Freddie Mac 2015 Annual Report Download - page 350

Directors, Corporate Governance, and Executive Officers Corporate Governance
Freddie Mac 2015 Form 10-K 348
• Redemptions or repurchases of subordinated debt, except as necessary to comply with the debt 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);
• Servicing transfers of 25,000 loans or more;
• 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.
Other than for large servicing transfers, FHFA requires prior Board approval for anything requiring
Conservator approval. In addition, FHFA requires us to provide FHFA with timely notice of any significant
changes in business processes or operations, including changes to single-family or multifamily credit
policies and loss mitigation strategies, other than changes made at the direction or request of FHFA.
FHFA will then determine whether any such items require Conservator and/or Board review or approval.
BOARD COMMITTEES
The Board has five standing committees: Audit, Compensation, Executive, Nominating and Governance,
and Risk. All standing committees, other than the Executive Committee, meet regularly and are chaired
by, and consist entirely of, independent directors. The Committees perform essential functions on behalf
of the Board. The Committee Chairs review and approve agendas for all meetings of their respective
Committees. Charters for the standing committees have been adopted by the Board and approved by the
Conservator, and describe each committee’s responsibilities. These charters are available on our website
at www.freddiemac.com/governance/bd_committees.html. The membership of each committee as of