Freddie Mac 2010 Annual Report Download - page 330

those companies and us, and the fact that these Board members are directors of these other companies rather than
employees, the non-employee members of the Board concluded that those business relationships did not constitute
material relationships between any of the Directors and us that would impair their independence as our Directors.
•Board Memberships With Charitable Organizations To Which We Have Made Contributions. Messrs. Koskinen,
Retsinas, and Williams or their immediate family members serve or served as board members or trustees of charitable
organizations that have received monetary contributions from us, the Freddie Mac Foundation or contributions by our
executive officers within the last three fiscal years. In each case, the total annual amount contributed was below the
applicable threshold in our Guidelines that would require a specific determination that the Board member is
independent in spite of the contribution. The non-employee members of the Board considered the contributions and
the nature of the organizations and concluded that those relationships with charitable organizations did not constitute
material relationships between any of the Directors and us that would impair their independence as our Directors.
•Board Members Who Are Executive Officers Or Employees Of Business Partners. Mr. Williams was appointed as
Executive Director of the Government Practice at The Corporate Executive Board Company in January 2010. CEB
provides best practices research and analysis and executive education to corporations through memberships in various
subject-matter interest groups organized and managed by CEB. Mr. Williams’ responsibilities at CEB include
contributing to and authoring literature; advising on the development of CEB’s state and local government service
strategy and its existing federal government service offerings; and promoting future CEB services. In 2008, 2009,
2010 and 2011 year-to-date, we paid CEB $664,200, $362,100, $515,700 and $347,300, respectively, for memberships
in certain of CEB’s subject-matter interest groups. Currently, we are a member of 11 CEB groups, and in 2008, 2009
and 2010 we were a member of 23, 11 and 12 groups, respectively. The annual amounts of our payments to CEB in
2008 and 2009 were substantially below 2% of CEB’s annual revenues for the applicable years and the 2010 and 2011
payments are substantially less than 2% of CEB’s 2009 revenues (the latest year for which CEB revenue is publicly
available). Therefore, under our Guidelines, those annual payments do not preclude the non-employee members of the
Board from concluding that Mr. Williams is independent. The non-employee members of the Board considered those
payments and the nature and extent of the relationship between us and CEB and concluded that this business
relationship did not constitute a material relationship between Mr. Williams and us that would impair Mr. Williams’
independence as our Director.
•Financial Relationships with For-Profit Business Partners. Since 2005, Ms. Bammann has owned stock of JPMorgan
Chase & Co., or JPMorgan. In the aggregate, this stock represents a material portion of her net worth. JPMorgan
conducts significant business with Freddie Mac, including, among other things, as a single-family and multifamily
seller/servicer, as an underwriter of our debt and mortgage securities and as a capital markets counterparty. In order to
eliminate any potential conflict of interest that might arise as a result of this stock ownership, Ms. Bammann has
agreed to recuse herself from discussing and acting upon any matters that are to be considered by the full Board or
any of the committees of which she is a member (including the Business and Risk Committee, which she chairs), and
that relate directly to JPMorgan, and that therefore might affect the value of her JPMorgan stock. The Audit
Committee Chairman, in consultation with the Non-Executive Chairman, will address any questions that may arise
regarding whether recusal from a particular discussion or action is appropriate.
In evaluating Ms. Bammann’s independence in light of her ownership of JPMorgan stock, the non-employee members
of the Board considered the nature and extent of Freddie Mac’s business relationship with JPMorgan, actions
previously undertaken by the Board through the Business and Risk Committee relating to JPMorgan and any potential
impact that her stock ownership might have on her independent judgment as a Freddie Mac director, taking into
account the recusal arrangement. The non-employee members of the Board concluded that Ms. Bammann’s recusal
arrangement concerning JPMorgan would address any actual or potential conflicts of interest that might arise with
respect to her ownership of JPMorgan stock. Accordingly, the non-employee members concluded that
Ms. Bammann’s ownership of JPMorgan stock does not constitute a material relationship between her and Freddie
Mac that would impair her independence as a Freddie Mac Director.
Mr. Rose receives an annuity from JPMorgan in connection with his retirement from that firm in 2001. The amount
of Mr. Rose’s annuity is fixed and does not depend in any way on JPMorgan’s revenues or profits. In evaluating the
impact of Mr. Rose’s annuity from JPMorgan on his independence, the non-employee members of the Board
considered the structure of the annuity, the amount of the annuity as a percentage of Mr. Rose’s annual adjusted gross
income, and Freddie Mac’s business relationship with JPMorgan. The non-employee members of the Board also were
informed that Mr. Rose had agreed to recuse himself from discussing or acting upon any matter to be considered by
our Board that could threaten the viability of JPMorgan. The non-employee members of the Board concluded that
Mr. Rose’s JPMorgan annuity does not constitute a material relationship between him and Freddie Mac that would
impair his independence as a Freddie Mac Director.
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