Senior Officers Compensation Disclosures - Proposed Rule
March 12, 2012
Mr. Gary K. Van Meter
Office of Regulatory Policy
Farm Credit Administration
1501 Farm Credit Drive
McLean, VA 22102-5090
Subject: Proposed Rule –Compensation, Retirement Programs, and Related Benefits– 77 FR 3172
Dear Mr. Van Meter:
I am an elected Director of AgStar Financial Services, ACA (“AgStar”) and chair of the HR committee. I appreciate the opportunity to comment on the Farm Credit Administration’s 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, and that a workgroup of System representatives is developing System-wide comment through the Farm Credit Council. I support the comments being made by the Farm Credit Council, but I also wanted to add some of my own perspective as an elected Director.
The HR Committee at Agstar has been hiring an outside consulting firm (McLagan) for its assistance in developing total compensation programs that are market competitive. They contain a mix of base salary, short-term incentive, along with a long-term incentive. In keeping with best practices, we have instituted "cliff " vesting on the long-term side. In order to understand the current best practices and nuances of various options, AgStar’s HR committee spends many hours reviewing work done by our management team and by McLagan. Expecting a stockholder who does not have the benefit of all of this information or the time to devote to these issues to cast an informed vote on an issue as complex as compensation programs seems unrealistic. In my service on cooperative Boards throughout the years, the great majority of stockholders do not comment on anything when everything is running smoothly. The very few who do, often seem to be reacting emotionally to a particular situation and have not taken the time to fully understand the issues.
I also believe an advisory vote undermines the role I hold as a Director. When the stockholders elected me, they entrusted me to be accountable to them and if I violate that trust, they will vote me out at the next election for my position on the Board.
The cost of preparing the ballots, along with the time of our staff, for an advisory vote would create another unnecessary burden to our operating rate.
Once again, I appreciate this opportunity to comment on the Proposed Rule and trust that these comments and those of other System institutions will assist the FCA. If you have any questions, please do not hesitate to contact me.
Steven A. Johnson
Agstar Financial Services, ACA