Freddie Mac 2014 Annual Report Download - page 277

272 Freddie Mac
Table 78 — Equity Compensation Plan Information
Plan Category
Number of securities to be issued
upon exercise of outstanding
options,
warrants and rights
Weighted average exercise price of
outstanding options,
warrants and rights
Number of securities remaining
available for future issuance under
equity compensation plans
(excluding
securities reflected in column (a))
Equity compensation plans approved
by stockholders 413,896(1) $54.29(2) 35,510,707(3)
Equity compensation plans not
approved by stockholders None N/A None
(1) Includes 54,891 restricted stock units and shares of restricted stock issued under the Directors’ Plan and the Employee Plans.
(2) For the purpose of calculating this amount, the restricted stock units and shares of restricted stock are assigned a value of zero.
(3) Includes 28,004,051 shares, 5,845,739 shares, and 1,660,917 shares available for issuance under the 2004 Employee Plan, the ESPP and the Directors’
Plan, respectively. No shares are available for issuance under the 1995 Employee Plan.
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. Under the policy, "related
person" means 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, our 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 considered potential related person transactions 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 June 2014, the Board adopted Corporate Governance Guidelines (our "Guidelines"), which were updated in December
2014 to reflect the name change of the Business and Risk Committee to the Risk Committee. Our Guidelines 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 (i) each of the non-employee members of our
Board currently serving who also served on our Board for all or part of 2014, and (ii) Mr. Bostic, who joined our Board in
January 2015. The non-employee members of the Board determined that all current members of our Board (other than
Mr. Layton, our CEO) are independent. Mr. Layton is not considered an independent director because he is our CEO.
The non-employee members of the Board 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
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