Senior Officers Compensation Disclosures - Proposed Rule
April 6, 2012
Mr. Gary K. Van Meter
Office of Regulatory Policy
Farm Credit Administration
1501 Farm Credit Drive
RE: Proposed Rule on Executive Compensation Disclosures
Dear Mr. Van Meter:
As a member of the AgChoice Farm Credit Board of Directors (Board), I strongly object to any requirement for a non-binding vote and other provisions of the Proposed Rule regarding requirements for Farm Credit System (System) institutions published in the January 23, 2012 Federal Register.
The cooperative model under which the AgChoice Farm Credit Association (AgChoice) operates distinguishes it significantly from other lending institutions. The director election process of member borrowers is but one of the highlights. This relies on active stockholder participation and excludes employees from taking any role in the nomination or election of directors, and precludes employees from serving on the Board of Directors. These governance procedures continue to serve the System well and have helped to avoid some of the problems encountered by other financial institutions during recent years. An important aspect of the cooperative structure is that our boards truly operate independent of the institution’s management.
I am proud to have been elected by my fellow stockholders to the Board. I do not take my responsibility to the stockholders lightly. I have devoted significant energy and time in educating myself on rules and regulations of the Farm Credit Administration and what is necessary to keep AgChoice strong. I find it affronting that if the proposed rules are adopted, the support of my fellow stockholders and my experience and training can be discounted so easily.
Considering the diversity of our stockholders, there are bound to be differences of opinion. If consensus were required on management decisions of the cooperative, it could not function. The election of stockholders as Board members provides accountability while enabling it to meet the needs of all Association members.
I am concerned that non-binding votes will be used to unduly “politicize” the election of directors. Stockholder members will never have all the information that Board members have when they make these decisions. Non-binding votes on an issue about which the stockholders have little information to form an opinion, will likely result in confusion of the issue and will ultimately lead to discord. The cost of conducting a non-binding vote will be significant. The implementation of numerous such votes by a few disgruntled stockholders could have a significant impact on the funds of the cooperative.
I have reviewed the comments prepared and submitted by both the Farm Credit Council and AgFirst Farm Credit Bank regarding these proposed rules. I support these comments. I believe that these additional regulatory requirements are not necessary given the unique nature and role of the Board of Directors and that each FCS institution utilizes appropriate policies and procedures that ensure complete, meaningful, timely and accurate compensation disclosures consistent with Generally Accepted Accounting Principles, the objectives of the Act and regulatory requirements.
Dennis B. Spangler,
AgChoice Farm Credit Director
6680 State Route304
New Berlin, Pennsylvania17855