Freddie Mac 2014 Annual Report Download - page 252

247 Freddie Mac
authority’s primary divisions. Mr. Williams also previously served as a director of Meruelo Maddux Properties, Inc.
Mr. Williams is also on the board of the Calvert Sage Fund and of each fund comprising the Calvert Multiple Funds.
Authority of the Board and Board Committees
The directors serve on behalf of, and exercise authority as directed by, the Conservator. The Conservator has delegated to
the Board and its committees authority to function in accordance with the duties and authorities set forth in applicable statutes,
regulations, guidance, orders and directives and our Bylaws and Board committee charters, while reserving certain powers of
approval to itself. The Conservator has instructed the Board that it should oversee that management consults with and obtains
approval of the Conservator before taking action in the following areas:
• matters requiring the approval of or consultation with Treasury under the covenants of the Purchase Agreement (see
“BUSINESS — Conservatorship and Related Matters — Treasury Agreements – Covenants Under Treasury
Agreement”);
• redemptions or repurchases of subordinated debt, except as necessary to comply with the limit in the Purchase
Agreement;
• increases in Board risk limits, material changes in accounting policy, and reasonably foreseeable material increases in
operational risk;
• matters that relate to the Conservator’s powers, the status of Freddie Mac in conservatorship, or the legal effect of the
conservatorship on contracts, such as, but not limited to, the initiation of material actions in connection with litigation
addressing the actions or authority of the Conservator, repudiation of contracts, qualified financial contracts in dispute
due to conservatorship status, and counterparties attempting to nullify or amend contracts due to conservatorship
status;
• retention and termination of external auditors and law firms serving as consultants to the Board;
• agreements relating to litigation, claims, regulatory proceedings, or tax-related matters where the value of the claim is
in excess of $50 million, including related matters that aggregate to more than $50 million (but excluding loan
workouts);
• alterations or changes to the terms of any master agreement between us and any of our top five single-family sellers or
servicers that are not otherwise mandated by FHFA and that will alter, in a material way, the business relationship
between the parties;
• termination of a contract (other than by expiration pursuant to its terms) between us and any of our top five single-
family sellers or servicers;
• actions that, in the reasonable business judgment of management at the time that the action is to be taken, are likely to
cause significant reputational risk to us or result in substantial negative publicity;
• creation of any subsidiary or affiliate, or entering into a substantial transaction with a subsidiary or affiliate, except for
the creation of, or a transaction with, a subsidiary or affiliate undertaken in the ordinary course of business (e.g.,
creation of a securitization trust or REMIC);
• setting or increasing the compensation or benefits payable to directors;
• entering into new compensation arrangements or increasing amounts or benefits payable under existing compensation
arrangements for senior vice presidents and above and other officers as FHFA may deem necessary to successfully
execute its role as Conservator;
• any establishment or modification by us of performance management processes for such officers, including the
establishment or modification of a Conservator scorecard; and
• establishing the annual operating budget.
FHFA has indicated that it expects the Board to review and approve all matters that will require Conservator approval
before such matters are submitted to FHFA. In addition, FHFA requires us to provide timely notice to it of any planned changes
in business processes or operations, including changes to single-family or multifamily credit policies and loss mitigation
strategies that management has determined in its reasonable business judgment to be significant, other than changes made at the
direction or request of FHFA. FHFA will then determine whether any such actions or plans require Conservator and/or Board
review or approval.
The Board has five standing committees: Audit; Compensation; Executive; Nominating and Governance; and Risk. All
standing committees other than the Executive Committee meet regularly. The membership of each committee as of February
19, 2015 is as follows:
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