Fact Sheet Farm Credit Administration

1501 Farm Credit Drive

McLean, Virginia 22102-5090

December 8, 2011 Contact: Michael Stokke or Christine Quinn,

703-883-4056

E-mail: info-line@fca.gov

Website: www.fca.gov

Fact Sheet on Senior Officer Compensation Disclosures and Related Topics

Proposed Rule

The Farm Credit Administration (FCA) adopted a proposed rule today to revise its regulations 

governing 

• disclosures of senior officer compensation and supplemental retirement plans, 

• reporting of significant events to shareholders, 

• compensation committee responsibilities, and 

• a nonbinding, advisory vote on senior officer compensation.

Economic and business environments are changing, and there have been recent developments 

in best practices related to compensation. As a result, FCA is updating and strengthening its

regulations to reflect current practices in the Farm Credit System and to maintain the high 

standards expected of a Government-sponsored enterprise composed of cooperative 

institutions. 

The proposed rule seeks to improve the transparency, completeness and timeliness of 

disclosures to shareholders; encourage member participation in the control and management of

their institution; and continue to ensure the exercise of good stewardship by compensation 

committees.

Summary of Proposed Changes

§ 611.410 Compensation of senior officers: The proposed rule would require a nonbinding 

advisory vote by voting shareholders on senior officer compensation if compensation increases 

or decreases by 15 percent from the previous reporting period or, at associations only, if 5 

percent of the voting shareholders petition for the vote. Current regulations do not require a vote.

The vote would provide shareholders a means to clearly express and easily communicate either 

their approval or disapproval of senior officer compensation practices to their institution’s board. 

§ 620.5(e)(4) Description of liabilities: In addition to describing insured and uninsured debt, the 

proposed rule would require banks and associations to disclose in their annual reports

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information about supplemental retirement plans for employees other than senior officers,

including the institution’s projected long-term obligations related to the plans. The disclosure 

would enhance the transparency and completeness of an institution’s obligations and 

commitments.

§ 620.6(c)(4) Compensation of senior officers: The proposed rule would require disclosure of 

supplemental executive retirement plans for senior officers. At a minimum, the institution would 

be required to disclose the funded and unfunded present value of accumulated benefits, years of 

credited service, and unvested or off-balance-sheet amounts. The enhanced disclosure would 

ensure that obligations and commitments for all senior officer retirement programs are complete 

and transparent to the shareholder.

§ 620.6(c)(5) Compensation of senior officers: The proposed rule would require disclosure of 

the overall risk and reward structure for senior officer compensation plans and practices, the 

relationship of senior officer compensation to the institution’s overall performance, and the 

relationship of the compensation to the senior officers’ performance.

§ 620.15 Notice of significant or material events: The proposed rule would require timely and 

transparent disclosure of certain significant or material events. The events would be disclosed in 

either a notice to shareholders or in the quarterly report to shareholders. Events to be disclosed 

would include, but not be limited to, early director departures, the unplanned departure of a 

senior officer, results of shareholder votes, reportable supervisory and enforcement actions, and 

changes in capitalization plans or bylaws. The disclosure is intended to enhance communication 

with member-owners and encourage participation in the control and management of their 

institution.

§§ 620.31(b) and 630.6(b)(2) Compensation committees: The proposed rule would clarify and 

enhance the responsibilities of compensation committees to ensure that each committee 

understands the terms and provisions of incentive-based compensation programs and an 

institution’s long-term obligations for compensation and retirement benefits, and balances 

financial rewards to senior officers against the risks to the institution.

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