The problem to be investigated is the conflict that can arise within companies between doing what is right (or moral) and doing what is often considered more important for the achievement of company objectives. This conflict is highlighted in the case study involving Fannie Mae (FM). (Jennings, 2009) In this case, corporate executives choose to focus on corporate goals and meeting market expectations, ignoring any moral issues that conflict with achieving their goal. (Jennings, 2009) To understand the reasons for managers' actions and learn from their mistakes and misjudgments, the following topics are examined: 1) ethics and social responsibility, 2) the importance of devolution, 3) power and value of incentive plans, 4) the logic of legitimate income smoothing, and 5) the impact of pep talks. FM is a federally chartered shareholder-owned corporation. The organization aims to increase the availability of affordable housing and attract investment in the real estate market. Combining federal charter and shareholder goals, FM must walk a fine line between ethics and business practices. FM was named the most ethical company in the United States by Business Ethics magazine in 2004. (Jennings, 2009) Unfortunately, there was a dark side to FM's story. Business leaders choose to focus on corporate goals and meeting market expectations, ignoring any moral issues that conflict with achieving their goal. (Jennings, 2009) To understand the reasons, the reader must be aware of several aspects of the FM situation, including: 1) ethics and social responsibility, 2) the importance of devolution, 3) the power and value of incentive plans, 4) the motivation for… half of the paper… whether Enron or Nazi Germany, can be the result of individuals not questioning authority. Conclusion It is clear, examining the FM case, that the corporate manager's personal personality morality was overwhelmed by the desire to obtain personal incentives and bonuses. The lack of internal controls allowed managers to control what was reported to ensure the objective was achieved. (Jennings, 2009) Maintaining control and limiting devolution kept those below the executive ranks largely in the dark. The executive team used company objectives to manage behaviors from the top down, ignoring and/or eliminating those who questioned their processes. (Marken, 2004) Analyzing the impact of how goals and incentives are communicated and calculated is a valuable lesson in understanding the balance between personal morality and the achievement of corporate goals. (Schultz and Wehmeier, 2010)