Notice of Petition - "Compensation, Retirement Programs and Related Benefits" Bruce Alford 3115 West 2nd Ct Russellville, AR 72801-4504
April 22, 2013
Barry F Mardock Deputy Director, Office of Regulatory Policy, Farm Credit Administration 1501 Farm Credit Drive McLean, VA 22102-5090
Dear Barry Mardock:
We appreciate the opportunity to respond and thank you for requesting comment on the regulatory petition filed by The Farm Credit Council regarding the Agency's say on pay mandatory shareholder vote on compensation matters.
Shareholders of Farm Credit have access to a great deal of information and several ways to make their voices heard in each association. Our membership is highly engaged in the nomination and election processes, with no interference from employees and existing directors. Specifically, our CEO‚€™s compensation is itemized at this time without further regulation. Additionally, our senior management‚€™s collective salaries are also disclosed and will be individually disclosed upon request to any member. We have had no complaints in this regard.
We believe that, as directors, we serve our membership in very important roles. One of the most important duties is the hiring of the Chief Executive Officer, determining his objectives and rewarding his/her accomplishments. We have a Compensation Committee that studies executive compensation, in order to better serve the association and better protect the safety and soundness of our financial cooperative.
To quote a paragraph from FCA‚€™s The Director‚€™s Role ‚€" Farm Credit System Institutions: ‚€œThe board can fulfill its responsibility and help protect the institution‚€™s future by making sure that day-to-day operations are properly managed. Every soundly run and successful operation is led by a quality management team. Therefore, the board‚€™s duty in hiring and retaining quality management becomes one of those critical elements, if not the most critical element, necessary for the institution‚€™s success. Consistent with these sound governance principles and FCA‚€™s governance regulations, especially 620.31, each institution must charter and maintain a formal compensation committee.‚€Ě As FCA has indicated with this quote, we believe that trained directors are needed to properly understand the dynamics of executive compensation.
FCA, in extending the comment period, has also asked for alternatives. We do not think that alternatives are necessary or helpful to our membership. As directors, we have been asked to make decisions in an oversight role. If further information and/or thoughts are needed in regard to executive compensation, we believe that the directorship should choose what best fulfills that need, not an FCA, regulatory-mandated say on pay vote.
We highly encourage FCA to eliminate this portion of the proposed regulation and not replace it with any alternatives.
Bruce Alford Chairman of the Board of Directors Farm Credit Services of Western Arkansas