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Notice of Petition - "Compensation, Retirement Programs and Related Benefits"

Mr. Barry F. Mardock
Deputy Director
Office of Regulatory Policy
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia  22102-5090
Dear Mr. Mardock:
Thank you for the opportunity to respond to FCA’s request for comments published in the Federal Register on February 19, 2013 seeking alternatives to the “say on pay” provisions in the final rule on Compensation, Retirement Programs, and Related Benefits.  I fully support the comments submitted in response to this request by the Farm Credit Council, and urge FCA to adopt the Farm Credit Council’s position, as set out in its original petition.  In addition to FCC’s comments, I offer the following points for you to consider:
As cooperative board members, we are nominated and elected by our fellow stockholders to serve them.  Our independent nominating committee procedures assure that elected directors represent our client-owners, providing a level of participation and control that does not exist with other corporate structures.  Our unique structure means we can maintain an arm’s length relationship with management because only non-employee stockholders can serve on the board.  As a director, I live among and interact with local stockholders who provide feedback to me on the Association’s business affairs.  I also participate in client advisory meetings, where we solicit input from owners.  For these reasons, Congress found it unnecessary to include Farm Credit institutions in the provisions for “say on pay” advisory voting procedures in the Dodd-Frank Act.  Our stockholders already participate in the “control, management and ownership” of their Association appropriately, and I don’t believe that soliciting an advisory vote on any issue would promote more meaningful involvement by our owners.
Our stockholders count on me to stay informed and make decisions in the best interests of the Association, including decisions about compensation programs.  I invested many hours in training and consulted independent experts for advice on compensation practices and trends.  Setting an arbitrary trigger requiring an advisory vote on senior officer compensation would undermine our compensation committee’s extensive work and could expose directors to unfounded legal claims with no safe harbor for protection, such as the Dodd-Frank Act provides.
I agree with the principle that the Farm Credit System relies on farmers and ranchers to participate in the control and oversight of each institution.  As a local client-owner, I have a strong interest in the success of our Association, and can best determine how to engage shareholders and provide them with meaningful disclosures on compensation and other issues.  As an alternative to the current non-binding advisory vote, I respectfully request that the Agency undertake a new rule-making project to consider the disclosure-based alternatives listed in FCC’s comments and withdraw the current non-binding advisory vote provision.  I appreciate your consideration of my comments.  If you have any questions, please feel free to contact me.     
Jeffrey Austman
Vice Chairperson, 1st Farm Credit Services