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Informational Memorandum
Subject:Maximum Bank Director Compensation for 2010
Date of Memorandum:03/15/2010
Expiration Date:
Office:Office of Regulatory Policy
Signed By:Jacob, Andrew
FCA Contact Person:Wilson, Michael
Contact Phone:703-883-4124
List of Attachments:Farm Credit Administration Summary of Annual Adjustments of Maximum Farm Credit System Bank Director Compensation



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INFORMATIONAL MEMORANDUM

March 15, 2010

To: Chairman, Board of Directors
Chief Executive Officer
All Farm Credit Banks

From: Andrew D. Jacob, CFA, Director
Office of Regulatory Policy

Subject: Maximum Bank Director Compensation for 2010

Section 4.21 of the Farm Credit Act of 1971, as amended (Act), and Farm Credit Administration (FCA) regulation 611.400 require an annual adjustment in the maximum annual compensation payable to Farm Credit System (FCS) bank1 directors to reflect the change in the Consumer Price Index (CPI). With the release of annual CPI data for 2009, the FCS bank director compensation maximum for 2010 changes accordingly.

The 2010 maximum is determined by the 2009 maximum plus the increase or decrease in the average CPI over the prior year as follows:

2010 Maximum Director Compensation = 2009 Maximum Director Compensation x (2009 Annual Average CPI/2008 Annual Average CPI)


2009 Annual Average CPI2= 214.537
2008 Annual Average CPI= 215.303
2010 Maximum Compensation= $52,133 x (214.537/215.303)
= $52,133 x 0.996442
= $51,947.513

The maximum compensation payable to FCS Bank Directors in 2010 is $51,948.

The change in the CPI from 2008 to 2009 results in a slight reduction in the computed maximum director compensation for 2010 when compared to the 2009 level. However, because the reduction in the computed maximum director compensation is not considered significant, FCA will not require FCS banks that have directors already receiving compensation above $51,948 to reduce their compensation levels to the 2010 maximum.

With the issuance of this Informational Memorandum, the FCA rescinds the Informational Memorandum, dated January 27, 2009, on the calculation of maximum bank director compensation.

If you have any questions regarding the annual adjustment process, please call Mike Wilson, Office of Regulatory Policy, (703) 883-4124, TTY (703) 883-4434, or contact him by e-mail at wilsonm@fca.gov.

Attachment
Copy to: Each FCS Institution

1 The four Farm Credit Banks and CoBank, ACB.
2 Based on the annual average Consumer Price Index for all Urban Consumers, U.S. City Average, All Items, 1982-84 = 100. Adjusted series CUUR0000SA0, U.S. Bureau of Labor Statistics.
3 Rounded to the nearest whole dollar.


Attachment


Farm Credit Administration
Summary of Annual Adjustments of Maximum
Farm Credit System Bank Director Compensation
YearAnnual
Average
CPI1
Annual CPI
Adjustment
Percentage
Maximum
Bank Director
Compensation
1997 160.5 1.029528 $22,474
1998 163.0 1.022945 $22,990
1999 166.6 1.015576$23,348
2000 172.2 1.022086$23,864
2001 177.1 1.033613$24,666
2002 179.9 1.028455$25,368
20032 184.0 1.015810 $25,769
20042 188.9 1.3178943$26,3583
2005 195.31.3529903 $27,0603
2006 201.61.033880$47,2904
2007 207.3421.032258$48,815
2008215.3031.028482$50,205
2009214.5371.038396$52,133
20100.996451 $51,948


1 Based on the annual average Consumer Price Index (CPI) for all Urban Consumers, U.S. City Average, All Items, 1982-84 = 100. Unadjusted series CUUR0000SA0, U.S. Bureau of Labor Statistics.
2 The annual adjustment for maximum director compensation for 2003 and 2004 were made via Bookletter BL-045, dated March 12, 2003, and BL-048, dated March 1, 2004, respectively.
3 The maximum annual director compensation was determined by using the 1992 maximum compensation level at $20,000 times the percentage increase in the average CPI since October 1992, using the October 1992 effective annual average CPI: $20,000 x (184.0/139.6167) = $26,358 for 2004 and $20,000 x (188.9/139.6167) = $27,060 for 2005.
4 Via its Bookletter BL-051, dated December 15, 2005, FCA authorized FCS banks to pay compensation for 2006 at a level not to exceed $45,740 plus the annual adjustment of inflation. The 2006 maximum director compensation is calculated as follows: $45,740 x (195.3/188.9) = $47,290 (See Informational Memorandum, dated February 15, 2006 (rescinded)).