Fannie Mae 2006 Annual Report Download - page 221

our directors must disclose to the Chair of the Nominating and Corporate Governance Committee, or another
member of the committee, any situation that involves or appears to involve a conflict of interest. This
includes, for example, any financial interest of a director, an immediate family member of a director, or a
business associate of a director in any transaction being considered by the Board, as well as any financial
interest a director may have in an organization doing business with us. Each of our directors also must
annually certify compliance with the Code of Conduct and Conflicts of Interest Policy for Members of the
Board of Directors.
Our Board’s delegation of authorities and reservation of powers requires our Board of Directors or the
Nominating and Corporate Governance Committee to review and approve any investment, acquisition,
financing or other transaction that Fannie Mae engages in directly with any current director or executive
officer or any immediate family member or affiliate of a current director or executive officer.
Our Code of Conduct for employees requires that we and our employees seek to avoid any actual or apparent
conflict between our business interests and the personal interests of our employees or their relatives or
associates. An employee who knows or suspects a violation of our Code of Conduct must raise the issue with
the employee’s manager, another appropriate member of management, a member of our Human Resources
division or our Compliance and Ethics division.
Under our Conflict of Interest Policy and Conflict of Interest Procedure for employees, an employee who has
a potential conflict of interest must request review and approval of the conflict. Conflicts requiring review and
approval include situations where the employee or a close relative of the employee has (1) a financial interest
worth more than $100,000 in an entity that does business with or seeks to do business with Fannie Mae or
(2) a financial interest worth more than $10,000 in such an entity combined with the ability to control or
influence Fannie Mae’s relationship with the entity. In accordance with its charter, our Nominating and
Corporate Governance Committee, in the case of potential conflicts involving our Chief Executive Officer,
Chief Business Officer, Chief Operating Officer, Chief Financial Officer, Chief Risk Officer, General Counsel,
Chief Audit Executive, or Chief Compliance Officer, must determine whether a conflict exists, any required
steps to address the conflict, and whether or not to grant a waiver of the conflict under our Conflict of Interest
Policy. In the case of conflicts involving other executive officers, our Chief Executive Officer makes the
determination.
Our Employment of Relatives Practice prohibits, among other things, situations where an employee would
exercise influence, control, or authority over the employee’s relative’s areas of responsibility or terms of
employment, including but not limited to job responsibilities, performance ratings or compensation.
Employees have an obligation to disclose the existence of any relation to another current employee prior to
applying for any position or engaging in any other work situation that may give rise to prohibited influence,
control or authority.
We require our directors and executive officers, not less than annually, to describe to us any situation
involving a transaction with Fannie Mae in which a director or executive officer could potentially have a
personal interest that would require disclosure under Item 404 of Regulation S-K.
Transactions with 5% Shareholders
Citigroup Inc. (“Citigroup”) beneficially owned more than 5% of the outstanding shares of our common stock
as of December 31, 2005 and December 31, 2006. Since January 1, 2006, we have engaged in securities and
other financial instrument transactions in the ordinary course of business with Citigroup and its affiliates. We
have extensive, multi-billion dollar relationships with Citigroup. Citigroup and/or its affiliates have at times
engaged in the following types of transactions and activities: distributing our debt securities as a dealer;
committing to sell or buy mortgage-related securities or mortgage loans as a dealer; delivering mortgage loans
to us for purchase by our mortgage portfolio or for securitization into Fannie Mae MBS; issuing investments
held in our liquid investment portfolio; and acting as a derivatives counterparty or a counterparty involved in
other financial instrument or investment transactions with us. These transactions were on substantially the
same terms as those prevailing at the time for comparable transactions with unrelated third parties.
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