[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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