Disclosure to Shareholders; Pension Benefit Disclosures, 10325-10326 [2015-04023]
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Federal Register / Vol. 80, No. 38 / Thursday, February 26, 2015 / Rules and Regulations
(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.
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
rmajette on DSK2VPTVN1PROD with RULES
SUMMARY:
VerDate Sep<11>2014
14:38 Feb 25, 2015
Jkt 235001
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’’
1 Public
Law 102–552, 106 Stat. 4131 (1992).
FCA Policy Statement ‘‘Cooperative
Operating Philosophy—Serving the Members of
Farm Credit System Institutions’’ (FCA–PS–80),
dated October 14, 2010.
2 See
PO 00000
Frm 00003
Fmt 4700
Sfmt 4700
10325
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
E:\FR\FM\26FER1.SGM
26FER1
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
VerDate Sep<11>2014
14:38 Feb 25, 2015
Jkt 235001
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:
PO 00000
Frm 00004
Fmt 4700
Sfmt 4700
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
Federal Aviation
Administration (FAA), DOT.
ACTION: Final special conditions; request
for comments.
AGENCY:
These special conditions are
issued for Boeing Model 767–2C series
SUMMARY:
E:\FR\FM\26FER1.SGM
26FER1
Agencies
[Federal Register Volume 80, Number 38 (Thursday, February 26, 2015)]
[Rules and Regulations]
[Pages 10325-10326]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-04023]
=======================================================================
-----------------------------------------------------------------------
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 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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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, Sec. 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
Sec. 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
[[Page 10326]]
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
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: 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