Freddie Mac 2014 Annual Report Download - page 278

273 Freddie Mac
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. During 2014 and currently, Ms. Byrd and Messrs. Lynch,
Retsinas, and Shanks serve as 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 those companies and us, and the fact that these Board members are
directors of these other companies rather than employees, the non-employee members of the Board concluded that
those business relationships do not constitute material relationships between any of the Directors and us that would
impair their independence as our Directors.
• Board Memberships With Charitable Organizations To Which We Have Made Contributions. During 2014 and
currently, Mr. Bostic has served as a board member of two charitable organizations that received monetary
contributions from us or the Freddie Mac Foundation. The total annual amount contributed to each of the charitable
organizations was below the applicable threshold in our Guidelines that would require a specific determination that
Mr. Bostic is independent in spite of the contributions. During 2014 and currently, Mr. Retsinas served as Director
Emeritus of a charitable organization that received monetary contributions from us or the Freddie Mac Foundation.
The total annual amount contributed to the charitable organization was below the applicable threshold in our
Guidelines that would require a specific determination that Mr. Retsinas is independent in spite of the contributions;
however, since Mr. Retsinas is neither a board member nor a trustee of the charitable organization, the contributions
would not require an independence determination in any event. The non-employee members of the Board considered
the contributions and the nature of the organizations and concluded that the relationships with the charitable
organizations did not constitute a material relationship between Mr. Bostic or Mr. Retsinas and us that would impair
either of their independence as our Director.
• Financial Relationships with For-Profit Business Partners. Mr. Hartnack owns stock of US Bancorp. In the
aggregate, this stock represents a material portion of his net worth. US Bancorp conducts significant business with
Freddie Mac, including as a single-family seller/servicer and as trustee of some of Freddie Mac’s securitization
transactions. In order to eliminate any potential conflict of interest that might arise as a result of this stock ownership,
Mr. Hartnack has agreed to recuse himself from discussing and acting upon any matters that are to be considered by
the full Board or any of the committees of which he is a member, and that relate directly to US Bancorp. The Audit
Committee Chairman, in consultation with the Non-Executive Chairman, will address any questions that may arise
regarding whether recusal from a particular discussion or action is appropriate.
In evaluating Mr. Hartnack’s independence in light of his ownership of US Bancorp stock, the non-employee members
of the Board considered the nature and extent of Freddie Mac’s business relationship with US Bancorp and any
potential impact that his stock ownership might have on his independent judgment as a Freddie Mac director, taking
into account the recusal arrangement. The non-employee members of the Board concluded that Mr. Hartnack’s recusal
arrangement concerning US Bancorp would address any actual or potential conflicts of interest that might arise with
respect to his ownership of US Bancorp stock. Accordingly, the non-employee members concluded that Mr.
Hartnack’s ownership of US Bancorp stock does not constitute a material relationship between him and Freddie Mac
that would impair his independence as a Freddie Mac director.
Mr. Naqvi owns stock of PNC Financial Services Group, Inc. ("PNC"). In the aggregate, this stock represents a
material portion of his net worth. PNC conducts significant business with Freddie Mac, including as a single-family
seller/servicer and as trustee of some of Freddie Mac’s securitization transactions. In order to eliminate any potential
conflict of interest that might arise as a result of this stock ownership, Mr. Naqvi has agreed to recuse himself from
discussing and acting upon any matters that are to be considered by the full Board or any of the committees of which
he is a member (including the Risk Committee), and that relate directly to PNC. The Audit Committee Chairman, in
consultation with the Non-Executive Chairman, will address any questions that may arise regarding whether recusal
from a particular discussion or action is appropriate.
In evaluating Mr. Naqvi’s independence in light of his ownership of PNC stock, the non-employee members of the
Board considered the nature and extent of Freddie Mac’s business relationship with PNC and any potential impact that
his stock ownership might have on his independent judgment as a Freddie Mac director, taking into account the
recusal arrangement. The non-employee members of the Board concluded that Mr. Naqvi’s recusal arrangement
concerning PNC would address any actual or potential conflicts of interest that might arise with respect to his
ownership of PNC stock. Accordingly, the non-employee members concluded that Mr. Naqvi’s ownership of PNC
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