Fannie Mae 2012 Annual Report Download - page 226

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though the director does not meet the standards listed above, so long as the determination of independence is consistent with
the NYSE definition of “independence.” Where the standards above do not address a particular relationship, the
determination of whether the relationship is material, and whether a director is independent, will be made by our Board,
based upon the recommendation of the Nominating & Corporate Governance Committee.
Our Board of Directors
Our Board of Directors, with the assistance of the Nominating & Corporate Governance Committee, has reviewed the
independence of all current Board members under the requirements set forth in FHFA’s corporate governance regulations
(which requires the standard of independence adopted by the NYSE) and under the standards of independence adopted by the
Board contained in our Corporate Governance Guidelines, as outlined above. Based on its review, the Board has affirmatively
determined that all of our non-employee directors meet the director independence standards of our Guidelines and the NYSE,
and that each of the following nine directors is independent: Philip A. Laskawy, William Thomas Forrester, Brenda J. Gaines,
Charlynn Goins, Frederick B. Harvey III, Robert H. Herz, Egbert L. J. Perry, Jonathan Plutzik and David H. Sidwell.
In determining the independence of each of these Board members, the Board of Directors considered the following
relationships in addition to those addressed by the standards contained in our Guidelines as set forth above:
• Certain of these Board members serve as directors or advisory Board members of other companies that engage in
business with Fannie Mae. In each of these cases, the Board members are only directors or advisory Board members of
these other companies. In addition, in most instances, the payments made by or to Fannie Mae pursuant to these
relationships during the past five years fell below our Guidelines’ thresholds of materiality for a Board member that is a
current executive officer, employee, controlling shareholder or partner of a company engaged in business with Fannie
Mae. In light of these facts, the Board of Directors has concluded that these business relationships are not material to
the independence of these Board members.
• One of these Board members serves as a trustee for a charitable organization that has received fees from Fannie Mae.
The amount of these fees fell substantially below our Guidelines’ thresholds of materiality for a Board member who is a
current trustee or board member of a charitable organization that receives donations from Fannie Mae. In light of this
fact, the Board of Directors has concluded that this relationship with the charitable organization is not material to the
independence of this Board member.
• Certain of these Board members serve as directors of other companies that hold Fannie Mae fixed income securities or
control entities that direct investments in such securities. It is not possible for Fannie Mae to determine the extent of the
holdings of these companies in Fannie Mae fixed income securities as all payments to holders are made through the
Federal Reserve, and most of these securities are held in turn by financial intermediaries. Each director has confirmed
that the transactions by these other companies in Fannie Mae fixed income securities are entered into in the ordinary
course of business of these companies and are not entered into at the direction of, or upon approval by, him in his
capacity as a director of these companies. In light of these facts, the Board of Directors has concluded that these
business relationships are not material to the independence of these Board members.
• Two of these Board members and an immediate family member of another Board member serve as directors and an
employee, respectively, of companies that have been sued by FHFA, as conservator to Fannie Mae and Freddie Mac,
for violations of laws in the sale of residential private-label mortgage-backed securities to Fannie Mae and Freddie
Mac. The Board of Directors has concluded that these relationships were not material to the independence of these
Board members.
• Mr. Perry is an executive officer and majority shareholder of The Integral Group LLC, which has had multiple indirect
business relationships with Fannie Mae during the past five years. These business relationships include the following:
• Since 2006, Fannie Mae has held six multifamily mortgage loans made to six borrowing entities sponsored by
Integral. In each case, Integral participates in the borrowing entity as a general partner of the limited partnership, or
as a managing member of the limited liability company, as the case may be, and holds a 0.01% economic interest in
such entity. The aggregate unpaid principal balance of these loans as of December 31, 2012 constituted
approximately 6% of Integral’s total debt outstanding. The borrowing entities have made interest payments on these
loans. The total amount of these interest payments did not exceed $1 million in any of the last five years.
• Fannie Mae has invested as a limited partner or member in certain LIHTC funds that in turn have invested as a
limited partner or member in various Integral Property Partnerships, which are lower-tier project partnerships or
limited liability companies that own LIHTC properties. Integral participates indirectly as a member or the general
partner of the Integral Property Partnerships (each a “Project General Partner”). The Integral Property Partnerships
construct, develop and manage housing projects, a portion of which includes affordable housing units. Each Project
General Partner and its affiliates earn certain fees each year in connection with those project activities, and such fees