Freddie Mac 2011 Annual Report Download - page 365

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Policy Governing Related Person Transactions
The Board has adopted a written policy governing the approval of related person transactions. This policy sets forth
procedures for the review and approval or ratification of transactions involving related persons, which consist of any
person who is, or was at any time since the beginning of our last completed fiscal year, a director, a director nominee, an
executive officer, or an immediate family member of any of the foregoing persons.
Under authority delegated by the Board, our General Counsel and the Nominating and Governance Committee (or its
Chair under certain circumstances), each, an Authorized Approver, are responsible for applying the Related Person
Transactions Policy. Transactions covered by the Related Person Transactions Policy consist of any transaction,
arrangement or relationship or series of similar transactions, arrangements or relationships, in which: (a) the aggregate
amount involved exceeded or is expected to exceed $120,000; (b) we were or are expected to be a participant; and (c) any
related person had or will have a direct or indirect material interest. The Related Person Transactions Policy includes a list
of categories of transactions identified by the Board as having no significant potential for an actual conflict of interest or
the appearance of a conflict or improper benefit to a related person, and thus not subject to review.
Our Legal Division assesses whether any proposed transaction involving a related person is covered by the Related
Person Transactions Policy. If so, the transaction is reviewed by the appropriate Authorized Approver. In consultation with
the Chair of the Nominating and Governance Committee, the General Counsel may refer any proposed transaction to the
Nominating and Governance Committee for review and approval.
If possible, approval of a related person transaction is obtained prior to the effectiveness or consummation of the
transaction. If advance approval of a related person transaction by the appropriate Authorized Approver is not feasible or
otherwise not obtained, then the transaction is considered promptly by the appropriate Authorized Approver to determine
whether ratification is warranted.
In determining whether to approve or ratify a related person transaction covered by the Related Person Transactions
Policy, the appropriate Authorized Approver reviews and considers all relevant information which may include: (a) the
nature of the related person’s interest in the transaction; (b) the approximate total dollar value of, and extent of the related
person’s interest in, the transaction; (c) whether the transaction was or would be undertaken in the ordinary course of our
business; (d) whether the transaction is proposed to be, or was, entered into on terms no less favorable to us than terms
that could have been reached with an unrelated third party; and (e) the purpose, and potential benefits to us, of the
transaction.
Corporate Governance Guidelines
In June 2011, the Board adopted our amended Corporate Governance Guidelines, or our Guidelines, which are
available on our website at www.freddiemac.com/governance/pdf/gov guidelines.pdf.
Director Independence
The non-employee members of the Board evaluated the independence, as defined in both Sections 4 and 5 of our
Guidelines and in Section 303A.02 of the NYSE Listed Company Manual, of the members of our Board who have served
in 2012, each of whom also served on our Board in 2011. In connection with that evaluation, the non-employee members
of the Board determined that all current members of our Board (other than Charles E. Haldeman, Jr., our CEO) were
independent during their service in 2011 and 2012. Mr. Haldeman is not considered an independent director because he is
our CEO.
The non-employee members of the Board also concluded that all current members of the Audit Committee, the
Compensation Committee, and the Nominating and Governance Committee are independent within the meaning of both
Sections 4 and 5 of our Guidelines and Section 303A.02 of the NYSE Listed Company Manual. The non-employee
members of the Board also determined that all current members of the Audit Committee are independent within the
meaning of Rule 10A-3 promulgated under the Exchange Act, and Section 303A.06 of the NYSE Listed Company
Manual.
In determining the independence of each Board member, the non-employee members of the Board reviewed the
following categories or types of relationships, in addition to those specifically addressed by the standards contained in
Section 5 of our Guidelines, to determine whether those relationships, either individually or when aggregated with other
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