[Federal Register Volume 64, Number 65 (Tuesday, April 6, 1999)]
[Rules and Regulations]
[Pages 16617-16618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8310]
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FARM CREDIT ADMINISTRATION
12 CFR Parts 611 and 620
RIN 3052-AB79
Organization; Disclosure to Shareholders; FCS Board Compensation
Limits
AGENCY: Farm Credit Administration.
ACTION: Final rule.
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SUMMARY: This final rule amends Farm Credit Administration (FCA)
regulations on Farm Credit System (System or FCS) bank director
compensation. The amendment removes the requirement for FCS banks to
obtain our prior
[[Page 16618]]
approval before paying their directors more than the generally
applicable limit.
EFFECTIVE DATE: This regulation will become effective 30 days after
publication in the Federal Register during which either or both houses
of Congress are in session. We will publish a notice of the effective
date in the Federal Register.
FOR FURTHER INFORMATION CONTACT: Alan Markowitz, Senior Policy Analyst,
Office of Policy and Analysis, Farm Credit Administration, McLean, VA
22102-5090, (703) 883-4479; or Rebecca S. Orlich, Senior Attorney,
Office of General Counsel, Farm Credit Administration, McLean, VA
22102-5090, (703) 883-4020, TDD (703) 883-4444.
SUPPLEMENTARY INFORMATION: We adopt these amendments without change
from the proposed rule (63 FR 49305, September 15, 1998), as part of
our continuing efforts to reduce the burden of regulatory compliance.
We amend Sec. 611.400 to remove the requirement for System banks to
obtain our prior approval before paying director compensation in excess
of the generally applicable limit. Section 4.21(a) of the Farm Credit
Act of 1971, as amended (Act), provides for the maximum amount of
annual compensation that System banks may ordinarily pay to directors.
Section 4.21(b) authorizes us to waive this limitation under
exceptional circumstances. The amended rule provides that:
Banks may pay a director more than the maximum amount when
a director has spent extraordinary time and effort on bank business in
exceptional circumstances.
The additional compensation may not exceed 30 percent of
the annual limit.
Each bank must have a written policy describing any
exceptional circumstances under which the board will pay additional
compensation.
Banks must document the exceptional circumstances for each
case in which additional amounts are paid.
We also make a conforming amendment to Sec. 620.5(i)(1), regarding
disclosure of additional compensation in the annual report to
shareholders.
We received comments on the proposed rule from the Farm Credit
Council on behalf of its member banks; Western Farm Credit Bank;
AgAmerica, FCB; and CoBank, ACB (CoBank). All commenters agreed with us
that elimination of our prior approval reduces regulatory burden while
preserving the requirement that banks pay additional compensation only
in exceptional circumstances. The following excerpt from CoBank's
comment was typical of the comments we received. ``Since FCA can and
will effectively monitor the payment of director compensation through
the examination process, CoBank believes it is both fair and achievable
to allow the Banks to make additional compensation determinations based
on exceptional circumstances and the documentation to support such
compensation.''
List of Subjects
12 CFR Part 611
Agriculture, Banks, banking, Rural areas.
12 CFR Part 620
Accounting, Agriculture, Banks, banking, Reporting and
recordkeeping requirements, Rural areas.
For the reasons stated above, parts 611 and 620 of chapter VI,
title 12 of the Code of Federal Regulations are amended to read as
follows:
PART 611--ORGANIZATION
1. The authority citation for part 611 continues to read as
follows:
Authority: Secs. 1.3, 1.13, 2.0, 2.10, 3.0, 3.21, 4.12, 4.15,
4.20, 4.21, 5.9, 5.10, 5.17, 7.0--7.13, 8.5(e) of the Farm Credit
Act (12 U.S.C. 2011, 2021, 2071, 2091, 2121, 2142, 2183, 2203, 2208,
2209, 2243, 2244, 2252, 2279a--2279f-1, 2279aa-5(e)); secs. 411 and
412 of Pub. L. 100-233, 101 Stat. 1568, 1638; secs. 409 and 414 of
Pub. L. 100-399, 102 Stat. 989, 1003, and 1004.
Subpart D--Rules for Compensation of Board Members
2. Section 611.400 is amended by revising paragraphs (c) and (d)(3)
to read as follows:
Sec. 611.400 Compensation of bank board members.
* * * * *
(c)(1) A Farm Credit bank is authorized to pay a director up to 30
percent more than the statutory compensation limit in exceptional
circumstances where the director contributes extraordinary time and
effort in the service of the bank and its shareholders.
(2) Banks must document the exceptional circumstances justifying
additional director compensation. The documentation must describe:
(i) The exceptional circumstances justifying the additional
director compensation, including the extraordinary time and effort the
director devoted to bank business; and
(ii) The amount and the terms and conditions of the additional
director compensation.
(d) * * *
(3) The exceptional circumstances under which the board would pay
additional compensation for any of its directors as authorized by
paragraph (c) of this section.
* * * * *
PART 620--DISCLOSURE TO SHAREHOLDERS
3. The authority citation for part 620 continues to read as
follows:
Authority: Secs. 5.17, 5.19, 8.11 of the Farm Credit Act (12
U.S.C. 2252, 2254, 2279aa-11); sec. 424 of Pub. L. 100-233, 101
Stat. 1568, 1656.
Subpart B--Annual Report to Shareholders
Sec. 620.5 [Amended]
4. Section 620.5(i)(1) is amended by removing the words ``under
which a waiver of section 4.21 of the Act was granted by the FCA'' and
adding in their place the words ``justifying the additional director
compensation as authorized by Sec. 611.400(c)(1) of this chapter'' in
the second sentence.
Dated: March 30, 1999.
Vivian L. Portis,
Secretary, Farm Credit Administration Board.
[FR Doc. 99-8310 Filed 4-5-99; 8:45 am]
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BILLING CODE 6705-01-P