Federal Register / Vol. 80, No. 38 / Thursday, February 26, 2015 / Rules and Regulations 10325 

1Public Law 102–552, 106 Stat. 4131 (1992). 

2See FCA Policy Statement ‘‘Cooperative 

Operating Philosophy—Serving the Members of 

Farm Credit System Institutions’’ (FCA–PS–80), 

dated October 14, 2010. 

(Approved by the Office of Management 

and Budget under control numbers 

0579–0040, 0579–0224, 0579–0393, 

and 0579–0425) 

Done in Washington, DC, this 20th day of 

February 2015. 

Kevin Shea, 

Administrator, Animal and Plant Health 

Inspection Service. 

[FR Doc. 2015–04074 Filed 2–25–15; 8:45 am] 

BILLING CODE 3410–34–P 

FARM CREDIT ADMINISTRATION 

12 CFR Part 620 

RIN 3052–AD02 

Disclosure to Shareholders; Pension 

Benefit Disclosures 

ACTION: Final rule. 

SUMMARY: The Farm Credit 

Administration (FCA, we or our) 

amends our regulations related to Farm 

Credit System (System) bank and 

association disclosures to shareholders 

and investors of senior officer 

compensation in the Summary 

Compensation Table (Table). Under the 

final rule, System banks and 

associations are not required to report in 

the Table the compensation of 

employees who are not senior officers 

and who would not otherwise be 

considered ‘‘highly compensated 

employees’’ but for the payments related 

to, or change(s) in value of, the 

employees’ qualified pension plans, 

provided that the plans were available 

to all employees on the same basis at the 

time the employees joined the plans. 

DATES: Effective Date: The regulation 

will be effective 30 days after 

publication in the Federal Register 

during which time either one or both 

Houses of Congress are in session. We 

will publish a notice of the effective 

date in the Federal Register. 

Compliance Date: System banks and 

associations must comply with the final 

rule for compensation reported in the 

Table for the fiscal year ending 2015, 

and may implement the final rule 

retroactively for the fiscal years ended 

2014, 2013, and 2012. However, 

retroactive application is not required, 

and we would expect footnote 

disclosure of the change in calculation 

for the fiscal years to which the final 

rule was applied. 

FOR FURTHER INFORMATION CONTACT: 

Michael T. Wilson, Policy Analyst, 

Office of Regulatory Policy, Farm Credit 

Administration, McLean, VA 22102– 

5090, (703) 883–4124, TTY (703) 883– 

4056, Or 

Jeff Pienta, Senior Attorney, Office of 

General Counsel, Farm Credit 

Administration, McLean, VA 22102– 

5090, (703) 883–4020, TTY (703) 883– 

4056. 

SUPPLEMENTARY INFORMATION: 

I. Objective 

The objective of this rule is to 

improve the quality of disclosure 

information shareholders receive on 

senior officer and highly compensated 

employee compensation. 

II. Background 

Congress explained in section 514 of 

the Farm Credit Banks and Associations 

Safety and Soundness Act of 1992 (1992 

Act) 1 that disclosures of financial 

information and compensation paid to 

senior officers, among other disclosures, 

provide System shareholders with 

information necessary to better manage 

their institution and make informed 

decisions regarding the operation of 

their institution. In addition, the FCA 

Board declared its commitment to 

support the cooperative business model 

and structure by encouraging memberborrowers to participate in the 

management, control, and ownership of 

their institutions.2 Providing memberborrowers with transparent and 

complete disclosures regarding the 

compensation of senior officers and 

certain other highly compensated 

employees is essential to fostering an 

environment wherein memberborrowers can do so effectively. 

With this as one of our objectives, we 

issued a final rule on October 3, 2012, 

that enhanced disclosure of senior 

officer compensation and other related 

topics. Section 620.6(c)(2)(i) requires 

System Banks and associations to 

disclose senior officer compensation for 

the last 3 fiscal years. For purposes of 

this reporting requirement only, 

§ 620.6(c)(2)(i) extends the regulatory 

definition of ‘‘senior officers’’ to include 

any employee whose compensation 

level was among the five highest paid 

during the reporting period. The intent 

of this extension was to ensure that 

System banks and associations provide 

shareholders with necessary 

compensation information on highly 

compensated employees even though 

they did not fall within the regulatory 

definition of ‘‘senior officer.’’ The intent 

was not to provide compensation 

information on employees who would 

only reach the ‘‘highly compensated’’ 

threshold solely because of payments 

related to or change(s) in the value of a 

qualified pension plan that was 

available to all employees on the same 

basis at the time they joined the plan. 

We believe that application of the 

existing rule could create such an 

unintended effect and reduce the 

effectiveness of the disclosure. 

Therefore, on November 17, 2014, we 

proposed amending existing 

§ 620.6(c)(2)(i) to exclude reporting 

employees’ compensation in the Table if 

the employees were not senior officers 

and would be considered highly 

compensated employees solely because 

of payments related to or change(s) in 

value of the employees’ qualified 

pension plans provided that the plans 

were available to all employees on the 

same basis at the time the employee 

joined the plan. 

III. Comments and Our Response 

The comment period for the proposed 

rule closed on December 17, 2014 (79 

FR 68376, Nov. 17, 2014). We received 

four comment letters on our proposed 

rule: One comment letter from the 

Independent Community Bankers of 

America (ICBA), responding on behalf 

of its members; one comment from a 

Farm Credit bank (FCB); one comment 

letter from a System association; and 

one comment letter from the Farm 

Credit Council, responding on behalf of 

its members. Two commenters 

supported the proposed rule, one 

supported it with suggested changes, 

and one opposed the rule. In the 

discussion below, we address the 

significant comments. After careful 

consideration of the comments, the 

proposed rule is finalized without any 

changes. 

A. Transparency and Quality of 

Disclosure 

The ICBA opposes the proposed rule 

and urges the FCA to withdraw the 

proposed rule or adopt the ICBA’s 

recommendations. The ICBA asserts that 

the proposed rule reduces transparency 

of pension disclosures to System 

shareholders and seeks to allow System 

institutions to hide significant 

enhancements to pensions and other 

compensation arrangements by not 

disclosing them. We agree with the 

ICBA that employee compensation 

should be reported in this disclosure 

item if the employee’s compensation 

reaches the highly compensated 

employee threshold due to large or 

significant bonuses and other such 

payments. As we explained in the 

proposed rule, however, there would be 

no reporting requirement for this 

disclosure item solely for employees 


rmajette on DSK2VPTVN1PROD with RULES
10326 Federal Register / Vol. 80, No. 38 / Thursday, February 26, 2015 / Rules and Regulations 

who are not senior officers and who 

would not otherwise be considered 

‘‘highly compensated employees’’ but 

for payments related to or change(s) in 

the value of the employee’s qualified 

pension plan. Also, the qualified plan 

must have been available to all 

employees on the same basis at the time 

the employee joined the plan. Thus, the 

proposed rule did not seek to change the 

current reporting requirement regarding 

payments such as those concerning the 

ICBA. Rather, if any such payout to the 

employee or change(s) in value to their 

plan is due to a benefit plan that is not 

a qualified plan and the plan was not 

offered to all employees on the same 

basis when the employee joined the 

plan, then the payout or change(s) in 

value would be included in determining 

whether the employee’s compensation 

reached the five highest paid threshold. 

Thus, we believe that the proposed rule 

increases the effectiveness and 

transparency of the disclosure and 

better achieves the original intent of the 

rule, which we did not change. 

The ICBA also expressed concern that 

large one-time lump sum payments 

made to numerous employees at the 

same time from a qualified pension plan 

that was available to all employees on 

the same basis at the time they joined 

the plan could represent significant cash 

outlays for the institution during a 

reporting period. The ICBA believes that 

System institution owners should be 

made aware of these payouts. We agree 

with the ICBA and would expect that 

such payouts be included in the 

financial statements or notes thereto or 

discussed in the management’s 

discussion and analysis section of the 

annual report if material to the 

institution’s financial condition and 

results of operations. As discussed 

above, the intent of this specific 

disclosure item was not and is not to 

include such payments in the 

calculation of the top five highest paid 

employees. 

In its comment letter, the ICBA also 

makes a number of recommendations, 

such as to disclose all employees’ 

compensation if that compensation 

exceeds the average income of the 

citizens in the surrounding geographic 

area, or to disclose the compensation for 

the twenty-five (25) highest paid 

employees for larger System 

institutions. We believe these 

recommendations go beyond the scope 

of the proposed rule and cannot be 

addressed in this rulemaking. 

B. Explanatory Notes and Method of 

Compliance 

The FCB, the Farm Credit Council, 

and the System association supported 

our proposed rule in their comment 

letters. Furthermore, they expressed that 

our proposal improves the disclosure 

language and aligns it with the intended 

purpose. The FCB also offered two 

constructive suggestions. The first 

suggestion was to allow System 

institutions affected by our proposed 

rule to disclose in a note to the Table 

that the calculation formula changed 

and describe the reason for the change 

and its effects. Also, because data is 

reported in the Table for 3 years, the 

FCB’s second suggestion was that each 

System institution be allowed to choose 

the method of compliance that works 

best for that institution’s situation. We 

agree with the suggestion regarding 

explanatory notes, but do not believe a 

change to our proposal is necessary. 

Such disclosure is not prohibited so 

long as the disclosure is not misleading, 

incomplete or inaccurate. Whether a 

System institution opts to restate one or 

all of the prior years’ disclosures or to 

report the data prospectively beginning 

for fiscal year ending 2015, we would 

expect that any change in the method of 

calculations versus prior years’ 

disclosures be described in a footnote to 

the Table to the extent needed so that 

the reported data will not be misleading 

or incomplete. Therefore, we agree with 

the FCB’s suggestion to the extent that 

the 3-year reporting period raises issues 

for affected institutions, but we do not 

believe that a change to the regulation 

language is necessary. We have 

addressed this issue in the compliance 

date information. 

IV. Regulatory Flexibility Act 

Pursuant to section 605(b) of the 

Regulatory Flexibility Act (5 U.S.C. 601 

et seq.), the FCA hereby certifies that the 

final rule would not have a significant 

economic impact on a substantial 

number of small entities. Each of the 

banks in the Farm Credit System, 

considered together with its affiliated 

associations, has assets and annual 

income in excess of the amounts that 

would qualify them as small entities. 

Therefore, Farm Credit System 

institutions are not ‘‘small entities’’ as 

defined in the Regulatory Flexibility 

Act. 

List of Subjects in 12 CFR Part 620 

Accounting, Agriculture, Banks, 

banking, Reporting and recordkeeping 

requirements, Rural areas. 

For the reasons stated in the 

preamble, part 620 of chapter VI, title 12 

of the Code of Federal Regulations is 

amended as follows: 

PART 620—DISCLOSURE TO 

SHAREHOLDERS 

■ 1. The authority citation for part 620 

continues to read as follows: 

Authority: Secs. 4.3, 4.3A, 4.19, 5.9, 5.19 

of the Farm Credit Act (12 U.S.C. 2154, 

2154a, 2207, 2243, 2252, 2254); sec. 424 of 

Pub. L. 100–233, 101 Stat. 1568, 1656, sec. 

514 of Pub. L. 102–552, 106 Stat. 4102. 

■ 2. Section 620.6(c)(2)(i) is revised to 

read as follows: 

§ 620.6 Disclosures in the annual report to 

shareholders relating to directors and 

senior officers. 

* * * * * 

(c) * * * 

(2) * * * 

(i) If applicable, when any employee 

who is not a senior officer has annual 

compensation at a level that is among 

the five highest paid by the institution 

during the reporting period, include the 

highly compensated employee(s) in the 

aggregate number and amount of 

compensation reported in the 

Compensation Table. However, exclude 

any such employee from the 

Compensation Table if the employee 

would be considered highly 

compensated solely because of 

payments related to or change(s) in 

value of the employee’s qualified 

pension plan provided that the plan was 

available to all similarly situated 

employees on the same basis at the time 

the employee joined the plan. 

* * * * * 

Dated: February 19, 2015. 

Mary Alice Donner, 

Acting Secretary, Farm Credit Administration 

Board. 

[FR Doc. 2015–04023 Filed 2–25–15; 8:45 am] 

BILLING CODE 6705–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 25 

[Docket No. FAA–2014–0710; Special 

Conditions No. 25–574–SC 

Special Conditions: Boeing Model 767– 

2C Series Airplanes; Isolation or 

Protection of Airplane ElectronicSystem Security From Unauthorized 

Internal Access 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final special conditions; request 

for comments. 

SUMMARY: These special conditions are 

issued for Boeing Model 767–2C series 


rmajette on DSK2VPTVN1PROD with RULES