April 16, 2012
Mr. Gary K. Van Meter
Director, Office of Regulatory Policy
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
RE: Proposed Rule on Compensation, Retirement Programs, and Related Benefits – 77 FR 3172
Dear Mr. Van Meter:
I would like to raise several points on Farm Credit Administration’s proposed regulation regarding disclosures to stockholders on executive compensation, retirement programs and related benefits
I am a row crop..beans and corn farmer with substantial acreage in the CRP programs.
My grandfather in one side immigrated to this country in the 20's and was a hired hand for half his life and then bought land in the second half of his career with livestock and grains.
My other grandfather ran the Iowa State Agronomy farm for his entire career.
My father and me operate together in Central Illinois. I also work off farm to earn enough to support our farms.
I agree with and support the points raised in our Association’s comment letter. As a client-owner, I raise these additional comments for you to consider:
I believe our disclosures on executive compensation and benefits are adequate. Our Association conducts an annual client survey, hosts advisory group discussions, and other board members and myselfinteract frequently with our other client-owners. I have'nt heard a single request from a stockholder seeking more disclosures on executive compensation.
Our cooperative structure means we directors are independent from management and that stockholders have the opportunity to hold directors accountable for serving the Association’s interests through regular elections. Management members cannot participate in director elections. All voting stockholders each have one vote regardless of stock investment, giving each stockholder EQUAL say in Association matters. Unlike in some publicly-traded companies, Farm Credit Association management does not receive stock options, and has NO incentive to manipulate share prices, nor can they serve on the board of directors. This structure adequately protects against executive compensation abuses that other companies have experienced.
Advisory Shareholder Vote
I REALLY object to any requirement for a non-binding “say on pay” vote for executive compensation. Our board receives a detailed report from our compensation committee each year after a thorough analysis of best practices and peer data on executive compensation, retirement plans, and benefits. We also regularly hire and consult with outside experts to assist us with executive compensation and benefits matters, and our compensation committee members receive extensive training on these issues. I just returned from a class in TX on this very subject with 5 of my other Directors from our association
A “say on pay” advisory vote from stockholders would be a disaster. They would not be informed on these issues, would undermine our board decisions out of ignorance creating a mess for our association to manage. In addition a lot of money would have to be wasted dealing with this. why doesn't the FCA just deal with whatever Farm Credit institution board that is not performing its duties on an individual basis instead of lumping all of us together in this costly reg?
Significant and Material Event Disclosure
We support timely and effective stockholder disclosures related to our Association’s financial performance or its safety and soundness. The proposed regulation definition is too broad, and would require disclosures that are not material or significant. This proposal runs the risk of overemphasizing some events that do not impact stockholders.Not every director or senior officer departure requires immediate disclosure.
Our cooperative model provides board independence and accountability to shareholders, who each have one equal vote. The current Farm Credit regulations and GAAP requirements already inform stockholders in a way that allows them to hold the board of directors accountable. So, for the reasons noted in our Association comment letter, and this letter,
This FCA regulation proposal should not be adopted
Thank You for your consideration. If you have any questions I'd be happy to explain further.
Clinton V. Brown
1st Farm Credit Services - Board of Directors