Freddie Mac 2010 Annual Report Download - page 331

Board Diversity
The Board identifies Director nominees or candidates when the Conservator has requested that the Board identify
candidates for the Conservator to consider for election by written consent and when there is a vacancy on the Board, at
which time the Board may exercise the authority delegated to it by the Conservator to fill such vacancies, subject to review
by the Conservator.
Our charter provides that our Board must at all times have at least one person from the homebuilding, mortgage
lending, and real estate industries, and at least one person from an organization representing community or consumer
interests or one person who has demonstrated a career commitment to the provision of housing for low-income households.
In addition, the examination guidance for corporate governance issued by FHFA provides that in identifying individuals for
nomination for election to the Board, the Board should consider the knowledge of such individuals, as a group, in the areas
of business, finance, 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 our safe and sound operation.
In addition, our Guidelines explain that we seek to have a diversity of talent on the Board and that candidates are
selected, in part, for their experience and expertise. The Guidelines also explain that when identifying director nominees, the
Nominating and Governance Committee considers, among other factors, our needs, the talents and skills then available on
the Board, and, with respect to incumbent directors, their continued involvement in business and professional activities
relevant to us, the skills and experience that should be represented on the Board, the availability of other individuals with
desirable skills to join the Board, and the desire to maintain a diverse Board.
FHFA has also adopted a final rule regarding minority and women inclusion that became effective on January 28, 2011.
The final rule implements section 1116 of HERA and requires us to, among other things, promote diversity and the inclusion
of women, minorities, and individuals with disabilities in all activities, including in the election of directors.
The Board does not currently have, but is developing, a formal policy with regard to the consideration of diversity in
identifying director nominees and candidates, as required by these regulations.
Board Leadership Structure and Role in Risk Oversight
The positions of Chief Executive Officer and Non-Executive Chairman of the Board are held by different individuals.
This leadership structure was established by the Conservator when it appointed separate individuals to hold those two
positions in September 2008. The examination guidance for corporate governance issued by FHFA provides that once
separated, the functions of the Chief Executive Officer and the Non-Executive Chairman of the Board should remain
separated until such time as the Director of FHFA determines otherwise.
The responsibility for risk oversight is shared by two committees of the Board, the Business and Risk Committee and
the Audit Committee. The Business and Risk Committee is responsible for assisting the Board in the oversight, on an
enterprise-wide basis, of our risk management framework, including management of credit risk (including counterparty risk),
market risk (including interest rate and liquidity risk), model risk, operational risk, strategic risk, and reputation risk. The risk
oversight responsibilities of the Audit Committee include reviewing: (a) management’s guidelines and policies governing the
processes for assessing and managing our risks; and (b) our major financial risk exposures (including but not limited to
market, credit, and operational risks) and the steps management has taken to monitor and control such exposures.
The Business and Risk Committee and the Audit Committee generally meet in joint session at least quarterly to carry
out their respective risk oversight responsibilities on behalf of the Board. The membership of those two committees
collectively consists of all members of the Board except Messrs. Koskinen and Haldeman, who generally also attend the joint
sessions. Copies of the Charters of the Audit Committee and the Business and Risk Committee are available on our website
at http://www.freddiemac.com/governance/bd_committees.html.
The Chief Enterprise Risk Officer reports regularly to the joint meetings of the Business and Risk Committee and the
Audit Committee. In addition, the Chief Credit Officer reports regularly to the Business and Risk Committee. The Chief
Enterprise Risk Officer and the Chief Credit Officer also report to the full Board as appropriate.
For a discussion of the Compensation Committee’s conclusion that our compensation policies and practices do not
create risks that are reasonably likely to have a material adverse effect on us, see “Executive Compensation — Compensation
and Risk.”
Transactions with 5% Shareholders
As a result of our issuance to Treasury of the warrant to purchase shares of our common stock equal to 79.9% of the
total number of shares of our common stock outstanding, on a fully diluted basis, we are deemed a related party to the
U.S. government. Except for the transactions with Treasury discussed in “NOTE 3: CONSERVATORSHIP AND RELATED
MATTERS — Government Support for our Business” and “NOTE 3: CONSERVATORSHIP AND RELATED MATTERS —
Housing Finance Agency Initiative” as well as in “NOTE 9: DEBT SECURITIES AND SUBORDINATED BORROWINGS,”
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