[Federal Register Volume 79, Number 221 (Monday, November 17, 2014)]
[Proposed Rules]
[Pages 68376-68377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27192]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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  Federal Register / Vol. 79, No. 221 / Monday, November 17, 2014 / 
Proposed Rules  

[[Page 68376]]



FARM CREDIT ADMINISTRATION

12 CFR Part 620

RIN 3052-AD02


Disclosure to Shareholders; Pension Benefit Disclosures

AGENCY: Farm Credit Administration.

ACTION: Proposed rule.

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SUMMARY: The Farm Credit Administration (FCA, we or our) is proposing 
to amend our regulations related to Farm Credit System (System) bank 
and association disclosures to shareholders and investors. The proposed 
rule would exclude certain employees and their associated compensation 
amounts from the reporting requirement in our regulations. Under the 
proposed rule, there would be no reporting requirement for employees 
that are not senior officers and would not otherwise be considered 
``highly compensated employees'' but for payments related to or 
change(s) in value of the employee's qualified pension plan. Under the 
proposed rule, such employees' pension plans must have been available 
to all similarly situated employees on the same basis.

DATES: Submit comments on or before December 17, 2014.

ADDRESSES: We offer a variety of methods for you to submit your 
comments. For accuracy and efficiency reasons, we encourage commenters 
to submit comments by email or through the FCA's Web site. As 
facsimiles (fax) are difficult for us to process and achieve compliance 
with section 508 of the Rehabilitation Act, we no longer accept 
comments submitted by fax. Regardless of the method you use, please do 
not submit your comment multiple times via different methods. You may 
submit comments by any of the following methods:
     Email: Send us an email at [email protected].
     FCA Web site: http://www.fca.gov. Select ``Public 
Commenters,'' then ``Public Comments,'' and follow the directions for 
``Submitting a Comment.''
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Barry F. Mardock, Deputy Director, Office of 
Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, 
McLean, VA 22102-5090.
    You may review copies of all comments we receive at our office in 
McLean, Virginia, or from our Web site at http://www.fca.gov. Once you 
are on the Web site, select ``Public Commenters,'' then ``Public 
Comments,'' and follow the directions for ``Reading Submitted Public 
Comments.'' We will show your comments as submitted, including any 
supporting data you provide, but for technical reasons we may omit 
items such as logos and special characters. Identifying information 
that you provide, such as phone numbers and addresses, will be publicly 
available. However, we will attempt to remove email addresses to help 
reduce Internet spam.

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 proposed rule is to improve the quality of 
disclosure information shareholders receive that is related to senior 
officer and other 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 member-
borrowers to participate in the management, control, and ownership of 
their institutions.\2\ Providing member-borrowers with transparent and 
complete disclosures regarding the compensation of senior officers and 
certain other highly compensated employees is essential to fostering an 
environment wherein member-borrowers can do so effectively.
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    \1\ Public Law 102-552, 106 Stat. 4131 (1992).
    \2\ See FCA Policy Statement ``Cooperative Operating 
Philosophy--Serving the Members of Farm Credit System Institutions'' 
(FCA-PS-80), dated October 14, 2010.
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    With this as one of our objectives, we issued a final rule on 
October 3, 2012, that enhanced disclosure of compensation and other 
related topics.

III. Analysis

    Section 620.6(c)(2) requires System banks and associations to 
disclose the number of senior officers and their compensation for the 
last 3 completed fiscal years. For the purposes of this reporting 
requirement only, existing Sec.  620.6(c)(2)(i) essentially 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 
such employees did not necessarily fall within the regulatory 
definition of ``senior officer'' during the reporting period.
    On the other hand, the intent of this extension was not to have 
System banks and associations provide shareholders with compensation 
information regarding employees who would only reach the ``highly 
compensated employee'' threshold solely because of payments related to 
or change(s) in 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. For 
instance, the existing requirement could result in a mid-level employee 
being considered a top five highest paid employees and thus being 
considered a

[[Page 68377]]

``highly compensated employee'' solely because of a one-time or lump 
sum pension payment that occurred at the end of their career. Such a 
result would necessarily cause an otherwise highly compensated employee 
who is not a ``senior officer'' to fall out of the top five highest 
compensated employees for that reporting period, and thus, to not be 
included in the disclosure required under Sec.  620.6(c)(2)(i).
    This proposed rule would improve the quality of the disclosure 
required under existing Sec.  620.6(c)(2)(i) by eliminating the 
potential for unintended results such as the one outlined above. 
Therefore, we propose to amend Sec.  620.6(c)(2)(i) to 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.

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 proposed 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 proposed to be amended 
as follows:

PART 620--DISCLOSURE TO SHAREHOLDERS

0
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.

0
2. Section 620.6(c)(2)(i) is revised to read as follows:


Sec.  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: November 12, 2014.
Dale L. Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2014-27192 Filed 11-14-14; 8:45 am]
BILLING CODE 6705-01-P