Federal Home Loan Bank Directors' Eligibility, Elections, Compensation and Expenses, 17037-17041 [2010-7418]
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Federal Register / Vol. 75, No. 64 / Monday, April 5, 2010 / Rules and Regulations
requires listing or certification by a
nationally recognized safety testing
laboratory, after March 9, 2017, shall
have an average full load efficiency of
not less than the following:
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Issued in Washington, DC, on March 29,
2010.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and
Renewable Energy.
[FR Doc. 2010–7642 Filed 4–2–10; 8:45 am]
BILLING CODE 6450–01–P
FEDERAL HOUSING FINANCE BOARD
12 CFR Part 918
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Part 1261
RIN 2590–AA03, 2590–AA31 and 2590–AA34
Federal Home Loan Bank Directors’
Eligibility, Elections, Compensation
and Expenses
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AGENCY: Federal Housing Finance
Agency, Federal Housing Finance
Board.
ACTION: Final rule.
SUMMARY: In this rulemaking, the
Federal Housing Finance Agency
(FHFA) is adopting a final rule that
implements two separate proposed
rules, which relate to Federal Home
Loan Bank (Bank) director elections and
director compensation, respectively. As
to director elections, FHFA is amending
its regulations relating to the process by
which successor Bank directors are
chosen after a directorship is
redesignated to a new state prior to the
end of the term as a result of the annual
designation of Bank directorships.
Under the final rule, the redesignation
causes the original directorship to
terminate and creates a new
directorship that will be filled by an
election of the members.
As to director compensation, FHFA is
implementing section 1202 of the
Housing and Economic Recovery Act of
2008 (HERA), which amended section
7(i) of the Federal Home Loan Bank Act
(Bank Act) by repealing the statutory
caps on the annual compensation that
can be paid to Bank directors. This
aspect of the final rule allows each Bank
to pay its directors reasonable
compensation and expenses, subject to
the authority of the FHFA Director to
object to, and to prohibit prospectively,
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compensation and/or expenses that the
Director determines are not reasonable.
DATES: This rule is effective May 5,
2010.
FOR FURTHER INFORMATION CONTACT:
Daniel Coates, Associate Director,
Division of FHLBank Regulation, 202–
408–2959, daniel.coates@fhfa.gov or
Neil R. Crowley, Deputy General
Counsel, 202–343–1316,
neil.crowley@fhfa.gov, Federal Housing
Finance Agency, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552. The
telephone number for the
Telecommunications Device for the Deaf
is (800) 877–8339.
SUPPLEMENTARY INFORMATION:
I. In General
On July 30, 2008, HERA, Public Law
110–289, 122 Stat. 2654 (2008), became
law and created FHFA as an
independent agency of the Federal
government. Among other things, HERA
transferred to FHFA the supervisory and
oversight responsibilities over the Banks
that formerly had been vested in the
now abolished Federal Housing Finance
Board (Finance Board). The Banks
continue to operate under regulations
promulgated by the Finance Board until
such time as the existing regulations are
supplanted by regulations promulgated
by FHFA.
Section 1202 of HERA amended
section 7 of the Bank Act, which
governs the eligibility, election,
compensation and expenses of Bank
directors. See 12 U.S.C. 1427. FHFA has
implemented section 7 in part 1261 of
its rules. 12 CFR part 1261.
Section 1201 of HERA (codified at 12
U.S.C. 4513(f)) requires the Director of
FHFA to consider the differences
between the Banks and the Enterprises
with respect to the Banks’ cooperative
ownership structure, mission of
providing liquidity to members,
affordable housing and community
development mission, capital structure,
and joint and several liability, whenever
promulgating regulations that affect the
Banks. The Director may also consider
any other differences that are deemed
appropriate. In preparing this final rule,
the Director considered the differences
between the Banks and the Enterprises
as they relate to the above factors and
determined that the rule is appropriate,
particularly because this final rule
applies only to the Banks.
II. Bank Director Eligibility and
Elections
In December 2009, FHFA published a
proposed rule that would deem
terminated a directorship that is
redesignated to a new state prior to the
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17037
end of its term as a result of the annual
designation of Bank directorships, with
a new directorship created for the new
state. See 74 FR 62708 (Dec. 1, 2009).
The new directorship would be filled by
an election of the members. The
proposal constituted a change from the
current Finance Board rule, which
deems the redesignation to create a
vacancy on the board. Under the Bank
Act, vacancies on the board are filled by
the remaining directors. See 12 U.S.C.
1427(f)(2); 12 CFR 1261.3 and 1261.4.
FHFA received one comment on the
proposed rule, which was from a Bank
and related to an aspect of the term limit
provisions. Section 1261.4(d)(2)
implements the term limit provision of
section 7(d) of the Bank Act. See 12 CFR
1261.4(d)(2); 12 U.S.C. 1427(d). The rule
provides that a term adjusted after July
30, 2008 (the effective date of HERA) to
a period of fewer than four years is not
considered a full term for purposes of
calculating term limits. See 12 CFR
1261.4(d)(2)(i). The Bank suggested that
FHFA use the term ‘‘adjusted’’ in new
paragraph 1261.3(e) to make clear that a
newly created directorship with a term
of less than four years as a result of a
redesignation of directorships would
not be a full term for purposes of the
statutory term limit. FHFA agrees that
this will clarify application of the rule
and has made the change in the final
rule. FHFA is adopting the remainder of
the changes as proposed.
FHFA also is making a technical
change to part 1261. It is creating a new
subpart A, which contains definitions
common to all subparts. These
definitions include the terms Act, Bank,
FHFA, and Director. These terms no
longer will appear in other subparts of
part 1261. The succeeding subparts will
be redesignated subparts B (eligibility
and elections), C (compensation and
expenses), and D (reserved). In the
newly redesignated subpart B, FHFA is
renumbering §§ 1261.1 through 1261.7
as §§ 1261.2 through 1261.8,
respectively. It is removing § 1261.8,
which was reserved. FHFA is correcting
the cross-references within subpart B to
take into account the new numbering.
III. Bank Director Compensation and
Expenses
In October 2009, FHFA published a
proposed rule to address changes HERA
section 1202 made to section 7(i) of the
Bank Act. See 74 FR 54758 (Oct. 23,
2009). Among other things, section 1202
repealed the statutory caps on the
annual compensation a Bank can pay to
its directors, the effect of which was to
authorize the Banks to pay reasonable
compensation and expenses to their
directors subject to FHFA approval. See
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12 U.S.C. 1427(i). The proposed rule
would implement the provisions of
section 7(i) of the Bank Act in a manner
that is consistent with the other
authorities that the FHFA Director has
over the compensation practices of the
other regulated entities, i.e., the Federal
National Mortgage Association and the
Federal Home Loan Mortgage
Corporation.
FHFA received six public comments
on the proposed rule, three from Banks,
one from the Council of Banks, which
is a trade group representing all twelve
Banks, one from a trade association
representing home builders, and one
from a public interest group. All
commenters generally supported the
rule and the goal of increased
transparency.
For aspects of the proposed rule with
respect to which FHFA received no
comments, FHFA is adopting those
provisions as proposed, and they
generally are not addressed in this
preamble. One comment concerned
provisions of part 1261 that were not the
focus of this rulemaking, such as board
diversity and differences between
elected and independent Bank directors.
Because those matters are beyond the
scope of the proposed rules, FHFA is
not addressing them in either the
regulation or this supplementary
information. FHFA discusses issues
raised by the other comments in the
analysis of the appropriate section of the
final rule below.
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A. Definitions—Section 1261.20
FHFA received no comments on the
definition section. However, because the
term ‘‘expense’’ is used throughout the
subpart and because reimbursable
expenses are described as part of
proposed § 1261.24, FHFA has decided
to relocate the substance of the
description of reimbursable expenses
into a new definition. The final rule
adds the term ‘‘expenses’’ to the
definition section without making any
substantive changes from proposed
§ 1261.24, which is deleted from the
final rule. FHFA received no comments
on § 1261.24.
B. General—Section 1261.21
FHFA has separated proposed
§ 1261.21(b) into two parts—the first
concerns annual reporting requirements
relating to anticipated compensation for
the coming year and the second
concerns annual reporting requirements
relating to compensation and expenses
for the prior year. FHFA received
comments on two aspects of the
reporting requirements. The first
comment concerned the report on
compensation a Bank expects to pay in
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the upcoming year. A Bank suggested
that FHFA change the due date for the
report from December 1 to December 31
because some Banks address
compensation issues at the last meeting
of the year, which may occur later in
December. FHFA has made this
amendment in § 1261.21(b)(1).
The second group of comments
concerned the reporting requirements
for compensation and expenses that a
Bank has paid in the prior year. In
response to these comments, FHFA is
making certain revisions to § 1261.21(b)
and is deleting proposed § 1261.25,
which would have required the Banks to
disclose certain information about
compensation practices in their annual
reports to members. Finance Board
regulations long had required the
annual reports the Banks provide to
their members to include certain
information about the compensation
and expenses paid to Bank directors.
Section 1261.25 of the proposed rule
would have expanded the elements a
Bank had to include in the annual
reports to provide members with
additional information about director
compensation, expenses, and meeting
attendance. That proposal prompted
comments questioning whether it
effectively would require the Banks to
include items in their filings with the
U.S. Securities and Exchange
Commission (SEC) that are not required
by the federal securities laws. Since the
Banks became registered with the SEC,
they generally have ceased providing
their members an annual report separate
from the Form 10–K that they file with
SEC, which includes information about
director and officer compensation.
FHFA agrees that the expanded
provisions of § 1261.25 of the proposed
rule could have the unintended
consequence of requiring a Bank to
include in its Form 10–K information
that differs from what otherwise is
required for SEC registrants, and has
determined that the appropriate course
is to delete from the final rule any
requirements relating to the content of
the Banks’ annual reports.
Because FHFA needs information
about director compensation and
expenses for its own supervisory and
regulatory purposes, i.e., to assess the
reasonableness of the compensation and
to compile compensation information
for its HERA-mandated annual report to
Congress, it has decided to revise the
final rule to require the Banks to report
the information they would have
provided in the annual reports to
members to FHFA. Thus, § 1261.21(b)(2)
of the final rule requires the Banks to
report by the tenth day of the calendar
year, seven categories of information
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relating to director compensation,
expenses, and meeting attendance for
the immediately preceding calendar
year. Those categories relate to
compensation and expenses paid to
each director, compensation and
expenses for all directors, group
expenses, as well as the number of
board and committee meetings held
during the year and each director’s
attendance at those meetings. FHFA
intends for these new reporting
requirements to cover compensation,
expenses, and meetings that occur in
calendar year 2010.
FHFA received several comments
about group expenses, such as dinners
in conjunction with board or committee
meetings that a Bank does not reimburse
back to individual directors.
Commenters suggested three different
methods for dealing with group
expenses: (1) Do not report it as an
expense; (2) treat it as an aggregated
expense that FHFA will review during
exam process; or (3) aggregate it, with
the average cost allocated back to each
director. FHFA believes that these group
expenses are ‘‘expenses’’ relating to the
directors’ attendance at board meetings,
but agrees that allocating them among
the attending directors might be
burdensome. Therefore, FHFA has
decided that the Banks need only
provide an aggregate sum of group
expenses as part of the report on prior
year payments.
Several commenters asked FHFA to
clarify that a director can attend a board
or committee meeting either in person
or through electronic means, such as
video or teleconferencing. FHFA
encourages in-person attendance by all
directors, but will deem an individual
director’s participation in the entire
meeting via video or teleconferencing as
attendance solely for purposes of
reporting that director’s attendance
under § 1261.21(b)(2)(vii). The board of
directors is still required by § 1261.24(a)
to hold a minimum of six in-person
meetings each year, which requirement
is separate from the reporting
requirements of § 1261.21.
C. Director Disapproval—Section
1261.23
FHFA received several comments on
proposed § 1261.23, which addresses
the FHFA Director’s authority to
disapprove compensation arrangements
that do not conform to the
reasonableness standard imposed by
section 7(i) of the Bank Act. One
commenter asked FHFA to clarify that
the prospective disapproval
determination or order does not apply to
earned but unpaid compensation and
expenses incurred but not yet
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reimbursed. FHFA has done so in the
final rule.
Two commenters suggested that the
final rule establish a formal process for
any determinations of unreasonable
director compensation and that the
Director provide a written factual
analysis to a Bank along with any order
directing a Bank to cease further
payments at that level. FHFA does not
see the need to establish a formal
process for reviewing the
reasonableness of a Bank’s
compensation practices, since there are
in place already certain requirements to
ensure the Agency makes decisions in a
responsible manner. Under the Bank
Act and principles of administrative
law, FHFA must act reasonably in all
cases and must have a reasonable
factual basis for any regulatory or
supervisory actions it takes. In light of
these statutory requirements, FHFA
believes that it is not necessary to create
an additional formal process or to treat
decisions made on director
compensation any differently from the
many other supervisory determinations
FHFA makes. While FHFA may not
issue a formal written analysis to a Bank
whenever the Director deems its
compensation arrangements to be
unreasonable, it will endeavor to ensure
that it provides an opportunity for the
Bank to provide its views. Further, the
Agency will provide guidance and will
advise generally on the aspects of the
compensation practices deemed
objectionable and suggest
improvements. The guidance likely will
be in the form of a dialogue with the
Bank, much like FHFA staff already
engages in with respect to other matters
of supervisory concern.
D. Board Meetings—Section 1261.24
In § 1261.24 of the final rule, FHFA
has combined two separate provisions
of the proposed rule relating to board
and committee meetings. Proposed
§ 1261.26, which concerned the number
of board and committee meetings, now
appears in § 1261.24(a) without
substantive change. Proposed § 1261.27,
which concerned the site of board and
committee meetings, now appears in
1261.24(b) without substantive change.
FHFA did not receive any comments on
these sections.
IV. Paperwork Reduction Act
The final rule does not contain any
information collection requirements that
require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
3501 et seq.).
V. Regulatory Flexibility Act
The final rule applies only to the
Banks, which do not come within the
meaning of ‘‘small entities’’ for purposes
of the Regulatory Flexibility Act (RFA).
See 5 U.S.C. 601(6). Therefore, in
accordance with section 605(b) of the
RFA, 5 U.S.C. 605(b), the FHFA certifies
that this final rule will not have a
significant economic impact on a
substantial number of small entities.
List of Subjects in 12 CFR Parts 918 and
1261
Banks, Banking, Community
development, Conflicts of interest,
Credit, Elections, Ethical conduct,
Federal home loan banks, Financial
disclosure, Housing, Reporting and
recordkeeping requirements, Wages.
For the reasons stated in the preamble,
under the authority of 12 U.S.C. 4511
and 4526, FHFA hereby amends
chapters IX and XII of title 12 of the
Code of Federal Regulations as follows:
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17039
CHAPTER IX—FEDERAL HOUSING
FINANCE BOARD
PART 918—[REMOVED]
■
1. Remove 12 CFR part 918.
CHAPTER XII—FEDERAL HOUSING
FINANCE AGENCY
PART 1261—FEDERAL HOME LOAN
BANK DIRECTORS
2. The authority citation for part 1261
continues to read as follows:
■
Authority: 12 U.S.C. 1426, 1427, 1432,
4511, and 4526.
3. Redesignate subparts A, B, and C as
subparts B, C, and D, respectively.
■ 4. Redesignate §§ 1261.1 through
1261.7 as §§ 1261.2 through 1261.8,
respectively.
■ 5. Add a new Subpart A to read as
follows:
■
Subpart A—Definitions
§ 1261.1
Definitions.
As used in this part:
Bank written in title case means a
Federal Home Loan Bank established
under section 12 of the Bank Act (12
U.S.C. 1432).
Bank Act means the Federal Home
Loan Bank Act, as amended (12 U.S.C.
1421 through 1449).
Director means the Director of the
Federal Housing Finance Agency.
FHFA means Federal Housing
Finance Agency.
Subpart B—[Amended]
6. Amend newly redesignated subpart
B as follows:
■ a. Revise all references to ‘‘the Act’’ to
read ‘‘the Bank Act’’; and
■ b. Amend references as indicated in
the table below:
■
Amend:
By removing the reference to:
And adding in its place:
Newly redesignated § 1261.2, definition of the
term ‘‘Voting State’’.
Newly redesignated § 1261.4(a)(2) ....................
12 CFR part 925 ................................................
12 CFR part 1263.
12 CFR 925.20 and 925.22, or any successor
provisions.
12 CFR 925.20 and 925.22, or any successor
provisions.
§ 1261.3(c) ..........................................................
§ 1261.3(c) ..........................................................
12 CFR 925.20 and 925.22, or any successor
provisions.
§ 1261.5 ..............................................................
§ 1261.6(f) ...........................................................
§ 1261.6(e) ..........................................................
§ 1261.6(a) ..........................................................
§ 1261.6(a)(3) .....................................................
§ 1261.5 ..............................................................
§§ 1263.20 and 1263.22 of this chapter.
§ 1261.6(e) ..........................................................
§ 1261.6(a) ..........................................................
§ 1261.7(e).
§ 1261.7(a).
Newly redesignated § 1261.4(b) .........................
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Newly redesignated § 1261.5(b) .........................
Newly redesignated § 1261.5(e)(1) ....................
Newly redesignated § 1261.6(b) .........................
Newly redesignated § 1261.7(a)(4) ....................
Newly redesignated § 1261.8(a) .........................
Newly redesignated § 1261.8(a)(iii) ....................
Newly redesignated § 1261.8(b) .........................
Newly redesignated § 1261.8(b) .........................
Newly redesignated § 1261.8(d), introductory
text.
Newly redesignated § 1261.8(g)(2) ....................
§ 1261.9(a) ..........................................................
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§§ 1263.20 and 1263.22 of this chapter.
§ 1261.4(c).
§ 1261.4(c).
§§ 1263.20 and 1263.22 of this chapter.
§ 1261.6.
§ 1261.7(f).
§ 1261.7(e).
§ 1261.7(a).
§ 1261.7(a)(3).
§ 1261.6.
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Amend:
By removing the reference to:
And adding in its place:
§ 1261.14(b) ........................................................
paragraphs (c) and (d) of § 1261.6 ....................
§ 1261.7(c) and (d).
7. In newly redesignated § 1261.2
revise the introductory text to read as
set forth below, and remove the
definitions of the terms Act, Bank,
Director and FHFA.
■
§ 1261.2
Definitions.
As used in this Subpart B:
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■ 8. Amend newly redesignated
§ 1261.4 by revising paragraph (d) and
adding new paragraph (e) to read as
follows:
§ 1261.4 Designation of member
directorships.
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(d) Notification. On or before June 1
of each year, FHFA will notify each
Bank in writing of the total number of
directorships established for the Bank
and the number of member
directorships designated as representing
the members in each voting state in the
Bank district.
(e) Change of state. If the annual
designation of member directorships
results in an existing directorship being
redesignated as representing members
in a different State, that directorship
shall be deemed to terminate in the
previous State as of December 31 of that
year, and a new directorship to begin in
the succeeding State as of January 1 of
the next year. The new directorship
shall be filled by vote of the members
in the succeeding State and, in order to
maintain the staggered terms of
directorships, shall be adjusted to a term
equal to the remaining term of the
previous directorship if it had not been
redesignated to another State.
■ 9. Amend newly redesignated
§ 1261.5 by revising paragraph (e) to
read as follows:
§ 1261.5
Director eligibility.
*
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*
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(e) Loss of eligibility. A director shall
become ineligible to remain in office if,
during his or her term of office, the
directorship to which he or she has been
elected is eliminated. The incumbent
director shall become ineligible after the
close of business on December 31 of the
year in which the directorship is
eliminated.
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*
§ 1261.8
[Amended]
10. Amend newly redesignated
§ 1261.8 by adding ‘‘(1)’’ after the ‘‘.’’ at
the end of the italicized heading of
paragraph (a).
■ 11. Add subpart C to read as follows:
■
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Subpart C—Federal Home Loan Bank
Directors’ Compensation and Expenses
Sec.
1261.20 Definitions.
1261.21 General.
1261.22 Directors’ compensation policy.
1261.23 Director disapproval.
1261.24 Board meetings.
Subpart C—Federal Home Loan Bank
Directors’ Compensation and
Expenses
§ 1261.20
Definitions.
As used in this subpart C:
Compensation means any payment of
money or the provision of any other
thing of current or potential value in
connection with service as a director.
Compensation includes all direct and
indirect payments of benefits, both cash
and non-cash, granted to or for the
benefit of any director.
Expenses means necessary and
reasonable travel, subsistence and other
related expenses incurred in connection
with the performance of official duties
as are payable to senior officers of the
Bank under the Bank’s travel policy,
except gift or entertainment expenses.
§ 1261.21
General.
(a) Standard. Each Bank may pay its
directors reasonable compensation for
the time required of them, and their
necessary expenses, in the performance
of their duties, as determined by a
resolution adopted by the board of
directors of the Bank and subject to the
provisions of this subpart.
(b) Reporting. (1) Following calendar
year. By December 31 of each calendar
year, each Bank shall report to the
Director the compensation it anticipates
paying to its directors for the following
calendar year.
(2) Preceding calendar year. No later
than the tenth business day of each
calendar year, each Bank shall report to
the Director the following information
relating to director compensation,
expenses and meeting attendance for the
immediately preceding calendar year:
(i) The total compensation paid to
each director;
(ii) The total expenses paid to each
director;
(iii) The total compensation paid to
all directors;
(iv) The total expenses paid to all
directors;
(v) The total of all expenses incurred
at group functions that are not
reimbursed to individual directors, such
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as the cost of group meals in connection
with board and committee meetings;
(vi) The total number of meetings held
by the board and its designated
committees; and
(vii) The number of board and
designated committee meetings each
director attended in-person or through
electronic means such as video or
teleconferencing.
§ 1261.22
Directors’ compensation policy.
(a) General. Each Bank’s board of
directors annually shall adopt a written
compensation policy to provide for the
payment of reasonable compensation
and expenses to the directors for the
time required of them in performing
their duties as directors. Payments
under the directors’ compensation
policy may be based on any factors that
the board of directors determines
reasonably to be appropriate, subject to
the requirements in this subpart.
(b) Minimum contents. The
compensation policy shall address the
activities or functions for which director
attendance or participation is necessary
and which may be compensated, and
shall explain and justify the
methodology used to determine the
amount of compensation to be paid to
the Bank directors. The compensation
policy shall require that any
compensation paid to a director reflect
the amount of time the director has
spent on official Bank business, and
shall require that compensation be
reduced, as necessary to reflect lesser
attendance or performance at board or
committee meetings during a given year.
(c) Prohibited payments. A Bank shall
not pay a director who regularly fails to
attend board or committee meetings,
and shall not pay fees to a director that
do not reflect the director’s performance
of official Bank business conducted
prior to the payment of such fees.
(d) Submission requirements. No later
than the tenth business day after
adopting its annual policy for director
compensation and expenses, and at least
30 days prior to disbursing the first
payment to any director, each Bank
shall submit to the Director a copy of
the policy, along with all studies or
other supporting materials upon which
the board relied in determining the level
of compensation and expenses to pay to
its directors.
§ 1261.23
Director disapproval.
The Director may determine, based
upon his or her review of a Bank’s
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director compensation policy,
methodology and/or other related
materials, that the compensation and/or
expenses to be paid to the directors are
not reasonable. In such case, the
Director may order the Bank to refrain
from making any further payments
under that compensation policy. Any
such order shall apply prospectively
only and will not affect either
compensation or expenses that have
been earned but not yet paid or
reimbursed or payments that had been
made prior to the date of the Director’s
determination and order.
§ 1261.24
Board meetings.
(a) Number of meetings. The board of
directors of each Bank shall hold as
many meetings each year as necessary
and appropriate to carry out its
fiduciary responsibilities with respect to
the effective oversight of Bank
management and such other duties and
obligations as may be imposed by
applicable laws, provided the board of
directors of a Bank must hold a
minimum of six in-person meetings in
any year.
(b) Site of meetings. The bank usually
should hold board of director and
committee meetings within the district
served by the Bank. The Bank shall not
hold board of director or committee
meetings in any location that is not
within the United States, including its
possessions and territories.
Dated: March 27, 2010.
Edward J. DeMarco,
Acting Director, Federal Housing Finance
Agency.
[FR Doc. 2010–7418 Filed 4–2–10; 8:45 am]
BILLING CODE P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Parts 27, 29, 91, 121, 125, and
135
[Docket No. FAA–2005–20245; Amendment
No. 27–45, 29–52, 91–313, 121–349, 125–
60 and 135–121]
RIN 2120–AJ65
erowe on DSK5CLS3C1PROD with RULES
Extension of the Compliance Date for
Cockpit Voice Recorder and Digital
Flight Data Recorder Regulations
AGENCY: Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
SUMMARY: On March 7, 2008, the FAA
published a final rule titled ‘‘Revisions
to Cockpit Voice Recorder and Digital
Flight Data Recorder Regulations.’’ The
VerDate Nov<24>2008
13:31 Apr 02, 2010
Jkt 220001
rule required certain upgrades of
cockpit voice recorder and digital flight
data recorder equipment on certain
aircraft beginning April 7, 2010. That
compliance date is being changed for
certain requirements on certain aircraft.
DATES: These amendments are effective
April 5, 2010.
FOR FURTHER INFORMATION CONTACT: For
technical questions concerning this final
rule contact Timothy W. Shaver,
Avionics Maintenance Branch, Flight
Standards Service, AFS–360, Federal
Aviation Administration, 950 L’Enfant
Plaza, SW., Washington, DC 20024;
telephone (202) 385–4292; facsimile
(202) 385–4651; e-mail
tim.shaver@faa.gov. For legal questions
concerning this final rule contact Karen
L. Petronis, Regulations Division, AGC–
200, Office of the Chief Counsel, Federal
Aviation Administration, 800
Independence Avenue, SW.,
Washington, DC 20591; telephone (202)
267–3073; facsimile (202) 267–7971;
e-mail karen.petronis@faa.gov.
SUPPLEMENTARY INFORMATION:
Authority for This Rulemaking
The FAA’s authority to issue rules on
aviation safety is found in Title 49 of the
United States Code. Subtitle I, Section
106 describes the authority of the FAA
Administrator. Subtitle VII, Aviation
Programs, describes in more detail the
scope of the agency’s authority.
This rulemaking is promulgated
under the authority described in
Subtitle VII, Part A, Subpart III, Section
44701. Under that section, the FAA is
charged with prescribing regulations
providing minimum standards for other
practices, methods and procedures
necessary for safety in air commerce.
This regulation is within the scope of
that authority since flight data recorders
are the only means available to account
for aircraft movement and flightcrew
actions critical to finding the probable
cause of incidents or accidents,
including data that could prevent future
incidents or accidents.
I. Background
A. History of the Regulatory
Requirements
In February 2005, the FAA issued a
notice of proposed rulemaking
proposing to amend the digital flight
data recorder (DFDR) and cockpit voice
recorder (CVR) regulations for much of
the U.S. fleet of aircraft (70 FR 9752;
February 28, 2005). Some of the changes
proposed were based on
recommendations from the National
Transportation Safety Board (NTSB or
Board) that were issued as a result of the
Board’s investigations of several aircraft
PO 00000
Frm 00015
Fmt 4700
Sfmt 4700
17041
accidents and incidents. A full
discussion of the NTSB’s
recommendations and the FAA’s
proposed changes can be found in the
2005 NPRM.
In March 2008, the FAA issued a final
rule adopting many of those proposals
(73 FR 12541; March 7, 2008). The
requirements were adopted as aircraft
certification or operating rules, some of
which take effect on April 7, 2010, and
include:
• The recording of datalink
communications, when the
communications equipment is installed
on or after April 7, 2010;
• Wiring requirements related to
single electrical failures and their effect
on the DFDR and CVR systems;
• The addition of a 10-minute
independent power source for the CVR;
• Requirements regarding the CVR
location and housing;
• Requirements for the duration of
DFDR recording;
• Requirements for the duration of
CVR recording; and
• Increased sampling rates for certain
DFDR parameters.
A detailed discussion of the
individual requirements and where they
appear in the regulations can be found
in the preamble to the 2008 final rule,
beginning at page 12556 (Section-BySection Analysis). Some of the
requirements were promulgated to be
effective in two years, while others were
required within four years of April 7,
2008.
Between May 1, 2009 and December
14, 2009, the FAA received seven
petitions from aircraft manufacturers
and two from industry associations
requesting either that the effective dates
in the regulations be changed or that
other relief from several of the 2008
requirements be granted for aircraft
manufactured on or after April 7, 2010.
In a notice of proposed rulemaking
(NPRM) published on January 7, 2010
(75 FR 943), the FAA denied all of the
petitions and instead proposed that
some of the requirements for newly
manufactured aircraft be extended from
the April 7, 2010 compliance date.
Specifically, the FAA proposed that:
1. For increased DFDR sampling rates,
the compliance date for newly
manufactured aircraft operated under
part 121, 125, or 135 would be extended
until December 6, 2010.
2. For the datalink recording
requirements, the compliance date after
which the installation of datalink
communications must include recording
equipment would be extended until
December 6, 2010 for aircraft operating
under part 121, 125, or 135.
E:\FR\FM\05APR1.SGM
05APR1
]]>Agencies
[Federal Register Volume 75, Number 64 (Monday, April 5, 2010)]
[Rules and Regulations]
[Pages 17037-17041]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7418]
=======================================================================
-----------------------------------------------------------------------
FEDERAL HOUSING FINANCE BOARD
12 CFR Part 918
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1261
RIN 2590-AA03, 2590-AA31 and 2590-AA34
Federal Home Loan Bank Directors' Eligibility, Elections,
Compensation and Expenses
AGENCY: Federal Housing Finance Agency, Federal Housing Finance Board.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this rulemaking, the Federal Housing Finance Agency (FHFA)
is adopting a final rule that implements two separate proposed rules,
which relate to Federal Home Loan Bank (Bank) director elections and
director compensation, respectively. As to director elections, FHFA is
amending its regulations relating to the process by which successor
Bank directors are chosen after a directorship is redesignated to a new
state prior to the end of the term as a result of the annual
designation of Bank directorships. Under the final rule, the
redesignation causes the original directorship to terminate and creates
a new directorship that will be filled by an election of the members.
As to director compensation, FHFA is implementing section 1202 of
the Housing and Economic Recovery Act of 2008 (HERA), which amended
section 7(i) of the Federal Home Loan Bank Act (Bank Act) by repealing
the statutory caps on the annual compensation that can be paid to Bank
directors. This aspect of the final rule allows each Bank to pay its
directors reasonable compensation and expenses, subject to the
authority of the FHFA Director to object to, and to prohibit
prospectively, compensation and/or expenses that the Director
determines are not reasonable.
DATES: This rule is effective May 5, 2010.
FOR FURTHER INFORMATION CONTACT: Daniel Coates, Associate Director,
Division of FHLBank Regulation, 202-408-2959, daniel.coates@fhfa.gov or
Neil R. Crowley, Deputy General Counsel, 202-343-1316,
neil.crowley@fhfa.gov, Federal Housing Finance Agency, Fourth Floor,
1700 G Street, NW., Washington, DC 20552. The telephone number for the
Telecommunications Device for the Deaf is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. In General
On July 30, 2008, HERA, Public Law 110-289, 122 Stat. 2654 (2008),
became law and created FHFA as an independent agency of the Federal
government. Among other things, HERA transferred to FHFA the
supervisory and oversight responsibilities over the Banks that formerly
had been vested in the now abolished Federal Housing Finance Board
(Finance Board). The Banks continue to operate under regulations
promulgated by the Finance Board until such time as the existing
regulations are supplanted by regulations promulgated by FHFA.
Section 1202 of HERA amended section 7 of the Bank Act, which
governs the eligibility, election, compensation and expenses of Bank
directors. See 12 U.S.C. 1427. FHFA has implemented section 7 in part
1261 of its rules. 12 CFR part 1261.
Section 1201 of HERA (codified at 12 U.S.C. 4513(f)) requires the
Director of FHFA to consider the differences between the Banks and the
Enterprises with respect to the Banks' cooperative ownership structure,
mission of providing liquidity to members, affordable housing and
community development mission, capital structure, and joint and several
liability, whenever promulgating regulations that affect the Banks. The
Director may also consider any other differences that are deemed
appropriate. In preparing this final rule, the Director considered the
differences between the Banks and the Enterprises as they relate to the
above factors and determined that the rule is appropriate, particularly
because this final rule applies only to the Banks.
II. Bank Director Eligibility and Elections
In December 2009, FHFA published a proposed rule that would deem
terminated a directorship that is redesignated to a new state prior to
the end of its term as a result of the annual designation of Bank
directorships, with a new directorship created for the new state. See
74 FR 62708 (Dec. 1, 2009). The new directorship would be filled by an
election of the members. The proposal constituted a change from the
current Finance Board rule, which deems the redesignation to create a
vacancy on the board. Under the Bank Act, vacancies on the board are
filled by the remaining directors. See 12 U.S.C. 1427(f)(2); 12 CFR
1261.3 and 1261.4.
FHFA received one comment on the proposed rule, which was from a
Bank and related to an aspect of the term limit provisions. Section
1261.4(d)(2) implements the term limit provision of section 7(d) of the
Bank Act. See 12 CFR 1261.4(d)(2); 12 U.S.C. 1427(d). The rule provides
that a term adjusted after July 30, 2008 (the effective date of HERA)
to a period of fewer than four years is not considered a full term for
purposes of calculating term limits. See 12 CFR 1261.4(d)(2)(i). The
Bank suggested that FHFA use the term ``adjusted'' in new paragraph
1261.3(e) to make clear that a newly created directorship with a term
of less than four years as a result of a redesignation of directorships
would not be a full term for purposes of the statutory term limit. FHFA
agrees that this will clarify application of the rule and has made the
change in the final rule. FHFA is adopting the remainder of the changes
as proposed.
FHFA also is making a technical change to part 1261. It is creating
a new subpart A, which contains definitions common to all subparts.
These definitions include the terms Act, Bank, FHFA, and Director.
These terms no longer will appear in other subparts of part 1261. The
succeeding subparts will be redesignated subparts B (eligibility and
elections), C (compensation and expenses), and D (reserved). In the
newly redesignated subpart B, FHFA is renumbering Sec. Sec. 1261.1
through 1261.7 as Sec. Sec. 1261.2 through 1261.8, respectively. It is
removing Sec. 1261.8, which was reserved. FHFA is correcting the
cross-references within subpart B to take into account the new
numbering.
III. Bank Director Compensation and Expenses
In October 2009, FHFA published a proposed rule to address changes
HERA section 1202 made to section 7(i) of the Bank Act. See 74 FR 54758
(Oct. 23, 2009). Among other things, section 1202 repealed the
statutory caps on the annual compensation a Bank can pay to its
directors, the effect of which was to authorize the Banks to pay
reasonable compensation and expenses to their directors subject to FHFA
approval. See
[[Page 17038]]
12 U.S.C. 1427(i). The proposed rule would implement the provisions of
section 7(i) of the Bank Act in a manner that is consistent with the
other authorities that the FHFA Director has over the compensation
practices of the other regulated entities, i.e., the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation.
FHFA received six public comments on the proposed rule, three from
Banks, one from the Council of Banks, which is a trade group
representing all twelve Banks, one from a trade association
representing home builders, and one from a public interest group. All
commenters generally supported the rule and the goal of increased
transparency.
For aspects of the proposed rule with respect to which FHFA
received no comments, FHFA is adopting those provisions as proposed,
and they generally are not addressed in this preamble. One comment
concerned provisions of part 1261 that were not the focus of this
rulemaking, such as board diversity and differences between elected and
independent Bank directors. Because those matters are beyond the scope
of the proposed rules, FHFA is not addressing them in either the
regulation or this supplementary information. FHFA discusses issues
raised by the other comments in the analysis of the appropriate section
of the final rule below.
A. Definitions--Section 1261.20
FHFA received no comments on the definition section. However,
because the term ``expense'' is used throughout the subpart and because
reimbursable expenses are described as part of proposed Sec. 1261.24,
FHFA has decided to relocate the substance of the description of
reimbursable expenses into a new definition. The final rule adds the
term ``expenses'' to the definition section without making any
substantive changes from proposed Sec. 1261.24, which is deleted from
the final rule. FHFA received no comments on Sec. 1261.24.
B. General--Section 1261.21
FHFA has separated proposed Sec. 1261.21(b) into two parts--the
first concerns annual reporting requirements relating to anticipated
compensation for the coming year and the second concerns annual
reporting requirements relating to compensation and expenses for the
prior year. FHFA received comments on two aspects of the reporting
requirements. The first comment concerned the report on compensation a
Bank expects to pay in the upcoming year. A Bank suggested that FHFA
change the due date for the report from December 1 to December 31
because some Banks address compensation issues at the last meeting of
the year, which may occur later in December. FHFA has made this
amendment in Sec. 1261.21(b)(1).
The second group of comments concerned the reporting requirements
for compensation and expenses that a Bank has paid in the prior year.
In response to these comments, FHFA is making certain revisions to
Sec. 1261.21(b) and is deleting proposed Sec. 1261.25, which would
have required the Banks to disclose certain information about
compensation practices in their annual reports to members. Finance
Board regulations long had required the annual reports the Banks
provide to their members to include certain information about the
compensation and expenses paid to Bank directors. Section 1261.25 of
the proposed rule would have expanded the elements a Bank had to
include in the annual reports to provide members with additional
information about director compensation, expenses, and meeting
attendance. That proposal prompted comments questioning whether it
effectively would require the Banks to include items in their filings
with the U.S. Securities and Exchange Commission (SEC) that are not
required by the federal securities laws. Since the Banks became
registered with the SEC, they generally have ceased providing their
members an annual report separate from the Form 10-K that they file
with SEC, which includes information about director and officer
compensation. FHFA agrees that the expanded provisions of Sec. 1261.25
of the proposed rule could have the unintended consequence of requiring
a Bank to include in its Form 10-K information that differs from what
otherwise is required for SEC registrants, and has determined that the
appropriate course is to delete from the final rule any requirements
relating to the content of the Banks' annual reports.
Because FHFA needs information about director compensation and
expenses for its own supervisory and regulatory purposes, i.e., to
assess the reasonableness of the compensation and to compile
compensation information for its HERA-mandated annual report to
Congress, it has decided to revise the final rule to require the Banks
to report the information they would have provided in the annual
reports to members to FHFA. Thus, Sec. 1261.21(b)(2) of the final rule
requires the Banks to report by the tenth day of the calendar year,
seven categories of information relating to director compensation,
expenses, and meeting attendance for the immediately preceding calendar
year. Those categories relate to compensation and expenses paid to each
director, compensation and expenses for all directors, group expenses,
as well as the number of board and committee meetings held during the
year and each director's attendance at those meetings. FHFA intends for
these new reporting requirements to cover compensation, expenses, and
meetings that occur in calendar year 2010.
FHFA received several comments about group expenses, such as
dinners in conjunction with board or committee meetings that a Bank
does not reimburse back to individual directors. Commenters suggested
three different methods for dealing with group expenses: (1) Do not
report it as an expense; (2) treat it as an aggregated expense that
FHFA will review during exam process; or (3) aggregate it, with the
average cost allocated back to each director. FHFA believes that these
group expenses are ``expenses'' relating to the directors' attendance
at board meetings, but agrees that allocating them among the attending
directors might be burdensome. Therefore, FHFA has decided that the
Banks need only provide an aggregate sum of group expenses as part of
the report on prior year payments.
Several commenters asked FHFA to clarify that a director can attend
a board or committee meeting either in person or through electronic
means, such as video or teleconferencing. FHFA encourages in-person
attendance by all directors, but will deem an individual director's
participation in the entire meeting via video or teleconferencing as
attendance solely for purposes of reporting that director's attendance
under Sec. 1261.21(b)(2)(vii). The board of directors is still
required by Sec. 1261.24(a) to hold a minimum of six in-person
meetings each year, which requirement is separate from the reporting
requirements of Sec. 1261.21.
C. Director Disapproval--Section 1261.23
FHFA received several comments on proposed Sec. 1261.23, which
addresses the FHFA Director's authority to disapprove compensation
arrangements that do not conform to the reasonableness standard imposed
by section 7(i) of the Bank Act. One commenter asked FHFA to clarify
that the prospective disapproval determination or order does not apply
to earned but unpaid compensation and expenses incurred but not yet
[[Page 17039]]
reimbursed. FHFA has done so in the final rule.
Two commenters suggested that the final rule establish a formal
process for any determinations of unreasonable director compensation
and that the Director provide a written factual analysis to a Bank
along with any order directing a Bank to cease further payments at that
level. FHFA does not see the need to establish a formal process for
reviewing the reasonableness of a Bank's compensation practices, since
there are in place already certain requirements to ensure the Agency
makes decisions in a responsible manner. Under the Bank Act and
principles of administrative law, FHFA must act reasonably in all cases
and must have a reasonable factual basis for any regulatory or
supervisory actions it takes. In light of these statutory requirements,
FHFA believes that it is not necessary to create an additional formal
process or to treat decisions made on director compensation any
differently from the many other supervisory determinations FHFA makes.
While FHFA may not issue a formal written analysis to a Bank whenever
the Director deems its compensation arrangements to be unreasonable, it
will endeavor to ensure that it provides an opportunity for the Bank to
provide its views. Further, the Agency will provide guidance and will
advise generally on the aspects of the compensation practices deemed
objectionable and suggest improvements. The guidance likely will be in
the form of a dialogue with the Bank, much like FHFA staff already
engages in with respect to other matters of supervisory concern.
D. Board Meetings--Section 1261.24
In Sec. 1261.24 of the final rule, FHFA has combined two separate
provisions of the proposed rule relating to board and committee
meetings. Proposed Sec. 1261.26, which concerned the number of board
and committee meetings, now appears in Sec. 1261.24(a) without
substantive change. Proposed Sec. 1261.27, which concerned the site of
board and committee meetings, now appears in 1261.24(b) without
substantive change. FHFA did not receive any comments on these
sections.
IV. Paperwork Reduction Act
The final rule does not contain any information collection
requirements that require the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
V. Regulatory Flexibility Act
The final rule applies only to the Banks, which do not come within
the meaning of ``small entities'' for purposes of the Regulatory
Flexibility Act (RFA). See 5 U.S.C. 601(6). Therefore, in accordance
with section 605(b) of the RFA, 5 U.S.C. 605(b), the FHFA certifies
that this final rule will not have a significant economic impact on a
substantial number of small entities.
List of Subjects in 12 CFR Parts 918 and 1261
Banks, Banking, Community development, Conflicts of interest,
Credit, Elections, Ethical conduct, Federal home loan banks, Financial
disclosure, Housing, Reporting and recordkeeping requirements, Wages.
0
For the reasons stated in the preamble, under the authority of 12
U.S.C. 4511 and 4526, FHFA hereby amends chapters IX and XII of title
12 of the Code of Federal Regulations as follows:
CHAPTER IX--FEDERAL HOUSING FINANCE BOARD
PART 918--[REMOVED]
0
1. Remove 12 CFR part 918.
CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY
PART 1261--FEDERAL HOME LOAN BANK DIRECTORS
0
2. The authority citation for part 1261 continues to read as follows:
Authority: 12 U.S.C. 1426, 1427, 1432, 4511, and 4526.
0
3. Redesignate subparts A, B, and C as subparts B, C, and D,
respectively.
0
4. Redesignate Sec. Sec. 1261.1 through 1261.7 as Sec. Sec. 1261.2
through 1261.8, respectively.
0
5. Add a new Subpart A to read as follows:
Subpart A--Definitions
Sec. 1261.1 Definitions.
As used in this part:
Bank written in title case means a Federal Home Loan Bank
established under section 12 of the Bank Act (12 U.S.C. 1432).
Bank Act means the Federal Home Loan Bank Act, as amended (12
U.S.C. 1421 through 1449).
Director means the Director of the Federal Housing Finance Agency.
FHFA means Federal Housing Finance Agency.
Subpart B--[Amended]
0
6. Amend newly redesignated subpart B as follows:
0
a. Revise all references to ``the Act'' to read ``the Bank Act''; and
0
b. Amend references as indicated in the table below:
----------------------------------------------------------------------------------------------------------------
By removing the
Amend: reference to: And adding in its place:
----------------------------------------------------------------------------------------------------------------
Newly redesignated Sec. 12 CFR part 925.... 12 CFR part 1263.
1261.2, definition of the term
``Voting State''.
Newly redesignated Sec. 12 CFR 925.20 and Sec. Sec. 1263.20 and 1263.22 of this chapter.
1261.4(a)(2). 925.22, or any
successor
provisions.
Newly redesignated Sec. 12 CFR 925.20 and Sec. Sec. 1263.20 and 1263.22 of this chapter.
1261.4(b). 925.22, or any
successor
provisions.
Newly redesignated Sec. Sec. 1261.3(c)... Sec. 1261.4(c).
1261.5(b).
Newly redesignated Sec. Sec. 1261.3(c)... Sec. 1261.4(c).
1261.5(e)(1).
Newly redesignated Sec. 12 CFR 925.20 and Sec. Sec. 1263.20 and 1263.22 of this chapter.
1261.6(b). 925.22, or any
successor
provisions.
Newly redesignated Sec. Sec. 1261.5...... Sec. 1261.6.
1261.7(a)(4).
Newly redesignated Sec. Sec. 1261.6(f)... Sec. 1261.7(f).
1261.8(a).
Newly redesignated Sec. Sec. 1261.6(e)... Sec. 1261.7(e).
1261.8(a)(iii).
Newly redesignated Sec. Sec. 1261.6(a)... Sec. 1261.7(a).
1261.8(b).
Newly redesignated Sec. Sec. 1261.6(a)(3) Sec. 1261.7(a)(3).
1261.8(b).
Newly redesignated Sec. Sec. 1261.5...... Sec. 1261.6.
1261.8(d), introductory text.
Newly redesignated Sec. Sec. 1261.6(e)... Sec. 1261.7(e).
1261.8(g)(2).
Sec. 1261.9(a)................ Sec. 1261.6(a)... Sec. 1261.7(a).
[[Page 17040]]
Sec. 1261.14(b)............... paragraphs (c) and Sec. 1261.7(c) and (d).
(d) of Sec.
1261.6.
----------------------------------------------------------------------------------------------------------------
0
7. In newly redesignated Sec. 1261.2 revise the introductory text to
read as set forth below, and remove the definitions of the terms Act,
Bank, Director and FHFA.
Sec. 1261.2 Definitions.
As used in this Subpart B:
* * * * *
0
8. Amend newly redesignated Sec. 1261.4 by revising paragraph (d) and
adding new paragraph (e) to read as follows:
Sec. 1261.4 Designation of member directorships.
* * * * *
(d) Notification. On or before June 1 of each year, FHFA will
notify each Bank in writing of the total number of directorships
established for the Bank and the number of member directorships
designated as representing the members in each voting state in the Bank
district.
(e) Change of state. If the annual designation of member
directorships results in an existing directorship being redesignated as
representing members in a different State, that directorship shall be
deemed to terminate in the previous State as of December 31 of that
year, and a new directorship to begin in the succeeding State as of
January 1 of the next year. The new directorship shall be filled by
vote of the members in the succeeding State and, in order to maintain
the staggered terms of directorships, shall be adjusted to a term equal
to the remaining term of the previous directorship if it had not been
redesignated to another State.
0
9. Amend newly redesignated Sec. 1261.5 by revising paragraph (e) to
read as follows:
Sec. 1261.5 Director eligibility.
* * * * *
(e) Loss of eligibility. A director shall become ineligible to
remain in office if, during his or her term of office, the directorship
to which he or she has been elected is eliminated. The incumbent
director shall become ineligible after the close of business on
December 31 of the year in which the directorship is eliminated.
Sec. 1261.8 [Amended]
0
10. Amend newly redesignated Sec. 1261.8 by adding ``(1)'' after the
``.'' at the end of the italicized heading of paragraph (a).
0
11. Add subpart C to read as follows:
Subpart C--Federal Home Loan Bank Directors' Compensation and Expenses
Sec.
1261.20 Definitions.
1261.21 General.
1261.22 Directors' compensation policy.
1261.23 Director disapproval.
1261.24 Board meetings.
Subpart C--Federal Home Loan Bank Directors' Compensation and
Expenses
Sec. 1261.20 Definitions.
As used in this subpart C:
Compensation means any payment of money or the provision of any
other thing of current or potential value in connection with service as
a director. Compensation includes all direct and indirect payments of
benefits, both cash and non-cash, granted to or for the benefit of any
director.
Expenses means necessary and reasonable travel, subsistence and
other related expenses incurred in connection with the performance of
official duties as are payable to senior officers of the Bank under the
Bank's travel policy, except gift or entertainment expenses.
Sec. 1261.21 General.
(a) Standard. Each Bank may pay its directors reasonable
compensation for the time required of them, and their necessary
expenses, in the performance of their duties, as determined by a
resolution adopted by the board of directors of the Bank and subject to
the provisions of this subpart.
(b) Reporting. (1) Following calendar year. By December 31 of each
calendar year, each Bank shall report to the Director the compensation
it anticipates paying to its directors for the following calendar year.
(2) Preceding calendar year. No later than the tenth business day
of each calendar year, each Bank shall report to the Director the
following information relating to director compensation, expenses and
meeting attendance for the immediately preceding calendar year:
(i) The total compensation paid to each director;
(ii) The total expenses paid to each director;
(iii) The total compensation paid to all directors;
(iv) The total expenses paid to all directors;
(v) The total of all expenses incurred at group functions that are
not reimbursed to individual directors, such as the cost of group meals
in connection with board and committee meetings;
(vi) The total number of meetings held by the board and its
designated committees; and
(vii) The number of board and designated committee meetings each
director attended in-person or through electronic means such as video
or teleconferencing.
Sec. 1261.22 Directors' compensation policy.
(a) General. Each Bank's board of directors annually shall adopt a
written compensation policy to provide for the payment of reasonable
compensation and expenses to the directors for the time required of
them in performing their duties as directors. Payments under the
directors' compensation policy may be based on any factors that the
board of directors determines reasonably to be appropriate, subject to
the requirements in this subpart.
(b) Minimum contents. The compensation policy shall address the
activities or functions for which director attendance or participation
is necessary and which may be compensated, and shall explain and
justify the methodology used to determine the amount of compensation to
be paid to the Bank directors. The compensation policy shall require
that any compensation paid to a director reflect the amount of time the
director has spent on official Bank business, and shall require that
compensation be reduced, as necessary to reflect lesser attendance or
performance at board or committee meetings during a given year.
(c) Prohibited payments. A Bank shall not pay a director who
regularly fails to attend board or committee meetings, and shall not
pay fees to a director that do not reflect the director's performance
of official Bank business conducted prior to the payment of such fees.
(d) Submission requirements. No later than the tenth business day
after adopting its annual policy for director compensation and
expenses, and at least 30 days prior to disbursing the first payment to
any director, each Bank shall submit to the Director a copy of the
policy, along with all studies or other supporting materials upon which
the board relied in determining the level of compensation and expenses
to pay to its directors.
Sec. 1261.23 Director disapproval.
The Director may determine, based upon his or her review of a
Bank's
[[Page 17041]]
director compensation policy, methodology and/or other related
materials, that the compensation and/or expenses to be paid to the
directors are not reasonable. In such case, the Director may order the
Bank to refrain from making any further payments under that
compensation policy. Any such order shall apply prospectively only and
will not affect either compensation or expenses that have been earned
but not yet paid or reimbursed or payments that had been made prior to
the date of the Director's determination and order.
Sec. 1261.24 Board meetings.
(a) Number of meetings. The board of directors of each Bank shall
hold as many meetings each year as necessary and appropriate to carry
out its fiduciary responsibilities with respect to the effective
oversight of Bank management and such other duties and obligations as
may be imposed by applicable laws, provided the board of directors of a
Bank must hold a minimum of six in-person meetings in any year.
(b) Site of meetings. The bank usually should hold board of
director and committee meetings within the district served by the Bank.
The Bank shall not hold board of director or committee meetings in any
location that is not within the United States, including its
possessions and territories.
Dated: March 27, 2010.
Edward J. DeMarco,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2010-7418 Filed 4-2-10; 8:45 am]
BILLING CODE P
