Freddie Mac 2010 Annual Report Download - page 329

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Policy Governing Related Person Transactions
The Board has adopted a written policy governing the approval of related person transactions. This policy sets forth
procedures for the review and approval or ratification of transactions involving related persons, which consist of any person
who is, or was at any time since the beginning of our last completed fiscal year, a director, a director nominee, an executive
officer, or an immediate family member of any of the foregoing persons.
Under authority delegated by the Board, the Executive Vice President — General Counsel & Corporate Secretary, or the
General Counsel, and the Nominating and Governance Committee (or its Chair under certain circumstances), each, an
Authorized Approver, are responsible for applying the Related Person Transactions Policy. Transactions covered by the
Related Person Transactions Policy consist of any transaction, arrangement or relationship or series of similar transactions,
arrangements or relationships, in which: (a) the aggregate amount involved exceeded or is expected to exceed $120,000;
(b) we were or are expected to be a participant; and (c) any related person had or will have a direct or indirect material
interest. The Related Person Transactions Policy includes a list of categories of transactions identified by the Board as having
no significant potential for an actual conflict of interest or the appearance of a conflict or improper benefit to a related
person, and thus not subject to review.
Our Legal Division assesses whether any proposed transaction involving a related person is covered by the Related
Person Transactions Policy. If so, the transaction is reviewed by the appropriate Authorized Approver. In consultation with
the Chair of the Nominating and Governance Committee, the General Counsel may refer any proposed transaction to the
Nominating and Governance Committee for review and approval.
If possible, approval of a related person transaction is obtained prior to the effectiveness or consummation of the
transaction. If advance approval of a related person transaction by the appropriate Authorized Approver is not feasible or
otherwise not obtained, then the transaction is considered promptly by the appropriate Authorized Approver to determine
whether ratification is warranted.
In determining whether to approve or ratify a related person transaction covered by the Related Person Transactions
Policy, the appropriate Authorized Approver reviews and considers all relevant information which may include: (a) the nature
of the related person’s interest in the transaction; (b) the approximate total dollar value of, and extent of the related person’s
interest in, the transaction; (c) whether the transaction was or would be undertaken in the ordinary course of our business;
(d) whether the transaction is proposed to be, or was, entered into on terms no less favorable to us than terms that could
have been reached with an unrelated third party; and (e) the purpose, and potential benefits to us, of the transaction.
Corporate Governance Guidelines
In March 2010, the Board adopted our amended Corporate Governance Guidelines, which are available on our website
at www.freddiemac.com/governance/pdf/gov_guidelines.pdf.
Director Independence
The non-employee members of the Board evaluated the independence, as defined in both Sections 4 and 5 of our
Guidelines and in Section 303A.02 of the NYSE Listed Company Manual, of the members of our Board who have served in
2011, each of whom also served on our Board in 2010, and Barbara T. Alexander, who served on our Board until March
2010. In connection with that evaluation, the non-employee members of the Board determined that all current members of
our Board (other than Charles E. Haldeman, Jr., our CEO) and Ms. Alexander were independent during their service in 2010
and 2011. Mr. Haldeman is not considered an independent director because he is our CEO.
The non-employee members of the Board also concluded that all current members of the Audit Committee, the
Compensation Committee, and the Nominating and Governance Committee are independent within the meaning of both
Sections 4 and 5 of our Guidelines and Section 303A.02 of the NYSE Listed Company Manual. The non-employee members
of the Board also determined that all current members of the Audit Committee are independent within the meaning of
Rule 10A-3 promulgated under the Exchange Act, and Section 303A.06 of the NYSE Listed Company Manual.
In determining the independence of each Board member, the non-employee members of the Board reviewed the
following categories or types of relationships, in addition to those specifically addressed by the standards contained in
Section 5 of our Guidelines, to determine whether those relationships, either individually or when aggregated with other
relationships, would constitute a material relationship between the Director and us that would impair a Director’s judgment
as a member of the Board or create the perception or appearance of such an impairment:
•Board Memberships With For-Profit Business Partners. Mses. Alexander, Bammann, and Byrd and Messrs. Glauber,
Lynch, Retsinas, and Rose serve as directors, and Mr. Shanks serves as a consultant to the board of directors, of other
companies that engage or have engaged in business with us resulting in payments between us and such companies
during the past three fiscal years. After considering the nature and extent of the specific relationship between each of
326 Freddie Mac