Senior Officers Compensation Disclosures - Proposed Rule
April 14, 2012
Mr. Gary K. Van Meter
Office of Regulatory Policy
Farm Credit Administration
1501 Farm Credit Drive
Subject: Proposed Rule –Compensation, Retirement Programs, and Related Benefits– 77 FR 3172
Dear Mr. Van Meter:
I am writing on behalf of Farm Credit East, ACA, in regard to the proposed regulations concerning compensation, retirement programs, and related disclosures to shareholders. I am Vice Chairman of with Farm Credit East, ACA and presently serve as a member of Farm Credit East’s Executive and Compensation committees.
Farm Credit East provides financial solutions to over 12,000 farm and commercial fishing businesses in Connecticut, New Jersey, Massachusetts, Rhode Island, New Hampshire and New York.
I appreciate the opportunity to comment on the Farm Credit Administration’s (FCA) proposed rule on compensation, retirement programs, and related disclosures to shareholders. I know this issue is of significant concern to all institutions of the Farm Credit System (“FCS” or “System”), and that a workgroup of System representatives is developing System-wide comment through the Farm Credit Council.
As part of our Board deliberations we have carefully reviewed and discussed the provisions of the proposed rule as well as the comments developed by the System wide work group. We support the comment letter submitted on behalf of the System.
While the System wide comment provides specific responses to issues raised by the Proposed Rule, I think it is important to voice my own specific observations regarding the following issue(s).
The specific requirements detailing the responsibilities of the compensation committee are overly prescriptive and fail to allow the committee the discretion to consider the unique factors in our own institution’s compensation programs.
I strongly object to the provision in the Proposed Rule calling for a stockholder vote on ‘say on pay’. Such a vote undermines the role of the board in approving compensation programs, and particularly undermines the roles and responsibilities of the board’s compensation committee. As a cooperative, we do not have an investor class of stockholders and do not offer stock options as a form of compensation, and management personnel do not serve on the compensation committee or the board. I am unaware of any other cooperatives that operate with such a program, and I do not view it as any kind of a “best practice” to do so.
Members have ample opportunities to be heard on this issue. Farm Credit East has a robust nomination and election process for directors. Members have opportunities to directly address the board and senior management at both the annual meeting and regularly scheduled meetings for each branch office. We encourage FCA to allow the cooperative governance process, through the election of directors, to manage this issue. Simply stated, do not circumvent or overly complicate our current cooperative governance practices.
Once again, I appreciate this opportunity to comment on the Proposed Rule and trust that my comments and those of other System representatives will assist the Agency. If you have any questions, please do not hesitate to contact me.
3111 Two Rod Rd.
East Aurora, New York 14052