Exhibit 10.2
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Subject: Severance — Officers
Policy Number: 3-254.1
Control Point: Director — Employee Relations
Approval Authority: EVP — Human Resources
Signature: /s/ Paul George
Paul George
Summary of this Policy
This policy sets forth the eligibility requirements and amount ofSeverance Pay available toEligible Officers. Defined terms are italicized. Please see Appendix A for definitions. Further details can be found in Freddie Mac’s Severance PlanSummary Plan Description.
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| I. | Under what circumstances isSeverance Pay provided? |
Freddie Mac providesSeverance Payto aSeverance Eligible Officerpursuant to the terms of this Policy. In addition, in the event an employee becomes aSeverance Eligible Officeras a result of aReduction in Force, Freddie Mac also providesNotice Pay, even if theSeverance Eligible Officerdoes not sign an agreement and release of claims.
ASeverance Eligible Officer’semployment is terminated as of theSeparation Date. Such former officer’s eligibility to receive any benefit from or to continue participation in other plans maintained by the company is governed by the terms and provisions of those plans.
In addition, the provision ofSeverance Payto aSeverance Eligible Officeris subject to the approval of Freddie Mac’s regulator.
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| II. | What procedures are followed to determine severance eligibility? |
Business-area management will submit to their respective Human Resources Business Partner (“HRBP”) for review any proposed termination of employment (including any proposed voluntary separation that could result inSeverance Pay) or proposed offer ofComparable Employmentprior to discussing the same with the impacted officer. The Director of Employee Relations in the Human Resources Division determines whether the employee is aSeverance Eligible Officer, and interprets and applies this policy.
Employee Relations, after consulting with the HRBP, the Legal Division, and possibly business-area management, also determines whether a job position to be offered to anEligible OfficerisComparable Employment. Eligible Officerswill be evaluated forComparable Employment, if at all, based on criteria including (but not limited to) their historical performance ratings and management’s assessment of relative skills.
After Employee Relations determines that the employee is aSeverance Eligible Officer, business-area management providesNoticeto theSeverance Eligible Officer. Business-area management will giveNoticein advance of the
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Separation Date,if at all, to the extent that advance notification is consistent with business circumstances or required by law.
Business-area management, after consulting with the HRBP, also establishes theSeparation Dateof aSeverance Eligible Officer.
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| III. | What is required for aSeverance Eligible Officer to receiveSeverance Pay? |
As a condition of receivingSeverance Pay, aSeverance Eligible Officermust sign an agreement and release of claims. Freddie Mac has exclusive discretion to determine what terms will be included within the agreement and release of claims. Among other things, the agreement and release of claims may contain provisions related to the following:
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| | • | Full release of claims |
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| | • | Non-participation in claims against Freddie Mac |
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| | • | Notice of receipt of subpoenas |
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| | • | Treatment of confidential information |
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| | • | Non-competition |
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| | • | Non-solicitation of Freddie Mac employees |
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| | • | Notice of future employment |
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| | • | Return of Freddie Mac property |
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| | • | Non-disparagement |
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| | • | Obligation to reasonably cooperate |
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| | • | Damages in the event of breach |
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| | • | Preclusionand/or restriction from future Freddie Mac employment |
Business-area management may require anEligible Officerto provide services to Freddie Mac up to and including theSeparation Dateas a condition of receivingSeverance Pay.
If aSeverance Eligible Officerdoes not receive two-weeks of advanceNoticeofhis/herSeparation Datefrom Freddie Mac, and does not execute an agreement and release of claims proffered by the company, then the officer will receivePay in Lieu of Noticefor the two-week period following the date ofNotice, and will receive noSeverance Pay.
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| IV. | How long is theSeverance Period of aSeverance Eligible Officer? |
TheSeverance Periodof aSeverance Eligible Officeris as specified in the Restrictive Covenant and Confidentiality Agreement between theSeverance Eligible Officerand Freddie Mac. If theSeverance Eligible Officeris entitled to receiveNotice Pay, thenhis/herSeverance Periodshall be theSeverance Period specified in the Restrictive Covenant and Confidentiality Agreement, minus the number of days ofNotice Payhe/she is entitled to receive. In no event will aSeverance Eligible Officerreceive less than four weeks ofSeverance Payin addition toNotice Pay.
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| Policy 3-254.1 dated July 16, 2010 | 2 |
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| V. | How does aSeverance Eligible Officer receive his/herSeverance Pay? |
ASeverance Eligible Officerhas the option of receivinghis/herSeverance Pay in periodic payments over the specifiedSeverance Periodcoinciding with Freddie Mac’s standard payroll procedures. Alternatively, theSeverance Eligible Officermay receivehis/herSeverance Payin aLump Sum. If theSeverance Eligible Officerelects periodic payments,he/she may be eligible to continuehis/her participation in certain benefits plans at a reduced cost, in accordance with the terms of those plans.
If a former officer receivingSeverance Paydies before receivinghis/her entireSeverance Pay, then Freddie Mac will pay the balance to the former employee’s estate or personal representative.
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| VI. | When does aSeverance Eligible Officer have to electLump Sum or Periodic Payments? |
ASeverance Eligible Officermust elect whether to receivehis/herSeverance Payin aLump Sumor in periodic payments by the datehe/she signs the required agreement and release of claims. Failure to make an election upon execution of the agreement and release of claims will result in theSeverance Eligible Officerreceivinghis/herSeverance Payin aLump Sum.
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| VII. | When doesSeverance Pay begin? |
Severance Paywill be paid in accordance with the company’s standard payroll practices, and will begin within 30 days after 1) the company’s receipt of theSeverance Eligible Officer’sproperly executed agreement and release of claims, 2) if applicable, expiration of the revocation period specified in the agreement and release of claims, and (3) (applicable only toSpecified Employees) six months has elapsed since theSeparation Date.
If the consideration period noted in the agreement and release of claims extends beyond theSeparation Dateand the company has not received theSeverance Eligible Officer’sproperly executed agreement and release of claims as of theSeparation Date, the company will place theSeverance Eligible Officeron unpaid Leave of Absence until (1) receipt of the properly signed agreement and release of claims or (2) the end of the consideration period (whichever comes first).
Failure by aSeverance Eligible Officerto submit a properly executed agreement and release of claims within the time period specified in such agreement will result in the proffered agreement and release of claims being withdrawn by the company.
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| VIII. | What happens toSeverance Pay upon re-employment by Freddie Mac? |
If a former officer receivingSeverance Payis re-employed by Freddie Mac before the end of theSeverance Period, the former officer will forfeit any remaining unpaidSeverance Pay. If the former officer receivedhis/herSeverance Payas aLump Sum, and becomes re-employed by Freddie Mac before the end of what would have been theSeverance Period, Freddie Mac reserves the right to require that some or all of theSeverance Paybe repaid as a condition of re-employment.
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| IX. | Restriction onSpecified Employees. |
If aSeverance Eligible Officeris aSpecified Employee, thenhe/she will not begin receivinghis/herSeverance Payuntil six (6) months followinghis/herSeparation Date, consistent with Treas.Reg. § 1.409A-3(g)(2), or any successor thereto. If theSeverance Eligible Officerelected to receivehis/herSeverance Payin periodic payments within the required
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| Policy 3-254.1 dated July 16, 2010 | 3 |
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election period, thenhe/she shall receive six months ofSeverance Payin aLump Sumupon the expiration of the six-month wait period, and then will receive the balance ofhis/herSeverance Payin periodic payments according to the company’s standard payroll procedures.
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| X. | Where can officers find additional information about Freddie Mac’s severance plan? |
Officers may find additional information about the company’s severance plan in Freddie Mac’s Severance PlanSummary Plan Description.
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| XI. | Reservation of Rights |
Freddie Mac reserves the right to amend or terminate this Policy or any of its provisions at any time for any reason in its sole discretion without giving rise to legal liability. Nothing in this Policy is intended nor shall be interpreted to create a contract of employment or alter the at-will employment relationship that otherwise may exist between Freddie Mac and such employee, or otherwise limit the discretion of either Freddie Mac or such employee to terminate the employment relationship at any time for any reason.
Effective Date:July 16, 2010
o New
xReplacesPolicy 3-254.1 dated August 17, 2009o Reviewed by Legal or Determined that No Legal Review Necessary
Appendix A Definitions
Comparable Employment
Comparable Employment will be assessed on acase-by-case basis. Exact criteria the company will use include each of the following, all of which must be met for the position to be deemed comparable.
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| | • | The content of the job to which the employee may be assigned. To be comparable, the new position must require substantially the same skill set and technical knowledge. |
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| | • | The commuting distance associated with the new position. To be comparable, the new position must not increase the commuting distance for the employee by more than 50 miles each way, or increase the commuting distance for the employee such that the total commuting distance exceeds 90 miles each way. |
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| | • | To be comparable, the employee’s base salary must not decrease by more than 10%. |
Eligible Officer
An employee who is appointed by Freddie Mac as an officer of the company.
Gross Misconduct
The occurrence or existence of any of the following:
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| | • | Recurrent or flagrant insubordination related to core job duties and responsibilities; |
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| | • | Stealing property belonging to Freddie Mac, another employee, or other theft in connection with employment; |
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| | • | Committing fraud, including computer fraud; |
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| | • | Willfully destroying property; |
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| | • | Inflicting bodily harm on another employee, threatening another employee with a weapon, or conviction (including any plea ofnolo contendere) of a crime; |
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| | • | Committing harassment; |
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| | • | Engaging in discriminatory behavior; |
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| | • | Engaging in dishonesty, including failure to cooperate fully, promptly and truthfully in an investigation; |
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| | • | Recurring or habitual tardiness or absenteeism which has resulted in a written reprimand; |
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| | • | Intentionally disclosing or intentionally misusing Confidential Information (as that term is defined in Freddie Mac policy, Code of Conduct, or applicable restrictive covenantand/or confidentiality agreement between the employee and Freddie Mac); |
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| | • | Negligently disclosing or negligently misusing Confidential Information (as that term is defined in Freddie Mac policy, Code of Conduct, or applicable restrictive covenantand/or confidentiality agreement between the employee and Freddie Mac) resulting in a significant adverse impact on Freddie Mac or on the business of Freddie Mac; or |
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| | • | A material breach of any provision of any written policy of Freddie Mac required by law or established to maintain compliance with applicable legal or regulatory requirements. |
Loss of Confidence
Determination by senior executive management in its sole discretion that it no longer maintains a high level of confidence in anEligible Officer’sdecisions, judgmentand/or conduct.
Lump Sum
The payment to aSeverance Eligible Officerof the entire amount ofSeverance Payin the form of a single payment, minus lawful deductions (rather than periodic payments over the span of theSeverance Period).
Notice
Oral or written communication from business-area management or an HRBP to aSeverance Eligible Officerabout the termination of the officer’s employment,Separation Date, terms of the proffered agreement and release of claims, and expectations concerninghis/her continued provision of services to Freddie Mac during the period between the Notice and theSeparation Date.
Notice Pay
The dollar amount of pay based on the number of days of continued pay required by applicable federaland/or state law upon triggering events, such as group layoffs that occur within a legally defined period of time. Laws that would triggerNotice Payinclude, but are not limited to, the federal Worker Adjustment and Retraining Notification (“WARN”) Act.
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| Policy 3-254.1 dated July 16, 2010 | 5 |
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Pay in Lieu of Notice
If aSeverance Eligible Officerdoes not receive two-weeks of advanceNoticeofhis/herSeparation Datefrom Freddie Mac, and does not execute an agreement and release of claims proffered by the company, then the employee will receive pay for the two-week period following the date ofNotice, and will receive noSeverance Pay.
Position Elimination
Loss of job due to company reorganization or job abolishment.
Reduction in Force
An elimination of a certain minimum number of jobs that occurs within a defined time-period and triggers a requirement to payNotice Pay. Laws that would requireNotice Payinclude (but are not limited to) the federal WARN Act.
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Senior Executive Officer
An employee who is appointed by Freddie Mac to be employed in the position of Senior Vice President or above of the company.
Separation Date
The last date on which aSeverance Eligible Officeris considered an active employee with Freddie Mac; also known as the Termination Date.
Severance Eligible Officer
AnEligible Officerwhose position is eliminated due to aPosition Elimination,Reduction in Force, orLoss of Confidence.
AnEligible Officeris not aSeverance Eligible Officerif such employee:
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| | • | at the time ofNoticeis classified as a temporary employee pursuant toPolicy 3-221, Worker Classifications (as may be amended, replaced or redesignated from time to time); |
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| | • | is terminated for engaging inGross Misconduct; |
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| | • | is regularly scheduled to work fewer than twenty (20) hours per week as ofhis/her receipt ofNotice; |
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| | • | is on “Leave of Absence” status as defined inPolicy 3-236, Other Excused Absences (as may be amended, replaced or redesignated from time to time) for thirty (30) or more calendar days as ofhis/her receipt ofNoticeunless otherwise provided by law; |
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| | • | fails to provide services to Freddie Mac in accordance with theNotice; |
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| | • | resigned employment as a result of a new assignment or reporting relationship; |
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| | • | received a written offer of employment from a Successor, which is an entity that acquires (through consolidation, reorganization, transfer, sublease, assignment or otherwise) all or substantially all of the business or assets of any business unit of Freddie Mac, or an entity that contracts with Freddie Mac to perform activities of the business unit in which the employee is assigned contemporaneous with the commencement of the contractual relationship; or |
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| | • | received a written offer ofComparable Employmentfrom Freddie Mac. |
In addition, anEligible Officerwho serves as a Senior Executive Officer is not aSeverance Eligible Officerunless the company’s regulator approves payment of severance pay, and the amount thereof, to such Senior Executive Officer at the time of termination.
Severance Pay
The dollar amount that will be paid to aSeverance Eligible Officerpursuant to the terms of this Policy.Severance Payis equal to theSeverance Eligible Officer’sbase salary (not including items such as overtime, bonus, retention payments,and/or commissions) as of theSeparation Datethat would normally be paid over the length of time designated as theSeverance Period, minus lawful deductions. Alternatively,Severance Paymay be paid in the form of aLump Sum.
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| Policy 3-254.1 dated July 16, 2010 | 7 |
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Severance Period
The length of theSeverance Periodis as specified in the Restrictive Covenant and Confidentiality Agreement between theSeverance Eligible Officerand the company. TheSeverance Periodbegins the day following theSeparation Date.
Specified Employee
ASeverance Eligible Officerwho is identified by Freddie Mac in its sole discretion as of theSeparation Dateas a “specified employee” as defined in Treas.Reg. § 1.409A-1(i), or any successor thereto, and whoseSeverance Payis determined by Freddie Mac to be subject to section 409A of the Internal Revenue Code.
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| Policy 3-254.1 dated July 16, 2010 | 8 |
