Notice of Petition - "Compensation, Retirement Programs and Related Benefits"
Please allow this communication to serve as my comment on the “say on pay” provision in the final rule on Compensation, Retirement Programs and Related Benefits – which was listed in the Federal Register on February 19, 2013. I believe and support the comments on this subject which were submitted by the Farm Credit Council. I encourage FCA to adopt the position of the Farm Credit Council.
The uniqueness of the cooperative method of doing business, as conducted by Farm Credit Services, demands an independent nominating committee focusing on assurance that elected directors represent our customers/clients. The level of accountability which the directors assume demands a level of control and participation which simply does not exist elsewhere in the corporate world. The organizational structure under which we operate requires a unique relationship with management because only non-employee stockholders can serve as directors. As one of the outside directors for our board who has served in this capacity for the past 25 years, I have interacted with our director members and clients to our organization who share with me priorities, concerns and plans related to director governance issues. Congress, in its wisdom to not include Farm Credit institutions in the “say on pay” provisions, understands that our clients/stockholders already fully participate in “control, management and ownership” of their Association with enhanced accountability due to the close relationship between directors and stockholders.
During these 25 years I have been on the FCS board as an outside director, I know the clients/stockholders count on me to stay as informed as possible on the critical issues which allow the association to be successful. Since I currently serve on the 1st FCS Compensation Committee, I attempt to stay fully informed with training via the Professional Governance Series of seminars and other self studies. Our Compensation Committee has contained within our committee charter the power to directly engage outside experts to be certain our decisions are appropriate and in the best interest of stockholders – and we have engaged some of these experts in the past. Our director members of this organization desire the flexibility and autonomy to independently study issues related to compensation and make appropriate decisions based on compensation practices and trends. We believe it would be a horrendous mistake for the FCA to establish an arbitrary figure requiring an advisory vote on senior compensation. And, it would further minimize the credibility of our Compensation Committee by undermining the extensive work we do each year to be certain our staff compensation is appropriate. As a director, I am also concerned about the potential liability to unfounded legal claims by attempting to use this arbitrary figure.
I can assure you our directors are intricately involved in the governance of our organization since each person has a strong interest in the control and oversight of 1st FCS. As an outside director, I do not want a legal definition to determine how to engage shareholders in providing them disclosures on compensation and other issues.
I suggest you remove the requirement for a non-binding advisory vote with the disclosure-based alternative listed in the FCC comments, thereby withdrawing the non-binding advisory vote provision. This will accommodate the concerns of the majority of board members regarding this issue and will realistically approach this “say on pay” provision with common sense and fairness to the stockholder and senior staff.
Thank you for your consideration of my comments. Larry Fischer, 1st FCS Board of Directors (outside director)