculated based on the bonus target in their respective

employment agreements, not the increased 2006 bonus targets. In setting 2006 bonus targets, the

CHRC took into account the competitive market data which indicated that, even after the increases

in bonus targets, the target total direct compensation for these oÇcers would be at or below the

median of total direct compensation for executives in comparable positions at companies in the

Comparator Group.

2006 Annual Bonus Compensation

With respect to objectives on the 2006 Bonus Funding Scorecard, at the February 1, 2007

CHRC meeting, management reported that the company exceeded its objective to improve the

retention of critical talent. Regarding our Mission goals, management reported that the company

exceeded all three of the 2006 annual housing goals and the multifamily subgoal, and two of the

three home purchase subgoals established by HUD. Of the single-family, owner-occupied home

purchase mortgages we Ñnanced in 2006, 16.93% were aÅordable to low-income families in lowincome areas or to very low-income families, which narrowly missed the 2006 special aÅordable

housing subgoal target of 17%. Management attributed this shortfall to diÇcult market conditions,

including a rise in interest rates in the wake of a prolonged period of rapid house price appreciation.

We substantially achieved the Touch More Loans objective to enhance the retention and

disposition capabilities for non-standard mortgage products. With respect to Risk Management and

Control, we completed the majority of our performance objectives and made substantial progress on

the rest. With respect to Financial Reporting, we did not achieve the objective of returning to

timely Ñnancial Ñling, but made substantial progress towards achieving this goal. With respect to the

Stretch Financial Plan, we were not able to achieve all of the objectives. However, our ability to

achieve these objectives became increasingly diÇcult throughout the year because of strategic

decisions that were taken in an eÅort to achieve the Mission goals and maintain appropriate market

share.

After reviewing and discussing the information presented by management, the CHRC

concurred that the assessment of company performance should be ""below plan.'' However, the

Compensation Discussion and Analysis

42
CHRC determined that the company was substantially better positioned at year-end 2006 than it

was at December 2005 and substantial progress was achieved during the year relative to Scorecard

objectives where the company failed to achieve all of the designated performance measures. In

reaching this conclusion, the CHRC also considered the following:

‚ The entirety of corporate performance, including both accomplishments captured on the

2006 Bonus Funding Scorecard and other achievements not addressed on the Scorecard;

‚ Market conditions during 2006; and

‚ The degree of diÇculty in achieving all of the elements for the six objectives in the 2006

Bonus Funding Scorecard.

Additionally, the CHRC considered Freddie Mac's results versus the objectives in light of the

unique business conditions under which the company operates. Freddie Mac's objectives require

the company to manage the delicate balance of optimizing the annual shareholder value

performance measures, making business decisions that allow us to meet our Mission goals and are in

the best long-term interest of the company, and executing against annual objectives that take into

account the guidance from our regulatory oversight agency. After discussing management's

recommendation, the CHRC approved a bonus funding level that incorporated a moderate

reduction of the projected bonus pool had the company achieved all its objectives.

Individual 2006 annual cash bonus payments were based on an assessment of each executive

oÇcer's business results and leadership eÅectiveness, as described below.

Messrs. Syron and McQuade. The cash bonuses awarded to the Chairman and Chief

Executive OÇcer and the President and Chief Operating OÇcer for 2006 reÖect the CHRC's

determination with respect to Messrs. Syron's and McQuade's individual leadership and

performance displayed throughout the year, as well as our performance relative to the objectives on

the 2006 Bonus Funding Scorecard. The CHRC concluded that the leadership of both executives

was a key factor in the Company's signiÑcant accomplishments under challenging circumstances.

It also noted that, in the aggregate, the metrics on the Bonus Funding Scorecard, a summary of

which is set forth above, were rated ""below plan'' for the year. As a result, the CHRC decided to

award (i) to Mr. Syron a bonus of $2,400,000, an amount lower than his bonus target, and (ii) to

Mr. McQuade a bonus of $1,500,000, an amount lower than his bonus target.

Mr. Piszel. For Mr. Piszel, the cash bonus paid is consistent with the terms of his

employment agreement.

Ms. Cook. For Ms. Cook, the cash bonus paid reÖects the CHRC's determination with

respect to her individual leadership and performance displayed throughout the year, as well as our

performance relative to the objectives on the 2006 Bonus Funding Scorecard. While some of the

Ñnancial objectives of the Investment and Capital Markets Division were not achieved, the CHRC

recognized that Ms. Cook's strategic decisions and the initiatives taken by the Division in response

to market conditions allowed Freddie Mac to optimize the opportunities presented by the market.

Ms. Cook was also recognized for the resources and support she oÅered to advance our progress

with respect to the Financial Reporting objective and the additional responsibilities she undertook,

including all sourcing for both single family and multifamily loans. As a result, the CHRC decided

to award Ms. Cook a bonus of $2,300,000, an amount greater than her bonus target.

Compensation Discussion and Analysis

43
Mr. Smialowski. For Mr. Smialowski, the cash bonus paid reÖects the CHRC's

determination with respect to his individual leadership and performance displayed throughout the

year, as well as our performance relative to the objectives on the 2006 Bonus Funding Scorecard.

The CHRC also took into consideration the Operations and Technology Division's performance

relative to its objectives. The CHRC recognized that Mr. Smialowski's leadership and knowledge

led to improvements in the quality of business decisions and strategic solutions. As a result, the

CHRC decided to award Mr. Smialowski a bonus of $975,000, an amount greater than his bonus

target.

2006 Long-Term Equity Awards

A signiÑcant portion of our named executive oÇcers' compensation is in the form of long-term

equity awards, to ensure that the executive oÇcers' Ñnancial interests are well aligned with the

long-term interests of our stockholders. Following our annual review of ""best practices'' in executive

compensation in 2005, we implemented stock ownership guidelines, which are discussed in more

detail under ""Stock Ownership Guidelines'' below. In addition, long-term equity compensation is a

key component of our compensation structure that enables us to motivate leaders and key

employees and encourage them to provide long-term service.

Awards consist of RSUs, stock options, or both, and full entitlement to such awards generally

requires service over a vesting period of four years. For performance in 2006, the only awards we

granted to named executive oÇcers were RSUs. As discussed below under ""RSUs,'' a portion of

these RSUs are subject to a performance-based vesting condition. The value of the equity awards

increases or decreases with changes in the value of Freddie Mac stock. The equity awards thus

focus executives on improving the long-term value of Freddie Mac through continued service

subsequent to the date of the award. On an annual basis, management provides the CHRC with an

overview of its proposed strategy, delivery methods, and utilization with respect to long-term equity

awards.

The value of the long-term equity awards made to each of the named executive oÇcers in

March 2007 in respect of 2006 performance was based on a number of factors, including:

‚ The executive's performance and contribution

‚ The executive's potential for making future contributions

‚ The engagement and retention of the executive

‚ Criticality of the executive's skills

‚ The executive's total direct compensation compared to competitive market levels, and

‚ The performance of the company against the 2006 Bonus Funding Scorecard.

Compensation Discussion and Analysis

44
The following table summarizes information with respect to the long-term equity award

opportunities aÅorded the named executive oÇcers for performance during 2006:

For Performance During 2006(1)

Target Actual Award

Mr. Syron ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $8,800,000 $8,600,000

Mr. McQuade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $6,000,000 $5,725,000

Mr. Piszel ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $3,000,000 $3,000,000

Ms. Cook ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $2,400,000 $2,763,000

Mr. Smialowski ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,800,000 $2,233,000

Mr. Baumann(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ n.a. n.a.

(1) The long-term equity awards in respect of performance during 2006 were granted in March 2007 and will also be

reported in our 2008 proxy statement.

(2) Mr. Baumann's termination arrangements, which were approved in March 2006, did not include a long-term equity

award in 2006.

Mr. Syron. The terms of Mr. Syron's employment agreement provide that he will be granted

a long-term equity award each year during his employment with a value of $8,800,000. After

evaluating the company's performance in 2006 relative to the objectives on the 2006 Bonus Funding

Scorecard, the CHRC determined that Mr. Syron's 2006 long-term equity award value should be

$8,600,000, which is less than the guaranteed minimum value in Mr. Syron's employment

agreement. In order to implement this action, Mr. Syron agreed to waive his right to receive the

guaranteed amount. See ""Executive Compensation Ì Employment and Separation Agreements Ì

Richard F. Syron.''

Mr. McQuade. The terms of Mr. McQuade's employment agreement provide that he will be

granted a long-term equity award each year during his employment with a value of $6,000,000.

After evaluating the company's performance in 2006 relative to the objectives on the 2006 Bonus

Funding Scorecard, the CHRC determined that Mr. McQuade's 2006 long-term equity award

value should be $5,725,000, which is less than the guaranteed minimum value in Mr. McQuade's

employment agreement. In order to implement this action, Mr. McQuade agreed to waive his right

to receive the guaranteed amount. See ""Executive Compensation Ì Employment and Separation

Agreements Ì Eugene M. McQuade.''

Mr. Piszel. Mr. Piszel's employment agreement guarantees that the long-term equity award

granted to him in 2007 will be no less than $3,000,000. This guarantee is designed to take into

account the long-term incentive opportunity that Mr. Piszel forfeited at his prior employer in order

to join Freddie Mac. See ""Executive Compensation Ì Employment and Separation

Agreements Ì Anthony S. Piszel.''

Ms. Cook. Ms. Cook's target long-term equity award for 2006 was set after the CHRC

considered the factors discussed under ""Evaluating and Targeting Executive Compensation'' above.

Her actual award for 2006 took into consideration her individual leadership and performance

displayed throughout the year. While her actual award for 2006 is greater than the target,

approximately $191,000 of the actual award amount is attributable to the elimination of the

economic discount and the CHRC's intention to keep this economically neutral for Ms. Cook. See

""Executive Compensation Ì Employment and Separation Agreements Ì Patricia L. Cook.''

Mr. Smialowski. Mr. Smialowski's target long-term equity award for 2006 was set after the

CHRC considered the factors discussed under ""Evaluating and Targeting Executive

Compensation Discussion and Analysis

45
Compensation'' above. His actual award for 2006 took into consideration his individual leadership

and performance displayed throughout the year. While his actual award for 2006 is greater than the

target, approximately $144,000 of the actual award amount is attributable to the elimination of the

economic discount and the CHRC's intention to keep this economically neutral for

Mr. Smialowski. See ""Executive Compensation Ì Employment and Separation Agreements Ì

Joseph A. Smialowski.''

RSUs

General. An RSU represents a conditional contractual right to receive one share of our

common stock at a speciÑed future date subject to certain restrictions (i.e., the vesting period). The

underlying stock is not issued until the time restrictions lapse, at which time the RSU is settled or,

if previously elected by the grantee, deferred. See ""Other Executive BeneÑts, including Perquisites

and Retirement BeneÑts Ì Executive Deferred Compensation and Supplemental Executive

Retirement Plan'' below for more information regarding the deferral of RSUs. In the event a cash

dividend is declared and paid on our common stock, holders of RSUs will receive dividend

equivalents, paid out in cash promptly after the payment date for such dividend, equal to the

number of RSUs held by the executive oÇcer multiplied by the dividend paid on each outstanding

share of our common stock. RSUs do not have voting rights because they are not considered legally

issued or outstanding shares.

RSUs granted as part of annual long-term equity awards generally vest in four installments at

the rate of 25% on each anniversary of the grant date. Of the awards of RSUs made to our named

executive oÇcers in March 2007, 25% are subject to an additional performance vesting criterion.

The satisfaction of this requirement will be determined in the sole discretion of the CHRC. In order

for these RSUs to be considered earned, the CHRC must determine that management has

improved our competitive position when considering our shareholders, Mission objectives, and

safety and soundness. If earned, these RSUs will be subject to the same time-based vesting as the

other RSUs held by our named executive oÇcers and will vest with respect to 25% of the award in

March 2008, 2009, 2010 and 2011.

Valuation of RSUs. In awarding RSUs to executive oÇcers for the annual award in 2005 and

previous years, the CHRC Ñrst set the dollar value of the RSUs to be awarded. The number of

RSUs awarded to each executive oÇcer was then calculated by dividing the dollar amount of the

award by the discounted value of a share of our common stock on the date of grant. The discount

reÖected the risk of forfeiture during the restricted period and was applied to the fair market value of

our common stock on the date of grant. The CHRC's independent compensation consultant advised

that the use of an economic discount was not an uncommon practice to convert the dollar amount

of a long-term incentive award into a speciÑc number of RSUs. The economic discount conversion

methodology was only applicable to the annual long-term equity awards.

In 2006, the CHRC decided to eliminate the use of the economic discount and requested that

management develop an economically neutral transition plan in order to minimize the impact of the

elimination of the discount on award recipients. The transition methodology designed by

management resulted in the value of the RSU portion of the long-term equity award being adjusted

upwards by approximately 11% for all named executive oÇcers other than Messrs. Syron and

McQuade. This transition methodology resulted in an economically neutral outcome from the

company's perspective. It did not result in additional cost to the company and did not provide the

Compensation Discussion and Analysis

46
employee with greater value, because the upward adjustment of the long-term equity award targets

was oÅset by the elimination of the economic discount.

On a going-forward basis, this transition methodology will not be applicable to Messrs. Syron

and McQuade, who requested not to have their target long-term equity awards adjusted upward.

Additionally, this adjustment will not be applicable to individuals with an employment agreement

which sets forth a deÑned dollar value for the annual long-term equity award.

Stock Options

General. Each stock option entitles its holder to purchase one share of our stock at its fair

market value on the date that the option was granted. Stock options granted as part of long-term

incentive awards generally vest in four installments at the rate of 25% on each anniversary of the

grant date. For example, the stock options granted to executive oÇcers in June 2006 will vest with

respect to 25% of the award in June 2007, 2008, 2009, and 2010.

Valuation of Stock Options. To determine the number of stock options for the annual award,

the CHRC Ñrst sets the dollar amount of stock options to be awarded. On the grant date, that dollar

amount is converted into a number of shares of common stock subject to the stock option using the

Black-Scholes model for the valuation of stock options. The exercise price of stock options is equal

to the fair market value of a share of our common stock on the grant date. At the time of the June

2006 grant of stock options, fair market value was deÑned by the 2004 Stock Compensation Plan,

or the 2004 Employee Plan, as the average of the high and low prices of a share of our common

stock on the grant date as reported in The Wall Street Journal's composite transactions table for

New York Stock Exchange listed securities. The CHRC approved an amendment on December 7,

2006 to the 2004 Employee Plan to change the deÑnition of fair market value which is used for

purposes of determining the exercise price of stock options, from the average of the high and low

prices to the closing price of our stock on the date of grant. Future option grants will be issued using

the revised deÑnition of fair market value.

Proportion of Long-Term Incentives Awarded in RSUs and Stock Options

The CHRC increased the proportion of the value of long-term incentives awarded in RSUs, as

compared to stock options, beginning with awards for performance in 2006. Pursuant to CHRC

action in March 2007, named executive oÇcers currently receive 100% of the value of their longterm incentives in the form of RSUs and no stock options. For awards made in 2007 for

performance during 2006, 75% of the RSUs received by our named executive oÇcers are subject to

time-based vesting only, and the remaining 25% are subject to additional performance-based

vesting criteria. If the performance-based vesting criteria are satisÑed, these RSUs become subject

to the same time-based vesting of the remaining 75% of the RSUs granted to our named executive

oÇcers. The CHRC's decision to modify the mix between RSUs and options as part of its annual

review of executive compensation and the overall mix of pay for our named executive oÇcers took

into account several factors, including the increased retention value of RSUs versus stock options,

the accounting charges now associated with stock options and competitive market practices at both

the companies in the Comparator Group and the Ñnancial services industry, which indicated an

increased trend toward the greater use of restricted stock/restricted stock units. A primary

consideration in the increased utilization of RSUs was the CHRC's conclusion that during our

Compensation Discussion and Analysis

47
ongoing restructuring period, an increased emphasis on RSUs better achieved a number of internal

objectives including:

‚ Motivating leaders and key employees and encouraging them to provide long-term service

without undue focus on short-term changes in stock price; and

‚ Increasing the immediate ""at risk'' equity value to assist in maximizing retention to maintain

stability in leadership and key contributor roles.

Other Executive BeneÑts, including Perquisites and Retirement BeneÑts

Generally Available BeneÑts

Health and Welfare Plans

The named executive oÇcers are eligible to participate in employee beneÑt programs and plans

that are generally available to all full-time and part-time employees (subject to fulÑlling certain

eligibility requirements). These include beneÑts such as our active employee health and welfare

plans (including medical, dental, vision, group life insurance, accidental death and personal loss

insurance and employee assistance beneÑts), as well as other programs such as our employee

stock purchase plan. In designing these beneÑts we seek to provide an overall level and mix of

beneÑts that is competitive with those oÅered by companies in our Comparator Group.

Tax-QualiÑed DeÑned BeneÑt and DeÑned Contribution Retirement Plans

The named executive oÇcers are eligible to participate in our broad-based tax-qualiÑed

retirement and savings plans (the Pension Plan and the Thrift/401(k) Savings Plan), on the same

terms as other employees. For additional information on these two plans, including the present

value of accumulated beneÑts under the Pension Plan for each of the named executive oÇcers, see

the ""Summary Compensation'' and ""Pension BeneÑts'' tables and narrative disclosures in the

""Executive Compensation'' section below.

Executive Deferred Compensation and Supplemental Executive Retirement Plan

The named executive oÇcers are eligible to participate in the Freddie Mac 2002 Executive

Deferred Compensation Plan, or the Executive Deferred Compensation Plan, which allows them to

elect to defer all or a portion of their annual salary and cash bonus and the settlement of their RSUs

received under our stock plan. None of our named executive oÇcers participated in the Executive

Deferred Compensation Plan in 2006.

The named executive oÇcers are also eligible to participate in the Freddie Mac Supplemental

Executive Retirement Plan (SERP). This plan has two components, which correspond to each of

the Pension Plan and the Thrift/401(k) Savings Plan. The SERP Restoration BeneÑt provides

participants with the full amount of beneÑts to which they would have been entitled under the

Pension Plan if the plan (1) was not subject to certain limits on compensation and beneÑts that can

be taken into account under the Internal Revenue Code and (2) did not exclude from

compensation amounts deferred under our Executive Deferred Compensation Plan. The SERP

Make-Up Contribution provides participants with the full amount of beneÑts to which they would

have been entitled under the Thrift/401(k) Savings Plan if the plan (1) was not subject to certain

limits under the Internal Revenue Code and (2) did not exclude from compensation amounts

deferred under our Executive Deferred Compensation Plan. We believe this is an appropriate beneÑt

Compensation Discussion and Analysis

48
because it generally places the executive in the same position as other employees who are not

aÅected by the Internal Revenue Code limits. Such a beneÑt is common among companies in our

Comparator Group.

For speciÑc information on the accruals and earnings under the Make-Up Contribution under

the SERP for each of the named executive oÇcers, see the ""Non-qualiÑed Deferred

Compensation'' table and accompanying narrative disclosures below. For a summary of our pension

beneÑt obligations to the named executive oÇcers, including under our tax-qualiÑed pension plan

and the Restoration BeneÑt of the SERP, see the ""Pension BeneÑts'' table and narrative disclosures

below.

Perquisites and Additional Life and Disability Insurance Payments

Certain perquisites are made available to named executive oÇcers. These include Ñnancial

planning services, relocation reimbursements and related tax gross ups, home security systems,

personal use of a car and driver for commuting transportation in the Washington, D.C. area and

related tax gross ups, payment of spousal business travel and dining costs for business purposes and

related tax gross ups. These types of perquisites are common among executives in our industry. In

addition, providing them as perquisites (as opposed to increasing base salary in an amount

designed to compensate for the loss of these perquisites) avoids the increase that would otherwise

occur in certain other beneÑt costs that are based on the level of an executive's base salary. Further

details regarding these perquisites are contained in the Summary Compensation Table and

accompanying footnotes. The Summary Compensation Table also details certain payments for life

and disability insurance made on behalf of the named executive oÇcers.

Post-Termination Compensation

The named executive oÇcers may receive certain payments or beneÑts at, following, or in

connection with a change in control of Freddie Mac, a change in the named executive oÇcer's

responsibilities, or a named executive oÇcer's termination, including resignation, severance,

retirement or constructive termination. These payments are described in detail in ""Executive

Compensation Ì Potential Payments Upon Termination or Change in Control'' and ""Executive

Compensation Ì Employment and Separation Agreements'', where the speciÑcs of the employment

agreement or separation arrangement applicable to each named executive oÇcer are explained.

The termination provisions diÅer signiÑcantly among the named executive oÇcers, all of whom

have employment agreements with us. These diÅerences grew out of the diÅerent negotiations that

occurred with respect to the employment of the named executive oÇcers, all of whom were hired

between December 31, 2003 and November 15, 2006. In light of the restructuring eÅorts that began

in 2003 and which are still underway and the relatively late stages in their careers of some of our

new named executive oÇcers, it was not unexpected that a condition of their accepting employment

was our provision of signiÑcant protections if their employment is terminated without cause or they

terminate for good reason during the early years of their employment with us.

There are diÅerences among the agreements regarding the magnitude of the payments to be

provided in the event of certain terminations that reÖect, among other things, the degree to which

these issues were critical to the particular executive.

Compensation Discussion and Analysis

49
Compensation Committee Discretion

The CHRC retains the discretion to decrease all forms of incentive payouts based on signiÑcant

individual or company performance, subject, in certain cases, to the terms of a named executive

oÇcer's employment agreement. Likewise, the CHRC retains the discretion to increase payouts

and/or consider special awards for signiÑcant achievements.

Timing of Equity Grants

Management annually recommends to the CHRC (or the Audit Committee in the case of the

General Auditor) the eÅective date of grant for the annual long-term equity incentive award to all

eligible employees, including named executive oÇcers. In selecting the eÅective date, management

considers, based on discussions with our Legal Division, the timing of the release of material, nonpublic information and other risks. If there is no material non-public information pending, then the

eÅective date is the date of the meeting at which the award is approved by the CHRC or Audit

Committee. If there is material non-public information pending, the eÅective date of grant is

deferred until at least three business days after the public announcement and release of the material

non-public information. Neither management nor the CHRC have in the past or plan in the future

to time the release of material non-public information for the purpose of aÅecting the value and

amount of equity incentive awards.

With respect to stock-based incentive awards other than annual awards, and subject to the

deferral of eÅective dates of grant for at least three business days in the case of pending material

non-public information, management recommends to the CHRC (or the Audit Committee in the

case of the General Auditor) that the eÅective date of grant be the date of the meeting at which the

award is approved by the CHRC or the Audit Committee. Notwithstanding the preceding sentence,

(a) in the case of sign-on awards, management recommends to the CHRC or Audit Committee

that the eÅective date of grant be the date of the next regular meeting of the CHRC or Audit

Committee, respectively, following both the CHRC's or Audit Committee's approval and the

individual's Ñrst date of employment, and (b) if an employment agreement or other contractual

obligation approved by the CHRC or the Audit Committee speciÑes an eÅective date of grant for an

award, the award is eÅective on that date. If an employment agreement or other contractual

obligation requires an award but does not specify a grant date (e.g., the agreement includes a ""pay

by'' date), management recommends to the CHRC or Audit Committee that the eÅective date of

grant be either the eÅective date of grant for the annual award to executive oÇcers or the date of the

regular meeting immediately prior to the date required by such employment agreement or

contractual obligation.

Adjustment or Recovery of Awards

Our standard RSU and stock option award agreements provide that any unvested RSUs and

any unexercised stock options, whether or not vested, would be immediately canceled and forfeited

and that the recipient would be required to repay all gains recognized upon the vesting of RSUs or

exercise of our stock options under the award in the event that the employee seeks or accepts

employment with a competitor to us. Under Section 304 of the Sarbanes-Oxley Act, if we are

required to restate our Ñnancials due to material noncompliance with any Ñnancial reporting

requirements as a result of misconduct, our Chief Executive OÇcer and our Chief Financial OÇcer

must reimburse us for (1) any bonus or other incentive-based or equity-based compensation

received during the 12 months following the Ñrst public issuance of the non-complying document,

Compensation Discussion and Analysis

50
and (2) any proÑts realized from the sale of our securities during those 12 months. Additionally,

OFHEO could require us to seek to include language regarding adjustments or return of prior stock

awards in employment agreements we may seek to enter into in the future.

Stock Ownership Guidelines

We expect our directors and oÇcers to own our common stock. A signiÑcant portion of director

and executive compensation is paid in common stock, as described in greater detail herein and in

""Proposal 1: Election of Directors Ì Board Compensation''. We believe that stock ownership by

our directors and executive oÇcers aligns their interests with the long-term interests of our

stockholders.

EÅective as of January 31, 2006, we expect our Chief Executive OÇcer and our President and

Chief Operating OÇcer to own, within four years of each such oÇcer's date of hire or promotion, as

appropriate, Freddie Mac stock with a fair market value equal to Ñve times such oÇcer's annual

base salary. We also expect, within four years of the date of hire or promotion to executive oÇcer,

our other executive oÇcers to own Freddie Mac stock with a fair market value equal to three times

such oÇcer's annual base salary. Each of our executive oÇcers, including our Chief Executive

OÇcer and our President and Chief Operating OÇcer, will be treated as complying with this stock

ownership requirement, even if the oÇcer does not otherwise meet the requirement, if the oÇcer:

‚ retains all Freddie Mac stock the oÇcer owned as of January 31, 2006;

‚ retains all restricted stock units (net of shares withheld for taxes) for which the restrictions

have lapsed; and

‚ retains all restricted stock units (net of shares withheld for taxes) for which the restrictions

lapse in the future.

For information on our stock ownership requirements for non-employee directors, see

""Proposal 1: Election of Directors Ì Board Compensation Ì Stock Ownership Guidelines.''

Compensation Discussion and Analysis

51
EXECUTIVE COMPENSATION

Compensation Tables

Summary Compensation Table

The following table sets forth compensation information that is required to be disclosed by SEC

registrants under the rules promulgated by the SEC for our Chief Executive OÇcer, our Chief

Financial OÇcer, our former Chief Financial OÇcer and our three other most highly compensated

executive oÇcers who were serving as executive oÇcers as of December 31, 2006. In the discussion

that follows, we refer to these individuals collectively as our named executive oÇcers. For more

information on the terms of their employment, see ""Potential Payments Upon Termination or

Change in Control'' and ""Employment and Separation Agreements'' below.

Change in

Pension Value

and

NonqualiÑed

Deferred

Stock Option Compensation All Other

Name and Principal Position Year Salary(1) Bonus(2) Awards(3)(7) Awards(3)(7) Earnings(4) Compensation(5) Total

Richard F. Syron 2006 $1,100,000 $2,400,000 $7,162,448 $3,261,460 $355,273 $ 453,882 $14,733,063

Chairman of the Board and

Chief Executive OÇcer

Eugene M. McQuade 2006 900,000 1,500,000 3,627,289 1,088,677 193,180 338,313 7,647,459

President and Chief Operating

OÇcer

Anthony S. Piszel(6) 2006 88,750 3,100,000 93,593 0 0 367,954 3,650,297

Executive Vice President and

Chief Financial OÇcer

Patricia L. Cook 2006 600,000 2,300,000 1,118,767 533,747 221,353 123,062 4,896,929

Executive Vice President,

Investments and Capital

Markets

Joseph A. Smialowski 2006 541,667 975,000 776,270 308,145 148,351 70,078 2,819,511

Executive Vice President,

Operations and Technology

Martin F. Baumann(6) 2006 225,000 Ì 2,503,404 264,387 0 1,651,646 4,644,437

Former Executive Vice

President, Finance and

Chief Financial OÇcer

(1) Mr. Piszel's 2006 salary of $88,750 was attributable to the period from his employment date, November 13, 2006,

through December 31, 2006, based on an annual salary of $650,000. Mr. Smialowski's 2006 salary of $541,667 was

attributable to his annual salary of $500,000 from January 1, 2006 through February 28, 2006 and $550,000 from

March 1, 2006 through December 31, 2006. Mr. Baumann resigned his position as Executive Vice President,

Finance and Chief Financial OÇcer eÅective March 21, 2006 and entered into a separation agreement with us, which

superceded his prior letter agreements and retention agreements. Under the terms of the separation agreement,

Mr. Baumann continued to serve as Executive Vice President, Special Advisor to the President and Chief Operating

OÇcer until May 31, 2006. For more information on Mr. Baumann's separation agreement, see ""Employment and

Separation Agreements Ì Martin F. Baumann'' below. Mr. Baumann's 2006 salary of $225,000 was attributable to

his employment through May 31, 2006 based on an annual salary of $540,000.

(2) Amounts reported for all named executive oÇcers are for performance in 2006. Mr. Piszel's bonus also includes a

one-time cash sign-on bonus of $2,500,000 that is subject to repayment under certain circumstances. Under the

terms of his March 21, 2006 separation agreement, Mr. Baumann did not receive a bonus for 2006 performance. The

2006 bonus amounts were approved by the CHRC on March 3, 2007 and paid on March 16, 2007. For more

information on the 2006 bonus amounts, see ""Compensation Discussion and Analysis Ì Compensation Structure Ì

2006 Annual Bonus Compensation'' above. For information regarding guaranteed bonuses and contractual target

bonuses for Messrs. Syron, McQuade and Piszel, see ""Employment and Separation Agreements'' below.

Executive Compensation

52
(3) Represents the compensation cost for 2006 of all of the named executive oÇcers' stock awards (all of which were

RSUs) and stock options, respectively, outstanding in 2006, as determined under SFAS 123(R), rather than an

amount paid to or realized by the executives. See NOTE 11 to the consolidated Ñnancial statements included in the

accompanying Annual Report for a discussion of the assumptions made in determining SFAS 123(R) values. The

amounts reported disregard estimates of forfeitures for awards with service-based vesting conditions. There can be

no assurance that the SFAS 123(R) amounts will ever be realized.

(4) Amounts reported reÖect only the actuarial increase in the present value of each named executive oÇcer's accrued

beneÑts under our Pension Plan and the Restoration BeneÑt of the SERP from September 30, 2005 to September 30,

2006, determined using the assumptions applied in our consolidated Ñnancial statements for the year ended

December 31, 2006 and the normal retirement age of 65 speciÑed in the Pension Plan. See NOTE 15 to the

consolidated Ñnancial statements included in the accompanying Annual Report for a discussion of these assumptions.

Present values are determined based on generational mortality tables developed by the Society of Actuaries'

Retirement Plans Experience Committee.

The amount reported for Mr. Piszel is zero because as of December 31, 2006 he had not met the eligibility

requirements for the Pension Plan and the SERP and had not accrued any beneÑts. The amount reported for

Mr. Baumann is zero because he was not vested in any pension beneÑts at the time of his termination of employment.

For the remaining named executive oÇcers, these values include amounts that the named executive oÇcers are not

currently entitled to receive because such amounts are not yet vested. The amounts reported do not include values

associated with retiree medical beneÑts, which are generally available to all employees. For additional information

concerning the Pension Plan and the SERP Restoration BeneÑt, see ""Pension BeneÑts'' below. For additional

information concerning the SERP Make-Up Contribution, see ""Non-qualiÑed Deferred Compensation'' below.

(5) Amounts reported reÖect (i) basic and matching contributions we made to our tax-qualiÑed Thrift/401(k) Savings

Plan in Ñscal 2006; (ii) accruals we made pursuant to the SERP Make-Up Contribution; (iii) FlexDollars

(described below); (iv) the dollar value of premiums paid by us with respect to life and disability insurance;

(v) perquisites and other personal beneÑts received; (vi) gross-ups for the payment of taxes associated with

perquisites and other personal beneÑts; and (vii) paid or accrued severance obligation. These amounts are as follows:

Life and Paid or

Thrift/401(k) SERP Disability Accrued

Savings Plan Make-Up Flex Insurance Tax Severance

Contributions Accruals Dollars Premiums Perquisites Gross-Ups Obligation

Mr. Syron ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $13,200 $229,375 $22,344 $167,694 $ 15,114 $ 6,155 $ 0

Mr. McQuade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,200 71,250 18,978 205,578 22,385 6,922 0

Mr. Piszel ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 0 180 0 250,132 117,642 0

Ms. Cook ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,100 96,250 13,712 0 0 0 0

Mr. Smialowski ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,167 49,767 13,144 0 Ì 0 0

Mr. Baumann ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,675 89,758 5,742 0 Ì 3,471 1,540,000

Employer contributions to the Thrift/401(k) Savings Plan are available on the same terms to all of our employees.

We match up to the Ñrst 6% of eligible compensation at 100% of the employee's contributions, with the percentage

matched dependent upon the employee's length of service. Employee contributions and our matching contributions

are invested in accordance with the employee's investment election and are immediately vested. In addition, we have

discretionary authority to make additional contributions to our Thrift/401(k) Savings Plan, referred to as the ""basic

contribution,'' that are allocated uniformly on behalf of each eligible employee, based on a stated percentage of each

employee's eligible compensation. The formula for the contribution is 2% of pay up to the Social Security wage base,

which was $94,200 for 2006, and 4% of pay above the Social Security wage base. In 2006, employees became vested

in the basic contribution after Ñve years of service.

For additional information regarding the SERP Make-Up Contribution, see ""Non-qualiÑed Deferred Compensation''

below.

Executive Compensation

53
FlexDollars are provided under our Flexible BeneÑts Plan and are generally available to all employees to oÅset costs

related to medical coverage, dental coverage, vision coverage, group term life insurance, accidental death and

personal loss insurance, and vacation purchase. FlexDollars can be used to oÅset the cost of other beneÑts and any

unused FlexDollars are payable as taxable income.

We provide Mr. Syron life insurance policies totaling $10,000,000 to be paid in the event of his death and a disability

policy due to be paid to Mr. Syron in the event of his disability. We provide Mr. McQuade life insurance policies

totaling $7,000,000 to be paid in the event of his death and disability coverage to provide beneÑts to Mr. McQuade

in the event of his disability. Amounts reported reÖect premiums paid on these policies in 2006. For more information

regarding insurance beneÑts made available to Messrs. Syron and McQuade, see ""Potential Payments Upon

Termination or Change in Control'' and ""Employment and Separation Agreements'' below.

Perquisites include Ñnancial planning, legal fees paid in connection with the negotiation of the executive's

employment contract, personal use of car and driver for commuting in the Washington, D.C. metro area, home

security systems, spousal travel and dining for business purposes, and relocation. Perquisites are valued at their

aggregate incremental cost to Freddie Mac. During 2006, the aggregate value of perquisites furnished to each of

Messrs. Baumann and Smialowski was less than $10,000.

For Mr. Piszel, the perquisite cost reported for 2006 that exceeds the greater of $25,000 or 10% of the total perquisite

costs reported is $225,132 for relocation expense. Aggregate incremental cost for this perquisite expense is calculated

based on the actual cost of services. For more information regarding Mr. Piszel's relocation expense, see

""Employment and Separation Agreements Ì Anthony S. Piszel'' below.

For Mr. Baumann, the amount reported under ""Paid or Accrued Severance Obligation'' is pursuant to his separation

agreement dated March 21, 2006. This amount includes $1,000,000 in cash with respect to a November 1, 2005

retention award and $540,000 in severance payable over one year in semi-monthly installments, of which $45,000 was

paid in 2006. For more information, see ""Potential Payments Upon Termination or Change in Control Ì Martin F.

Baumann'' and ""Employment and Separation Agreements Ì Martin F. Baumann'' below.

(6) Mr. Piszel became Executive Vice President and Chief Financial OÇcer on November 13, 2006. Mr. Baumann

became Executive Vice President, Finance on April 2, 2003 and was appointed Chief Financial OÇcer on June 6,

2003. Mr. Baumann resigned his position as Executive Vice President, Finance and Chief Financial OÇcer eÅective

March 21, 2006 and continued to serve as Executive Vice President, Special Advisor to the President and Chief

Operating OÇcer until May 31, 2006.

(7) Grants of RSUs include the right to receive dividend equivalents. Prior to January 1, 2006, stock options also had

dividend equivalent rights on each share underlying the option equal to the dividend per share declared and paid on

our outstanding common stock. For stock options vested as of December 31, 2004, dividend equivalents are accrued

and are payable in cash upon exercise or expiration of the option. In response to Internal Revenue Code

Section 409A, the CHRC approved a modiÑcation of the terms of certain outstanding stock options granted under

the 2004 Employee Plan. In particular, the terms of any stock option grant or portion thereof outstanding as of

December 31, 2005 that was not vested as of December 31, 2004 were modiÑed to eliminate the accrual of dividend

equivalents. Dividend equivalents accrued through December 31, 2005 with respect to these stock options were

distributed in a lump sum in 2006. Thereafter, dividend equivalents with respect to these stock options will not accrue

but will be distributed as soon as practicable after dividend equivalents on our common stock have been declared.

Beginning January 1, 2006, dividend equivalents are no longer granted in connection with awards of stock options.

Executive Compensation

54
The value of dividend equivalents is recognized in the compensation expense of the stock option and RSU awards

shown in the Summary Compensation Table. The table below shows the actual amount of cash dividend equivalents

paid in 2006 to the named executive oÇcers on their outstanding RSU awards and the portions of their outstanding

stock option awards that were not vested and exercisable before January 1, 2005.

Dividend

Dividend Equivalents Equivalents Paid on Total Dividend

Paid on RSUs Stock Options Equivalents Paid

Mr. Syron ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $471,555 $1,180,719 $1,652,274

Mr. McQuade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $288,602 $ 347,332 $ 635,934

Mr. Piszel ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 39,470 $ 0 $ 39,470

Ms. Cook ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $111,177 $ 190,655 $ 301,832

Mr. Smialowski ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 83,212 $ 86,856 $ 170,068

Mr. Baumann ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 94,768 $ 257,930 $ 352,698

Grants of Plan-Based Awards

The following table contains information concerning awards of stock options and RSUs made

to each of the named executive oÇcers during Ñscal year 2006. In 2006, we did not make any grants

of awards under any non-equity or equity incentive plans. For more information on the equity

awards to our named executive oÇcers, including the timing of equity grants and determination of

the exercise price of stock option awards, see ""Compensation Discussion and Analysis Ì RSUs''

and ""Ì Stock Options'' above.

All Other All Other

Stock Awards: Option Awards: Grant Date

Number of Number of Exercise or Fair Value of

CHRC Shares of Securities Base Price of Closing Price Stock and

Grant Approval Stock or Units Underlying Option Awards on Grant Date Option

Name Date(1) Date(1) (#)(2) Options (#)(3) ($/Sh)(4) ($) Awards(5)($)

Mr. Syron ÏÏÏÏÏÏÏÏÏÏ 06/05/06 06/01/06 120,770 131,430 $60.45 $60.10 $9,500,685

Mr. McQuade ÏÏÏÏÏÏ 06/05/06 06/01/06 82,300 89,610 60.45 60.10 6,475,106

Mr. Piszel ÏÏÏÏÏÏÏÏÏÏ 12/07/06 09/07/06 78,940 Ì Ì 68.50 5,473,305

Ms. Cook ÏÏÏÏÏÏÏÏÏÏ 06/05/06 06/01/06 36,400 39,580 60.45 60.10 2,862,949

Mr. Smialowski ÏÏÏÏÏ 06/05/06 06/01/06 34,330 37,340 60.45 60.10 2,700,321

Mr. Baumann(6) ÏÏÏÏÏ Ì Ì Ì Ì Ì Ì Ì

(1) Other than for Mr. Piszel, these equity awards were made in 2006 in respect of the executive's performance in 2005.

The CHRC approved the annual grant of RSUs and stock options for executive oÇcers on June 1, 2006, with an

eÅective grant date of June 5, 2006, which was the second business day of the open stock trading window period

following the release of our Ñscal year 2005 Ñnancial results.

On September 7, 2006, the CHRC approved a one-time sign-on grant of RSUs for Mr. Piszel with an eÅective date

of December 7, 2006, the date of the next regularly scheduled CHRC meeting after Mr. Piszel's start date of

November 13, 2006.

(2) To determine the number of RSUs for the annual award, the CHRC Ñrst sets the dollar amount of RSUs to be

awarded. On the grant date, that dollar amount is converted into RSUs by dividing the dollar amount of the award by

the fair market value of our common stock on the grant date. Prior to December 7, 2006, fair market value was equal

to the average of the high and low prices of our common stock on the grant date. EÅective December 7, 2006, fair

market value is equal to the closing price of our common stock on the grant date.

With the exception of Mr. Piszel's sign-on award, the RSUs granted to the named executive oÇcers will vest at a rate

of 25% in each of June 2007, 2008, 2009 and 2010. Mr. Piszel's December 7, 2006 award will vest at a rate of 25% in

each of December 2007, 2008, 2009 and 2010.

Executive Compensation

55
(3) To determine the number of stock options for the annual award, the CHRC Ñrst sets the dollar amount of stock

options to be awarded. On the grant date, that dollar amount is converted into a number of shares of common stock

subject to the stock option using the Black-Scholes model for the valuation of stock options. The stock options

granted to the named executive oÇcers will vest at a rate of 25% in each of June 2007, 2008, 2009 and 2010.

(4) Consistent with the terms of the 2004 Employee Plan, the option exercise price is set at a price equal to the fair

market value of our common stock on the grant date.

(5) The amounts reported in this column reÖect the aggregate grant date fair value, determined in accordance with

SFAS 123(R), of RSU and stock option awards granted during 2006.

The grant date fair value of RSU awards is calculated by multiplying the number of RSUs granted by the grant date

fair value of our common stock. The grant date fair value of our common stock was $60.45 on June 5, 2006. In

accordance with SFAS 123(R), the grant date fair value of Mr. Piszel's sign-on award is based on the fair market

value of our common stock on his date of hire, which was $69.34. The grant date fair value of stock option awards is

calculated by multiplying the number of stock options granted by the Black-Scholes value of the option. The peroption SFAS 123(R) grant date fair value was $16.74. See NOTE 11 to the consolidated Ñnancial statements

included in the accompanying Annual Report for a discussion of assumptions made by us in determining the grant

date fair value of these equity awards. There can be no assurance that the RSUs and stock options will ever vest and

that the stock options will ever be exercised (in which case no value will be realized by the executive) or that the

value on vesting of the RSUs or on exercise of the stock options will equal the SFAS 123(R) value.

The following is a break-out of the aggregate SFAS 123(R) grant date fair values of each named executive oÇcer's

RSU and stock option awards reported in this column:

Grant Date Fair Value Grant Date Fair Value

of RSU Awards of Option Awards

Name ($) ($)

Mr. SyronÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $7,300,547 $2,200,138

Mr. McQuade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,975,035 1,500,071

Mr. PiszelÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,473,305 Ì

Ms. Cook ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,200,380 662,569

Mr. Smialowski ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,075,249 625,072

Mr. Baumann ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì

(6) Mr. Baumann left the company in 2006 and did not receive any awards of stock options or RSUs during 2006.

Executive Compensation

56
Outstanding Equity Awards at Fiscal Year-End

The following table shows outstanding equity awards held by the named executive oÇcers as of

December 31, 2006.

Option Awards Stock Awards

Number of Securities Number of Securities Number of Shares Market Value of

Underlying Underlying Option or Units of Stock Shares or Units of

Unexercised Options Unexercised Options Exercise Price Option That Have Not Stock That Have

Name Exercisable (#) Unexercisable (#) ($)(1) Expiration Date Vested (#) Not Vested ($)(2)

Mr. Syron ÏÏÏÏÏÏÏÏÏÏÏ 83,290(4) 83,290(4) $64.36 08/08/14 37,815(4) $2,567,639

41,347(5) 124,043(5) 62.69 05/05/15 58,238(5) 3,954,360

Ì 131,430(5) 60.45 06/04/16 120,770(5) 8,200,283

Mr. McQuadeÏÏÏÏÏÏÏÏ Ì Ì Ì Ì 30,883(6) 2,096,956

28,192(5) 84,578(5) 62.69 05/05/15 39,713(5) 2,696,513

Ì 89,610(5) 60.45 06/04/16 82,300(5) 5,588,170

Mr. Piszel ÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì Ì 78,940(6) 5,360,026

Ms. Cook ÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì Ì 3,870(6) 262,773

9,290(5) 9,290(5) 64.63 08/01/14 8,560(5) 581,224

9,397(5) 28,193(5) 62.69 05/05/15 13,238(5) 898,860

Ì 39,580(5) 60.45 06/04/16 36,400(5) 2,471,560

Mr. Smialowski ÏÏÏÏÏÏ Ì Ì Ì Ì 4,043(6) 274,520

7,050(5) 21,150(5) 62.69 05/05/15 9,930(5) 674,247

Ì 37,340(5) 60.45 06/04/16 34,330(5) 2,331,007

Mr. Baumann(3) ÏÏÏÏÏÏ Ì Ì Ì Ì 16,950(7) 1,150,905

Ì Ì Ì Ì 6,740(4) 457,646

Ì Ì Ì Ì 7,060(5) 479,374

Ì Ì Ì Ì 16,300(8) 1,106,770

(1) Consistent with the terms of our 2004 Employee Plan, the option exercise price is set at a price equal to the fair

market value of our common stock on the grant date.

(2) Market value is calculated by multiplying the number of RSUs held by each named executive oÇcer on

December 31, 2006 by the closing price of our common stock on December 29, 2006 ($67.90), the last day of trading

for the year.

(3) Mr. Baumann resigned his position as Executive Vice President, Finance and Chief Financial OÇcer eÅective

March 21, 2006 and continued to serve as Executive Vice President, Special Advisor to the President and Chief

Operating OÇcer until May 31, 2006. For more information see ""Employment and Separation Agreements Ì

Martin F. Baumann'' below.

(4) Stock options and RSUs granted on August 9, 2004 vest at a rate of 25% on August 9, 2005, April 1, 2006, April 1,

2007 and April 1, 2008. Mr. Baumann's RSU awards have vested and will be settled according to such schedule.

(5) Stock options and RSUs granted on August 2, 2004, May 6, 2005 and June 5, 2006 vest at a rate of 25% on each

anniversary of the grant date. Mr. Baumann's RSU awards have vested and will be settled according to such

schedule.

(6) Mr. McQuade's sign-on grant of RSUs vests at a rate of 33.33% on each anniversary of the September 1, 2004 grant

date. Mr. Piszel's September 7, 2006 sign-on award of RSUs vests at a rate of 25% on each anniversary of the

December 7, 2006 grant date. Ms. Cook's sign-on award of RSUs vests at a rate of 33.33% on each anniversary of the

August 2, 2004 grant date. Mr. Smialowski's sign-on award of RSUs vests at a rate of 33%, 33%, and 34% on each

anniversary of the December 13, 2004 grant date.

(7) RSUs granted on November 26, 2003 are vested and will settle on March 6, 2008.

(8) RSUs granted on November 1, 2005 are vested and will settle on December 31, 2007.

For information on alternative settlement provisions of RSU and stock option grants in the

event of certain terminations, see ""Potential Payments Upon Termination or Change in Control''

below.

Executive Compensation

57
Option Exercises and Stock Vested

The following table sets forth information concerning value realized upon the exercise of stock

options and the vesting of RSUs during Ñscal year 2006 by each of the named executive oÇcers.

Option Awards Stock Awards

Number of Shares Number of Shares Value

Acquired on Value Realized Acquired on Realized on

Name Exercise (#) on Exercise ($) Vesting (#)(1) Vesting ($)(2)

Mr. SyronÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 88,673 $5,792,908

Mr. McQuade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 44,120 2,784,742

Mr. PiszelÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì Ì

Ms. Cook ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 12,562 742,040

Mr. Smialowski ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 7,234 476,341

Mr. Baumann(3)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23,967 $154,465 6,900 427,460

(1) Amounts reported reÖect the number of RSUs that vested during 2006 prior to our withholding of shares to satisfy

appropriate taxes.

(2) Amounts reported are calculated by multiplying the number of pre-tax RSUs that vested during 2006 by the fair

market value of our common stock on the day of vesting.

(3) Mr. Baumann left the company in 2006. For more information, see ""Potential Payments Upon Termination or

Change In Control Ì Martin F. Baumann'' and ""Employment and Separation Agreements Ì Martin F. Baumann''

below.

Pension BeneÑts

The following table shows the actuarial present value of the accumulated retirement beneÑts

payable under the Pension Plan and the SERP Restoration BeneÑt to each of the named executive

oÇcers, computed as of September 30, 2006, the date used for pension calculations in our

consolidated Ñnancial statements for the year ended December 31, 2006 included in the

accompanying Annual Report. A summary of the material terms of each plan follows the table,

including information on early retirement.

Executive Compensation

58
Number of Years Present Value of

Credited Accumulated Payments During

Name Plan Name Service(#)(1)(3) BeneÑt($)(2)(3) Last Fiscal Year($)

Mr. Syron ÏÏÏÏÏÏÏÏÏÏÏÏÏ Pension Plan 3.0 $ 59,360 $0

SERP Ì Restoration 3.0 752,685

Mr. McQuade ÏÏÏÏÏÏÏÏÏ Pension Plan 2.3 35,334 0

SERP Ì Restoration 2.3 287,170

Mr. Piszel ÏÏÏÏÏÏÏÏÏÏÏÏÏ Pension Plan 0 0 0

SERP Ì Restoration 0 0

Ms. Cook ÏÏÏÏÏÏÏÏÏÏÏÏÏ Pension Plan 2.4 30,344 0

SERP Ì Restoration 2.4 311,446

Mr. Smialowski ÏÏÏÏÏÏÏÏ Pension Plan 2.1 31,549 0

SERP Ì Restoration 2.1 154,500

Mr. BaumannÏÏÏÏÏÏÏÏÏÏ Pension Plan Ì Ì 0

SERP Ì Restoration Ì Ì

(1) Amounts reported represent the credited years of service for each named executive oÇcer as of September 30, 2006,

under either the Pension Plan or the Restoration BeneÑt of the SERP. Amounts reported do not reÖect certain

contractual retirement beneÑts Messrs. Syron and McQuade would receive pursuant to their respective employment

agreements should their employment be terminated under certain conditions prior to vesting in the SERP

Restoration BeneÑt. For further information on these additional beneÑts for Messrs. Syron and McQuade, see

""Potential Payments Upon Termination or Change in Control''.

(2) Amounts reported reÖect the present value, expressed as a lump sum as of September 30, 2006, of each named

executive oÇcer's beneÑts under the Pension Plan and the Restoration BeneÑt of the SERP, respectively. Amounts

reported are calculated using the assumptions applied in NOTE 15 to the consolidated Ñnancial statements included

in the accompanying Annual Report, and the normal retirement age of 65 speciÑed in the Pension Plan. Present

values represent generational mortality tables developed by the Society of Actuaries' Retirement Plans Experience

Committee, which are typically used by companies since this table continually updates itself and reÖects improving

mortality. For all of the named executive oÇcers except Messrs. Piszel and Baumann, the amounts shown may

include amounts in which the named executive oÇcers are not yet vested. Pension Plan and SERP Restoration

beneÑts are subject to a Ñve-year cliÅ vesting schedule. For additional information, see the descriptions of their

respective employment agreements under ""Employment and Separation Agreements'' below. Mr. Piszel joined us as

Executive Vice President and Chief Financial OÇcer on November 13, 2006 and has not yet met the one year and

1000 hour eligibility requirements for the Pension Plan or SERP Restoration BeneÑt; therefore, the beneÑt amounts

as of September 30, 2006 for Mr. Piszel are zero.

(3) Mr. Baumann was not vested in the Pension Plan or the SERP Restoration BeneÑt at the time of his termination of

employment with us on May 31, 2006.

Pension Plan

The Pension Plan is a tax-qualiÑed, deÑned beneÑt pension plan we maintain that covers

substantially all employees who have attained age 21 and completed one year of service with us.

Pension Plan beneÑts are based on an employee's years of service and highest average monthly

compensation, up to limits imposed by law. SpeciÑcally, the normal retirement beneÑt under the

Pension Plan is a monthly payment calculated as 1% of the participant's highest average monthly

compensation for the 36-consecutive month period during which the participant's compensation

was the highest, multiplied by the participant's full and partial years of credited service under the

Pension Plan.

For purposes of the Pension Plan, compensation includes the non-deferred base salary paid to

each employee, as well as overtime pay, shift diÅerentials, non-deferred bonuses paid under our

corporate-wide annual bonus program or pursuant to a functional incentive plan (excluding the

value of any stock options or cash equivalents), commissions, and amounts deferred under the

Executive Compensation

59
Thrift/401(k) Savings Plan, the Flexible BeneÑts Plan and qualiÑed transportation under

Section 132(c)(4) of the Internal Revenue Code. Compensation does not include supplemental

compensation plans providing temporary pay, or any amounts paid after termination of employment.

Notwithstanding the lump sum nature of the disclosure in the table above, lump sum payments

are not permitted under the Pension Plan if the present value of the accrued beneÑt would equal or

exceed $25,000. The normal form of beneÑt under the Pension Plan is an annuity providing

monthly payments for the life of the participant and a survivor annuity for the participant's spouse or

beneÑciary, if applicable. Optional forms of beneÑt payment are available, including single life

annuity payments, subject to spousal consent if the actuarial present value of such beneÑt exceeds

$5,000 at the time of distribution. A beneÑt with an actuarial present value equal to or less than

$5,000 may only be paid as a lump sum.

Participants under the Pension Plan who terminate employment before age 55 with at least

Ñve years of service are considered ""terminated vested'' participants. Such participants may

commence their beneÑt under the Pension Plan as early as age 55. The beneÑt is equal to the vested

portion of the participant's accrued beneÑt, reduced by 1/180th for each of the Ñrst 60 months, and

by 1/360th for each of the next 60 months, by which the commencement of such beneÑts precedes

age 65.

An early retirement beneÑt is available to a participant who terminates employment on or after

age 55 with at least Ñve years of service. This early retirement beneÑt is reduced by three

percent (3%) for each year (prorated monthly for partial years) by which the commencement of

such beneÑts precedes the earlier of (i) age 65 or (ii) such participant's attainment of age 62 or

later with at least 15 years of service or projected service as if the participant continued working

until age 62. There is no reduction for early commencement if the beneÑt is commenced at or after

age 62 (but before age 65) if the participant has 15 years of service or projected service.

Supplemental Executive Retirement Plan Ì Restoration BeneÑt

The ""Restoration BeneÑt'' component of the SERP is designed to provide participants with the

full amount of beneÑts to which they would have been entitled under the Pension Plan if the plan

(1) was not subject to certain limits on compensation that can be taken into account under the

Internal Revenue Code and (2) did not exclude from ""compensation,'' amounts deferred under our

Executive Deferred Compensation Plan. For example, the Pension Plan is only permitted under the

Internal Revenue Code to consider the Ñrst $220,000 of an employee's compensation during 2006

for the purpose of determining the participant's compensation-based normal retirement beneÑt. We

believe the Restoration BeneÑt is an appropriate beneÑt because oÅering such a beneÑt helps us

remain competitive with companies in the Comparator Group.

The Restoration BeneÑt is calculated as the participant's accrued annual beneÑt payable at

age 65 (or current age, if greater) under the Pension Plan without application of the limits described

in the preceding paragraph, less the participant's actual accrued beneÑt under the Pension Plan.

The Restoration BeneÑt is vested for each participant to the same extent that the participant is

vested in the corresponding beneÑt under the Pension Plan.

To be eligible for the SERP for any year, the named executive oÇcer must be eligible to

participate in the Pension Plan and eligible for matching contributions and basic contributions under

the Thrift/401(k) Savings Plan for part of that year.

Executive Compensation

60
SERP Restoration BeneÑts that vest on or after January 1, 2005 are generally distributed in a

lump sum after separation from service (other than death) and are payable 90 days after the end of

the calendar year in which separation occurs. However, at the election of the employee, and subject

to certain restrictions and requirements under Section 409A, the Restoration BeneÑt may be paid

upon separation in the form of a single life annuity at age 65 or in equal annual installments over

Ñve, 10 or 15 years.

If the Restoration BeneÑt becomes payable in a lump sum, such lump sum is calculated as the

greater of (i) the lesser of (a) the present value of the annuity, calculated either under the normal

beneÑt formula as in eÅect on December 31, 1997 or the immediate and deferred annuity rates

published by the Pension BeneÑt Guaranty Corporation for plans terminating on January 1, 1998,

and (b) the single employer immediate and deferred rate issued by the Pension BeneÑt Guaranty

Corporation for plans terminating on January 1 of the year of calculation, or (ii) the present value

of the annuity calculated under the normal beneÑt formula using the actuarial assumptions

applicable to calculation of a lump sum under the Pension Plan as of January 1 of the year of

calculation.

Internal Revenue Code Section 409A imposed a signiÑcant new statutory framework applicable

to nonqualiÑed deferred compensation, generally eÅective for deferred amounts that vest on or after

January 1, 2005. These new rules necessitated amendments to our SERP in 2005, as well as

changes in operation that are not yet reÖected in plan language given the fact that regulatory

guidance from the Internal Revenue Service on Internal Revenue Code Section 409A was only

recently provided in April 2007. Additional amendments to our SERP may be required given the

Internal Revenue Service's Ñnal regulations implementing Section 409A. The forms of payment

described above are applicable to beneÑts that vest on or after January 1, 2005. BeneÑts that vested

prior to that date are distributed in diÅerent forms. None of the named executive oÇcers have any

SERP Restoration BeneÑts that were vested prior to January 1, 2005.

Non-qualiÑed Deferred Compensation

The following table shows the contributions, earnings, withdrawals and distributions, and

accumulated balances under the Make-Up Contribution of the SERP for each named executive

oÇcer as of December 31, 2006. None of the named executives has deferred compensation balances

under the Executive Deferred Compensation Plan. A summary of the material terms of the MakeUp Contribution of the SERP follows the table. For more information, see ""Compensation

Discussion and Analysis Ì Other Executive BeneÑts, including Perquisites and Retirement

BeneÑts Ì Executive Deferred Compensation and Supplemental Executive Retirement Plan''

above.

Executive Compensation

61
Executive Freddie Mac Aggregate Aggregate

Contributions Contributions Earnings in Aggregate Balance at

in Last in Last Last Withdrawals/ Last

Name FY($)(1) FY($)(2) FY($)(3) Distributions($) FYE($)(4)

Mr. SyronÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $0 $229,375 $12,774 $0 $345,938

Mr. McQuade ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 71,250 2,339 0 81,513

Mr. PiszelÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 0 0 0 0

Ms. Cook ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 96,250 2,948 0 106,000

Mr. Smialowski ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 49,767 1,372 0 51,765

Mr. Baumann ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0 89,758 7,631 0 187,749

(1) The SERP does not allow for employee contributions.

(2) Amounts reported reÖect company accruals under the Make-Up Contribution component of the SERP during 2006.

These amounts are also reported in the ""All Other Compensation'' column of the Summary Compensation Table.

Mr. Piszel is not yet eligible to participate in the SERP and, therefore, had not accrued any beneÑts as of

December 31, 2006.

(3) Amounts reported represent the total interest and other earnings credited to each named executive oÇcer under the

Make-Up Contribution of the SERP during 2006. None of the amounts reported are reÖected in the column

""Change in Pension Value and NonqualiÑed Deferred Compensation Earnings'' in the Summary Compensation

Table because none of the earnings were above-market or preferential as deÑned by SEC rules. Mr. Piszel is not yet

eligible to participate in the SERP and, therefore, had not accrued any beneÑts as of December 31, 2006.

(4) Amounts reported reÖect the accumulated balances under the Make-Up Contribution of the SERP for each named

executive oÇcer, including non-vested accruals. Matching contribution accruals vest immediately, whereas the basic

contribution accruals as of December 31, 2006 are subject to a Ñve-year cliÅ-vesting schedule. Because none of the

named executive oÇcers has met the Ñve-year vesting requirement for the basic contribution, the diÅerence in the

aggregate balance above and the vested balance is equal to the non-vested basic contributions plus earnings. The

vested and non-vested components for each named executive oÇcer are as follows: Mr. Syron: vested balance:

$205,143; non-vested balance: $140,796; Mr. McQuade: vested balance: $77,775; non-vested balance: $3,738;

Mr. Piszel: not yet eligible, therefore no accruals; Ms. Cook: vested balance: $104,339; non-vested balance: $1,661;

Mr. Smialowski: vested balance: $50,865; non-vested balance: $900; and Mr. Baumann: vested balance: $105,478;

non-vested balance: $82,271. For a more detailed discussion of the matching contribution accruals and basic

contribution accruals, see ""Supplemental Executive Retirement Plan Ì Make-Up Contribution'' below.

Supplemental Executive Retirement Plan Ì Make-Up Contribution

The ""Make-Up Contribution'' portion of the SERP is an unfunded, nonqualiÑed deÑned

contribution plan designed to provide participants with the full amount of beneÑts that they would

have been entitled to under the Thrift/401(k) Savings Plan if that plan (1) was not subject to

certain limits on compensation that can be taken into account under the Internal Revenue Code and

(2) did not exclude from compensation amounts deferred under our Executive Deferred

Compensation Plan. For example, in 2006 under the Internal Revenue Code, only the Ñrst $220,000

of an employee's compensation is considered when determining the company's percentage-based

matching contribution for any participant in the Thrift/401(k) Savings Plan. We believe the MakeUp Contribution is an appropriate beneÑt because oÅering such a beneÑt helps us remain

competitive with companies in the Comparator Group.

The Make-Up Contribution equals the amount of the employer matching contributions and

basic contribution for each named executive oÇcer that would have been made to the Thrift/401(k)

Savings Plan during the year, based upon the participant's eligible compensation, without

application of the above limits, less the amount of the matching contributions and basic

contribution actually made to the Thrift/401(k) Savings Plan during the year. Participants are

Executive Compensation

62
credited with earnings or losses in their Make-Up Contribution accounts based upon each

participant's individual direction of the investment of such notional amounts among the virtual

investment funds available under the SERP. Such investment options are based upon and mirror the

performance of those investment options available under the Thrift/401(k) Savings Plan. As of

December 31, 2006, there were 11 investment options in which participants' notional amounts could

be invested.

To be eligible for the SERP, the named executive oÇcer must be eligible to participate in the

Pension Plan and be eligible for matching contributions and basic contributions under the

Thrift/401(k) Savings Plan for part of the year. Additionally, to be eligible for the portion of the

Make-Up Contribution attributable to employer matching contributions, the named executive

oÇcer must contribute the maximum amount permitted under the terms of the Thrift/401(k)

Savings Plan on a pre-tax basis throughout the entire portion of the year in which the named

executive oÇcer is eligible to make such contributions. That portion of the Make-Up Contribution is

vested when accrued, while the accrual relating to the basic contribution is subject to Ñve year cliÅ

vesting. For amounts vesting on or after January 1, 2005, the Make-Up Contribution is distributed

as a lump sum payable 90 days after the end of the calendar year in which separation occurs.

As mentioned above, Internal Revenue Code Section 409A has led us to amend our SERP, and

we anticipate future amendments now that Ñnal regulations have been released. The form of

payment described above is applicable to amounts that vest on or after January 1, 2005. None of the

named executive oÇcers had any beneÑts that were vested as of that date.

Potential Payments Upon Termination or Change in Control

We have entered into certain employment agreements and maintain certain plans that will

require us to provide compensation to our named executive oÇcers in the event of a termination of

employment or a change in control of Freddie Mac. The compensation and beneÑts payable to each

named executive oÇcer as of December 31, 2006 are shown in the tables below. For more

information, see ""Employment and Separation Agreements'' below. OFHEO has reviewed the

terms of the employment and separation agreements for Ms. Cook and Messrs. Syron, McQuade,

Piszel and Baumann and has approved the termination beneÑts set forth therein.

As of December 31, 2006, none of the named executive oÇcers were eligible for retirement

beneÑts. With the exception of Mr. Baumann, the amounts presented in the tables below do not

include vested RSU or stock option awards or vested balances in the SERP Make-Up Contribution

as of December 31, 2006 because such vesting was not in connection with a termination or change

in control. Amounts shown in the tables also do not include certain items available to all employees

generally upon a termination event.

Alternative Settlement Provisions of Equity Awards in the Event of Certain Terminations

RSUs

The RSUs awarded to our employees, including the named executive oÇcers, provide for

alternative settlement provisions in the event of certain terminations, as follows:

‚ Immediate vesting and settlement occurs in the event of death or disability.

‚ In the event of normal retirement, as deÑned in the 2004 Employee Plan, RSUs will vest

immediately and will be settled in accordance with the vesting schedule outlined in the award

Executive Compensation

63
agreement as if termination had not occurred, with the exception that RSUs granted within

one year of retirement will be forfeited. This treatment is subject to the executive's signing

an agreement containing certain restrictive covenants, including, but not limited to, noncompetition, non-solicitation, continued cooperation and other matters to protect our

business interests. Violation of any of the covenants results in the forfeiture of unsettled

shares and the requirement to repay any after-tax gain realized from the settlement of shares

within 12 months of the forfeiture event. In the event of retirement other than a normal

retirement, as deÑned in the 2004 Employee Plan, the vesting and settlement of awards may

be accelerated at the discretion of the CHRC with respect to the named executive oÇcers

other than Messrs. Syron and McQuade. This provision is not applicable to the awards

granted to Messrs. Syron and McQuade as their employment agreements govern the

treatment of long-term equity awards under various termination scenarios.

‚ In the event of a termination due to ""special circumstances,'' such as a reorganization, a job

relocation, or a restructuring or other no-fault displacement, as determined in the sole and

absolute discretion of the Chairman and Chief Executive OÇcer, the RSUs vest

immediately and settle in accordance with the vesting schedule outlined in the award

agreement as if termination had not occurred. This provision is not applicable to the awards

granted to Mr. Syron, Mr. McQuade and Mr. Piszel's sign-on grant as their agreements

govern the treatment of long-term equity awards under various termination scenarios.

Stock Options

The stock options granted to our employees, including the named executive oÇcers, provide for

alternative settlement provisions in the event of certain terminations, which are similar to the

provisions for RSUs, with the following modiÑcations:

‚ The stock options remain exercisable for three years after the date of termination in the event

of death.

‚ The stock options remain exercisable for the full balance of their term in the event of

disability.

‚ In the event of retirement, as deÑned in the 2004 Employee Plan, stock options will continue

to vest and remain exercisable for the full balance of the term, subject to the executive's

signing an agreement containing the same restrictive covenants as described above for

RSUs.

‚ The stock options will continue to vest and remain exercisable for the full balance of their

term in the event of termination due to ""special circumstances'' as described above for

RSUs. This provision is not applicable to the awards granted to Messrs. Syron and

McQuade as their employment agreements govern the treatment of long-term equity awards

under various termination scenarios.

‚ If the individual's employment is terminated for any reason other than those described above,

the employee has 90 days after termination to exercise options vested as of the date of

termination.

Executive Compensation

64
Richard F. Syron

The following table describes the potential payments as of December 31, 2006 upon

termination or a change in control of Freddie Mac for Richard F. Syron, our Chief Executive

OÇcer.

Voluntary For Good

Voluntary Reason Resignation Change in

BeneÑts and Without Good Involuntary or Involuntary Control

Payments Reason For Cause Without Cause Death or (Without

Upon Termination Resignation(1) Termination(2) Termination(1)(3) Disability(4) Termination)(5)

Compensation:

Base Salary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì $ 2,200,000 Ì Ì

Annual Bonus(6) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 3,960,000 $ 1,320,000 Ì

Equity Awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 16,263,109 16,642,546 $16,263,109

BeneÑts:

Non-qualiÑed Pension ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 752,685 752,685 Ì

Deferred Compensation PayoutsÏÏÏÏÏÏÏ Ì Ì Ì 140,796 Ì

Post-termination Health Care ÏÏÏÏÏÏÏÏÏ Ì Ì 20,529 Ì Ì

Life Insurance Proceeds ÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 9,693,520 Ì

Disability BeneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 505,392 Ì

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì $23,196,323 $29,054,939(7) $16,263,109

(1) A June 1, 2006 agreement with Mr. Syron that increased his annual bonus target attributable to performance during

2006 from 120% to 240% of his base salary provides that for subsequent performance years the payment of an annual

bonus pursuant to the 120% target speciÑed in his December 31, 2003 employment agreement will not constitute

""Good Reason.'' Also, our Board's appointment, prior to the December 31, 2008 termination of Mr. Syron's

employment agreement, of a successor Chief Executive OÇcer reasonably acceptable to Mr. Syron does not

constitute ""Good Reason,'' provided that Mr. Syron remains Chairman of our Board.

(2) Mr. Syron may be considered for a bonus attributable to 2006 under this termination event, at the discretion of the

CHRC.

(3) The amount reported under Base Salary reÖects Mr. Syron's annualized base salary of $1,100,000 payable with

respect to the two years left under Mr. Syron's employment agreement (attributable to 2007 and 2008). The amount

reported under Annual Bonus reÖects the sum of Mr. Syron's target bonus attributable to each of 2006, 2007 and

2008. The amount reported under Equity Awards reÖects $8,800,000 in cash for the unvested long term equity

award granted in 2006; the value of all unvested RSUs granted prior to 2006, which vest immediately upon such

termination; and the value of all unvested options granted prior to 2006, which become exercisable immediately upon

such termination. For RSUs granted prior to 2006, the value is calculated on a grant-by-grant basis by multiplying

the number of unvested RSUs by the closing price of our common stock on December 29, 2006. For stock options

granted prior to 2006, the value is calculated on a grant-by-grant basis by multiplying the number of unvested options

granted by the diÅerence between the exercise price for such option and the closing price of our common stock on

December 29, 2006. The amount reported under Non-qualiÑed Pension reÖects the non-vested lump sum value of

the SERP Restoration BeneÑt as of September 30, 2006. Mr. Syron's employment agreement provides for payment of

the non-vested SERP Restoration BeneÑt under this termination event. Mr. Syron also is entitled through

December 31, 2008 to continue to participate in health and related welfare plans in which he participated prior to

termination at a cost to him that is equal to the cost required to be incurred by an active senior executive under the

terms of the applicable plan. The amount reÖected under Post-termination Health Care reÖects Freddie Mac's cost of

continued participation in our health care plans for twenty four months.

Executive Compensation

65
(4) The amount reported under Annual Bonus reÖects a $1,320,000 target bonus attributable to 2006. The amount

reported under Equity Awards reÖects the value of all outstanding RSUs, which vest immediately upon such

termination, and the value of all unvested stock options, which become exercisable immediately upon such

termination. For RSUs, the value is calculated on a grant-by-grant basis by multiplying the number of unvested

RSUs by the closing price of our common stock on December 29, 2006. For stock options, the value is calculated on a

grant-by-grant basis by multiplying the number of unvested options granted by the diÅerence between the exercise

price for such option and the closing price of our common stock on December 29, 2006. The amount reported under

Non-qualiÑed Pension reÖects the non-vested SERP Restoration BeneÑt as of September 30, 2006, which is payable

under a disability event. The amount reported under Deferred Compensation Payouts reÖects the non-vested SERP

Make-Up Contribution as of December 31, 2006, which is payable upon a disability event. Mr. Syron is not eligible

for the non-vested SERP Restoration BeneÑt or the non-vested Make-Up Contribution in the event of death. The

amount reported under Life Insurance Proceeds reÖects the life insurance policies we provide Mr. Syron with beneÑts

totaling $10,000,000. As of December 31, 2006, the beneÑt to Mr. Syron's beneÑciaries was $9,693,520, $6,000,000

of which is Term-Life and $3,693,520 of which is Endorsement Split Dollar. We are the owner of the Endorsement

Split Dollar Policy until the scheduled termination date, which is December 31, 2008 (the ""Scheduled Termination

Date''). As of December 31, 2006, in the event of death prior to the Scheduled Termination Date, the remaining

$306,480 would be payable to us. The amount reported under Disability BeneÑt reÖects the amount due to Mr. Syron

in the event of disability from December 31, 2006 through the Scheduled Termination Date. An additional $240,000

would be paid annually under the group long-term disability plan should Mr. Syron be approved for long-term

disability.

(5) This termination event represents a Change in Control in which Mr. Syron does not voluntarily terminate his

employment for Good Reason and he is not involuntarily terminated without Cause. If Mr. Syron terminated his

employment for Good Reason or he is involuntarily terminated without Cause in connection with the Change in

Control, he would receive the amounts reported under the column ""Voluntary For Good Reason Resignation or

Involuntary Without Cause Termination'' in lieu of this amount.

The amount reported under Equity Awards reÖects $8,800,000 in cash for the unvested long term equity awards

granted in 2006; the value of all unvested RSUs granted prior to 2006, which vest immediately upon such termination;

and the value of all unvested options granted prior to 2006, which become exercisable immediately upon such

termination. For information on the calculation of the value of these RSUs and options, see Note (3) above.

(6) The June 1, 2006 agreement provides that any termination beneÑt that may be paid to Mr. Syron pursuant to the

terms of his December 6, 2003 employment agreement will be based on the 120% bonus target in Mr. Syron's

December 6, 2003 employment agreement and not the 240% bonus target in the June 1, 2006 agreement.

(7) The amount reÖected under Death or Disability includes both Life Insurance Proceeds and Disability BeneÑts. The

Total amount will change based on the actual event. For a death event, the Total amount will exclude the amount

reÖected under Disability BeneÑts. For a disability event, the Total amount will exclude the amount reÖected under

Life Insurance Proceeds.

A June 1, 2006 agreement increasing Mr. Syron's annual bonus target attributable to

performance during 2006 from 120% to 240% of his base salary and a March 3, 2007 agreement

applying the 240% bonus target agreed to in the June 1, 2006 agreement to performance during

2007, provide that the 240% target shall not be used to calculate any termination of employment

beneÑt that may be paid to him pursuant to the terms of his December 6, 2003 employment

agreement. The March 3, 2007 agreement also reduces Mr. Syron's 2007 annual equity grant from

$8,800,000 (the amount agreed upon in his December 6, 2003 employment agreement) to

$8,600,000. The March 3, 2007 agreement further provides that the increase in Mr. Syron's bonus

target for 2007 and the reduction of his 2007 annual equity grant will not be used to calculate any

termination beneÑt that may be paid pursuant to the terms of his December 6, 2003 agreement.

Change in Control

Upon a ""change in control,'' any equity award granted to Mr. Syron at least 12 months prior to

the change in control will immediately vest. Vested RSUs will be paid out immediately and vested

Executive Compensation

66
stock options will remain exercisable until the expiration date of the options. Any equity awards

granted less than 12 months prior to the change in control will be cancelled in consideration of our

payment to Mr. Syron of $8,800,000 in cash for each cancelled equity award.

Termination Due to Death or Disability

In the event of a termination of his employment prior to December 31, 2008 due to disability or

death, we will pay Mr. Syron or his beneÑciaries his base salary through the end of the month in

which termination of employment occurs. We will pay any earned but unpaid bonus amounts from

the most recently completed calendar year, plus a prorated percentage of Mr. Syron's target bonus

for the calendar year in which employment termination occurs. Also, all RSUs awarded to

Mr. Syron will immediately vest and be paid out and all stock options granted will become

immediately exercisable. The stock options will remain exercisable: (i) in the event termination

occurs as a result of death, until the earlier to occur of (a) the third anniversary of the employment

termination or (b) the expiration date of the options; and (ii) in the event termination occurs as a

result of disability, until the scheduled expiration date applicable to the options. In the event of

termination due to disability, we will provide long-term disability beneÑts equal to 70% of

Mr. Syron's base salary during the period beginning on the Ñrst day of the month that immediately

follows the month in which the termination occurred through the earlier of December 31, 2008 or

the date he no longer has a disability.

Termination for Good Reason or Without Cause

Subject to Mr. Syron's execution of a general release and waiver, in the event that Mr. Syron

terminates his employment prior to December 31, 2008 for good reason or is terminated by us

without cause, we will pay Mr. Syron a lump sum cash payment equal to the base salary that would

have been paid to him for the period beginning on the termination date and ending on

December 31, 2008. We will pay any earned but unpaid bonus amounts from the most recently

completed Ñscal year. Also, we will pay Mr. Syron a lump sum cash payment equal to the sum of the

target annual bonuses that would have been paid to him in respect of each calendar year that ends

during the period beginning on the termination date and ending on December 31, 2008.

All RSUs awarded to Mr. Syron at least 12 months prior to the termination date will

immediately vest and be paid out, and all stock options granted to Mr. Syron at least 12 months

prior to the termination date will become immediately exercisable. All such stock options will

remain exercisable until the earlier to occur of (i) three years following such termination, or (ii) the

expiration date of the options. All equity awards granted less than 12 months prior to the

termination date will be cancelled in consideration of our payment to Mr. Syron of $8,800,000 in

cash for each cancelled equity award.

In addition, if he is not entitled to the Restoration BeneÑt under the SERP solely because he is

not yet vested under our tax-qualiÑed pension plan, then we will pay Mr. Syron the beneÑt that

would have been payable to him under the SERP as of the date of the termination without regard to

the vesting requirement, and he will be entitled to the Make-Up Contribution in accordance with

the terms of the SERP. We will provide Mr. Syron and his family continued health and other

similar welfare beneÑts coverage through December 31, 2008.

Executive Compensation

67
Termination for Cause

In the event that Mr. Syron's employment is terminated by us for cause prior to December 31,

2008, we will pay Mr. Syron any earned but unpaid base salary through the date of termination and

any earned but unpaid bonus amounts from the most recently completed calendar year. All

unvested equity awards will be immediately cancelled.

Termination Following the Scheduled Termination Date

In the event that Mr. Syron terminates his employment following December 31, 2008 due to

retirement (and at the time of such termination of Mr. Syron's employment we could not have

terminated him for cause), all RSUs awarded to Mr. Syron will immediately vest, but will settle

pursuant to the vesting schedule set forth in the grant agreements. All stock options granted to

Mr. Syron will become immediately exercisable and will remain outstanding until the expiration

date of the options.

Eugene M. McQuade

The following table describes the potential payments as of December 31, 2006 upon

termination or a change in control of Freddie Mac for Eugene M. McQuade, our President and

Chief Operating OÇcer.

Voluntary For

Good Reason

Voluntary Resignation Change in

Without Good Involuntary or Involuntary Control

BeneÑts and Payments Reason For Cause Without Cause Death or (Without

Upon Termination Resignation(1)(2) Termination(1)(3) Termination(2)(4) Disability(5) Termination)(6)

Compensation:

Base Salary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì $ 900,000 Ì Ì

Annual Bonus(7) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 1,800,000 $ 900,000 Ì

Equity Awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 11,234,120 11,489,884 $11,234,120

Repayment to Freddie Mac ÏÏÏÏÏÏÏÏÏÏÏÏÏ $(443,836) $(443,836) Ì Ì Ì

BeneÑts:

Non-qualiÑed Pension ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 287,170 287,170 Ì

Deferred Compensation PayoutsÏÏÏÏÏÏÏÏ Ì Ì Ì 3,738 Ì

Post-termination Health Care ÏÏÏÏÏÏÏÏÏÏ Ì Ì 10,183 Ì Ì

Life Insurance Proceeds ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 7,000,000 Ì

Disability BeneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 390,000 Ì

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(443,836) $(443,836) $14,231,473 $20,070,792(8) $11,234,120

(1) The amount reported under Repayment to Freddie Mac reÖects the prorated repayment of Mr. McQuade's initial

cash sign-on bonus of $2,000,000, which Mr. McQuade is required to repay us if he leaves during the initial three year

term of his employment agreement.

(2) A June 1, 2006 agreement with Mr. McQuade that increased his annual bonus target attributable to performance

during 2006 from 100% to 180% of his base salary provides that for subsequent performance years the payment of an

annual bonus pursuant to the 100% target speciÑed in his August 3, 2004 agreement will not constitute ""Good

Reason'' for him to terminate his employment with us.

(3) Mr. McQuade may be considered for a bonus attributable to 2006 under this termination event, at the discretion of

the CHRC.

Executive Compensation

68
(4) The amount reported under Base Salary reÖects an annualized base salary of $900,000. The amount reported under

Annual Bonus reÖects a $900,000 target bonus attributable to each of 2006 and 2007. The amount reported under

Equity Awards reÖects $6,000,000 in cash for unvested long-term equity awards granted in 2006; the value of all

unvested RSUs granted prior to 2006, which vest immediately; and the value of unvested stock options granted prior

to 2006, which become exercisable immediately upon such termination. For information on the calculation of the

value of these RSUs and stock options, see Note (3) to Mr. Syron's table. The amount reported under NonqualiÑed Pension reÖects the non-vested lump sum value of the SERP Restoration BeneÑt as of September 30, 2006.

Mr. McQuade's employment agreement stipulates payment of the non-vested SERP Restoration BeneÑt under this

termination event. Mr. McQuade is entitled through December 31, 2007 to continue to participate in health and

related welfare plans in which he participated prior to termination at a cost to him that is equal to the cost required to

be incurred by an active senior executive under the terms of the applicable plan. The amount reÖected under Posttermination Health Care reÖects Freddie Mac's cost of continued participation in our health care plans for twelve

months.

(5) The amount reported under Annual Bonus reÖects a $900,000 target bonus attributable to 2006. The amount reported

under Equity Awards reÖects the value of all outstanding RSUs, which vest immediately, and the value of all

outstanding options, which become exercisable immediately upon such termination. For information on the

calculation of the value of the RSUs and stock options, see Note (4) to Mr. Syron's table. The amount reported

under Non-qualiÑed Pension reÖects the non-vested SERP Restoration BeneÑt as of September 30, 2006, which is

payable under a disability event. The amount reported under Deferred Compensation Payouts reÖects the non-vested

SERP Make-Up Contribution as of December 31, 2006, which is payable upon a disability event. Mr. McQuade is

not eligible for the non-vested SERP Restoration BeneÑt or the non-vested SERP Make-Up Contribution in the

event of death. The amount reported under Life Insurance Proceeds reÖects life insurance policies we provide

Mr. McQuade totaling $7,000,000 to be paid to his beneÑciaries in the event of his death. The amount under

Disability BeneÑts reÖects the annual amount due to Mr. McQuade in the event of his disability, which equates to

$390,000. An additional $240,000 would be paid annually under the group long-term disability plan should

Mr. McQuade be approved for long-term disability.

(6) This termination event represents a Change in Control in which Mr. McQuade does not voluntarily terminate his

employment for Good Reason or he is not involuntarily terminated without Cause in connection with the Change in

Control. If Mr. McQuade terminated his employment for Good Reason or he is involuntarily terminated without

Cause in connection with the Change in Control, he would receive the amounts reported under the column

""Voluntary For Good Reason Resignation or Involuntary Without Cause Termination'' in lieu of this amount.

The amount reported under Equity Awards reÖects $6,000,000 in cash for unvested long-term equity awards granted

in 2006; the value of all unvested RSUs granted prior to 2006, which vest immediately; and the value of unvested

stock options granted prior to 2006, which become exercisable immediately upon such termination. For information

on the calculation of the value of these RSUs and stock options, see Note (3) to Mr. Syron's table.

(7) The June 1, 2006 agreement provides that any termination beneÑt that may be paid to Mr. McQuade pursuant to the

terms of his August 3, 2004 employment agreement will be based on the 100% bonus target in Mr. McQuade's

August 3, 2004 employment agreement and not the 180% bonus target in the June 1, 2006 agreement.

(8) The amount reÖected under Death or Disability includes both Life Insurance Proceeds and Disability BeneÑts. The

Total amount will change based on the actual event. For a death event, the Total amount will exclude the amount

under Disability BeneÑts. For a disability event, the Total amount reÖected will exclude the amount under Life

Insurance Proceeds.

Upon a change in control, the beneÑts aÅorded to Mr. McQuade are the same as set forth in

Mr. Syron's employment agreement, except that the payment to Mr. McQuade will be $6,000,000

in cash for each cancelled equity award.

Mr. McQuade may terminate his employment agreement for good reason (as deÑned in his

August 3, 2004 employment agreement). Subject to Mr. McQuade's execution of a general release

Executive Compensation

69
and waiver, in the event his employment is terminated by him for good reason or by us without

cause:

‚ We will pay Mr. McQuade any accrued and unpaid base salary, as well as any earned but

unpaid bonus amounts, from our most recently completed calendar year;

‚ We will pay Mr. McQuade a lump sum cash payment equal to the base salary and target

bonuses that would have been paid to him for the longer of (i) one year and (ii) the

remaining term of the employment agreement (the ""Severance Period'');

‚ We will provide Mr. McQuade and his beneÑciaries with continued coverage during the

Severance Period under our medical, dental and other similar beneÑt plans in which they

participated prior to the termination of his employment;

‚ We will provide Mr. McQuade with the same SERP beneÑt as is to be provided to Mr. Syron

under similar circumstances;

‚ All RSUs awarded to Mr. McQuade at least 12 months prior to the date of termination of his

employment will immediately vest and be paid out;

‚ All stock options granted to Mr. McQuade at least 12 months prior to the termination date

will become immediately exercisable until the earlier to occur of (i) three years following

the termination or (ii) the scheduled expiration date applicable to the options; and

‚ Any annual equity awards made less than 12 months prior to the termination will be

cancelled in consideration of our payment to Mr. McQuade of $6,000,000 in cash for each

cancelled equity award.

A June 1, 2006 agreement increasing Mr. McQuade's annual bonus target attributable to

performance during 2006 from 100% to 180% of his base salary, and a March 3, 2007 agreement

applying the 180% bonus target agreed to in the June 1, 2006 agreement to 2007, provide that the

180% target shall not be used to calculate any termination of employment beneÑt that may be paid

to him pursuant to the terms of his August 3, 2004 employment agreement. The March 3, 2007

agreement reduces Mr. McQuade's 2007 annual equity grant from $6,000,000 (the amount agreed

upon in his August 3, 2004 employment agreement) to $5,725,000. The March 3, 2007 agreement

further provides that the increase in Mr. McQuade's bonus target for 2007 and the reduction of his

2007 annual equity grant shall not be used to calculate any termination beneÑt that may be paid

pursuant to the terms of his August 3, 2004 agreement.

If Mr. McQuade resigns because he is not appointed to succeed Mr. Syron as Chief Executive

OÇcer by September 1, 2007 or he otherwise resigns for good reason during 2007 because

Mr. Syron ceases to be Chief Executive OÇcer and someone other than Mr. McQuade is appointed

as his successor (other than an interim Chief Executive OÇcer), then awards issued to

Mr. McQuade in 2007 will not be subject to the accelerated vesting provisions described in the Ñfth,

sixth and seventh bullets immediately above. In addition, if the termination is due to our decision

not to renew the term of his employment agreement, Mr. McQuade will be entitled to an

additional year's service credit with respect to his unvested equity awards in lieu of the accelerated

vesting provisions described immediately above.

Mr. McQuade is required to execute the same general release and waiver as Mr. Syron in order

to receive these beneÑts. In the event of termination of Mr. McQuade's employment prior to the

Executive Compensation

70
scheduled termination date due to disability or death, we will provide Mr. McQuade with beneÑts

similar to those provided to Mr. Syron under the same circumstances.

As noted above, we recently extended an oÅer to Mr. McQuade to succeed Mr. Syron as Chief

Executive OÇcer. Mr. McQuade has informed us that he does not wish to accept this oÅer and that

he has decided to leave Freddie Mac at the conclusion of his current employment agreement on

September 1, 2007 to pursue a position guiding a more traditional Ñnancial institution.

Mr. McQuade will continue as President and Chief Operating OÇcer of Freddie Mac until that

date.

Anthony S. Piszel

The following table describes the potential payments as of December 31, 2006 upon

termination for Anthony S. Piszel, our Executive Vice President and Chief Financial OÇcer.

Involuntary

BeneÑts and Payments Voluntary For Cause Involuntary Termination Death or

Upon Termination Resignation(1) Termination(1) Other Than For Cause(2) Disability(3)

Compensation:

Base Salary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì $1,300,000 Ì

Annual Bonus ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 600,000 $ 600,000 600,000 $ 600,000

Equity Awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 5,000,000 5,360,026

Repayment to Freddie Mac ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,500,000) (2,500,000) Ì Ì

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(1,900,000) $(1,900,000) $6,900,000 $5,960,026

(1) The amount reported under Annual Bonus reÖects a guaranteed bonus of $600,000 attributable to performance in

2006. If Mr. Piszel terminates his employment with us for any reason or is terminated for cause before the second

anniversary of his employment date, he is required to repay the full $2,500,000 of his sign-on cash bonus which is

reÖected under Repayment to Freddie Mac.

(2) The amount reported under Base Salary reÖects two times annualized base salary of $650,000; under Annual Bonus,

reÖects a guaranteed bonus of $600,000 attributable to 2006; and under Equity Awards, reÖects the one time sign-on

grant which will be cancelled and in consideration of which we will pay Mr. Piszel $5,000,000 in cash upon such

termination.

(3) The amount reported under Annual Bonus reÖects a guaranteed bonus of $600,000 attributable to 2006 and under

Equity Awards reÖects the value of all outstanding RSUs, which vest immediately upon such termination. For

information on the calculation of the value of the RSUs and stock options, see Note (4) to Mr. Syron's table.

Mr. Piszel's October 14, 2006 employment agreement provides that, if, prior to the fourth

anniversary of his employment date, we terminate Mr. Piszel's employment for any reason other

than Cause, he will receive a lump sum cash payment equal to two times his annualized base salary

in eÅect at the time of termination. This payment will be made in lieu of any payments under our

otherwise applicable severance plan, policy or practice. In the event that Mr. Piszel's employment

is terminated after the fourth anniversary of his employment date, he will be eligible to receive

severance pay pursuant to the terms of our applicable severance plan or policy. If Mr. Piszel

terminates his employment with us for any reason or is terminated for Cause before the second

anniversary of his employment date, he is required to repay the full $2,500,000 of his sign-on cash

bonus. If we terminate Mr. Piszel's employment for any reason other than Cause between the Ñrst

and fourth anniversaries of the date of grant, then the sign-on grant of 78,940 RSUs will vest and

continue to settle pursuant to the vesting schedule set forth in the grant agreement. If we terminate

Mr. Piszel's employment for any reason other than Cause before the Ñrst anniversary of the date of

grant, then the sign-on grant of 78,940 RSUs will be cancelled and we will pay Mr. Piszel

Executive Compensation

71
$5,000,000 in cash. If Mr. Piszel terminates his employment with us for any reason or is terminated

for Cause, then any unvested RSUs will be forfeited. Mr. Piszel is subject to non-competition and

non-solicitation of employees restrictions for a period of one year following any termination of his

employment.

Patricia L. Cook

The following table describes the potential payments as of December 31, 2006 upon

termination for Patricia L. Cook, our Executive Vice President, Investments and Capital Markets.

Voluntary Resignation Involuntary Other Than

or Involuntary For For Gross Misconduct Special

BeneÑts and Payments Gross Misconduct or Special Circumstance Death or Circumstance

Upon Termination Termination Termination(1) Disability(2) Termination(3)

Compensation:

Base Salary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì $1,200,000 Ì $1,200,000

Equity Awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì $4,686,598 2,766,431

BeneÑts:

Non-qualiÑed Pension ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 311,446 Ì

Deferred Compensation PayoutsÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 1,661 Ì

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì $1,200,000 $4,999,705 $3,966,431

(1) The amount reported for Base Salary reÖects the sum of Ms. Cook's annualized base salary of $600,000 pursuant to

her employment agreement plus severance pay equal to Ms. Cook's annualized base salary of $600,000 pursuant to

our oÇcer severance plan. Ms. Cook may be eligible to participate in the 2006 bonus program at the discretion of

the Chief Executive OÇcer, Chief Operating OÇcer or Executive Vice President, Human Resources and Corporate

Services. Any bonus paid under this program will be subject to CHRC approval.

(2) The amount reported under Equity Awards reÖects the value of all unvested RSUs, which will vest and will be settled

immediately upon such termination, and the value of all unvested stock options, which become exercisable

immediately upon such termination. The amount reported under Non-qualiÑed Pension reÖects the non-vested

SERP Restoration BeneÑt as of September 30, 2006, which is payable under a disability event. The amount reported

under Deferred Compensation Payouts reÖects the non-vested SERP Make-Up Contribution as of December 31,

2006, which is payable upon a disability event. Ms. Cook is not eligible for the non-vested SERP Restoration BeneÑt

or the non-vested Make-Up Contribution in the event of death.

(3) The amount reported under Base Salary reÖects the sum of Ms. Cook's annualized base salary of $600,000 pursuant

to her employment agreement plus severance pay equal to Ms. Cook's annualized base salary of $600,000 pursuant to

our oÇcer severance plan. The amount reported under Equity Awards reÖects the value of Ms. Cook's 2006 longterm equity awards as of December 31, 2006. For information on the calculation of the value of the RSUs and stock

options, see Note (4) to Mr. Syron's table.

Pursuant to the long-term equity award agreement for awards made in 2006, Ms. Cook's termination would be

classiÑed as a ""Special Circumstance Termination'' if (a) her job were eliminated due to a reorganization or job

relocation or if her employment were terminated due to a restructuring or other no fault displacement, as determined

by the Chief Executive OÇcer, and (b) she had executed a written agreement containing non-competition, nonsolicitation, and other covenants. Under this provision, long-term equity awards granted in 2006 will vest immediately

and will be settled in accordance with the vesting schedule outlined in the award agreement as if termination had

not occurred.

Ms. Cook's July 8, 2004 employment agreement, as amended by a letter agreement dated

July 9, 2004 and action taken by the CHRC on May 6, 2005, provides that, in the event that we

terminate Ms. Cook on or after the second anniversary of her employment date but prior to her

sixty-second birthday for any reason other than gross misconduct, as this term may be modiÑed in

our sole discretion from time to time, or any other willful or malicious misconduct on her part that

is substantially injurious to us, she will receive a lump sum cash severance payment in the amount

Executive Compensation

72
of $600,000. If Ms. Cook's employment with Freddie Mac terminates for any reason (other than

disability or death) prior to the lapse of restrictions on her RSU grant, she forfeits all of the units.

Pursuant to the terms of a Restrictive Covenant Agreement between Ms. Cook and us, in the

event that she is eligible for severance pay pursuant to the terms of our oÇcer severance policy upon

the termination of her employment, the amount she would receive is equal to her annualized base

salary at the time of termination; provided, that she executed a general release and waiver that is

satisfactory to us which may contain, in addition to a release of claims, provisions related to nonparticipation in others' claims against us, non-competition and non-solicitation provisions akin to

Mr. Piszel's, and non-disparagement, continued cooperation and treatment of conÑdential

information and such other provisions as we deem appropriate.

Joseph A. Smialowski

The following table describes the potential payments as of December 31, 2006 upon

termination for Joseph A. Smialowski, our Executive Vice President, Operations and Technology.

Voluntary Resignation Involuntary Other Than

or For Gross For Gross Misconduct Special

BeneÑts and Payments Misconduct or Special Circumstance Death or Circumstance

Upon Termination Termination Termination(1) Disability(2) Termination(3)

Compensation:

Base Salary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì $550,000 Ì $ 550,000

Equity Awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì $3,668,148 2,609,190

BeneÑts:

Non-qualiÑed Pension ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 154,500 Ì

Deferred Compensation PayoutsÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 900 Ì

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì $550,000 $3,823,548 $3,159,190

(1) The amount reported under Base Salary reÖects severance pay equal to Mr. Smialowski's annualized base salary of

$550,000 pursuant to our oÇcer severance plan. Mr. Smialowski may be eligible to participate in the 2006 bonus

program at the discretion of the Chief Executive OÇcer, Chief Operating OÇcer or Executive Vice President,

Human Resources and Corporate Services. Any bonus paid under this program will be subject to CHRC approval.

(2) The amount reported under Equity Awards reÖects the value of all unvested RSUs, which vest immediately upon

such termination, and the value of all unvested stock options, which become exercisable immediately upon such

termination. For information on the calculation of the value of the RSUs and stock options, see Note (4) to

Mr. Syron's table. The amount reported under Non-qualiÑed Pension reÖects the non-vested SERP Restoration

BeneÑt as of September 30, 2006, which is payable under a disability event. The amount reported under Deferred

Compensation Payouts reÖects the non-vested SERP Make-Up Contribution as of December 31, 2006, which is

payable upon a disability event. Mr. Smialowski is not eligible for the non-vested SERP Restoration BeneÑt or the

non-vested Make-Up Contribution in the event of death.

(3) The term ""Special Circumstance Termination'' has the same meaning as for Ms. Cook (see Note (3) to Ms. Cook's

table). The amount reported under Base Salary reÖects severance pay equal to Mr. Smialowski's annualized base

salary of $550,000 pursuant to our oÇcer severance plan. The amount reported under Equity Awards reÖects the

value of Mr. Smialowski's 2006 long-term equity awards as of December 31, 2006.

Pursuant to the terms of a Restrictive Covenant Agreement between Mr. Smialowski and us, in

the event that he was eligible for severance pay pursuant to the terms of our oÇcer severance

policy, the amount he would receive is equal to his annualized base salary at the time of

termination; provided, that he executes a general release and waiver that is satisfactory to us which

may contain, in addition to a release of claims, provisions related to non-participation in others'

claims against us, non-competition, non-solicitation, non-disparagement, continued cooperation,

treatment of conÑdential information and such other provisions as we deem appropriate. If

Executive Compensation

73
Mr. Smialowski's employment with us terminates for any reason (other than disability or death)

prior to the lapse of restrictions on his RSU grants, he forfeits all of the units.

Martin F. Baumann

Mr. Baumann resigned his position as Executive Vice President, Finance and Chief Financial

OÇcer eÅective March 21, 2006, and entered into a separation agreement with us dated March 21,

2006, which superceded his prior employment agreements and retention agreements with us. For

information on Mr. Baumann's termination beneÑts, see ""Employment and Separation

Agreements Ì Martin F. Baumann'' below.

Employment and Separation Agreements

The employment and separation agreements described below for Mr. Syron, Mr. McQuade,

Mr. Piszel, Ms. Cook, Mr. Smialowski and Mr. Baumann are available on Freddie Mac's website at

www.freddiemac.com/governance. For information on the termination provisions in Mr. Syron's,

Mr. McQuade's, Mr. Piszel's, Ms. Cook's and Mr. Smialowski's employment agreements, as well

as certain compensation agreements we entered into with Messrs. Syron and McQuade on June 1,

2006 and March 3, 2007, see ""Potential Payments Upon Termination or Change in Control'' above.

We entered into employment agreements with each of the named executive oÇcers when they

Ñrst joined us. All of our named executive oÇcers, with the exception of Mr. Smialowski, are

parties to currently eÅective agreements. Mr. Smialowski's agreement only governed his

compensation in 2005. Some agreements contain minimum guarantees with respect to base pay,

bonus, and long-term equity awards, as well as special provisions applicable upon termination. The

CHRC and management considered the executive protections (such as guaranteed bonuses and

special termination beneÑts) provided by each of these agreements necessary in order to achieve our

goal of recruiting and retaining exceptional leaders and executive oÇcers during a time of

transition.

Messrs. Syron's, McQuade's and Piszel's base salary, minimum bonus opportunities, and longterm equity award opportunities are set by the terms of their employment agreements. Ms. Cook's

base salary is set by the terms of her employment agreement. Mr. Baumann's release and

separation arrangement was entered into on March 21, 2006.

Richard F. Syron

Mr. Syron was appointed Chairman of the Board and Chief Executive OÇcer, eÅective

December 31, 2003. The terms of his employment with us are governed by (a) a December 6, 2003

employment agreement, as supplemented by a December 12, 2003 agreement that continues in

eÅect until the earlier of December 31, 2008 or the occurrence of an event of termination, (b) a

June 1, 2006 compensation agreement and (c) a March 3, 2007 compensation agreement. The

June 1, 2006 agreement superceded the provisions of Mr. Syron's employment agreement that

pertain to his cash bonus target for performance during 2006. The March 3, 2007 agreement

supercedes the provisions of Mr. Syron's employment agreement that pertain to his cash bonus

target for performance during 2007 and to his 2007 annual equity award.

Executive Compensation

74
During the term of Mr. Syron's agreement, Mr. Syron receives an annual minimum base salary

of $1,100,000, which amount may be increased in the discretion of the CHRC. The agreement also

provides that he has the opportunity to earn an annual cash bonus targeted at 120% of his base

salary, subject to a maximum payment of 200% of that target.

Subject to modiÑcations to Mr. Syron's employment agreement described above, Mr. Syron is

entitled to receive an annual equity award with an aggregate value on the grant date of $8,800,000,

of which at least 50% is in the form of RSUs and the rest is in the form of stock options. The

CHRC may in its discretion award a higher percentage of RSUs. Under the agreement, all of the

RSUs will vest on the Ñfth anniversary of the grant date, and the stock options will generally vest in

four equal annual installments beginning on the Ñrst anniversary of the grant date; provided, that

the CHRC in its discretion may accelerate the vesting of the RSUs or stock options or provide for

an accelerated vesting schedule.

During the term of the employment agreement, we will maintain, at our cost, term life

insurance on the life of Mr. Syron for the beneÑt of his beneÑciaries, with a face amount equal to

$10,000,000. If Mr. Syron remains employed by us through December 31, 2008, upon the later to

occur of December 31, 2008 and his turning 65, we will deliver to Mr. Syron a fully paid-up

permanent life insurance policy with a face amount equal to $4,000,000.

Pursuant to the agreement, Mr. Syron is entitled to participate in all other compensation and

employee beneÑt or perquisite programs generally available from time to time to our senior

executives, on the terms and conditions then prevailing under each such program, except that

Mr. Syron is not eligible to participate in our oÇcer severance plan or policy.

Mr. Syron is subject to non-competition and non-solicitation restrictions for periods of two

years and one year, respectively, following the termination of his employment with us.

Eugene M. McQuade

We entered into an August 3, 2004 employment agreement with Mr. McQuade, which provides

for his employment as President and Chief Operating OÇcer, eÅective September 1, 2004. The

agreement has an initial term of three years and is subject to automatic extension for successive

one-year periods unless either party gives notice that such extension shall not occur. A June 1, 2006

agreement supercedes the provision of Mr. McQuade's employment agreement that pertains to his

cash bonus target for performance during 2006. A March 3, 2007 agreement supersedes the

provision of Mr. McQuade's employment agreement that pertains to his cash bonus target for

performance during 2007 and to his 2007 annual equity award.

Mr. McQuade's agreement is similar to Mr. Syron's employment agreements, with the

following diÅerences:

‚ An annual base salary of $900,000, which amount may be increased in the discretion of the

CHRC;

‚ A sign-on bonus of $2,000,000 (however, if Mr. McQuade resigns for other than good reason

or is terminated for cause during the initial three-year term of his agreement, he is required

to repay us a pro-rata portion of the sign-on bonus);

Executive Compensation

75
‚ The opportunity to earn an annual cash bonus targeted at 100% of his base salary, subject to

a maximum bonus of 200% of his base salary.

‚ An annual equity award with an aggregate value on the grant date of $6,000,000, of which at

least 50% will be in the form of RSUs and the rest will be in the form of stock options. The

CHRC may in its discretion award a higher percentage of RSUs. The RSUs will vest on the

fourth anniversary of the grant date, and the options will vest in four equal annual

installments beginning on the Ñrst anniversary of the grant date, unless the CHRC

determines otherwise.

‚ Participation in (i) all other incentive and other compensation programs generally available

to senior executives, (ii) executive and employee beneÑt plans or programs at a level

commensurate with his position and duties with us, and (iii) all special beneÑt or perquisite

programs generally available from time to time to our Chief Executive OÇcer, all on the

terms and conditions then prevailing under each such program, except that Mr. McQuade is

not eligible to participate in our oÇcer severance plan or policy; and

‚ At our cost, term life insurance on the life of Mr. McQuade for the beneÑt of his

beneÑciaries with a face amount of $7,000,000, which will be converted to a fully paid-up

permanent life insurance policy with a face amount of $2,800,000 on the later to occur of the

termination of his employment with us or his turning 60, if Mr. McQuade remains

employed by us through both the scheduled termination date of the employment agreement

and his turning 60.

The CHRC, in accordance with the terms of our stock compensation plan, will determine the

exercise price of the stock options granted pursuant to Mr. McQuade's employment agreement.

The vesting of Mr. McQuade's initial and annual equity-based compensation is subject to his

continued employment with us. The CHRC in its discretion may accelerate the vesting of the RSUs

or stock options or provide for an accelerated vesting schedule.

Mr. McQuade also is subject to non-competition and non-solicitation restrictions similar to

those of Mr. Syron for periods of two years and one year, respectively, following the termination of

his employment with us.

Anthony S. Piszel

Mr. Piszel joined us as our Executive Vice President and Chief Financial OÇcer on

November 13, 2006. Under the terms of a letter agreement dated October 14, 2006, Mr. Piszel

receives an annualized base salary of $650,000 and the opportunity to earn annual bonuses and longterm equity awards. Under the terms of the agreement, Mr. Piszel received a one-time sign-on

bonus in the amount of $7,500,000, composed of $2,500,000 in cash and $5,000,000 in the form of

RSUs. The number of RSUs subject to the sign-on award is 78,940, which vest in four equal

annual installments beginning on December 7, 2007. The agreement also provides Mr. Piszel with

an opportunity to earn an annual cash bonus targeted at $1,007,500, with guaranteed minimum

annual bonuses for 2006 and 2007 of $600,000 and $1,007,500, respectively.

The agreement provides Mr. Piszel with an annual long-term equity award with a targeted

aggregate value of $3,000,000, with a guaranteed minimum equity award in 2007 of $3,000,000. The

long-term equity award vests in four equal annual installments beginning on the Ñrst anniversary of

Executive Compensation

76
the grant date. The agreement also provides, in addition to our standard senior oÇcer relocation

beneÑt, that we will pay for four months temporary living at a local hotel or comparable living

arrangement (in lieu of our standard temporary living relocation beneÑt); for reimbursement of up

to $40,000 in travel costs incurred by Mr. Piszel and his immediate family members prior to

permanent relocation to the Washington, D.C. area; and for a cash payment of $200,000 to cover

relocation expenses not covered by our standard senior oÇcer relocation beneÑt, as well as a tax

gross-up to oÅset Mr. Piszel's personal tax liability associated with the cash payment.

Patricia L. Cook

Ms. Cook joined us as our Executive Vice President, Investments on August 2, 2004 and

became Executive Vice President, Investments and Capital Markets on February 1, 2005. Under the

terms of a letter agreement dated July 8, 2004, as amended by a letter agreement dated July 9, 2004

and action taken by the CHRC on May 6, 2005, Ms. Cook receives an annualized base salary of

$600,000 and an annual cash bonus targeted at 167% of her bonus eligible earnings (currently

deÑned as base salary), subject to a maximum of 200% of this target, absent approval by the CHRC

of a greater amount. Ms. Cook also has the opportunity to earn an annual long-term equity award

that has no maximum award restriction.

Joseph A. Smialowski

Mr. Smialowski joined us as our Executive Vice President, Operations and Technology on

December 1, 2004. Under the terms of a letter agreement dated November 1, 2004, Mr. Smialowski

received an initial annualized base salary of $500,000, which was increased in 2006 to $550,000, and

the opportunity to earn short-term and long-term performance-based awards.

Martin F. Baumann

We hired Mr. Baumann in April 2003 as Executive Vice President, Finance. In June 2003, he

was appointed Chief Financial OÇcer. Mr. Baumann resigned from these positions eÅective

March 21, 2006. We entered into a separation agreement with Mr. Baumann eÅective March 21,

2006, which supercedes his letter agreements and retention agreements with us prior to that date.

The separation agreement provides, among other matters, the following termination beneÑts:

‚ Mr. Baumann's continued service to Freddie Mac as Executive Vice President, Special

Advisor to the President and Chief Operating OÇcer until May 31, 2006, at his then-current

base salary of $540,000, together with a bonus of $750,000 for his service in 2005.

‚ Mr. Baumann's availability to advise and consult with us on an as-needed basis until

December 31, 2008 (""Availability Period''), for no more than 15 days per calendar quarter

without his consent.

‚ Severance in the amount of $540,000 payable over one year in semi-monthly installments

commencing six months after May 31, 2006.

Executive Compensation

77
‚ With respect to a November 1, 2005 retention award, a cash payment of $1,000,000 and

settlement on December 31, 2007 of RSUs that had a value on the grant date of $1,000,000.

‚ Forfeiture of all stock options unvested as of May 31, 2006 and 25% of the RSUs granted in

2005 as part of the annual equity award.

‚ With respect to RSUs granted in 2003 and 2004 and 75% of the RSUs granted in 2005,

continued settlement through December 31, 2008 in accordance with their terms.

Mr. Baumann also has agreed to non-competition, non-solicitation, non-disparagement and

cooperation covenants that apply during the Availability Period. Mr. Baumann will forfeit any

remaining payments and beneÑts, and promptly return to us any payments or beneÑts provided

under the separation agreement in the event that he materially breaches his obligations under the

agreement pertaining to consultation (as described above), general release of claims, noncompetition, non-solicitation, cooperation, non-disparagement and treatment of our conÑdential

business information.

Executive Compensation

78
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

As provided in its charter, the Audit Committee (rather than the full Board) selects our

independent auditors, reviews the scope of the annual audit and pre-approves all audit and non-audit

services permitted under applicable law to be performed by the independent auditors. The Audit

Committee has evaluated the performance of PricewaterhouseCoopers and has selected them as our

independent auditors for Ñscal 2007. You are requested to ratify the Audit Committee's

appointment of PricewaterhouseCoopers. Representatives of PricewaterhouseCoopers will be

present at the annual meeting and will be given the opportunity to make a statement, if they desire

to do so, and to respond to appropriate questions from stockholders present at the meeting. Unless

stockholders specify otherwise in their proxy, proxies solicited by the Board will be voted by the

proxy holders at the annual meeting to ratify the selection of PricewaterhouseCoopers as our

independent auditors for Ñscal 2007. A majority of the votes cast at the annual meeting is required

for ratiÑcation.

Description of Fees(1)

The following is a description of fees billed to us by PricewaterhouseCoopers during 2005

and 2006.

2006 2005

Audit Fees(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $45,075,574 $45,971,130

Audit-Related Fees(3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,898,000 3,243,470

Tax Fees(4) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 17,955

All Other Fees(5) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 46,680

Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $53,973,574 $49,279,235

(1) These fees represent amounts billed within the designated year and include reimbursable expenses of $3,442,574 and

$5,777,805 for 2006 and 2005 respectively.

(2) Audit fees include fees billed by PricewaterhouseCoopers in connection with the audits of our annual consolidated

Ñnancial statements. The audit fees during 2006 include fees and expenses related to the 2005 ($26,428,000) and

2006 ($18,547,574) audits and preferred stock comfort letters ($100,000). In addition to the amounts shown above,

approximately $15.4 million of fees and reimbursable expenses were billed in 2007 for the 2006 audit. The audit fees

during 2005 include fees and expenses related to the 2002 ($404,298), 2003 ($1,328,582), 2004 ($19,978,250) and

2005 ($24,260,000) audits. Audit fees of $37,400 and $29,400 in 2006 and 2005, respectively, related to the Freddie

Mac Foundation are excluded because these fees are incurred and paid separately by the Freddie Mac Foundation.

(3) 2006 audit-related fees principally include fees and expenses related to internal control design reviews ($6,377,000),

agreed upon procedures associated with Freddie Mac-sponsored securitization transactions ($2,353,000), agreed

upon procedures with respect to Freddie Mac's option-adjusted spread fair value disclosure ($150,000) and

Comperio subscription services ($18,000). 2005 audit-related fees principally include fees and expenses related to

internal control design reviews ($1,470,970), agreed upon procedures associated with Freddie Mac-sponsored

securitization transactions ($1,700,500) and agreed upon procedures reports associated with structured Ñnance

transaction testing ($72,000).

(4) Tax fees in 2005 include fees for providing periodic updates on tax matters and certain advisory services. These

payments were eliminated in 2006.

(5) All other fees were zero for 2006 as Comperio, an online library for Ñnancial reporting and assurance literature, was

included in audit-related services, reÖecting the primary purpose and use of the subscription. All other fees in 2005

include the subscription renewal for Comperio and certain other PricewaterhouseCoopers publications and surveys.

Proposal 2: RatiÑcation of Appointment of Independent Auditors

79
Approval of Independent Auditor Services and Fees

The Sarbanes-Oxley Act and related rules adopted by the SEC require that all services

provided to companies subject to the reporting requirements of the Exchange Act by their

independent auditors be pre-approved by their audit committee or by authorized members of the

committee, with certain exceptions. The Audit Committee's charter requires that the Audit

Committee pre-approve any audit services, and any non-audit services permitted under applicable

law, to be performed by our independent auditors (or to designate one or more members of the

Audit Committee to pre-approve such services and to report such pre-approval to the Audit

Committee).

Audit services that are within the scope of an auditor's engagement approved by the Audit

Committee prior to the performance of those services are deemed pre-approved and do not require

separate pre-approval. Audit services not within the scope of an Audit Committee-approved

engagement, as well as permissible non-audit services, must be separately pre-approved by the

Audit Committee.

When the Audit Committee pre-approves a service, the Audit Committee typically sets a dollar

limit for such service. Management endeavors to obtain pre-approval of the Audit Committee, or of

the Chairman of the Audit Committee (when the Chairman of the Audit Committee has been

delegated such authority), before it incurs fees in excess of the dollar limit. If the Chairman of the

Audit Committee approves the increase, the Chairman will report such approval at the Audit

Committee's next scheduled meeting.

The pre-approval procedure is administered by our senior Ñnancial management, which reports

throughout the year to the Audit Committee. The Audit Committee pre-approved all audit and

audit-related services performed in 2006. At the direction of the Audit Committee,

PricewaterhouseCoopers did not provide any non-audit services to us in 2006.

We recommend that you vote for the ratiÑcation of the selection of PricewaterhouseCoopers

as our independent auditors for 2007.

Proposal 2: RatiÑcation of Appointment of Independent Auditors

80
PROPOSAL 3: APPROVAL OF AMENDMENT AND RESTATEMENT OF

THE 1995 DIRECTORS' STOCK COMPENSATION PLAN

General

You are being asked to approve the amendment and restatement of the Federal Home Loan

Mortgage Corporation 1995 Directors' Stock Compensation Plan at the annual meeting. Our Board

approved this amendment and restatement of the Directors' Plan on March 3, 2007, subject to

approval of our stockholders.

In 1995, stockholders initially approved the Directors' Plan, reserving 2.4 million shares for

equity awards for non-employee directors. Stockholders approved an amendment and restatement of

the Directors' Plan in 1998, which did not increase the number of shares reserved. By its terms, the

Directors' Plan will expire at the time of our annual meeting of stockholders in 2008. The proposed

amendment and restatement of the Directors' Plan would extend its eÅectiveness until 2017.

Stockholders are not being asked to approve any increase in the number of shares reserved and

available under the Directors' Plan.

The Board believes that the Directors' Plan has been and will continue to be a valuable means

by which we can attract and retain highly qualiÑed persons to serve as non-employee directors.

Recent corporate governance reforms in the United States have underscored the fact that having

qualiÑed and diligent independent directors is essential for the long-term success of a company. Our

on-going governance reforms have imposed increased responsibilities on our non-employee

directors, including greater demands on members serving on Board committees. The Directors'

Plan has been designed in a Öexible manner, to give the Board and the CHRC an opportunity to

determine the appropriate type, amounts and terms of equity awards, in order to provide reasonable

compensation for service by our non-employee directors, and to align the interests of our nonemployee directors with the interests of our stockholders.

Key features of and other signiÑcant historical information regarding the Directors' Plan

include:

‚ There has not been any increase in the number of shares authorized for awards under the

Directors' Plan since its adoption;

‚ No more than 40% of the Directors' Plan shares are available for full-value awards, such as

restricted stock and RSUs;

‚ No stock options will be granted with an exercise price less than 100% of the fair market

value of Freddie Mac's common stock on the date of grant;

‚ Fair market value is based upon the closing sale price per share of Freddie Mac's common

stock on the NYSE;

‚ Without stockholder approval, stock options may not be repriced, which includes canceling

and replacing an option with a new option having a lower exercise price;

‚ Shares tendered or withheld to pay the exercise price of an option will not be available again

for grant, and shares will not be withheld to cover taxes;

‚ Dilution, or the sum of shares underlying outstanding awards plus those remaining available

for new grants under all of our equity compensation plans, expressed as a percentage of our

Proposal 3: 1995 Directors' Stock Compensation Plan

81
outstanding shares at December 31, 2006 was 3.04% (dilution excludes shares issuable under

our Employee Stock Purchase Plan and vested shares that have been electively deferred by

employees and directors); and

‚ The number of shares underlying awards granted in a given year under our equity

compensation plans divided by the number of our outstanding shares at year-end has

averaged 0.30% for each of the last three years.

Reasons for Stockholder Approval

We seek stockholder approval of the amendment and restatement of the Directors' Plan in

order to satisfy requirements of the NYSE, and to meet the requirements of the current terms of the

Directors' Plan. Historically, we have granted equity awards only under plans approved by our

stockholders.

Accounting Treatment of the Directors' Plan

In accounting for stock-based compensation, we apply SFAS 123(R), which provides a

method by which the fair value of awards granted under the Directors' Plan, including stock options,

can be calculated and reÖected as an expense in our Ñnancial statements.

Restriction on Repricing

Without stockholder approval, we will not amend or replace previously granted options in a

transaction that constitutes a ""repricing.''' For this purpose, ""repricing'' means lowering the exercise

price of an option after it is granted; canceling an option at a time when its exercise price or grant

price exceeds the fair market value of the underlying stock, in exchange for another option,

restricted stock or other award, other equity, cash or other property; any other action that is treated

as a repricing under generally accepted accounting principles; or any other action that has the same

eÅect. An adjustment to an option resulting from a stock split, spinoÅ or other extraordinary

corporate transaction does not constitute a repricing.

Description of the Directors' Plan

The following is a brief description of the material terms and features of the Directors' Plan.

This description is qualiÑed in its entirety by reference to the full text of the Directors' Plan, a copy

of which is attached to this Proxy Statement as Appendix A.

Shares Available Under the Directors' Plan. As stated above, adoption of this proposal would

not change the number of shares available for awards under the Directors' Plan. Rather, it would

extend the term of the Directors' Plan for nine additional years.

At December 31, 2006, 1,504,225 shares remained available under the Directors' Plan. There

are 282,526 shares that will be issued upon exercise of outstanding options and settlement of

outstanding RSUs and deferred stock. The Directors' Plan limits the number of shares that may be

delivered in connection with awards of restricted stock and RSUs to a maximum of 40% of the

shares reserved under the Directors' Plan. At December 31, 2006, 799,111 shares remained available

under the Directors' Plan for restricted stock and RSU awards. As discussed below, the number of

shares of common stock reserved and available under the Directors' Plan is subject to adjustment

in the event of stock splits, stock dividends, and other extraordinary events.

Proposal 3: 1995 Directors' Stock Compensation Plan

82
Shares count against the Directors' Plan limits when delivered to participants in connection

with an award and thereafter when all restrictions have lapsed. Thus, shares remain available for

new awards if an award expires or is forfeited or otherwise terminated without delivery of shares to

the participant. Upon exercise of an option, the gross number of shares subject to the portion of the

option exercised will be deemed to have been delivered and therefore will count against the shares

reserved under the Directors' Plan. The Directors' Plan does not permit the withholding of shares to

cover the participant's taxes, so there is no ""recapture'' of shares relating to such tax withholding.

Shares delivered under the Directors' Plan may be either authorized but previously unissued

shares, treasury shares, or shares acquired in market transactions on behalf of the participants.

Information on the total number of shares available under our existing equity compensation

plans and unissued shares deliverable under outstanding awards as of the end of the last Ñscal year is

presented below under the caption ""Securities Authorized for Issuance Under Equity

Compensation Plans.'' The information covers plans for employees as well as those for nonemployee directors. Based on our equity award plans in eÅect and outstanding awards at

December 31, 2006, the total number of shares subject to outstanding awards and available for

future awards under the Directors' Plan and other current equity compensation plans, but excluding

the Employee Stock Purchase Plan, or ESPP, is as follows:

Shares subject to outstanding awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,256,500

Shares available for future equity awards (Note: this proposal does not

add shares to any plan) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,423,163

Total shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20,679,663

Percentage of outstanding shares* ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.13%*

* Outstanding shares (the denominator in this calculation) includes all common stock outstanding

at December 31, 2006 and does not include issuance of unissued shares reserved for outstanding or

future awards under the current equity compensation plans.

On April 18, 2007, the last reported sale price of our common stock in consolidated trading of

NYSE-listed securities was $64.36 per share.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information about our common stock that may be issued upon the

exercise of options, warrants and rights under our existing equity compensation plans at

December 31, 2006. Our stockholders have approved the ESPP, the 2004 Employee Plan, the 1995

Employee Plan and the Directors' Plan.

Proposal 3: 1995 Directors' Stock Compensation Plan

83
(c)

(a) Number of securities

Number of securities remaining available for

to be issued (b) future issuance under

upon exercise Weighted average equity compensation

of outstanding exercise price of plans (excluding

options, warrants outstanding options, securities reÖected in

Plan Category and rights warrants and rights column (a))

Equity compensation plans approved by stockholders ÏÏÏÏÏÏ 8,309,398(1) $41.52(2) 18,797,747(3)

Equity compensation plans not approved by stockholders ÏÏÏ None N/A None

(1) Includes 2,404,575 restricted stock units issued under the Directors' Plan, the 2004 Employee Plan and 1995 Employee Plan and

options to purchase up to 52,898 shares under the ESPP, which are issuable in connection with the oÅering period ended on

January 31, 2007.

(2) For the purpose of calculating this amount, RSUs are assigned an exercise price of zero.

(3) Consists of 10,918,938 shares, 6,374,584 shares and 1,504,225 shares available for issuance under the 2004 Employee Plan, the ESPP

and the Directors' Plan, respectively.

Eligibility. Awards may be granted under the Directors' Plan only to our non-employee

directors. If the nominees for election as director named in this proxy statement are reelected,

11 directors would qualify as non-employee directors eligible to participate in the Directors' Plan.

Administration. Under the Directors' Plan, the Board and the CHRC each have

administrative authority. The Board establishes policies as to the type of awards Ì options,

restricted stock, or RSUs Ì to be granted to non-employee directors, the amount and timing of

such awards, and other award terms not speciÑcally set out in the Directors' Plan. The CHRC is

authorized to perform all other administrative functions under the Directors' Plan, including

specifying award terms not speciÑed in the Directors' Plan or by the Board, adopting award

agreements and Directors' Plan regulations, interpreting the provisions of the Directors' Plan, and

making recommendations regarding award policies to the Board. The Board may itself perform any

function of the CHRC in connection with the administration of the Directors' Plan. Nothing in the

Directors' Plan precludes the Board or the CHRC from authorizing payment of other compensation

to directors outside of the Directors' Plan. The Directors' Plan provides that directors and others

acting on behalf of the Board or the CHRC shall not be personally liable, and shall be fully

indemniÑed, in connection with any action, determination, or interpretation taken or made in good

faith under the Directors' Plan.

Stock Options. The Directors' Plan authorizes the grant of stock options to non-employee

directors. As stated above, the Board and the CHRC will determine the amount and timing of

option grants, the times at which options will become exercisable and the terms under which options

will be forfeited upon termination of a director's service. Options will be non-qualiÑed stock options,

will have an exercise price equal to 100% of the fair market value of the underlying common stock

at the date of grant and a maximum term of ten years, and will not include rights to dividend

equivalents. A director may pay the exercise price of an option in cash, by surrendering previously

acquired shares of common stock or by directing us to withhold shares from the option shares

deliverable upon exercise to cover the exercise price. Our current policy regarding compensation of

non-employee directors, discussed above under the caption ""Board Compensation,'' does not

provide for grants of stock options.

Restricted Stock and RSUs. The Directors' Plan authorizes the Board to grant restricted stock

and RSUs to non-employee directors. As stated above, the Board and the CHRC will determine

the amount and timing of grants of restricted stock or RSUs, as well as the times at which such

awards will vest, the terms under which such awards will be forfeited upon termination of a

director's service, and, in the case of RSUs, the times at which such awards may be settled.

Proposal 3: 1995 Directors' Stock Compensation Plan

84
Restricted stock is an award of shares, issued in the name of the director, which are subject to a

risk of forfeiture and nontransferable for a speciÑed vesting period. Although such shares are issued

shortly after grant, we deliver them to the director only upon vesting. RSUs represent a contractual

right to receive one share of common stock at a speciÑed future date for each RSU, if the vesting

conditions are met. An RSU is subject to a risk of forfeiture and nontransferable for a speciÑed

period, but delivery of a share in settlement of the RSU may be deferred to a date after the lapse of

the risk of forfeiture and restriction on transferability. Dividends are payable on outstanding

restricted stock, and dividend equivalents are credited on outstanding RSUs in the form of

additional RSUs. Cash dividends on restricted stock are nonforfeitable, and non-cash dividends are

forfeitable to the same extent as the underlying restricted stock. The Board speciÑes the forfeiture

terms, if any, with respect to dividend equivalents on RSUs. Directors have voting rights with

respect to outstanding restricted stock, but not with respect to RSUs. Our current policy provides for

annual grants of RSUs, as discussed above under ""Board Compensation.''

Election to Receive Fees in the Form of Stock or Deferred Stock. The Directors' Plan also

permits a non-employee director to elect to receive fees otherwise payable in cash in the form of

common stock or deferred stock. The director may make such election for up to 100% of the fees

otherwise payable to him or her, including annual retainer fees, fees for service on a Board

committee, and fees for service as chairman of a Board committee. See ""Board Compensation.'' If a

director elects to receive fees in the form of common stock, we will issue to the director, or to an

account established on behalf of the director, a number of shares having an aggregate fair market

value equal to the fees that otherwise would have been payable at that date. Similarly, if a director

elects to receive fees in the form of deferred stock, we will credit the director's deferral account with

deferred stock (valued the same way as issuance of actual shares would have been), each share of

which represents a contractual right to receive one share of common stock at a speciÑed future date.

The Board or the CHRC may determine the terms applicable to deferred stock and the deferral

accounts, including the terms of dividend equivalents to be credited on deferred stock (which may

include mandatory or elective reinvestment in additional deferred stock). Common stock and

deferred stock acquired under this elective feature are at all times non-forfeitable.

Other Terms of Awards. Awards granted under the Directors' Plan generally may not be

pledged or otherwise encumbered and are not transferable except by will or by the laws of descent

and distribution, or to a designated beneÑciary upon the participant's death, except that the CHRC

may permit transfers for estate-planning purposes, other than transfers for value. The CHRC may

require or permit participants to defer the settlement of all or part of an award in accordance with

such terms and conditions as the CHRC may establish, including payment or crediting of interest

or dividend equivalents on any deferred amounts, but subject to compliance with requirements of

Internal Revenue Code Section 409A. Awards under the Directors' Plan generally will be granted

without a requirement that the participant pay consideration in the form of cash or property for the

grant (as distinguished from the exercise of the award).

Adjustments Upon Certain Events. We will generally adjust the number and kind of shares

issued or reserved for issuance under the Directors' Plan or under outstanding awards in the event a

share dividend or split, reorganization, recapitalization, merger, spin-oÅ, extraordinary dividend or

other similar corporate transaction or event aÅects the common stock.

Amendment and Termination of the Directors' Plan. The CHRC may suspend, discontinue,

or terminate, and, in limited circumstances, amend or alter, the Directors' Plan without stockholder

Proposal 3: 1995 Directors' Stock Compensation Plan

85
approval. Generally, amendments to the Directors' Plan require stockholder approval under NYSE

rules, our bylaws and other applicable laws or regulations. Even when not required by our bylaws or

applicable laws or regulations, the CHRC may, in its discretion, submit other amendments to

stockholders for approval. Board approval is required for any amendment that requires stockholder

approval or exceeds the authority of the CHRC under its charter and other corporate governance

documents. Stockholder approval is not, however, required for all possible amendments that might

increase the cost of the Directors' Plan. Outstanding awards may be amended, but the CHRC

cannot modify or waive award terms that would be mandatory if it were then granting a new award.

In addition, for awards that are intended to be settled in common stock according to their written

terms, cash settlement should be rare and only in response to circumstances that are unique,

outside of the participant's control, and perceived to result in a hardship to the participant. Unless

otherwise determined by the CHRC, such cash settlements must receive prior approval by our

Chief Financial OÇcer.

If the amendment and restatement of the Directors' Plan is approved by stockholders, awards

may be granted under the Directors' Plan until the time of our Annual Meeting of Stockholders in

2017, but not thereafter. Unless earlier terminated by the Board, the Directors' Plan will terminate

thereafter at such time that we have no further rights or obligations with respect to any outstanding

award.

Federal Income Tax Consequences

We believe that under current law the following federal income tax consequences generally

would arise with respect to awards under the Directors' Plan.

The grant of an option will create no federal income tax consequences for the participant or

Freddie Mac. Upon exercising an option, the participant generally must recognize ordinary income

equal to the diÅerence between the exercise price and the fair market value of the freely

transferable or non-forfeitable shares acquired on the date of exercise. A disposition of the option

shares generally will result in short-term or long-term capital gain or loss measured by the

diÅerence between the sale price and the participant's tax ""basis'' in such shares. The tax ""basis''

normally is the exercise price plus any amount he or she recognized as ordinary income upon the

exercise of the option.

Awards other than options that result in a transfer to the participant of shares generally will be

structured under the Directors' Plan to meet applicable requirements under Internal Revenue Code

Section 409A, which regulates deferred compensation. If no restriction on transferability or

substantial risk of forfeiture applies to shares distributed to a participant, the participant generally

must recognize ordinary income equal to the fair market value of the shares actually received. Thus,

for example, if an award of RSUs has vested but the receipt of shares has been validly deferred, the

participant should not become subject to income tax until the time at which shares are actually

distributed.

On the other hand, if a restriction on transferability and substantial risk of forfeiture applies to

shares actually distributed to a participant under an award (such as, for example, a grant of

restricted stock), the participant generally must recognize ordinary income equal to the fair market

value of the transferred amounts at the earliest time either the transferability restriction or the risk

of forfeiture lapses. A participant may elect to be taxed at the time of grant of restricted stock or

other property rather than upon lapse of restrictions on transferability or the risk of forfeiture, but if

Proposal 3: 1995 Directors' Stock Compensation Plan

86
the participant subsequently forfeits such shares or property he or she would not be entitled to any

tax deduction, including as a capital loss, for the value of the shares or property on which he or she

previously paid tax.

We normally can claim a tax deduction equal to the amount recognized as ordinary income by

a participant in connection with an award, but no tax deduction relating to a participant's capital

gains.

Any award that is deemed to be a deferral arrangement (excluding certain exempted shortterm deferrals) will be subject to Internal Revenue Code Section 409A. Participant elections to

defer compensation under such awards and as to the timing of distributions relating to such awards

must meet the requirements under Section 409A in order for income taxation to be deferred upon

vesting of the award and tax penalties avoided by the participant.

The foregoing provides only a general description of the application of federal income tax laws

to certain awards under the Directors' Plan. This discussion is intended for the information of

stockholders considering how to vote at the annual meeting and not as tax guidance to participants,

as the tax consequences may vary with the types of awards made, the identity of the recipient and

other circumstances. DiÅerent tax rules may apply, including in the case of variations in transactions

that are permitted under the Directors' Plan (such as payment of the exercise price of an option by

surrender of previously acquired shares). The summary does not address the eÅects of other

federal taxes (such as Social Security and Medicare taxes) or taxes imposed under state, local or

foreign tax laws.

New Plan BeneÑts Under the Directors' Plan

Because future awards under the Directors' Plan will be granted in accordance with policies

that will be set from time to time by the Board, the type, number, recipients, and other terms of such

awards cannot be determined at this time. We describe our current compensation policy for

Directors above under the caption ""Board Compensation.'' Under this policy, we expect that, at the

2007 Annual Meeting, 11 non-employee directors will each be granted RSUs having an aggregate

grant-date fair market value of $120,000. These grants will not be aÅected by the outcome of the

stockholder vote on this proposal to amend and restate the Directors' Plan. If stockholders decline to

approve this proposal, no further awards could be granted under the Directors' Plan after our

Annual Meeting of Stockholders in 2008.

Vote Required for Approval

Approval of the amendment and restatement of the Directors' Plan will require the aÇrmative

vote of a majority of the votes cast on the proposal at the annual meeting.

The Board considers the amendment and restatement of the Directors' Plan to be in the best

interests of Freddie Mac and its stockholders and therefore recommends that stockholders vote to

approve the amended and restated Directors' Plan at the annual meeting.

Proposal 3: 1995 Directors' Stock Compensation Plan

87
OTHER PROPOSED ACTIONS

As of the date of this Proxy Statement, there are no matters that the Board intends to present,

or has reason to believe others will present, for a vote at the annual meeting other than those

described in this Proxy Statement. If any other matters come before the annual meeting, the

persons designated as proxies will vote on those matters in accordance with their best judgment.

AVAILABILITY OF ANNUAL REPORT

Our Annual Report, which contains audited consolidated Ñnancial statements for 2006 and

other information, accompanies this Proxy Statement. Additional copies of the Annual Report and

any Information Statement Supplements may be obtained without charge by visiting our Internet

website (www.freddiemac.com/investors) or by writing or calling us at:

Freddie Mac

Investor Relations Department

Mailstop 486

8200 Jones Branch Drive

McLean, VA 22102-3110

Telephone: (571) 382-4732 or 1-800-FREDDIE (800-373-3343)

shareholder@freddiemac.com

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING

Section 16(a) of the Exchange Act requires directors and certain oÇcers of reporting

companies, and persons who own more than 10% of a registered class of such company's equity

securities, to Ñle reports of ownership and changes in ownership with the SEC and the exchange on

which such company's securities trade, and to furnish the company with copies of the reports. Until

we complete voluntary registration with the SEC, our directors and executive oÇcers are not

subject to these requirements. However, our directors and executive oÇcers provide the equivalent

of Section 16(a) reports to us, and we make them available on our Website at

www.freddiemac.com within the same time frames required for Section 16(a) reports. Based solely

on a review of such reports, we believe that during 2006, our directors and executive oÇcers

complied with such reporting obligations.

STOCKHOLDER PROPOSALS AND NOMINATIONS FOR

NEXT ANNUAL MEETING OF STOCKHOLDERS

As we did for this annual meeting, we will announce by press release the timeframes and

process for submitting stockholder proposals and director nominations once we have Ñnalized the

timing of the next annual meeting. To be considered for inclusion in the next proxy statement,

stockholder proposals must be submitted in writing by the announced deadline to the Corporate

Secretary, Freddie Mac, 8200 Jones Branch Drive, McLean, Virginia 22102. The written notice

must be accompanied by speciÑc information regarding the proposal and the interest of the

stockholder. If the stockholder does not comply with the requirements as set forth in our bylaws and

the press release, the chair of the next annual meeting may declare the proposal not properly

brought before the meeting.

Other Matters

88
Stockholder nominations of candidates for election as directors must be submitted in writing to

the Corporate Secretary, Freddie Mac, 8200 Jones Branch Drive, McLean, Virginia 22102 by the

same deadlines as for stockholder proposals to be introduced from the Öoor of the 2008 annual

meeting. The written notice must include (i) the name, age, business address and residential

address of the nominee, (ii) the principal occupation or employment of the nominee, (iii) a

description of all arrangements or understandings between the stockholder and the nominee and any

other person relating to the nomination, and (iv) all other information about the nominee that

would be required to be included in a proxy statement soliciting proxies for the election of directors

under the rules promulgated under the Exchange Act, including a written consent from the

nominee to being named in the proxy statement and to serve if elected. The stockholder also must

provide his, her or its name and record address, the number of shares beneÑcially owned and a

representation that the stockholder intends to appear in person or by proxy at the meeting to make

the nomination. If the stockholder does not comply with the requirements of Section 3.03 of our

bylaws, the chair of the annual meeting may declare the nomination defective and it will be

disregarded.

SOLICITATION BY BOARD; EXPENSES OF SOLICITATION

Our Board has sent you this Proxy Statement. We will pay all expenses in connection with the

solicitation of the enclosed proxy. In addition to solicitation by mail, our oÇcers and employees,

who will receive no extra compensation for their services, may solicit proxies by telephone, in

writing or in person. We also have retained Morrow & Co. Inc., a proxy soliciting Ñrm, to assist in

the solicitation of proxies for an estimated fee of $15,000, plus reimbursement of reasonable out-ofpocket expenses. We also will reimburse brokers and nominees who hold shares in their names for

their reasonable out-of-pocket expenses to furnish proxy materials to the beneÑcial owners of such

shares.

By Order of the Board of Directors,

Robert E. Bostrom

Executive Vice President, General Counsel and Corporate Secretary

May 7, 2007

Other Matters

89
APPENDIX A

FEDERAL HOME LOAN MORTGAGE CORPORATION

1995 DIRECTORS' STOCK COMPENSATION PLAN

EÅective May 2, 1995

As Amended and Restated June 8, 2007

A-1
TABLE OF CONTENTS

Page

ARTICLE I Ì Establishment of the Plan ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

1.1 Purposes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

1.2 EÅective Date of Original Plan and Amendment and Restatement of Plan ÏÏÏÏÏ A-4

1.3 Plan Name ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

ARTICLE II Ì DeÑnitions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

2.1 Award ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

2.2 Award Document ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

2.3 BeneÑciary ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

2.4 Board ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

2.5 Code ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

2.6 Committee ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-4

2.7 Common Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-5

2.8 Compensation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-5

2.9 Corporation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-5

2.10 Deferred Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-5

2.11 Disability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-5

2.12 Director ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-5

2.13 Dividend Equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-5

2.14 Early Retirement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-5

2.15 Fair Market Value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-5

2.16 Option ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

2.17 ParticipantÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

2.18 Plan ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

2.19 Restricted Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

2.20 Restricted Stock Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

2.21 Retirement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

2.22 Retirement Age ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

2.23 Stock Election ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

ARTICLE III Ì Administration ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

3.1 Authority of the Committee Generally ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-6

3.2 Authority of the Board ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-7

3.3 Good Faith Reliance; Limitation on LiabilityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-7

3.4 Limitation on Repricing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-7

ARTICLE IV Ì Common Stock Available Under the Plan; Adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏ A-7

4.1 Common Stock Available for Delivery ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-7

4.2 Source of Common StockÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-8

4.3 Adjustments in Response to Corporate EventsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-8

ARTICLE V Ì Eligibility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

5.1 Persons Eligible ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

5.2 Rights to Awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

ARTICLE VI Ì Terms of Awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

6.1 General ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

6.2 Limitations on TransferabilityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

6.3 No Stockholder Rights ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

6.4 Insider Trading Policies Apply ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

A-2
Page

ARTICLE VII Ì Options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

7.1 Award ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-9

7.2 Terms of Award ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-10

7.3 Termination of Board Membership ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-10

ARTICLE VIII Ì Restricted Stock and Restricted Stock Units ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-10

8.1 Award ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-10

8.2 Vesting Schedule ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-10

8.3 Termination of Board Membership ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-10

8.4 Other Terms of Restricted Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-10

8.5 Other Terms of Restricted Stock UnitsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-11

ARTICLE IX Ì Stock Election ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-11

9.1 Election to Receive StockÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-11

9.2 Amount of Stock or Deferred Stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-12

9.3 Receipt of Common Stock Pursuant to a Stock Election ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-12

9.4 Award of Deferred Stock Pursuant to a Stock Election ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-13

ARTICLE X Ì General Provisions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-13

10.1 Consideration ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-13

10.2 Compliance with Laws and Obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-14

10.3 No Right to Continued MembershipÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-14

10.4 Changes to the Plan and Awards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-14

10.5 Governing Law ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-15

10.6 Certain Limitations on Awards to Ensure Compliance with

Code Section 409A ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-15

10.7 Continued Service as an Employee ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-16

10.8 Plan Termination; EÅect of Amendment and Restatement ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-16

A-3
FEDERAL HOME LOAN MORTGAGE CORPORATION

1995 DIRECTORS' STOCK COMPENSATION PLAN

As Amended and Restated June 8, 2007

ARTICLE I

Establishment of the Plan

1.1 Purposes. The purposes of this 1995 Directors' Stock Compensation Plan (the ""Plan'')

of the Federal Home Loan Mortgage Corporation (the ""Corporation'') are to advance the interests

of the Corporation and its stockholders by providing a means to attract and retain highly-qualiÑed

persons who are not employees of the Corporation to serve as Directors, to provide reasonable

compensation for service to the Corporation by such Directors, and to promote ownership by such

Directors of a greater proprietary interest in the Corporation, thereby aligning such Directors'

interests more closely with the interests of stockholders of the Corporation.

1.2 EÅective Date of Original Plan and Amendment and Restatement of Plan. This Plan

became eÅective May 2, 1995. This amendment and restatement of the Plan shall become eÅective

when approved by the Corporation's stockholders as set forth in Section 10.8.

1.3 Plan Name. The name of the Plan is the Federal Home Loan Mortgage Corporation

1995 Directors' Stock Compensation Plan.

ARTICLE II

DeÑnitions

2.1 Award. Any Option, Restricted Stock, Restricted Stock Unit, or right to receive shares

of Common Stock or Deferred Stock pursuant to a Stock Election, or any combination thereof,

granted under the Plan.

2.2 Award Document. Any written or electronic agreement, contract, notice, or other

instrument or document evidencing an Award. The use of an ""electronic record'' and an ""electronic

signature'' in connection with any Award Document shall be governed by the federal Electronic

Signatures in Global and National Commerce Act of 2000 (E-SIGN) or the Uniform Electronic

Transactions Act (UETA) as enacted by the Commonwealth of Virginia, as applicable. The terms

""electronic records'' and ""electronic signature'' shall have the meanings ascribed to such terms in

E-SIGN or the Virginia UETA, as applicable.

2.3 BeneÑciary. The person(s) or trust(s) which have been designated by a Participant in

his or her most recent beneÑciary designation Ñled with the Committee to receive the beneÑts in

connection with an Award upon such Participant's death, or to whom or to which an Award or

rights relating thereto are transferred if and to the extent permitted under Section 6.2. If, upon a

Participant's death, there is no designated BeneÑciary or surviving designated BeneÑciary, then the

term BeneÑciary means the person(s) or trust(s) entitled by will or laws of descent and distribution

to receive such beneÑts.

2.4 Board. The Board of Directors of the Corporation.

2.5 Code. The Internal Revenue Code of 1986, as amended from time to time.

2.6 Committee. The Compensation and Human Resources Committee of the Board, or

such other Board committee as may be designated by the Board to administer the Plan. No member

of the Committee who is a Participant shall participate in any determination relating solely or

primarily to his or her own Award. In addition, in any case in which the Board exercises any

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authority granted to the Committee under the Plan, each reference to ""Committee'' shall be

deemed to mean the Board, unless the context otherwise requires.

2.7 Common Stock. The Common Stock, $0.21 par value, of the Corporation or such other

common stock as may be substituted or resubstituted for Common Stock pursuant to an adjustment

under Section 4.3.

2.8 Compensation. The retainer and meeting fees and any other fees paid to a Director for

services as such, including for service as a member of a committee of the Board.

2.9 Corporation. The Federal Home Loan Mortgage Corporation.

2.10 Deferred Stock. An Award, in lieu of other Compensation pursuant to a Stock Election

under Article IX or as a result of Dividend Equivalents, which Award represents a generally

nontransferable right to receive one share of Common Stock at a speciÑed future date for each

share of Deferred Stock awarded, together with a right to Dividend Equivalents and other rights,

and subject to the terms and conditions set forth in Article IX.

2.11 Disability. A Participant's termination of service as a Director of the Corporation due

to injury or sickness which the Participant's personal physician has certiÑed to the Committee

prevents the Participant from performing the material duties of a Director.

2.12 Director. A duly elected or appointed member of the Board who is not an employee of

the Corporation or any subsidiary.

2.13 Dividend Equivalents. With respect to each Restricted Stock Unit and each share of

Deferred Stock, a right either to receive payments equal to the dividends or distributions declared

or paid on a share of Common Stock at the same time as those dividends or distributions are paid

to holders of Common Stock, or to receive such amounts, at the time the Restricted Stock Unit or

Deferred Stock is or would be otherwise settled, or to have such amounts credited to the

Participant, at the time the dividends or distributions are paid to holders of Common Stock, in the

form of additional Restricted Stock Units or Deferred Stock having a Fair Market Value, at the

date such dividends or distributions are paid on Common Stock, equal to the amount of the

dividends or distributions declared and paid on a share of Common Stock, subject to Section 9.4.

Rights to Dividend Equivalents shall be non-forfeitable in all cases. The Committee shall determine

the manner of payment or crediting of Dividend Equivalents at or before the grant date for any

Award of Restricted Stock Units or Deferred Stock. No Dividend Equivalents will be credited or

payable with respect to any Award other than Restricted Stock Units or Deferred Stock.

2.14 Early Retirement. A Director's termination of membership on the Board (other than

due to Disability, Retirement or death) and (a), for a Director appointed by the President of

United States (""President''), upon (i) notiÑcation by the President (or designee) that the Director

will not be reappointed or (ii) failure of the President to reappoint the Director, or notify the

Corporation of his intention to reappoint the Director, within 120 days after the end of that

Director's term of oÇce; (b), for all other Directors, after completing ten consecutive terms in oÇce

as a Director.

2.15 Fair Market Value. The closing sale price of a share of Common Stock reported for

composite transactions in the New York Stock Exchange listed securities in print or electronically

by The Wall Street Journal or by another recognized provider designated by the Committee for

such date or, if no such prices are reported for such date, on the most recent trading day prior to

such date for which such prices are reported; provided, however, that the Committee may, in good

faith, establish alternative methods or procedures for determining Fair Market Value. Fair Market

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Value of Restricted Stock, Restricted Stock Units, or Deferred Stock shall be based on the shares

subject to such Award without regard to any risk of forfeiture or restriction on transferability

applicable to such Award.

2.16 Option. An Award under Article VII representing a conditional right to purchase, upon

the exercise of the right by the Participant or his or her BeneÑciary, a speciÑed number of shares of

Common Stock at a Ñxed price during a speciÑed period or periods, and subject to such other

conditions as the Committee may specify.

2.17 Participant. A Director who has been granted an Award under the Plan.

2.18 Plan. This 1995 Directors' Stock Compensation Plan.

2.19 Restricted Stock. An Award under Article VIII pursuant to which a speciÑed number

of shares of Common Stock are granted to the Participant, subject to a speciÑed risk of forfeiture

and restriction on transferability until the expiration of a speciÑed restricted period or periods, and

subject to such other conditions as the Committee may specify.

2.20 Restricted Stock Units. An Award under Article VIII or as a result of Dividend

Equivalents which represents a generally nontransferable right to receive one share of Common

Stock at a speciÑed future date for each Restricted Stock Unit awarded, together with a right to

Dividend Equivalents and other rights, subject to a speciÑed risk of forfeiture (except in the case of

Restricted Stock Units resulting from Dividend Equivalents) until the expiration of a speciÑed

period or periods and other terms and conditions set forth in Article VIII, and subject to such other

conditions as the Committee may specify.

2.21 Retirement. A stockholder-elected Director's termination of membership on the Board

upon or after, and as a consequence of, attaining the Retirement Age.

2.22 Retirement Age. The retirement age which, under the Board retirement policy adopted

by the Board of Directors (as such policy may be modiÑed from time to time), is applicable to the

aÅected stockholder-elected Director.

2.23 Stock Election. An election, made pursuant to Article IX, by an eligible Director, to

receive Common Stock or Deferred Stock in payment of all or a portion of Compensation.

ARTICLE III

Administration

3.1 Authority of the Committee Generally. The Plan shall be administered by the

Committee, except insofar as administrative authority is expressly reserved to the Board. The

Committee shall have full and Ñnal authority to take the following actions, in each case subject to

and consistent with the provisions of the Plan:

(a) to recommend to the Board policies regarding the type or types of Awards to be

granted to Directors for speciÑed services, the time or times at which such Awards may be

granted, the number of shares of Common Stock to be subject to each Award, and the material

terms and conditions of such Awards not otherwise speciÑed in the Plan, and to determine all

other matters in connection with an Award not otherwise speciÑed in the Plan or determined

by the Board;

(b) to prescribe the form of each Award Document;

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(c) to adopt, amend, suspend, waive, and rescind such rules and regulations as the

Committee may deem necessary or advisable to administer the Plan, including rules that reÖect

the advice of counsel, promoting compliance with applicable laws and regulations;

(d) to correct any defect, Ñll any omission or reconcile any inconsistency in the Plan and

to construe and interpret the Plan and any Award, rules and regulations, Award Document, or

other instrument hereunder; and

(e) to make all other decisions and determinations as may be required under the terms of

the Plan or as the Committee may deem necessary or advisable for the administration of the

Plan.

3.2 Authority of the Board. In furtherance of the authority of the Board to establish policies

providing for reasonable compensation to Directors and setting the form, timing, and other terms of

such compensation, the Board shall have full and Ñnal authority to establish policies regarding the

type or types of Awards to be granted under Articles VII and VIII to Directors for speciÑed

services, the time or times at which such Awards may be granted, the number of shares of Common

Stock to be subject to each Award, and the material terms and conditions of Awards, in each case

subject to and consistent with the provisions of the Plan. In addition, the Board may exercise any

authority of the Committee under the Plan.

3.3 Good Faith Reliance; Limitation on Liability. Each member of the Committee or the

Board shall be entitled to, in good faith, rely or act upon any report or other information furnished

to him or her by any oÇcer or other employee of the Corporation, the Corporation's independent

public accountants, or any compensation consultant, legal counsel, or other professional retained by

the Corporation or the Committee to assist in the administration of the Plan. No member of the

Committee or Board, nor any oÇcer or employee of the Corporation acting on behalf of the

Committee or Board hereunder, shall be personally liable for any action, determination, or

interpretation taken or made in good faith with respect to the Plan, and members of the Committee

and Board and any oÇcer or employee of the Corporation acting on behalf of the Committee or

Board or members thereof shall, to the extent permitted by law, be fully indemniÑed and protected

by the Corporation with respect to any such action, determination, or interpretation.

3.4 Limitation on Repricing. Other provisions of the Plan notwithstanding, without the prior

approval of the Corporation's stockholders, the Committee will not amend or replace previously

granted Options in a transaction that constitutes a ""repricing.'' ""Repricing'' means: (a) lowering the

exercise price of an Option after it is granted; (b) canceling an Option at a time when its exercise

price exceeds the fair market value of the underlying stock, in exchange for another Option,

Restricted Stock, other Award, other equity, or cash or other property, unless the cancellation and

exchange occurs in connection with a merger, acquisition, spin-oÅ or other similar corporate

transaction; (c) any other action that is treated as a repricing under generally accepted accounting

principles; or (d) any other action that has the same eÅect as those itemized in (a) Ó (c);

provided, however, that any adjustment authorized by Section 4.3 shall under no circumstances be

considered a ""repricing.''

ARTICLE IV

Common Stock Available Under the Plan; Adjustments

4.1 Common Stock Available for Delivery. Subject to adjustment as hereinafter provided,

the total number of shares of Common Stock reserved and available for delivery in connection with

Awards under the Plan shall be 2,400,000, which is the number of shares originally authorized under

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the Plan at its eÅective date (adjusted for stock splits since the eÅective date); provided, however,

that not more than 40% of the total number of shares reserved and available under the Plan shall

be subject to Awards of Restricted Stock and Restricted Stock Units under Section 8.1 which

become vested and nonforfeitable under Section 8.2. If all or any portion of any Award is forfeited,

or otherwise is terminated without delivery of shares of Common Stock to the Participant, the

shares to which such Award or portion thereof related shall again be available for Awards under the

Plan. For this purpose, upon exercise of an Option, the gross number of shares subject to the

portion of the Option so exercised shall be deemed to have been delivered upon exercise of the

Award.

4.2 Source of Common Stock. Any shares of Common Stock delivered pursuant to an

Award may consist, in whole or in part, of authorized but previously unissued shares, treasury

shares, or shares acquired in market transactions on behalf of the Participants.

4.3 Adjustments in Response to Corporate Events. In the event that the Committee shall

determine that any large and non-recurring dividend or other distribution (whether in the form of

cash or other property), recapitalization, forward or reverse split, dividend of Common Stock,

reorganization, merger, consolidation, spin-oÅ, combination, repurchase or share exchange, rights

oÅering, or other similar corporate transaction or event aÅects the Common Stock, then the

Committee shall, in such manner as it may deem equitable, (i) adjust any or all of the number and

kind of shares of Common Stock then authorized for delivery for Awards under Section 4.1 and the

number and kind of shares of Common Stock to be subject to each automatic grant of Options

under Article VII or Restricted Stock or Restricted Stock Units under Article VIII in accordance

with any granting policy of the Board then in eÅect; and (ii) if an adjustment is necessary in order

to prevent dilution or enlargement of the rights of Participants under the Plan, as determined by

the Committee, adjust (A) the number and kind of shares of outstanding Restricted Stock or other

outstanding Award in connection with which shares have been issued or delivered, (B) the number

and kind of shares that may be issued or delivered in respect of other outstanding Awards, (C) the

exercise price, grant price, or purchase price relating to any Award (or, if deemed appropriate, the

Committee may make provision for a cash payment with respect to any outstanding Award), and

(D) any other term relating to an Award; provided that any adjustment eÅecting any outstanding

Award shall be made in accordance with Section 10.4(b). Unless otherwise determined by the

Committee, in the event of a forward split of Common Stock or a dividend in the form of Common

Stock, each adjustment speciÑed in Section 4.3(i) and (ii)(A), (B) and (C) shall be eÅected

automatically by multiplying the relevant pre-transaction number of shares by the sum of one plus

the number of shares deliverable in respect of each outstanding share, and dividing the exercise

price of each outstanding Option by that same sum. In furtherance of the foregoing, in the event of

an ""equity restructuring'' as deÑned in FAS 123R which aÅects the Common Stock, a Participant

shall have a legal right to an adjustment to the Participant's Award which shall preserve without

enlarging the value of the Award, with the manner of such adjustment to be determined by the

Committee in its discretion, and subject to any limitation on this right set forth in the applicable

Award Document. If at any date an insuÇcient number of shares are available for the grant of

Awards hereunder, then all Awards to be made at that date shall be reduced proportionately by

applying a fraction, the numerator of which shall be the number of shares remaining and the

denominator of which shall be the number of shares necessary for the grant of full Awards

hereunder.

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ARTICLE V

Eligibility

5.1 Persons Eligible. Any Director of the Corporation is eligible to be granted Awards under

the Plan.

5.2 Rights to Awards. A Participant or Director eligible to be a Participant shall be entitled

to Awards under the Plan as expressly provided in and as authorized by the Board under the Plan.

ARTICLE VI

Terms of Awards

6.1 General. Awards shall be granted on the terms and conditions set forth herein and as

speciÑed by the Board and the Committee hereunder.

6.2 Limitations on Transferability. Awards and any other rights under the Plan shall not be

transferable by a Participant except by will or the laws of descent and distribution (or to a

designated BeneÑciary in the event of a Participant's death) and, if exercisable, shall be exercisable

during the lifetime of a Participant only by such Participant or his or her guardian or legal

representative. No transfer by will or the laws of descent and distribution shall be eÅective to bind

the Corporation unless the Corporation shall have been furnished with a copy of such will or other

evidence as the Corporation may deem necessary to establish the validity of the transfer. Awards

and other rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise

encumbered, and shall not be subject to the claims of creditors. The foregoing notwithstanding, if

and to the extent expressly permitted by the Committee, and subject to such terms and conditions

as established by the Committee, such Awards and other rights may be transferred by a Participant

to one or more BeneÑciaries, and may be exercised by such BeneÑciaries in accordance with the

terms of such Award, but such transfers may be permitted only for estate-planning purposes and

shall not be transfers for value.

6.3 No Stockholder Rights. No Award shall confer on any Participant any of the rights of a

stockholder of the Corporation unless and until Common Stock is duly issued or transferred to the

Participant in accordance with the terms of the Award or, in the case of an Option, at such time at

or after the exercise of the Option as may be speciÑed by the Committee in order to facilitate

exercise procedures.

6.4 Insider Trading Policies Apply. A Participant's rights under any Award, including rights

to exercise or receive settlement and rights to sell any Common Stock delivered in connection with

an Award, are subject to the terms of the Corporation's Code of Conduct (or any successor

thereof) and related policies on insider trading and may be restricted by those documents. Such

restrictions currently include limitations on the times at which the Participant may engage in such

transactions.

ARTICLE VII

Options

7.1 Award. Options shall be granted to Directors in accordance with policies established

from time to time by the Board specifying the number of shares to be subject to each Option, the

time or times at which such Options shall be granted, and other Award terms not inconsistent with

this Article VII.

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7.2 Terms of Award. Each Option granted to a Participant under the Plan shall be

evidenced by an Award Document containing terms and conditions as follows:

(a) Option Price. The Option price per share shall be the Fair Market Value of the

Common Stock at time of grant.

(b) Option Term. Each Option awarded under this Plan shall expire on the date which

is ten years after the date of grant (or such lesser period as may be speciÑed by the Board at

the time of grant), or such earlier date as the Option may no longer be exercised and cannot,

by its terms, thereafter become exercisable.

(c) Exercise. The Board may establish terms regarding the times at which Options shall

become vested and exercisable.

(d) Payment. The purchase price of the shares to which an Option relates shall be paid

to the Corporation either in cash, in Common Stock owned by the Participant, or by directing

the Corporation to withhold from the shares deliverable upon exercise of the Option shares

suÇcient to pay the exercise price, or any combination of these exercise methods, or by any

other exercise method as may be authorized by the Committee, except to the extent that the

Committee may restrict any of these exercise methods (providing that at least one exercise

method must remain permitted).

7.3 Termination of Board Membership. The Board may establish terms regarding the extent

to which, upon or following termination of a Director's membership on the Board, including upon

death, Disability, Retirement or Early Retirement, Options shall become vested and exercisable on

an accelerated basis, Options shall cease to become vested and exercisable, or Options shall cease to

be exercisable or shall be forfeited.

ARTICLE VIII

Restricted Stock and Restricted Stock Units

8.1 Award. Restricted Stock and Restricted Stock Units shall be granted to Directors in

accordance with policies established from time to time by the Board specifying the number of shares

of Restricted Stock or Restricted Stock Units to be granted, the time or times at which such

Restricted Stock or Restricted Stock Units shall be granted, and other Award terms not inconsistent

with this Article VIII.

8.2 Vesting Schedule. The Board may establish terms regarding the times at which

Restricted Stock or Restricted Stock Units shall vest and become nonforfeitable, and the times at

which Restricted Stock Units will be settled.

8.3 Termination of Board Membership. The Board may establish terms regarding the extent

to which, upon or following termination of a Director's membership on the Board, including upon

death, Disability, Retirement or Early Retirement, Restricted Stock and Restricted Stock Units

shall become nonforfeitable on an accelerated basis, continue to vest or shall be forfeited.

8.4 Other Terms of Restricted Stock. The Board or Committee shall specify terms and

conditions applicable to Restricted Stock, subject to and consistent with the terms of the Plan,

including the following:

(a) Non-Cash Dividends or Distributions on Restricted Stock. Unless otherwise

determined by the Board, any non-cash dividend or distribution on Restricted Stock, including

shares of Common Stock distributed as a dividend on Restricted Stock or other securities or

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property other than shares of Common Stock, shall remain subject to all restrictions and risk

of forfeiture as applied to the shares of Restricted Stock with respect to which it or they were

paid as a dividend or distribution. In the case of securities other than shares of Common Stock

or in the case of other property, issued with respect to Restricted Stock, the Board may

determine that such securities or other property may be held in an escrow account, whether

such securities or property is issued by the Corporation or by another issuer, and such

securities or other property and any cash or other proceeds thereof received by the escrow agent

on account of a redemption or other transaction aÅecting such securities or other property shall

be delivered out of escrow to a Participant or to the Corporation at the time of vesting or

forfeiture of the related Restricted Stock. A Participant will be required to execute any

instrument or document upon the reasonable request of the Corporation and deliver it to the

Corporation, including for the purposes of enforcing any forfeiture of the Restricted Stock or

other securities or property referred to in this Section 8.4(a) or the proceeds thereof, or

otherwise to implement the provisions of this Plan or any applicable Award Document relating

to Restricted Stock.

(b) Stockholder Rights. Except as otherwise provided herein, each Participant shall

have all of the rights and privileges of a stockholder of the Corporation as to his or her

Restricted Stock, including the right to receive any cash dividends and, subject to

Section 8.4(a), other dividends declared with respect to such stock and the right to exercise

voting rights.

(c) Section 83(b) Elections. A Participant who Ñles an election with the Internal

Revenue Service to include the Fair Market Value of any shares of Restricted Stock in gross

income while such shares are subject to restrictions shall promptly furnish the Committee with

a copy of such election. The Participant shall be responsible for paying the amount of any

Federal, state, local, or other taxes required to be paid with respect to such election.

8.5 Other Terms of Restricted Stock Units. The Board or Committee shall specify terms and

conditions applicable to Restricted Stock Units, subject to and consistent with the terms of the

Plan, including the following:

(a) Deferral Period and Settlement. The Board or Committee shall specify periods of

deferral and the time or times (including events) that shall give rise to settlement of Restricted

Stock Units. Such deferral periods may expire at the same time or later than the time the risk

of forfeiture of Restricted Stock Units lapses under Section 8.2 and terms of the applicable

Award Document. Restricted Stock Units shall be settled solely by delivery of one share of

Common Stock for each Restricted Stock Unit to be settled; provided, however, that

reasonable provisions may be made to pay cash in lieu of issuance or delivery of any fractional

shares.

(b) Dividend Equivalents. Dividend Equivalents shall be credited on previously credited

Restricted Stock Units, on terms and conditions speciÑed by the Board or Committee.

(c) Accounts. The Board or Committee may authorize the creation of bookkeeping

accounts to reÖect transactions and events aÅecting Restricted Stock Units.

ARTICLE IX

Stock Election

9.1 Election to Receive Stock. Any eligible Director who is entitled to receive Compensation

may elect to receive all or a portion of such Compensation in the form of Common Stock, in lieu of

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cash, or, if and to the extent authorized under Section 9.4, to defer receipt of such Compensation

in the form of Deferred Stock, in accordance with this Article IX and subject to such terms and

conditions as may be speciÑed by the Board or Committee. A Director shall make such an election

by executing a Stock Election, on or before such date as may be speciÑed by the Board or

Committee but not later than December 31 preceding the calendar year (the ""Plan Year'') in

which such Compensation would otherwise be payable in cash. If an eligible Director is not in oÇce

as of December 31 preceding a Plan Year, the Director may execute a Stock Election for such Plan

Year not later than the earlier of the day before the date of the Ñrst meeting of the Board that such

Director attends for such Plan Year or the date that is 30 days after the date the Director became

eligible to participate in the Plan, provided that if the Director elects to receive Compensation in

the form of Deferred Stock, the election shall apply only to Compensation for services to be

performed after the election has been made. Such stock election shall be eÅective upon its receipt

by the Corporation.

9.2 Amount of Stock or Deferred Stock. On each date that Compensation would otherwise

be paid (the ""Payment Date''), a Director who has made a Stock Election to receive Common

Stock hereunder shall be entitled to receive a number of shares of Common Stock the Fair Market

Value of which is equal to the amount of the Compensation which would have been paid to such

Director had such Stock Election not been made, and, if and to the extent authorized under

Section 9.4, a Director who has made a Stock Election to receive Deferred Stock hereunder shall be

entitled to receive a number of shares of Deferred Stock equal to the number of shares of Common

Stock the Fair Market Value of which is equal to the amount of the Compensation which would

have been paid to such Director had such Stock Election not been made. The number of shares of

Common Stock or Deferred Stock to be acquired by a Director pursuant to a Stock Election shall

be determined by dividing the amount of Compensation subject to the Stock Election by the Fair

Market Value as of the Payment Date.

9.3 Receipt of Common Stock Pursuant to a Stock Election. In the case of a Stock Election

to receive shares of Common Stock in lieu of Compensation on a non-deferred basis, the following

terms and conditions apply:

(a) Source of Shares. The shares of Common Stock issued pursuant to such a Stock

Election may consist of authorized but previously unissued shares, treasury shares or shares

acquired on the open market on the next business date following the Payment Date through

the Corporation's transfer agent, Computershare Limited, or any successor agent designated by

the Committee to act under the provisions of this Plan.

(b) Account. A separate account will be maintained by an agent designated by the

Corporation for each Participant and shares will be allocated to such account under this

Section 9.3 as of the applicable Payment Date.

(c) Stockholder Rights. On each Payment Date, a Participant shall acquire all of the

rights and privileges of a stockholder of the Corporation with respect to shares issued to him or

her pursuant to such a Stock Election under the Plan as of such Payment Date, including the

right to vote on any matter for which the record date for voting is on or after such Payment

Date and the right to payment of a dividend the record date for which is on or after such

Payment Date.

(d) Delivery of Shares. Shares of Common Stock acquired under this Section 9.3 shall

be delivered to the Participant at such time and in such manner as the Corporation may

reasonably determine. Unless otherwise permitted by the oÇcers authorized to administer the

Plan, shares delivered under this Section 9.3 shall be registered solely in the name of the

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Participant and shall be delivered solely to the Participant (or, if deceased, to the Participant's

BeneÑciary). If Participant has ownership and control of the account speciÑed in

Section 9.3(b), delivery of shares will be governed by the terms of that account.

(e) Fractional Shares. A Participant (or, if deceased, the Participant's BeneÑciary)

shall be paid, in cash, an amount equal to the value of any fractional share credited to the

Participant's account under this Section 9.3 quarterly or as otherwise determined by the head of

Human Resources. For this purpose, the value of a fractional share shall be based upon the

Fair Market Value of the Common Stock on the date of such request or the date of

termination. Any fractional share for which such a payment is made shall be deemed to have

been sold on such date. If the Participant has ownership and control of the account speciÑed in

Section 9.3(b), the treatment of any fractional shares will be governed by the terms of that

account.

(f) Participation in Dividend Reinvestment Plan. A Participant may elect to reinvest

dividends paid on the shares held in his or her account under this Section 9.3 in the purchase of

additional shares of Common Stock pursuant to any dividend reinvestment plan oÅered by the

Corporation to stockholders generally.

9.4 Award of Deferred Stock Pursuant to a Stock Election. The Board may authorize the

award of Deferred Stock in lieu of Compensation, pursuant to the Stock Elections by Directors. In

such case, the Board or Committee shall specify terms and conditions applicable to such Stock

Elections and Deferred Stock, subject to and consistent with the terms of the Plan, including the

following:

(a) Deferral Period and Settlement. The Director shall elect the periods of deferral and

the time or times (including events) which shall give rise to settlement of Deferred Stock,

provided that the alternatives that may be elected shall be speciÑed by the Board or Committee

and shall meet the requirements of Section 9.1 and 10.6. Deferred Stock shall be settled solely

by delivery of one share of Common Stock for each share of Deferred Stock to be settled;

provided, however, that reasonable provisions may be made to pay cash in lieu of issuance or

delivery of any fractional shares.

(b) Dividend Equivalents. Unless otherwise determined by the Board or Committee, a

Participant shall be credited with Dividend Equivalents on his or her Deferred Stock, which

may be payable in cash, on a current or deferred basis, or by the crediting of additional

Deferred Stock having a Fair Market Value equal to the value of such Dividend Equivalents, as

speciÑed by the Board or Committee.

(c) Accounts. The Board or Committee may authorize the creation of bookkeeping

accounts to reÖect crediting and other transactions and events aÅecting Deferred Stock.

ARTICLE X

General Provisions

10.1 Consideration. Options, Restricted Stock, and Restricted Stock Units will be granted

under the Plan in order to obtain for the Corporation the beneÑt of the services of Participants and,

except for such services and the payment of the exercise price of an Option, no other consideration

shall be required in connection with such Awards. The consideration for Common Stock issued or

delivered pursuant to a Participant's Stock Election or in settlement of Deferred Stock granted

pursuant to a Participant's Stock Election will be the Participant's services during the period to

which the Compensation paid in the form of Common Stock or Deferred Stock relates.

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10.2 Compliance With Laws and Obligations. The Corporation shall not be obligated to

issue or deliver Common Stock in connection with any Award or take any other action under the

Plan in a transaction subject to any federal or state law, any requirement under any listing

agreement between the Corporation and any national securities exchange or automated quotation

system, or any other law, regulation, or contractual obligation of the Corporation, until the

Corporation is satisÑed that such laws, regulations, and other obligations of the Corporation have

been complied with in full. CertiÑcates representing shares of Common Stock delivered under the

Plan will be subject to such stop transfer orders and other restrictions as may be applicable under

such laws, regulations, and other obligations of the Corporation, including any requirement that a

legend or legends be placed thereon. In addition, the Corporation may aÇx to any shares issued as

Restricted Stock an appropriate legend reÖecting the restrictions imposed under the Plan. The

Corporation shall make best eÅorts to satisfy the compliance obligations relating to the Plan and

Awards in order to avoid adverse eÅects on Participants under this Section 10.2.

10.3 No Right to Continued Membership. Neither the Plan nor any action taken hereunder

shall be construed as (i) giving any Director the right to be retained as a member of the Board of

the Corporation, or (ii) interfering in any way with the right of the Corporation to terminate any

Director's membership at any time. Except as expressly provided in the Plan and an Award

Document, neither the Plan nor any Award Document shall confer on any person other than the

Corporation and the Participant any rights or remedies hereunder or thereunder.

10.4 Changes to the Plan and Awards.

(a) Plan Amendments. The Committee may, with prospective or retroactive eÅect,

amend, alter, suspend, discontinue, or terminate the Plan without the consent of stockholders or

Participants, except that any amendment shall be subject to the approval of the Corporation's

stockholders at or before the Ñrst annual meeting of stockholders for which the record date

falls on or after the date of such Committee action if such amendment is required under

Section 303A.08 of the Listed Company Manual of the New York Stock Exchange or is

otherwise subject to a requirement of stockholder approval under any applicable law or

regulation, the rules of any stock exchange or automated quotation system on which the

Common Stock may then be listed or quoted, or the Corporation's Bylaws. In addition, the

Committee may otherwise, in its discretion, determine that any other such changes to the Plan

also shall be subject to the approval of the Corporation's stockholders. The foregoing

notwithstanding, without the consent of an aÅected Participant, except to the extent required

by Section 10.2 hereof, no such action may materially impair the rights of such Participant

under any Award theretofore granted. The foregoing notwithstanding, the Committee shall not

adopt a material amendment to this Section or Section 4.1, or adopt an amendment that would

be subject to stockholder approval under this Section or otherwise would exceed the authority

of the Committee under its charter and other corporate governance documents of the

Corporation, without the approval of the Board.

(b) Changes to the Terms of Outstanding Awards. The Committee may waive any

conditions or rights under, or amend, alter, suspend, discontinue, or terminate, any Award

previously granted and any Award Document relating thereto; provided, however, that, except

to the extent required by Section 10.2 hereof, no such action may materially impair the rights

of a Participant under such Award without the consent of the aÅected Participant, and

provided further that, for Awards that are intended to be settled in Common Stock per their

written terms, cash settlement should be rare and only in response to circumstances that are

unique, outside of the Participant's control, and perceived to result in a hardship to the

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Participant. Unless otherwise determined by the Committee, such cash settlements must

receive prior approval of the Corporation's Chief Financial OÇcer. ModiÑcations that are in

substance cash settlements are subject to this same requirement. The foregoing

notwithstanding, the Committee shall have no authority to waive or modify any Award term

after the Award has been granted to the extent the waived or modiÑed term would be

inconsistent with Section 3.4 (or otherwise would not be within the discretion of the

Committee if it were then granting a new Award).

10.5 Governing Law. The validity, construction, and eÅect of the Plan, any resolution or

program implementing the Plan, any rules and regulations under the Plan, and any Award

Document will be determined in accordance with the Federal Home Loan Mortgage Corporation

Act of 1970, other federal laws regulating the Corporation, and other laws of the United States.

This Plan and the respective rights and obligations of the Corporation and the Participants, except to

the extent otherwise provided by Federal law, shall be construed under the laws of the

Commonwealth of Virginia (without giving eÅect to principles of conÖicts of laws). The validity,

enforceability and eÅectiveness of any electronic records or electronic signatures used in

connection with any Award Document shall be governed by E-SIGN or the Virginia UETA, as

applicable.

10.6 Certain Limitations on Awards to Ensure Compliance with Code Section 409A.

(a) 409A Deferrals. Other provisions of the Plan notwithstanding, the terms of any

Award that constitutes a deferral of compensation for purposes of Code Section 409A (a

""409A Deferral''), including any authority of the Corporation and rights of the Participant with

respect to the 409A Award, shall be limited to those terms permitted under Section 409A, and

any terms not permitted under Section 409A shall be automatically modiÑed and limited to

the extent necessary to conform with Section 409A. The following rules will apply to 409A

Awards (and other Awards, as indicated):

(i) If a Participant is permitted to make a deferral election in connection with the

409A Deferral, including an election to defer Compensation, such election will be

permitted only at times in compliance with Section 409A (including transition rules

thereunder);

(ii) The Committee may, in its discretion, require or permit on an elective basis a

change in the distribution terms applicable to 409A Awards, and any other Award that

qualiÑes for the short-term deferral exemption under Section 409A, during 2006 and

2007 in accordance with, and to the fullest extent permitted by, Proposed Treasury

Regulation Û 1.409A (including Preamble Û XI.C) and IRS Notice 2005-1, and at any

time in accordance with Section 409A and regulations thereunder. The head of Human

Resources of the Corporation is authorized to modify any such outstanding Awards to

permit election of diÅerent deferral periods, provided that any such modiÑcations may not

otherwise increase the beneÑts to Participants or the costs of such Awards to the

Corporation;

(iii) The Corporation shall have no authority to accelerate distributions relating to

409A Awards in excess of the authority permitted under Section 409A;

(iv) Any distribution of a 409A Award triggered by a Participant's termination of

service and intended to qualify under Section 409A(a)(2)(A)(i) shall be made only at

the time that the Participant has had a ""separation from service'' within the meaning of

Section 409A(a)(2)(A)(i) (or earlier at such time, after a termination of service as a

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Director, that there occurs another event triggering a distribution under the Plan or the

applicable Award agreement in compliance with Section 409A), and any such distribution

shall otherwise comply with 409A; and

(v) In the case of any distribution of a 409A Award, if the timing of such distribution

is not otherwise speciÑed in the Plan or an Award agreement or other governing

document, the distribution shall be made not later than 75 days after the date at which the

settlement of the Award is speciÑed to occur.

(b) Distributions Upon Vesting. In the case of any Award providing for a distribution

upon the lapse of a risk of forfeiture, if the timing of such distribution is not otherwise speciÑed

in the Plan or an Award Document or other governing document, the distribution shall be

made not later than March 15 of the year following the year in which the risk of forfeiture

lapsed.

(c) Scope and Application of this Provision. For purposes of this Section 10.6,

references to a term or event (including any authority or right of the Corporation or a

Participant) being ""permitted'' under Section 409A mean that the term or event will not cause

the Participant to be deemed to be in constructive receipt of compensation relating to the 409A

Award prior to the distribution of shares or cash or other property or to be liable for payment

of interest or a tax penalty under Section 409A.

10.7 Continued Service as an Employee. If a Participant ceases serving as a Director and,

immediately thereafter, is employed by the Corporation or any aÇliate, then, solely for purposes of

Sections 7.3 and 8.3 of the Plan, such Participant will not be deemed to have ceased service as a

Director at that time, and his or her continued employment by the Corporation or any subsidiary will

be deemed to be continued service as a Director; provided, however, that such former Director will

not be eligible for additional Awards under the Plan.

10.8 Plan Termination; EÅect of Amendment and Restatement. The amendment and

restatement of the Plan shall be eÅective upon its approval by the stockholders of the Corporation by

an aÇrmative vote that meets the requirements of the Corporation's Bylaws and the Listed

Company Manual of the New York Stock Exchange then in eÅect. Unless earlier terminated by

action of the Board or Committee, the Plan will remain in eÅect until such time as no Common

Stock remains available for delivery under the Plan and the Corporation has no further rights or

obligations under the Plan with respect to outstanding Awards. No Awards shall be made under the

Plan, including pursuant to Article IX, after the Corporation's Annual Meeting of Stockholders in

2017. Any Award granted prior to the eÅectiveness of the Amendment and Restatement of the

Plan on March 3, 2007 shall be governed by the terms of Articles VII and VIII of the Plan (as

applicable) as in eÅect at the time such Award was granted.

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