Fannie Mae 2010 Annual Report Download - page 209

removed from office in accordance with the law, whichever occurs first. Under the Charter Act, each director
is elected or appointed for a term ending on the date of our next shareholders’ meeting. As noted above,
however, the conservator appointed the initial directors to our Board, delegated to the Board the authority to
appoint directors to subsequent vacancies subject to conservator review, and defined the term of service of
directors during conservatorship.
Under the Charter Act, our Board shall at all times have as members at least one person from each of the
homebuilding, mortgage lending and real estate industries, and at least one person from an organization that
has represented consumer or community interests for not less than two years or one person who has
demonstrated a career commitment to the provision of housing for low-income households. It is the policy of
the Board that a substantial majority of Fannie Mae’s directors will be independent, in accordance with the
standards adopted by the Board. In addition, the Board, as a group, must be knowledgeable in business,
finance, capital markets, accounting, risk management, public policy, mortgage lending, real estate, low-
income housing, homebuilding, regulation of financial institutions and any other areas that may be relevant to
the safe and sound operation of Fannie Mae.
In addition to knowledge in the areas noted above, the Nominating and Corporate Governance Committee
considers the personal attributes and diversity of backgrounds offered by candidates, but does not have a
formal policy on the consideration of diversity in identifying Board members. The Nominating and Corporate
Governance Committee seeks out Board members who possess the highest personal values, judgment and
integrity, diverse ideas and perspectives, and an understanding of the regulatory environment in which Fannie
Mae does business. The Committee also considers whether a prospective candidate for the Board has the
ability to attend meetings and fully participate in the activities of the Board.
The Nominating and Corporate Governance Committee evaluates the qualifications of current directors on an
annual basis. Factors taken into consideration by the Committee in making this evaluation include:
• a director’s contribution to the effective functioning of the corporation;
• any change in the director’s principal area of responsibility with his or her company or his or her
retirement from the company;
• whether the director continues to bring relevant experience to the Board;
• whether the director has the ability to attend meetings and fully participate in the activities of the Board;
• whether the director has developed any relationships with Fannie Mae or another organization, or other
circumstances have arisen, that might make it inappropriate for the director to continue serving on the
Board;
• the director’s age and length of service on the Board; and
• the director’s particular experience, qualifications, attributes and skills.
Information regarding the particular experience, qualifications, attributes or skills of each of our current
directors is provided above under “Directors.”
Board Leadership Structure
We have had a non-executive Chairman of the Board since 2004. FHFA examination guidance requires
separate Chairman of the Board and Chief Executive Officer positions and requires that the Chairman of the
Board be an independent director. Our Board is also structured so that all but one of our directors, our Chief
Executive Officer, are independent. A non-executive Chairman structure enables non-management directors to
raise issues and concerns for Board consideration without immediately involving management and is
consistent with the Board’s emphasis on independent oversight, as well as our conservator’s directives.
Our Board has five standing committees: the Audit Committee, the Compensation Committee, the Executive
Committee, the Nominating and Corporate Governance Committee, and the Risk Policy and Capital
Committee. The Board and the standing Board committees function in accordance with their designated duties
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