Fannie Mae 2011 Annual Report Download - page 222

with us. Each of our directors also must annually certify compliance with the Code of Conduct and Conflicts of
Interest Policy for Members of the Board of Directors.
The Nominating and Corporate Governance Committee Charter and our Board’s delegation of authorities and
reservation of powers require the Nominating and Corporate Governance Committee to approve any transaction
that Fannie Mae engages in with any director, nominee for director or executive officer, or any immediate family
member of a director, nominee for director or executive officer, that is required to be disclosed pursuant to
Item 404 of Regulation S-K. In addition, the Board’s delegation of authorities and reservation of powers requires
the Board and the conservator to approve any action that in the reasonable business judgment of the Board at the
time the action is taken is likely to cause significant reputational risk. Depending on the Board’s business
judgment, this requirement might include a related party transaction.
Our Code of Conduct for employees requires that we and our employees seek to avoid any actual or apparent
conflict between our business interests and the personal interests of our employees or their family members. An
employee who knows or suspects a violation of our Code of Conduct must raise the issue with the employee’s
manager, another appropriate member of management, a member of our Human Resources division or our
Compliance and Ethics division.
Our Conflict of Interest Policy and Conflict of Interest Procedure for employees requires that our executive
officers report to the Compliance & Ethics Division any existing or currently proposed transaction with us,
whether or not in the ordinary course of business, in which the executive officer or any immediate family
member of the executive officer has a direct or indirect interest. Our Conflict of Interest Procedure for employees
provides that the Compliance & Ethics Division will refer any such report to the Office of the Corporate
Secretary for review to determine whether the Nominating and Corporate Governance Committee or FHFA is
required to review and approve the transaction pursuant to the Nominating and Corporate Governance
Committee Charter and/or the Board’s delegation of authorities and reservation of powers.
We are required by the conservator to obtain its approval for various matters, some of which may involve
relationships or transactions with related persons. These matters include actions involving the senior preferred
stock purchase agreement, the creation of any subsidiary or affiliate or any substantial non-ordinary course
transactions with any subsidiary or affiliate, actions involving hiring, compensation and termination benefits of
directors and officers at the executive vice president level and above and other specified executives, and any
action that in the reasonable business judgment of the Board at the time that the action is taken is likely to cause
significant reputational risk. The senior preferred stock purchase agreement requires us to obtain written
Treasury approval of transactions with affiliates unless, among other things, the transaction is upon terms no less
favorable to us than would be obtained in a comparable arm’s-length transaction with a non-affiliate or the
transaction is undertaken in the ordinary course or pursuant to a contractual obligation or customary employment
arrangement in existence at the time the senior preferred stock purchase agreement was entered into.
We also require our directors and executive officers, not less than annually, to describe to us any situation
involving a transaction with us in which a director or executive officer could potentially have a personal interest
that would require disclosure under Item 404 of Regulation S-K.
TRANSACTIONS WITH RELATED PERSONS
Transactions with Treasury
Treasury beneficially owns more than 5% of the outstanding shares of our common stock by virtue of the warrant
we issued to Treasury on September 7, 2008. The warrant entitles Treasury to purchase shares of our common
stock equal to 79.9% of our outstanding common stock on a fully diluted basis on the date of exercise, for an
exercise price of $0.00001 per share, and is exercisable in whole or in part at any time on or before September 7,
2028. We describe below our current agreements with Treasury, as well as payments we will be making to
Treasury in the future pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011.
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