Freddie Mac 2011 Annual Report Download - page 366

relationships, would constitute a material relationship between the Director and us that would impair a Director’s
judgment as a member of the Board or create the perception or appearance of such an impairment:
•Board Memberships With For-Profit Business Partners. Mses. Bammann and Byrd and Messrs. Glauber, Lynch,
Retsinas, Rose and Shanks serve as directors of other companies that engage or have engaged in business with us
resulting in payments between us and such companies during the past three fiscal years. After considering the
nature and extent of the specific relationship between each of 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. Mr. Retsinas serves as
a board member of a charitable organization that has received monetary contributions from us or the Freddie Mac
Foundation. The total annual amount contributed was below the applicable threshold in our Guidelines that would
require a specific determination that Mr. Retsinas is independent in spite of the contributions. The non-employee
members of the Board considered the contributions and the nature of the organization and concluded that the
relationship with the charitable organization did not constitute a material relationship between Mr. Retsinas and us
that would impair his independence as our Director.
•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 and
served in that role during 2011. In January 2012, Mr. Williams became a Senior Fellow of the Government Practice
of CEB. 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 2009, 2010, 2011 and 2012 year-to-date, we paid CEB $362,100, $515,700, $447,500 and
$492,400, respectively, for memberships in certain of CEB’s subject-matter interest groups. Currently, we are a
member of 14 CEB groups, and in 2009, 2010 and 2011 we were a member of 11, 12 and 13 groups, respectively.
The annual amounts of our payments to CEB in 2009 and 2010 were substantially below 2% of CEB’s annual
revenues for the applicable years and the 2011 and 2012 payments are substantially less than 2% of CEB’s 2010
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 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 and retiree medical benefits 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
361 Freddie Mac