Fannie Mae 2006 Annual Report Download - page 223

employees, including our retirement plan. As a member of senior management, she also received benefits
under our compensation and benefit plans available to senior officers, including payment for tax and financial
planning services, participation in the Supplemental Pension Plan and 2003 Supplemental Pension Plan and
participation in our elective deferred compensation plan. In July 2007, Ms. Senhauser entered into a separation
agreement with us under our management severance program. Under the terms of her separation agreement,
Ms. Senhauser became entitled to receive early approximately $154,000 in previously awarded cash bonuses
and gave up approximately $158,000 in previously awarded cash bonuses as a result of her termination of
employment. In addition, she became entitled to early vesting of 8,125 shares of restricted stock and early
payment of 1,983 shares of common stock under our performance share program; she forfeited 8,439 shares of
restricted stock. Ms. Senhauser’s separation agreement provides that she will be entitled to receive a cash
bonus for 2007 if cash bonuses are paid for 2007 under our annual incentive plan, based on corporate
performance and prorated for her seven months of service during 2007. Ms. Senhauser also became entitled to
a severance payment of approximately $396,000, accelerated vesting of options to purchase 4,770 shares of
our common stock, medical coverage worth up to an estimated $21,000 and up to $18,000 in outplacement
services under her separation agreement.
Our employment relationship with and compensation of Mr. Levin’s sister and Mr. Senhauser’s wife have not
required review and approval under any of our policies and procedures relating to transactions with related
persons, other than the terms of Ms. Senhauser’s separation agreement, which were approved by the Board’s
Nominating and Corporate Governance Committee.
Director Independence
Our Board of Directors, with the assistance of the Nominating and Corporate Governance Committee, has
reviewed the independence of all current Board members under the listing standards of the NYSE, and the
standards of independence adopted by the Board, as set forth in our Corporate Governance Guidelines and
outlined below. It is the policy of our Board of Directors that a substantial majority of our seated directors will
be independent in accordance with these standards. Based on its review, the Board has determined that all of
our independent directors meet the director independence standards of our Corporate Governance Guidelines
and the NYSE.
Our Board of Directors has affirmatively determined that the following Board members are independent:
Stephen Ashley, the non-executive Chairman, Dennis Beresford, Louis Freeh, Brenda Gaines, Karen Horn,
Bridget Macaskill, Joe Pickett, Leslie Rahl, Greg Smith, Patrick Swygert and John Wulff. Board member
Daniel Mudd, our President and Chief Executive Officer, is not independent.
Under the standards of independence adopted by our Board, which meet and in some respects exceed the
definition of independence adopted by the NYSE, an “independent director” must be determined to have no
material relationship with us, either directly or through an organization that has a material relationship with
us. A relationship is “material” if, in the judgment of the Board, it would interfere with the director’s
independent judgment. In addition, under the NYSE’s listing requirements for audit committees, members of a
company’s audit committee must meet additional, heightened independence criteria, although our own
independence standards require all independent directors to meet these criteria.
To assist it in determining whether a director is independent, our Board has adopted the standards set forth
below, which are posted on our Web site, www.fanniemae.com, under “Corporate Governance”:
• A director will not be considered independent if, within the preceding five years:
• the director was our employee; or
• an immediate family member of the director was employed by us as an executive officer.
• A director will not be considered independent if:
• the director is a current partner or employee of our outside auditor, or within the preceding five years,
was (but is no longer) a partner or employee of our outside auditor and personally worked on our audit
within that time; or
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