Fannie Mae 2012 Annual Report Download - page 221

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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 Legal department for review to determine whether the Nominating & Corporate Governance
Committee or FHFA is required to review and approve the transaction pursuant to the Nominating & 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, any substantial non-ordinary course transaction with a subsidiary or affiliate, the
compensation or benefits of directors and officers at the senior vice president level and above and other executives FHFA
may designate, and 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 or result in substantial negative publicity. 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 are making to Treasury pursuant to the Temporary Payroll Tax Cut Continuation Act of
2011.
FHFA, as conservator, approved the senior preferred stock purchase agreement and the amendments to the agreement, our
role as program administrator for the Home Affordable Modification Program and other initiatives under the Making Home
Affordable Program, and the housing finance agency transactions described below.
Treasury Senior Preferred Stock Purchase Agreement
We issued the warrant to Treasury pursuant to the terms of the senior preferred stock purchase agreement we entered into
with Treasury on September 7, 2008. Under the senior preferred stock purchase agreement, we also issued to Treasury one
million shares of senior preferred stock. We issued the warrant and the senior preferred stock as an initial commitment fee in
consideration of Treasury’s commitment to provide funds to us under the terms and conditions set forth in the senior
preferred stock purchase agreement. The senior preferred stock purchase agreement was subsequently amended on September
26, 2008, May 6, 2009, December 24, 2009 and August 17, 2012. See “Business—Conservatorship and Treasury Agreements
—Treasury Agreements” for a description of the terms of the senior preferred stock purchase agreement, the senior preferred
stock and the warrant, including the revisions to the agreement and the senior preferred stock set forth in the August 2012
amendment to the agreement.
As of December 31, 2012, we had received an aggregate of $116.1 billion from Treasury under the senior preferred stock
purchase agreement, and the remaining amount of funding available to us under the agreement was $117.6 billion. Through
December 31, 2012, we had paid an aggregate of $31.4 billion to Treasury in dividends on the senior preferred stock. Our
dividend payment on the senior preferred stock for the first quarter of 2013 was $4.2 billion.
Treasury Making Home Affordable Program
In February 2009, the Obama Administration announced its Homeowner Affordability and Stability Plan, a plan to provide
stability and affordability to the U.S. housing market. Pursuant to this plan, in March 2009, the Administration announced the
details of its Making Home Affordable Program, a program intended to provide assistance to homeowners and prevent
foreclosures. One of the primary initiatives under the Making Home Affordable Program is the Home Affordable