Fannie Mae 2002 Annual Report Download - page 8

6FANNIE MAE 2002 ANNUAL REPORT
Fannie Mae puts a premium on upholding our
core principles of openness, integrity, responsibility,
and accountability in our corporate mission,
business, and culture for an important reason:
Tr ust is uniquely crucial to our company.
Responsibility. The Chairman and CEO is responsible
for Fannie Mae, its management and employees, and
to shareholders and other stakeholders.
As Chairman and CEO, I am personally responsible for
ensuring that Fannie Mae operates in an effective, ethical
manner that produces long-term value for shareholders.
I must not put my personal interests ahead of — or
in conflict with — the interest of the company or
shareholders. Also, it is my duty to ensure that I know
how Fannie Mae earns income and the risks we are
undertaking in the course of business. Indeed, before it
was required of us, Fannie Mae announced that our
CEO and Chief Financial Officer would sign and certify
as to the honesty and accuracy of our financial statements,
and we have a rigorous review process to ensure that.
As a CEO, one of the most offensive things about the
corporate scandals that emerged recently was to hear
CEOs claim that they did not know, they could not
know, and they could not be expected to know about the
activities that brought down their companies.
Accountability. Fannie Mae has a highly independent
Board of Directors that selects and oversees the CEO.
On behalf of shareholders, the Board of Directors
holds the CEO and senior management responsible for
ensuring that Fannie Mae is operating effectively and
with openness, integrity, responsibility, and accountability.
At Fannie Mae, the vast majority of our Board of
Directors is independent from management. Board
members are chosen for their experience, knowledge,
and willingness to be active, engaged, and equipped to
challenge the CEO and management on the competent
and ethical operation of the company.
The Board and its Audit Committee ensure that
management produces financial statements that are clear,
complete, timely, and accurate. The Audit Committee,
consisting of independent directors, has the sole
authority to retain the independent auditor. The Audit
Committee undertakes substantial due diligence to
ensure that our auditors are independent, experienced,
and well-qualified.
The Fannie Mae Board of Directors also includes a
Compensation Committee and a Nominating and Corporate
Governance Committee that are completely independent
from management, which ensure that compensation and
management choices and our corporate governance
principles fully represent the interests of shareholders.
These core principles — openness, integrity,
responsibility, and accountability — are the cornerstones
of Fannie Mae’s corporate governance practices, which
we make available on our new Corporate Governance
Web site on fanniemae.com.
Standard & Poor’s praises Fannie Mae’s
corporate governance
To provide independent verification of our corporate
governance and financial disclosures, Fannie Mae asked
the independent ratings agency Standard & Poor’s
to examine and rate our standards. The report gave
Fannie Mae an exceptional score of 9.0 on a 10-point
scale, noting that, “Fannie Mae’s corporate governance
practices are judged … to be at a very strong level on a
global basis of comparison.”
The Standard & Poor’s report stated, “in recent
years, a combination of voluntary initiatives and specifics
of [its regulatory] oversight have resulted in disclosure