UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed
by
the Registrant S Filed
by
a Party other than the Registrant £
Check
the
appropriate box:
£ Preliminary
Proxy Statement
£ Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
S Definitive
Proxy Statement
£ Definitive
Additional Materials
£ Soliciting
Material Pursuant to Sec.240.14a-12
FEDERAL
AGRICULTURAL
MORTGAGE CORPORATION
(Name
of
Registrant as Specified In Its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of
Filing
Fee (Check the appropriate box):
S No
fee
required.
£ Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1)
Title
of
each class of securities to which transaction applies:
(2)
Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other
underlying value of transaction computed pursuant to Exchange Act
Rule
0-11 (set forth the amount on which the filing fee is calculated
and state
how it was determined):
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(4)
Proposed
maximum aggregate value of transaction:
(5)
Total
fee
paid:
£
Fee
paid
previously with preliminary materials.
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£
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its
filing.
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(1)
Amount
Previously Paid:
(2) Form,
Schedule or Registration Statement No.:
(3)
Filing
Party:
(4)
Date
Filed:
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION
1133
Twenty-First Street, N.W.
Suite
600
Washington,
D.C. 20036
________________
TO
HOLDERS OF FARMER MAC
VOTING
COMMON STOCK
April
27,
2007
Dear
Farmer Mac Stockholder:
The
Board
of Directors of the Federal Agricultural Mortgage Corporation (“Farmer Mac” or
the “Corporation”) is pleased to invite you to attend the 2007 Annual Meeting of
Stockholders of the Corporation to be held on Thursday, June 7, 2007, at 8:00
a.m. local time at the Embassy Suites Hotel, 1250 Twenty-Second Street, N.W.,
Washington, D.C. 20037. The Notice of Annual Meeting and Proxy Statement
accompanying this letter describe the business to be transacted at the
meeting.
We
hope
you will be able to attend the meeting and suggest you read the enclosed Notice
of Annual Meeting and Proxy Statement for information about your Corporation
and
the Annual Meeting of Stockholders. We have also enclosed Farmer Mac’s 2006
Annual Report. Although the report is not proxy soliciting material, we suggest
you read it for additional information about your Corporation. Please complete,
sign, date and return a proxy card at your earliest convenience to help us
establish a quorum and avoid the cost of further solicitation. The giving of
your proxy will not affect your right to vote your shares personally if you
do
attend the meeting. If you plan to attend the meeting, please so indicate on
the
enclosed proxy card.
Sincerely,
/s/ Fred L. Dailey
Fred
L.
Dailey
Chairman
of the
Board
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION
________________
NOTICE
OF ANNUAL MEETING
April
27,
2007
Notice
is
hereby given that the 2007 Annual Meeting of Stockholders of the Federal
Agricultural Mortgage Corporation (“Farmer Mac” or the “Corporation”) will be
held on Thursday, June 7, 2007, at 8:00 a.m. local time at the Embassy Suites
Hotel, 1250 Twenty-Second Street, N.W., Washington, D.C. 20037.
As
described in the attached Proxy Statement, the meeting will be held for the
following purposes:
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to
elect ten directors, five of whom will be elected by holders of Class
A
Voting Common Stock and five of whom will be elected by holders of
Class B
Voting Common Stock, to serve until the next annual meeting of
stockholders and until their respective successors are elected and
qualified;
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to
ratify the selection by the Audit Committee of Deloitte & Touche LLP
as the Corporation’s independent auditors for fiscal year 2007;
and
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to
consider and act upon any other business that may properly be brought
before the meeting or any adjournment or postponement of the meeting.
Please read the attached Proxy Statement for complete information
on the
matters to be considered and acted
upon.
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Eligible
holders of record of the Corporation’s Class A Voting Common Stock and Class B
Voting Common Stock at the close of business on April 18, 2007
are
entitled to notice of and to vote at the meeting and any adjournment(s) of
the
meeting.
For
at
least ten days prior to the meeting, a list of Farmer Mac stockholders will
be
available for examination by any stockholder for any purpose germane to the
meeting at the offices of the Corporation between the hours of 9:00 a.m. and
5:00 p.m. local time.
Whether
you intend to be present at the meeting or not, please complete the enclosed
proxy card, date and sign it exactly as your name appears on the card and return
it in the postpaid envelope. This will ensure the voting of your shares if
you
do not attend the meeting. Giving your proxy will not affect your right to
vote
your shares personally if you do attend the meeting. THIS PROXY IS SOLICITED
BY
THE BOARD OF DIRECTORS OF THE CORPORATION.
By
order of the Board
of Directors,
/s/
Jerome G.
Oslick
Jerome
G.
Oslick
Corporate
Secretary
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Table
of Contents
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Page
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| Voting Rights .............................................................................................................................................................................................................................................................................. | ||
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7
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Class
A Nominees
…………………………......................…...................................................................................................................................................…………………..…..
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7
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Class
B Nominees
……………………………………....................................................................................................................................................................................………..
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9
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Directors
appointed by the President of the United States
…….....................................................................................................................................................................…
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10
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—
Compensation Discussion and Analysis
………….................................................................................................................................................................…………………………..
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18
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General
Compensation Philosophy and Pay Elements
…..................................................................................................................................................................……...……
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18
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Benchmarking
and Peer Groups
…………………………….........................................................................................................................................................................……..
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19
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Governance
………………………………………….................................................................................................................................................................................……………
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20
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Market
Posture and How Amounts Were Determined
………...................................................................................................................................................................……….
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21
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Compensation
Elements
……………………………...................................................................................................................................................….......................…………..
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22
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Payments
in Connection with Any Change-in-Control
….....................................................................................................................................................................…………..
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24
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Post-Employment
Compensation
………………………….......................................................................................................................................................................………….
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24
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Impact
of Accounting and Tax Treatments on Compensation Awards
................................................................................................................................................................
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24
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Farmer
Mac’s Policies Regarding Stock Ownership and Trading
……..................................................................................................................................................................
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25
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—
Compensation Committee Report
…………………………..………………......................................................................................................................................................................
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25
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—
Compensation Committee Interlocks and Insider Participation
………………..............................................................................................................................................................
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25
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—
Compensation of Directors
…………………………………………………......................................................................................................................................................................
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25
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—
Compensation of Executive Officers
…………………...……………………....................................................................................................................................................................
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28
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Summary
Compensation Table
………………………………………........................................................................................................................................................................
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28
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Option
Grants During 2006
…………………………………………...........................................................................................................................................................................
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28
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Outstanding
Option Awards at Year End
……………………………......................................................................................................................................................................
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30
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Option
Exercises
……………………………………………………............................................................................................................................................................................
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31
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Equity
Compensation Plans
…………….……………………...…….........................................................................................................................................................................
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31
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Employment
Agreements with Officers
………………………………......................................................................................................................................................................
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33
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—
Certain Relationships and Related Person Transactions
………………………............................................................................................................................................................
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34
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Review
of Related Person Transactions
………………………………....................................................................................................................................................................
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34
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Transactions
with Related Persons in 2006
………………………….......................................................................................................................................................................
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34
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Audit
Fees
………………………………………………………...............................................................................................................................................................................
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35
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Audit-Related
Fees
…………………………………………………............................................................................................................................................................................
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35
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Tax
Fees
…………………………………………………………...............................................................................................................................................................................
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36
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All
Other Fees
…………………………………………………….............................................................................................................................................................................
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36
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Audit
Committee Pre-Approval Policies
………………………….........................................................................................................................................................................
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36
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i
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION
1133
Twenty-First Street, N.W.
Suite
600
Washington,
D.C. 20036
PROXY
STATEMENT
For
the Annual Meeting of Stockholders
to
be held on June 7, 2007
This
Proxy Statement is furnished in connection with the solicitation by the Board
of
Directors of the Federal Agricultural Mortgage Corporation (“Farmer Mac” or the
“Corporation”) of proxies from the holders of the Corporation’s Class A Voting
Common Stock and Class B Voting Common Stock (together, the “Voting Common
Stock”). The Corporation is not soliciting proxies from the holders of its Class
C Non-Voting Common Stock. The proxies will be voted at the 2007 Annual Meeting
of Stockholders of the Corporation (the “Meeting”), to be held on Thursday, June
7, 2007, at 8:00 a.m. local time, at the Embassy Suites Hotel, 1250
Twenty-Second Street, N.W., Washington, D.C. 20037, and at any adjournments
or
postponements of the Meeting. The Notice of Annual Meeting, this Proxy Statement
and the enclosed proxy card are being mailed to stockholders on or about
April 27, 2007.
The
Board
of Directors of the Corporation (the “Board of Directors” or “Board”) will
present for a vote at the Meeting the election of ten members to the Board
and
the ratification of the appointment of Deloitte & Touche LLP as independent
auditors for the Corporation for fiscal year 2007. The Board is not aware of
any
other matter to be presented for a vote at the Meeting.
One
of
the purposes of the Meeting is to elect ten members to the Board of Directors.
Title VIII of the Farm Credit Act of 1971, as amended, (the “Act”) provides that
the Corporation’s Class A Voting Common Stock may be held only by banks,
insurance companies and other financial institutions or entities that are not
Farm Credit System institutions. The Act also provides that the Corporation’s
Class B Voting Common Stock may be held only by Farm Credit System
institutions.1
Holders
of the Class A Voting Common Stock (the “Class A Holders”) and holders of the
Class B Voting Common Stock (the “Class B Holders”) must each elect five members
to the Board of Directors. The remaining five members of the Board are appointed
by the President of the United States, with the advice and consent of the United
States Senate. None of Farmer Mac’s directors is or has been an officer or
employee of the Corporation, resulting in a Board of Directors composed entirely
of non-management directors. Currently, fourteen of Farmer Mac’s fifteen
directors are “independent,” as defined in Farmer Mac’s Corporate Governance
Guidelines, Securities and Exchange Commission (“SEC”) rules and
New
1 Holders of Voting Common Stock who are not eligible holders of that stock should dispose of their ownership of such stock to eligible holders. Farmer Mac has the right, but not the obligation, to repurchase shares of Voting Common Stock from ineligible holders for book value.
York
Stock Exchange (“NYSE”) listing standards. After
the Meeting, assuming all of the nominees for director are elected, fourteen
of
Farmer Mac’s fifteen directors will be independent. See “Director Independence”
for more information regarding the Board’s independence
determinations.
The
Board
of Directors has fixed April 18, 2007 as the record date for the
determination of stockholders entitled to receive notice of and to vote at
the
Meeting. At the close of business on that date, there were issued and
outstanding 1,030,780 shares
of
Class A Voting Common Stock and 500,301 shares of Class B Voting Common Stock,
which constitute the only outstanding capital stock of the Corporation entitled
to vote at the Meeting. See “Principal Holders of Voting Common
Stock.”
The
holders
of Farmer Mac’s Voting Common Stock are entitled to one vote per share, with
cumulative voting at all elections of directors. Under cumulative voting, each
stockholder is entitled to cast the number of votes equal to the number of
shares of the class of Voting Common Stock owned by that stockholder, multiplied
by the number of directors to be elected by that class. All of a stockholder’s
votes may be cast for a single candidate for director or may be distributed
among any number of candidates. Class A Holders are entitled to vote only for
the five directors to be elected by Class A Holders, and Class B Holders are
entitled to vote only for the five directors to be elected by Class B Holders.
Other than the election of directors, the Class A Holders and Class B Holders
vote together as a single class on any matter submitted to a vote of the holders
of Voting Common Stock.
The
presence, in person or by proxy, of the holders of at least a majority of the
Corporation’s outstanding Voting Common Stock is required to constitute a quorum
at the Meeting. Thus, 765,541 shares
of Voting Common Stock must be represented by stockholders present at the
Meeting or by proxy to have a quorum.
Although
many of Farmer Mac’s stockholders are unable to attend the Meeting in person,
they are afforded the right to vote by means of the proxy solicited by the
Board
of Directors. When a proxy is returned properly completed and signed, the shares
it represents must be voted by the Proxy Committee (described below) as directed
by the stockholder. Stockholders are urged to specify their choices by marking
the appropriate boxes on the enclosed proxy card. A stockholder may withhold
a
vote from one or more nominees by writing the names of those nominees in the
space provided on the proxy card. Under those circumstances, unless other
instructions are given in writing, the stockholder’s votes will then be cast
evenly among the remaining nominees for its class. The five nominees from each
class who receive the greatest number of votes will be elected directors. If
one
or more of the nominees becomes unavailable for election, the Proxy Committee
will cast votes under the authority granted by the enclosed proxy for such
substitute or other nominee(s) as the Board of Directors may designate. If
no
instructions are indicated on the proxies, the proxies represented by the Class
A Voting Common Stock will be voted in favor of the five nominees specified
in
this Proxy Statement as Class A nominees, with the votes being cast evenly
among
each of the Class A nominees, and the proxies represented by the Class
B
2
Voting
Common Stock will be voted in favor of the five nominees specified in this
Proxy
Statement as Class B nominees, with the votes being cast evenly among each
of
the Class B nominees.
Shares
of
Voting Common Stock represented by proxies marked “Abstain” for any proposal
presented at the Meeting (other than the election of directors) will be counted
for purposes of determining the presence of a quorum but will not be voted
for
or against such proposal. If a proposal involves a vote for which a broker
(or
its nominee) may only vote a customer’s shares in accordance with the customer’s
instructions and the broker (or its nominee) does not vote those shares due
to a
lack of instructions, the votes represented by those shares and delivered to
the
Corporation (“broker non-votes”) will be counted as shares present at the
Meeting for purposes of determining whether a quorum is present but will not
be
voted for or against such proposal. Abstentions and broker non-votes (if
applicable) will have the effect of a vote against such proposals (except with
respect to the election of directors). Because only a plurality is required
for
the election of directors, abstentions and broker non-votes (if applicable)
will
have no effect on the election of directors.
Execution
of a proxy will not prevent a stockholder from attending the Meeting, revoking
a
previously submitted proxy and voting in person.
Any
stockholder who gives a proxy may revoke it at any time before it is voted
by
notifying the Corporate Secretary in writing on a date later than the date
of
the proxy, by submitting a later dated proxy, or by voting in person at the
Meeting. Mere attendance at the Meeting, however, will not constitute revocation
of a proxy. Written notices revoking a proxy should be sent to Jerome G. Oslick,
Corporate Secretary, Federal Agricultural Mortgage Corporation, 1133
Twenty-First Street, N.W., Suite 600, Washington, D.C. 20036.
The
Proxy
Committee, composed of three officers of the Corporation, Henry D. Edelman,
Timothy L. Buzby and Jerome G. Oslick, will vote all shares of Voting
Common Stock represented by proxies signed and returned by stockholders in
the
manner specified. The Proxy Committee will also vote the shares represented
thereby on any matters not known at the time this Proxy Statement was printed
that may properly be presented for action at the Meeting in accordance with
their judgment.
Each
year, at the annual meeting, the Board of Directors submits to the stockholders
its nominees for election as Class A and Class B directors. In addition, the
Audit Committee’s selection of independent auditors for the year is submitted
for stockholder ratification at each annual meeting, pursuant to the
Corporation’s Amended and Restated By-Laws (“By-Laws”). The Board of Directors
may, in its discretion and upon proper notice, also present other matters to
the
stockholders for action at the annual meeting. In addition to those matters
presented by the Board of Directors, the stockholders may be asked to act at
the
annual meeting upon proposals timely submitted by eligible holders of Voting
Common Stock.
Proposals
of stockholders to be presented at the 2007 Annual Meeting of Stockholders
were
required to be received by the Corporate Secretary before December 19, 2006
for inclusion in this Proxy Statement and the accompanying proxy. Other than
the
election of ten members to the Board of
3
Directors
and the ratification of the appointment of Deloitte & Touche LLP as
independent auditors for the Corporation for fiscal year 2007, the Board of
Directors knows of no other matters to be presented for action at the Meeting.
If any other matters are properly brought before the Meeting or any adjournment
or postponement of the Meeting, the Proxy Committee intends to vote proxies
in
accordance with its members’ best judgment.
If
any
stockholder eligible to do so intends to present a proposal for consideration
at
the Corporation’s 2008 Annual Meeting of Stockholders, the Corporate Secretary
must receive the proposal before December 27, 2007 to be considered for
inclusion in the 2008 Proxy Statement. Proposals should be sent to Jerome G.
Oslick, Corporate Secretary, Federal Agricultural Mortgage Corporation, 1133
Twenty-First Street, N.W., Suite 600, Washington, D.C. 20036. In addition,
if any stockholder notifies the Corporation after March 3, 2008 of an intent
to
present a proposal at the Corporation’s 2008 Annual Meeting of Stockholders, the
Corporation’s proxy holders will have the right to exercise discretionary voting
authority with respect to that proposal, if presented at the meeting, without
the Corporation including information regarding the proposal in its proxy
materials.
Stockholders
and other interested parties may communicate directly with members of the Board
of Directors by writing to them at Federal
Agricultural Mortgage Corporation, 1133 Twenty-First Street, N.W.,
Suite 600, Washington, D.C. 20036.
In
2006,
the Board of Directors held a total of seven meetings.
Each member of the Board attended 75 percent or more of the aggregate
number of meetings of the Board of Directors and of the committees on which
he
or she served during 2006. As Chairman of the Board, Fred L. Dailey presides
over all meetings of the Board of Directors, including regularly scheduled
executive sessions of the Board in which members of management do not
participate. All members of the Board of Directors are expected to attend the
Annual Meeting of Stockholders, which is held in conjunction with a regularly
scheduled meeting of the Board of Directors. All fifteen members of the Board
of
Directors attended the 2006 Annual Meeting of Stockholders.
The
Board
has established seven standing committees to assist it in the performance of
its
responsibilities. The committees currently consist of the following: Audit
Committee, Compensation Committee, Corporate Governance Committee, Credit
Committee, Finance Committee, Marketing Committee and Public Policy Committee.
Each director serves on at least one committee. See “Class A Nominees,” “Class B
Nominees” and “Directors Appointed by the President of the United States” for
information regarding the committees on which directors serve. The Audit
Committee and the Compensation Committee met eleven times and nine times,
respectively, during the fiscal year ended December 31, 2006. The Corporate
Governance Committee, which selects nominees for election to the Board of
Directors, approves corporate governance policies for the Corporation, sets
agendas for the meetings of the Board of Directors and is able to exercise
certain powers of the Board of Directors during the intervals between meetings
of the Board, met ten times during the fiscal year ended December 31, 2006.
The Credit Committee, which is responsible for reviewing and approving all
policy
4
matters
relating to changes to the Corporation’s Seller/Servicer Guide and making
recommendations to the Board of Directors on agricultural credit matters, met
seven times during the fiscal year ended December 31, 2006. The Finance
Committee, which is responsible for determining the financial policies of the
Corporation and managing the Corporation’s financial affairs, met eight times
during the fiscal year ended December 31, 2006. The Marketing Committee,
which is responsible for the development and monitoring of the Corporation’s
programs and marketing plan, met six times during the fiscal year ended
December 31, 2006. The Public Policy Committee, which considers matters of
public policy referred to it by the Board of Directors such as the Corporation’s
relationship with and policies regarding borrowers, Congress and governmental
agencies and conflicts of interest, met six times during the fiscal year ended
December 31, 2006. See “Item No. 1: Election of Directors,”
“Compensation of Directors and Executive Officers” and “Report of the Audit
Committee” and “Item No. 2: Selection of Independent Auditors” for information
concerning the Corporate Governance Committee, the Compensation Committee and
the Audit Committee, respectively.
Farmer
Mac has adopted a code of business conduct and ethics (the “Code”) that applies
to all directors, officers, employees and agents of Farmer Mac, including the
Corporation’s principal executive officer, principal financial officer and
principal accounting officer. A copy of the Code is available on Farmer Mac’s
website, www.farmermac.com, in the “Corporate Governance” portion of the
“Investors” section. Farmer Mac will post any amendment to, or waiver from, a
provision of the Code in that same location on its website. A print copy of
the
Code is available free of charge upon written request to Jerome G. Oslick,
Corporate Secretary, Federal Agricultural Mortgage Corporation, 1133
Twenty-First Street, N.W., Suite 600, Washington, D.C. 20036.
At
the
Meeting, ten directors will be elected for one-year terms. The Act provides
that
five of the directors will be elected by a plurality of the votes of the Class
A
Holders, and five of the directors will be elected by a plurality of the votes
of the Class B Holders. All of the Class A nominees and four of the Class B
nominees currently are members of the Board of Directors. John G.
Nelson,
a
current member of the Board elected by Class B holders, is not a nominee for
election as a director at the Meeting. The directors elected by the Class A
Holders and the Class B Holders will hold office until the Corporation’s 2008
Annual Meeting of Stockholders, or until their respective successors have been
duly elected and qualified.
The
Act
further provides that the President of the United States will appoint five
members to the Board of Directors with the advice and consent of the United
States Senate (the “Appointed Members”). The Appointed Members serve at the
pleasure of the President of the United States. The Board of Directors, after
the election at the Meeting, will consist of the Appointed Members named under
“Directors Appointed by the President of the United States” below or such other
Appointed Members as may be appointed by the President and confirmed by the
Senate between April 18, 2007 and June 7, 2007 and the ten members who are
elected by the holders of Farmer Mac’s Voting Common Stock.
5
In
order
to facilitate the selection of director nominees, the Board of Directors
utilizes a Corporate Governance Committee that consists of the Chairman of
the
Board, the Vice Chairman of the Board and two additional members each from
the
Class A directors and Class B directors, resulting in a committee composed
of
two directors from each of the Board’s three constituent groups. The current
members of the Corporate Governance Committee are: Appointed Members
Messrs. Dailey and Junkins; Class A directors Messrs. Kenny and Kruse; and
Class B directors Messrs. DeBriyn and Raines. As described in more
detail in “Director Independence,” the Board has determined that all members of
the Corporate Governance Committee are “independent,” as defined in Farmer Mac’s
Corporate Governance Guidelines, SEC rules and NYSE listing standards. The
Corporate Governance Committee Charter and Farmer Mac’s Corporate Governance
Guidelines are available on Farmer Mac’s website, www.farmermac.com, in the
“Corporate Governance” portion of the “Investors” section. Print copies of the
Corporate Governance Committee Charter and Farmer Mac’s Corporate Governance
Guidelines are available free of charge upon written request to Jerome G.
Oslick, Corporate Secretary, Federal Agricultural Mortgage Corporation, 1133
Twenty-First Street, N.W., Suite 600, Washington, D.C. 20036.
The
Board
has adopted a policy statement on directors that expresses the general
principles that should govern director selection and conduct, which the
Corporate Governance Committee uses in identifying and evaluating potential
candidates for director. The Corporate Governance Committee reviews, on an
annual basis, the appropriate skills and characteristics required of Board
members in the context of the perceived needs of the Board at that point in
time. The Committee strives to identify and retain as members of the Board
individuals who have the qualities, business background and experience that
will
enable them to contribute significantly to the development of Farmer Mac’s
business and its future success. The Board has determined that its elected
members should be comprised of individuals with a variety of business
backgrounds and experiences who are deemed to have a broad perspective and
good
record of accomplishment either as senior members of agricultural business
management, as agricultural or commercial lenders, as accountants or auditors,
or as entrepreneurs. The Board has also determined that it is desirable to
have
qualified women and minority representation on the Board. In selecting a nominee
for director, the Corporate Governance Committee also considers an individual’s
character, judgment, fairness and overall ability to serve Farmer Mac. Thus,
in
addition to considering the current needs of the Board and the quality of an
individual’s professional background and experience, the Corporate Governance
Committee seeks individuals who:
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have
integrity,
independence, and an inquiring mind; an ability to work with others;
good
judgment; intellectual competence; and
motivation;
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have
the willingness and ability to represent all stockholders’ interests, and
not just the particular constituency that elected the director to
serve on
the Board;
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have
an awareness of and a sensitivity to the public purpose of Farmer
Mac and
a sense of responsibility to Farmer Mac’s intended
beneficiaries;
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are
willing to commit the necessary time and energy to prepare for and
attend
Board and committee meetings; and
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are
willing and have the ability to advance their views and opinions
in a
forthright manner, but, upon the conclusion of deliberations, to
act in
the best interests of Farmer Mac, and, once a decision is reached
by a
majority, to support the decision.
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6
The
Committee recommended five individuals to be considered for election as
Class A nominees and five individuals to be considered for election as
Class B nominees and the Board of Directors has approved these
recommendations. The individuals recommended by the Corporate Governance
Committee are referred to collectively as the “Nominees.” The Nominees will
stand for election to serve for terms of one year each, or until their
respective successors are duly elected and qualified. One of the ten Nominees,
Michael A. Gerber, is not a current member of the Board standing for
re-election. Mr. Gerber was recommended to the Corporate Governance
Committee by CoBank,
ACB,
the
holder of approximately 12.6 percent of the Class B Voting Common Stock. No
fees were paid to any director search firms or other third parties to assist
in
identifying and evaluating the Nominees.
In
identifying potential candidates for the Board, the Corporate Governance
Committee considers suggestions from Board members, management, stockholders
and
others. From time to time, the Committee may retain a search firm to assist
in
identifying potential candidates and gathering information about the background
and experience of such candidates. The Committee will consider all proposed
nominees, including stockholder nominees, in light of the qualifications
discussed above and the assessed needs of the Board at the time. For the 2008
Annual Meeting of Stockholders, the Corporate Governance Committee will consider
nominees recommended by holders of Farmer Mac’s Voting Common Stock, who may
submit recommendations by letter to Jerome G. Oslick, Corporate Secretary,
Federal
Agricultural Mortgage Corporation, 1133 Twenty-First Street, N.W., Suite 600,
Washington, D.C. 20036, by January 31, 2008.
If
any of
the ten Nominees named below is unable or unwilling to stand as a candidate
for
the office of director on the date of the Meeting or at any adjournment(s)
or
postponement(s) thereof, the proxies received on behalf of such Nominee will
be
voted for such substitute or other Nominee(s) as the Board of Directors may
designate. The Board of Directors has no reason to believe that any of the
Nominees will be unable or unwilling to serve if elected.
Each
of
the Nominees has been principally employed in his or her current position for
the past five years unless otherwise noted.
Class
A Nominees
Dennis
L. Brack,
54, has
been a member of the Board of Directors of the Corporation since June 7,
2001 and serves as chairman of the Compensation Committee and as a member of
the
Credit Committee. Mr. Brack has served as President and Chief Executive Officer
of Bath State Bank, Bath, Indiana, since 1988 and has been a member of the
Franklin County, Indiana Community Foundation Investment Committee since 1999
and was a member of the Union County, Indiana Community board of directors
in
2003 and 2004. He has recently worked on the steering committees for
Comprehensive Plan Development in both Franklin and Union Counties, Indiana.
He
was also a director of the Indiana Bankers Association from 1994 to 1996 and
previously served a three-year term on the Purdue University Dean’s Advisory
Council.
7
Dennis
A. Everson, 56, has
been
a member of the Board of Directors of the Corporation since June 3, 2004
and is a member of the Finance Committee and the Marketing Committee. Mr.
Everson has been President and Manager of the First Dakota National Bank
Agri-business Division since 2002. From 1984 until 2002, he was Vice President
and Manager of the First Dakota National Bank Agri-business Division. From
2000
until 2002, Mr. Everson was a member of the Federal Home Loan Bank Committee
of
the American Bankers Association. During 1998, he served as Chairman of the
Agricultural & Rural Bankers Committee of the American Bankers
Association.
Mitchell
A. Johnson, 65,
has
been a member of the Board of Directors of the Corporation since June 12, 1997
and is a member of the Compensation Committee and the Finance Committee. Mr.
Johnson is President of MAJ Capital Management, Inc., an investment management
firm that he founded in 1994 following his retirement from the Student Loan
Marketing Association (“Sallie Mae”), the nation’s largest provider of college
education financing. He is a Trustee of the Advisors’ Inner Circle Funds, the
Advisors’ Inner Circle Funds II, The Bishop Street Funds, Diversified Investors
Portfolios, The Diversified Investors Funds Group, The Diversified Investors
Funds Group II, and The Diversified Strategic Variable Funds. During his 21
years with Sallie Mae, Mr. Johnson held numerous positions within that
organization including, for the seven years preceding his retirement, Senior
Vice President, Corporate Finance. He has been a trustee of Citizens Funds,
a
mutual fund company based in Portsmouth, New Hampshire and a director of the
Rushmore Funds, a mutual fund company owned by FBR Investment Services, Inc.
Mr.
Johnson also served as a director of Eldorado Bankshares, Inc., Laguna Hills,
California, the holding company for Eldorado and Antelope Valley Banks, and
was
the first President and one of the founding members of the Washington
Association of Money Managers and a trustee of the District of Columbia
Retirement Board, among other community activities.
Timothy
F. Kenny, 45,
has
been a member of the Board of Directors of the Corporation since June 3,
2004 and serves as a member of the Audit Committee and the Corporate Governance
Committee. He is a Certified Public Accountant and Managing Director with
BearingPoint, Inc. (formerly KPMG Consulting, Inc.) in McLean, Virginia. He
joined KPMG LLP, the predecessor organization to KPMG Consulting, in 1986 and
was a KPMG Audit Partner until the separation of KPMG Consulting from KPMG
LLP
in February 2001. While with KPMG LLP, Mr. Kenny served as a technical resource
for the firm’s audit partners and managers nationwide on mortgage banking
issues, including financial accounting and reporting; auditing; and operational,
strategic, and regulatory matters. Currently, Mr. Kenny directs a team of
financial professionals on consulting projects with various federal credit
agencies and is a member of the BearingPoint, Inc. 401(k) Plan Committee, where
he serves in an independent fiduciary role. Mr. Kenny previously served on
the
Board of Directors of the Mortgage Bankers Association of Metropolitan
Washington.
Charles
E. Kruse, 62,
has
been a member of the Board of Directors of the Corporation since June 7,
2001 and serves as chairman of the Marketing Committee and is a member of the
Corporate Governance Committee. Mr. Kruse has been a member of the Board of
Directors of Central Bancompany since 2000. He has served as President of the
Missouri Farm Bureau since 1992 and has been a member of the American Farm
Bureau Board of Directors, representing 12 midwestern State Farm Bureaus, since
1995. Mr. Kruse has also served on the Commission on 21st Century
Production
8
Agriculture;
the Agricultural Technical Advisory Committee for Trade in Grains, Feed, and
Oilseeds; the President’s Council on Rural America; and the U.S. Trade
Representative’s Intergovernmental Advisory Committee.
Class
B Nominees
Ralph
W. “Buddy” Cortese,
60, has
been a member of the Board of Directors of the Corporation since June 5,
2003 and serves as chairman of the Credit Committee and is a member of the
Compensation Committee. He is a farmer, rancher and cattle feeder from Fort
Sumner, New Mexico. Mr. Cortese has been a member of the board of directors
of
the Farm Credit Bank of Texas since 1995. As a member of that board of
directors, he served as vice chairman from 1998 to 2000 and has served as
chairman since 2000. Previously, Mr. Cortese was the chairman of the board
of
directors of the Production Credit Association of Eastern New Mexico (now Ag
New
Mexico, ACA) from 1992 to 1994, a member of the PCA Stockholders’ Advisory
Committee from 1990 to 1994 and a member of the executive committee of the
Tenth
District Federation of PCAs from 1991 to 1994. He has also been a member of
the
American Land Foundation Board since 2001.
Paul
A. DeBriyn, 52,
has
been a member of the Board of Directors of the Corporation since June 1,
2000. He serves as chairman of the Audit Committee and is a member of the
Corporate Governance Committee and the Compensation Committee. Mr. DeBriyn
has
served as President and Chief Executive Officer of AgStar Financial Services,
ACA (and its predecessor, Farm Credit Services of Southern Minnesota) since
1995. He was previously Executive Vice President and Chief Operating Officer
of
Farm Credit Services of Southern Minnesota from 1993 to 1995 and President
and
Chief Executive Officer of Farm Credit Services of Southeast Minnesota from
1987
to 1993.
Michael
A. Gerber, 48,
has
served as President and Chief Executive Officer of Farm Credit of Western New
York, ACA, located in Batavia New York, since 1998. Mr. Gerber also currently
serves as a director and as chairman of the audit committee of Financial
Partners, Inc., a service company owned by Farm Credit System associations.
Mr.
Gerber also is a member of the Farm Credit System’s President’s Planning
Committee and as a director of the Genesee County Economic Development Council.
Mr. Gerber was Executive Vice President of Farm Credit of Western New York
from
1994 to 1998 and served as Credit Supervisor and Director of Financial Services
for the former Farm Credit System Southern New England Association from 1992
to
1994.
Ernest
M. Hodges, 59, has
been
a member of the Board of Directors of the Corporation since June 16, 2005
and is
a
member of the Credit Committee. He has served as President and Chief Executive
Officer of Sacramento Valley Farm Credit, ACA, in Woodland California since
1993. Mr. Hodges was Chief Credit Officer of Sacramento Valley Farm Credit
from 1991 to 1993 and served as an Examiner with the United States Office of
the
Comptroller of the Currency in 1991. Mr. Hodges served in executive
management positions with the Western Farm Credit Bank from 1982 to 1990, most
recently as Senior Vice President.
John
Dan Raines,
63, has
been a member of the Board of Directors of the Corporation since June 18,
1992 and is a member of the Audit Committee and the Corporate Governance
Committee. He is the owner and operator of Raines Commercial Group, Inc., a
general business corporation. From 1986 to
9
1990,
Mr.
Raines was a member of the board of directors of the South Atlantic Production
Credit Association, and served as its chairman in 1989 and 1990. Since 1990,
Mr.
Raines has served as a member of the board of directors of AgFirst Farm Credit
Bank (formerly, the Farm Credit Bank of Columbia, South Carolina). He also
has
served since 1981 as a member of the board of directors of AgGeorgia Farm
Credit, ACA, and its predecessor Farm Credit System institution.
Directors
Appointed by the President of the United States
Julia
Bartling,
48, has
been a member of the Board of Directors of the Corporation since June 5,
2003. She serves as chairman of the Public Policy Committee and is a member
of
the Audit Committee. Her appointment to the Board was confirmed by the United
States Senate on June 3, 2003. Ms. Bartling has been an elected member of
the South Dakota House since January 1, 2001. She also served as Auditor of
Gregory County, South Dakota from 1983 through 2000. Ms. Bartling and her spouse
have owned and operated Bartling Feed, Grain & Trucking since
1977.
Fred
L. Dailey,
61, has
been a member of the Board of Directors of the Corporation and has served as
its
Chairman since August 16, 2002. He also serves as chairman of the Corporate
Governance Committee and is a member of the Compensation Committee and the
Public Policy Committee. His appointment to the Board was confirmed by the
United States Senate on July 29, 2002. Mr. Dailey served as the Director of
the
Ohio Department of Agriculture from 1991 until 2007, the longest serving Ag
Director in the history of Ohio. Prior to that time, he was the executive vice
president of the Ohio Beef Council and executive secretary of the Ohio
Cattlemen’s Association from 1982 to 1991 and served as the Director of the
Indiana Division of Agriculture from 1975 to 1981. Mr. Dailey is past
President of the National Association of State Departments of Agriculture and
is
a recipient of the Honorary American Farmer degree from the FFA. In 1998, he
received the national “Outstanding State Agriculture Executive” award presented
by the Biotechnology Industry Organization and was named “Man of the Year” by
Progressive Farmer magazine in 1999. Mr. Dailey resides on a working farm
in Ohio where he raises Angus cattle.
Grace
T. Daniel,
61, has
been a member of the Board of Directors of the Corporation since August 17,
2002
and is a member of the Public Policy Committee and the Marketing Committee.
Her
appointment to the Board was confirmed by the United States Senate on July
29,
2002. Ms. Daniel is the Principal of Golden State Marketing Services, a
consulting firm that she founded in 1987 and that provides marketing services
for corporations and government agencies. Ms. Daniel served on the California
Agricultural Labor Relations Board from 1997 to 1999. She also served as the
California Governor’s Chief Deputy Appointments Secretary from 1994 to 1997 and
as Executive Director at the California Trade and Commerce Agency Office of
Small Business from 1991 to 1994, where she was responsible for the State’s loan
guarantee program. From 2004 to 2007, Ms. Daniel served as Deputy Director
of
California Parks and Recreation under Governor Schwarzenegger.
Lowell
L. Junkins, 63,
has
been a member of the Board of Directors of the Corporation since June 13,
1996 and Vice Chairman of the Board since December 5, 2002. He serves as a
member of the Corporate Governance Committee, the Finance Committee and the
Public Policy Committee. He was appointed to the Board of Directors by President
Clinton in April 1996 while the Senate was in recess and was confirmed by the
Senate on May 23, 1997 and was reconfirmed by the Senate on
10
June 3,
2003. Mr. Junkins works as a public affairs consultant for Lowell Junkins &
Associates in Des Moines, Iowa. He owns and operates Hillcrest Farms in
Montrose, Iowa, where he served as Mayor from 1971 to 1972. From 1974 through
1986, Mr. Junkins served as an Iowa State Senator, including as majority leader
from 1981 to 1986.
Glen
O. Klippenstein,
69, has
been a member of the Board of Directors of the Corporation since June 5, 2003
is
a member of the Public Policy Committee and the Credit Committee. His
appointment to the Board was confirmed by the United States Senate on June
3,
2003. Mr. Klippenstein has served as the Chief Executive Officer of the
American Chianina Association since November 8, 2000. Prior to 2000, he operated
his family farm, engaged in cattle production. Mr. Klippenstein also served
as a Missouri State Senator from 1993 to 1994.
In
addition to the affiliations set forth above, the Nominees and Appointed Members
are active in many local and national trade, commodity, charitable, educational
and religious organizations.
11
As
of
April 15, 2007, the members of the Board of Directors, Nominees for
election as directors and executive officers of the Corporation listed in the
table below might be deemed to be “beneficial owners” of the indicated number of
equity securities of the Corporation, as defined by the rules of the SEC. The
Corporation’s Voting Common Stock may be held only by banks, insurance companies
and financial institutions and Farm Credit System institutions, and may not
be
held by individuals. Accordingly, no executive officer owns, directly or
indirectly, any shares of any class of the Corporation’s Voting Common Stock.
Furthermore, Appointed Members may not be officers or directors of financial
institutions or Farm Credit System institutions and may not, directly or
indirectly, own Voting Common Stock of the Corporation. There are no ownership
restrictions on the Class C Non-Voting Common Stock. For information about
the beneficial owners of 5 percent or more of the Voting Common Stock of
the Corporation, see “Principal Holders of Voting Common Stock.”
|
|
Voting
Common Stock
|
|
Non-Voting
Common Stock2
|
||
|
|
Class
A or
|
Percent
|
|
|
Percent
|
|
|
Class
B
|
of
Class
|
|
Class
C
|
of
Class
|
|
Timothy
L. Buzby
|
------
|
------
|
|
88,895
|
1.02%
|
|
Nancy
E. Corsiglia
|
------
|
------
|
|
312,855
|
3.60%
|
|
Henry
D. Edelman
|
------
|
------
|
|
712,678
|
8.19%
|
|
Jerome
G. Oslick
|
------
|
------
|
|
74,256
|
*
|
|
Paul
N. Peiffer
|
------
|
------
|
|
2,000
|
*
|
|
Tom
D. Stenson
|
------
|
------
|
|
185,969
|
2.14%
|
|
Mary
K. Waters
|
------
|
------
|
|
6,360
|
*
|
|
Julia
Bartling
|
------
|
------
|
|
6,000
|
*
|
|
Dennis
L. Brack
|
------
|
------
|
|
24,689
|
*
|
|
Ralph
W. Cortese
|
------
|
------
|
|
12,713
|
*
|
|
Fred
L. Dailey
|
------
|
------
|
|
18,000
|
*
|
|
Grace
T. Daniel
|
------
|
------
|
|
18,233
|
*
|
|
Paul
A. DeBriyn
|
------
|
------
|
|
25,508
|
*
|
|
Dennis
A. Everson
|
------
|
------
|
|
10,065
|
*
|
|
Michael
A. Gerber
|
------
|
------
|
|
------
|
*
|
|
Ernest
M. Hodges
|
------
|
------
|
|
------
|
*
|
|
Mitchell
A. Johnson
|
------
|
------
|
|
23,000
|
*
|
|
Lowell
L. Junkins
|
------
|
------
|
|
23,000
|
*
|
|
Timothy
F. Kenny
|
------
|
------
|
|
13,477
|
*
|
|
Glen
O. Klippenstein
|
------
|
------
|
|
12,822
|
*
|
|
Charles
E. Kruse
|
------
|
------
|
|
25,768
|
*
|
|
John
G. Nelson III**
|
------
|
------
|
|
23,499
|
*
|
|
John
Dan Raines
|
------
|
------
|
|
11,187
|
*
|
|
All
directors and executive officers
as a group (23 persons)
|
------
|
------
|
|
1,630,974
|
18.74%
|
*
Less
than
1%.
** Not
a
candidate for re-election.
2
Includes
shares of Class C Non-Voting Common Stock that may be acquired within
60 days
through the exercise of stock options as follows: Mr. Edelman, 712,678
shares;
Mr. Buzby, 88,895 shares; Ms. Corsiglia, 305,582 shares; Mr. Oslick,
70,006 shares; Mr. Peiffer, 2,000 shares; Mr. Stenson, 173,393 shares; Ms.
Waters 6,360 shares; Ms. Bartling, 6,000 shares; Mr. Everson,
9,900 shares; Mr. Raines, 11,000 shares; each of Messrs. Cortese,
Kenny and Klippenstein, 12,000 shares; each of Mr. Dailey and Ms. Daniel,
18,000 shares; each of Messrs. Brack, DeBriyn, Johnson, Junkins, Kruse and
Nelson, 23,000 shares; and all directors and executive officers as a group,
1,595,814 shares.
12
The
Board
of Directors has adopted a formal set of categorical standards to form the
basis
for determinations of director independence required by NYSE rules. To be
considered “independent” for purposes of these standards, the Board must
affirmatively determine that a director does not have a material relationship
with Farmer Mac other than as a director of Farmer Mac. The Board broadly
considers all relevant facts and circumstances in making an independence
determination, including the following criteria, among others, in determining
whether a director lacks a material relationship and therefore is
“independent”:
|
(a)
|
the
director is not and has not been employed by the Corporation within
the
past three years;
|
|
(b)
|
the
director has not received more than $100,000 per year in direct
compensation from the Corporation, other than director and committee
fees,
within the past three years;
|
|
(c)
|
the
director is not and has not been for the past three years a significant
advisor or consultant to the Corporation, and is not affiliated with
a
Corporation or a firm that is (revenue of the greater of 2% of the
other
Corporation’s consolidated gross revenues or $1 million is considered
significant);
|
|
(d)
|
the
director is not and has not been for the past three years a significant
customer or supplier of the Corporation nor affiliated with a Corporation
or firm that is (revenue of the greater of 2% of the other Corporation’s
consolidated gross revenues or $1 million is considered
significant);
|
|
(e)
|
the
director is not and has not been for the past three years employed
by or
affiliated with an internal or external auditor of the Corporation
that
provided services to the Corporation within the past three
years;
|
|
(f)
|
the
director is not and has not been for the past three years employed
by
another Corporation where any of the Corporation’s present executives
serve on that Corporation’s compensation
committee;
|
|
(g)
|
the
director is not a spouse, parent, sibling, child, mother- or
father-in-law, son- or daughter-in-law or brother- or sister-in-law
or any
person who shares a residence with any person described by (a) through
(f);
|
|
(h)
|
the
director is not and has not been for the past three years affiliated
with
a tax-exempt entity that received significant contributions from
the
Corporation (revenue of the greater of 2% of the entity’s consolidated
gross revenues or $1 million is considered significant);
and
|
|
(i)
|
the
director does not have any other relationships with the Corporation
or the
members of management of the Corporation that the Board has determined
to
be material not described in (a) through
(h).
|
The
criteria, which are included in Farmer Mac’s Corporate Governance Guidelines
available on the Corporation’s website, www.farmermac.com, in the “Corporate
Governance” portion of the “Investors” section, meet all requirements for
director independence contained in SEC and NYSE rules.
13
In
April
2007, the Board considered all direct and indirect transactions and
relationships between each director (either directly or as a partner,
stockholder, officer or director of an entity that has a business relationship
with Farmer Mac) and the Corporation and its management to determine whether
any
such transactions or relationships were inconsistent with a determination that
the director is independent. As a result of its review, the Board affirmatively
determined that each of the following current directors meets the criteria
for
director independence set forth above and, therefore, is independent: Julia
Bartling, Dennis L. Brack, Ralph W. Cortese, Fred L. Dailey, Grace T.
Daniel, Paul A. DeBriyn, Dennis A. Everson, Mitchell A. Johnson, Lowell L.
Junkins, Timothy F. Kenny, Glen O. Klippenstein, Charles E. Kruse, John G.
Nelson and John Dan Raines. The Board has also determined that Michael A.
Gerber, the only Nominee who is not a current member of the Board, meets the
criteria for director independence.
In
applying
the criteria for director independence set forth above, Mr. Hodges was
determined to have a material relationship with Farmer Mac, and therefore not
to
be independent, by virtue of Farmer Mac’s receipt of approximately $829,785 in
commitment fees in 2004 from Sacramento Valley Farm Credit, ACA (“SVFC”), of
which Mr. Hodges is the President. That amount was approximately
2.7 percent of SVFC’s consolidated gross revenues for 2004 (approximately
$31.0 million), which exceeded the 2 percent threshold used to determine
whether an entity affiliated with a director is a significant customer of the
Corporation. During 2005, Farmer Mac received approximately $736,000 in
commitment fees from SVFC, which was approximately 1.8 percent of SVFC’s
consolidated gross revenues for 2005 (approximately $40.0 million). During
2006, Farmer Mac received approximately $684,000 in guarantee and commitment
fees from SVFC, which was approximately 1.4 percent of SVFC’s consolidated
gross revenues for 2006 (approximately 50.2 million).
In
determining that
Mr. Gerber and each of the other current directors besides Mr. Hodges is
independent, the Board considered that because financial institutions are
required to own Voting Common Stock to participate in the Farmer Mac I program,
transactions often occur in the ordinary course of business between the
Corporation and companies or other entities at which some of Farmer Mac’s
directors are or have been officers or directors. In particular, with respect
to
each of the most recent three completed fiscal years, the Board evaluated for
each of Messrs. Brack, Cortese, DeBriyn, Gerber, Everson and Raines all
transactions between Farmer Mac and the company where he serves as an executive
officer or director, including sales of qualified loans and USDA-guaranteed
portions and LTSPC and swap transactions and the annual amount of guarantee
and
commitment fees paid to Farmer Mac by that company and any servicing or other
fees received by that company from Farmer Mac. In each case, the transactions
had terms and conditions comparable to those applicable to entities unaffiliated
with Farmer Mac, and the amount paid to or received from each of these companies
in each of the last three years did not exceed the 2 percent of total
revenue threshold in the director independence criteria used to determine
whether an entity affiliated with a director is a significant customer of the
Corporation. The Board determined that none of these relationships it considered
impaired the independence of the named individuals. For additional information
about transactions between Farmer Mac and entities affiliated with directors,
see Note 3 to Farmer Mac’s Annual Report on Form 10-K for the year ended
December 31, 2006.
14
The
following report of the Audit Committee shall not be deemed to be “soliciting
material,” or to be “filed” with the SEC, and will not be deemed to be
incorporated by reference into any filing by the Corporation under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Corporation specifically requests that such information be
treated as soliciting material or specifically incorporates the report by
reference into a document.
The
Audit
Committee reviewed and recommended reaffirmation of the Audit Committee Charter,
which reaffirmation was approved by the full Board on February 1, 2007. The
complete text of the charter, which reflects standards set forth in SEC
regulations and NYSE listing standards, is available on the Corporation’s
website, www.farmermac.com, in the “Corporate Governance” portion of the
“Investors” section. A print copy of the Audit Committee Charter is available
free of charge upon written request to Jerome G. Oslick, Corporate Secretary,
Federal Agricultural Mortgage Corporation, 1133 Twenty-First Street, N.W.,
Suite
600, Washington, D.C. 20036. The Audit Committee and the Board reviews and
approves changes to the Audit Committee Charter annually. The Board of Directors
has determined that: (1) all the directors who serve on the Audit Committee
are
“independent,” as defined in Farmer Mac’s Corporate Governance Guidelines, SEC
rules and NYSE listing standards; and (2) Timothy F. Kenny, a member of the
Audit Committee, is an “audit committee financial expert,” as defined in SEC
rules.
Audit
Committee Report for the Year Ended December 31, 2006
To
Our
Stockholders:
Management
is primarily responsible for establishing and maintaining the financial public
reporting process, including the system of internal accounting controls, and
for
the preparation of Farmer Mac’s consolidated financial statements in accordance
with accounting principles generally accepted in the United States. The Audit
Committee, on behalf of the Board, monitors Farmer Mac’s financial reporting
processes and systems of internal accounting control, the independence and
performance of the independent auditors and the performance of the internal
audit function. The Corporation’s independent auditors are responsible for
auditing those consolidated financial statements and expressing an opinion
as to
their conformity with generally accepted accounting principles and on
management’s assessment of the effectiveness of the Corporation’s internal
control over financial reporting. In addition, the independent auditors will
express their own opinion on the effectiveness of Farmer Mac’s internal control
over financial reporting.
Management
has represented to the Audit Committee that Farmer Mac’s audited consolidated
financial statements were prepared in accordance with accounting principles
generally accepted in the United States. The Audit Committee reviewed and
discussed Farmer Mac’s audited consolidated financial statements with both
management and the Corporation’s independent auditors prior to their issuance.
The Audit Committee has discussed with the independent auditors their evaluation
of the accounting principles, practices and judgments applied by management,
and
the Audit Committee has discussed any items required to be communicated to
it by
the independent auditors pursuant to rules and regulations promulgated by the
Securities and Exchange Commission and the Public Company
15
Oversight
Board and the standards established by the American Institute of Certified
Public Accountants, including matters required to be discussed pursuant to
Statement on Auditing Standards No. 61 (Communication With Audit
Committees).
With
respect to the Corporation’s independent auditors, the Audit Committee, among
other things, received from Deloitte & Touche LLP the written disclosures as
required by the Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with them their independence
from the Corporation and its management. The Audit Committee has reviewed and
pre-approved the audit fees of the independent auditors. It also has approved
non-audit services and reviewed fees for such services to assure compliance
with
applicable provisions of the Securities Exchange Act of 1934, as amended, and
applicable rules and regulations to assure compliance with the auditor
independence requirements that prohibit independent auditors from performing
specified services that might impair their independence as well as compliance
with Farmer Mac’s and the Audit Committee’s policies.
The
Audit
Committee discussed with Farmer Mac’s independent auditors the overall scope of
and plans for its audit. Finally, the Audit Committee continued to monitor
the
scope and adequacy of the Corporation’s internal auditing program, including
proposals for adequate staffing and to strengthen internal procedures and
controls where appropriate.
In
reliance upon these reviews and discussions, the Audit Committee recommended
to
the Board of Directors that the Board approve the inclusion of the Corporation’s
audited consolidated financial statements in the Corporation’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2006 for filing with the
Securities and Exchange Commission, as filed on March 16, 2007.
Audit
Committee
Paul
A.
DeBriyn, Chairman Timothy
F. Kenny
Julia
Bartling
John
Dan
Raines
The
following table sets forth the names and ages of the current executive officers
of Farmer Mac, the principal positions held with the Corporation by such
executive officers, and the officers’ experience prior to joining the
Corporation.
Name
Age Capacity
in which Served and Five-Year History
Henry
D. Edelman 58
President
and Chief Executive Officer of the Corporation since June 1, 1989.
From November 1986 until he joined Farmer Mac, Mr. Edelman was
First
VicePresidentfor Federal Government Finance of PaineWebber Incorporated, New
York, New York. Previously, Mr. Edelman was Vice President for Government
Finance at Citibank N.A., New York, New York and Director of Financing,
Investments and Capital Planning at General Motors
16
Corporation
in New York, New York, where he served in various capacities
on the Legal Staff and Financial Staff for ten years.
Timothy
L. Buzby
38
Vice
President - Controller since June 5, 2003. From July 1997 until he joined Farmer
Mac as Controller in December 2000, Mr. Buzby, a certified public
accountant since 1992, was Chief Financial Officer for George Mason Mortgage
Corporation, a regional residential mortgage lender, from March 2000 to December
2000 and for Mortgage Edge Corporation, a national mortgage lender, from July
1997 to February 2000. Prior to July 1997, Mr. Buzby was a Manager on the
Mortgage Consulting Staff of KPMG Peat Marwick, LLP.
Nancy
E. Corsiglia
51
Vice
President - Finance since June 1, 2000, Treasurer since
December 8, 1989 and Chief Financial Officer since
May 13, 1993. From December 8, 1989 until June 1, 2000 when she was
appointed Vice President - Finance, Ms. Corsiglia was Vice President - Business
Development. From 1988 until she joined Farmer Mac, Ms. Corsiglia was Vice
President for Federal Government Finance at PaineWebber Incorporated, New York,
New York. From 1984 to 1988, she served as a Senior Financial Analyst and a
Manager on the Financial Staff of General Motors Corporation, New York, New
York.
Jerome
G. Oslick 60
Vice
President - General Counsel and Corporate Secretary since February 1, 2000.
From
1987 until he joined Farmer Mac as Assistant General Counsel in February 1994,
Mr. Oslick was an associate in the Washington, D.C. office of the New York-based
law firm of Brown & Wood. From 1970 to 1987, he was an attorney and branch
chief in the Office of General Counsel, United States Department of
Agriculture.
Paul
N. Peiffer 49
Vice
President - Agricultural Credit since February 1, 2007. From June 2005 until
February 1, 2007, Mr. Peiffer was Director of Underwriting of the Corporation.
From July 1998 until joining Farmer Mac in 2005, he was Agribusiness Portfolio
Manager for Deere Credit, Inc., a subsidiary of Deere, Inc. in Johnston,
Iowa.
Tom
D. Stenson
56
Vice
President - Agricultural Finance since August 7, 1997. From November
1996 until August 7, 1997, Mr. Stenson was Director - Agricultural Finance
of the Corporation. From 1993 until joining Farmer Mac in 1996, he was Vice
President - Agribusiness for ValliWide Bank, a “super-community” bank in the San
Joaquin Valley of California.
17
Mary
K. Waters 48 Vice
President - Corporate Relations since June 16, 2005. From May 2001 until April
2005, Ms. Waters was Assistant Secretary, Congressional Relations at the
United States Department of Agriculture. From 1986 until her nomination to
the
position at USDA in 2001, Ms. Waters served as Senior Director and Legislative
Counsel for ConAgra Foods.
The
Compensation Committee determines, subject to ratification by the Board of
Directors, the salaries,
benefit
plans and other compensation of directors and officers of the Corporation.
The
current members of the Compensation Committee are Messrs. Cortese, Dailey,
DeBriyn, Johnson and Brack (chairman). No member of Farmer Mac’s Compensation
Committee is or has been an officer or employee of the Corporation. As described
in more detail in “Director Independence,” the Board has determined that all
members of the Compensation Committee are “independent,” as defined in Farmer
Mac’s Corporate Governance Guidelines, SEC rules and NYSE listing
standards.
The
Compensation Committee reviewed and recommended reaffirmation of the
Compensation Committee Charter, which reaffirmation was approved by the full
Board on February 1, 2007. The complete text of the charter, which reflects
standards set forth in SEC and NYSE rules, is available on the Corporation’s
website, www.farmermac.com, in the “Corporate Governance” portion of the
“Investors” section. A print copy of the Compensation Committee Charter is
available free of charge upon written request to Jerome
G.
Oslick, Corporate Secretary, Federal Agricultural Mortgage Corporation, 1133
Twenty-First Street, N.W., Suite 600, Washington, D.C. 20036.
|
—
|
Compensation
Discussion and Analysis
|
General
Compensation Philosophy and Pay Elements
Farmer
Mac’s general compensation and benefits philosophy is to operate a program that
will attract and retain talented and dedicated employees and motivate them
to
act in the best interests of the Corporation. To accomplish those goals, the
compensation program is designed to reward the execution of strategies
to:
|
·
|
accomplish
the Corporation’s Congressional mission as measured by increases in
business volume and net income (adjusted for non-economic accounting
conventions);
|
|
·
|
maintain
and enhance effective internal
controls;
|
|
·
|
increase
net income (adjusted for non-economic accounting conventions);
and
|
|
·
|
enlarge
stockholder value.
|
Executive
compensation at Farmer Mac is designed to provide further that the levels and
proportions of salary, annual cash incentive awards and long-term incentive
award values are consistent with the value and effectiveness of the named
executive officers’ execution of Board-approved strategies, with due
consideration given to the competitive market.
18
The
total
compensation package for named executive officers consists of the following,
provided with a view to offering a balanced compensation package:
|
·
|
base
salary;
|
|
·
|
annual
cash incentive pay;
|
|
·
|
long-term
non-cash incentive pay; and
|
|
·
|
retirement
and other benefits, most of which are similarly provided to all other
full-time employees.
|
Benchmarking
and Peer Groups
Farmer
Mac was created by Congress to establish a secondary market for agricultural
and
rural housing mortgages that would increase the availability of credit for
agricultural producers, provide greater liquidity and lending capacity for
agricultural lenders and facilitate intermediate- and long-term agricultural
funding. Farmer Mac’s charter, particularly as revised in 1996, casts it in the
mold of the other mortgage loan secondary market government-sponsored
enterprises (“GSEs”), Federal National Mortgage Association (“Fannie Mae”) and
the Federal Home Loan Mortgage Corporation (“Freddie Mac”), which have
established a mature secondary market for housing mortgages. A third reference
point has been SLM Corporation (“Sallie Mae”), a company that began as a
government-sponsored enterprise. These three GSEs constitute the peer group
for
pay purposes.
From
the
outset, Farmer Mac’s Board of Directors and its Compensation Committee
recognized that the accomplishment of Farmer Mac’s mission would require that it
attract, retain and motivate highly qualified personnel capable of addressing
the formidable tasks necessary to develop and operate a secondary market for
agricultural mortgage loans where none had previously existed, and to persevere
in their efforts through what would likely be a number of difficult and
uncertain years. The Corporation believes that this approach continues to be
sound, inasmuch as the Corporation must compete in the general market for the
services of individuals with the education, experience and prior achievements
necessary to enhance the financial results and safety and soundness of Farmer
Mac’s expanding and increasingly complex operations. (In this CD&A,
references to the “Board” are to the Board of Directors, and references to the
“Committee” are to the Compensation Committee of the Board of
Directors.)
Accordingly,
the Board and the Committee have undertaken to compensate those employees in
a
reasonable manner consistent with compensation for executives in other
comparable businesses that involve similar duties and responsibilities.
The
outcome intended by the Board and the Committee is that pay opportunities for
named executive officers should be comparable to those received by persons
with
similar qualifications and experience (but not necessarily the same position
and
title) at the peer group companies. Due to the large size of the peer group
companies relative to Farmer Mac, the positions considered comparable to them
are one level lower than the Farmer Mac position. Farmer Mac’s chief executive
officer position is considered comparable to a Business Unit Chief Executive
or
corporate Chief Financial Officer at the peer group companies. These are
positions from which Farmer Mac would most likely draw a chief executive officer
in the future.
19
To
provide context for the market data drawn from the peer group, the Committee
also asks its consultant, Hewitt Associates LLC, to provide data on the pay
of
the chief executive officers at various cooperative primary lender organizations
and monoline bond insurance companies. These figures are for reference
only.
This
methodology ensures that the Corporation’s compensation structure is
sufficiently competitive to attract and retain highly qualified
executives.
Governance
The
Committee makes recommendations to the Board of Directors as to the actual
levels of compensation to be awarded. In measuring performance against defined
levels based upon business plan objectives and results, the Committee makes
comparisons to performance criteria established by the Board and management
in
the business plan.
The
chief
executive officer is not present, nor is any other named executive officer,
during deliberations on his or her compensation by the Committee or the Board.
The compensation of all other named executive officers is based primarily upon
the evaluation of their performance during the business plan year by the chief
executive officer, as revised in consultation with the Committee.
20
Market
Posture and How Amounts Were Determined: Change in Approach for
2006-2007
The
Committee changed its approach to executive compensation, effective July 1,
2006, as described below. The revised compensation program targets pay at the
50th percentile of compensation for all components of comparable pay. This
provides management with lesser baseline expectations and greater potential
compensation for performance significantly above defined levels.
|
Component
of
Pay
|
Practice
Through June 2006
|
Practice
After June 2006
|
|
Base
salary
|
Targeted
at 115% of the median of the GSE
comparator
positions to reflect the challenges and
risks
of Farmer Mac’s developmental and political
characteristics
|
Targeted
at 100% of the median of the GSE comparator positions
|
|
Short-term
incentive
|
· Targeted
at the median opportunity applying to
similar base salaries at complex financial
organizations, as developed by the Committee’s
consultant, expressed as a percent of bases salary
· No
payout allowable above target
· Based
70% on a discretionary assessment by the
Committee of the executive’s contribution to:
1) Progress
in the fulfillment of Farmer Mac's
Congressional mission for farmers, ranchers
and rural
homeowners and the lenders who
serve them;
2) Effective
risk management, internal
controls,operations,
corporate governance,
and resource allocation;
and
3)
Positive trends in financial results.
· Based
30% on individual managerial skills and
performance
|
· No
change to median
posture
· Payouts
allowed
above
target, similar
to the
designs found
at similar
organizations
· Based
70% on
quantitative measures
of corporate
performance,
determined
formulaically
· No
change to 30%
individual portion
|
|
Stock
option
grants
|
· Targeted
at the median opportunity applying to
similar base salaries at complex financial
organizations, as developed by the Committee’s
consultant, expressed as a percent of base salary
· Multiplied
by the rating used in the short-term
incentive
plan, generally less than 100%
|
· No
change to median target
· Eliminated
impact of individual rating
|
21
Compensation
Elements
Each
element of the pay program is discussed in more detail below.
Base
Salary.
Base
salary is paid to provide current and prospective executives with a predictable
core amount of compensation, regardless of the Corporation’s financial results,
so long as they perform their duties in a competent, professional manner.
This
element is set at a level that, by itself, would provide executives with a
level
of financial security slightly less than commensurate with the competitive
market,
but not
at a level expected to be adequate alone to retain executives or motivate
outstanding performance.
Base
salary is reviewed annually by the Committee in June, at the end of the
July-through-June business plan year, as well as at the time of executive
promotions or other changes in responsibilities. Increases in salary normally
take effect on July 1.
The
Committee determines the base salary for the chief executive officer and
recommends to the Board the base salary for each of the other named executive
officers based on an evaluation of each executive’s performance, experience,
level of responsibilities, level of base salary and peer group market data
provided by the Committee’s consultant. For each named executive officer other
than the president and chief executive officer, the Committee bases its
determinations on recommendations of the chief executive officer in addition
to
the factors listed in the previous sentence.
Annual
Cash Incentive Pay.
Annual
cash incentive pay is provided as
a
means of motivating and rewarding outstanding performance by an executive of
his
or her shorter-term goals, typically those slated for accomplishment in the
current year of the business plan.
An
executive’s annual cash incentive pay target is set at a level that, when added
to salary, would be expected to produce total cash compensation adequate to
retain executives and motivate outstanding performance.
For
the
2005-06 year, earned Annual Cash Incentive Pay was based 70% on a qualitative
assessment of each executive’s performance. A rating of from 0% to 100% was
developed for each executive, and multiplied by target bonus to calculate actual
bonus.
22
For
the
2006-07 year, each individual whose individual performance is rated 60% or
higher will earn varying percentages of his or her targeted bonus, determined
formulaically pursuant to the following table:
|
Measure
|
Weight
|
Threshold
(Pays
50%)
|
Target
(Pays
100%)
|
Maximum
(Pays
200%)
|
|
Earnings
before
FAS
133, FAS
123R,
loan losses and yield maintenance
|
28%
|
75%
of
Business
Plan
|
100%
of
Business
Plan
|
115%
of
Business
Plan
|
|
New
total mission volume
|
28%
|
80%
of
Business
Plan
|
100%
of
Business
Plan
|
180%
of
Business
Plan
|
|
Delinquency
rate and net charge-
offs
|
14%
|
<1.5%
90-day delinquencies
Chargeoffs
= 200% of Business Plan
|
<1%
90-day delinquencies
Chargeoffs
= 100% of Business Plan
|
<0.6%
90-day delinquencies
Chargeoffs
= 50% of Business Plan
|
|
Individual
rating
|
30%
|
Rating
of 60%
|
Rating
of 80%
|
Rating
of 100%
|
|
Total
|
100%
|
Long-Term
Non-Cash Incentive Pay.
Long-term non-cash incentive pay, in the form of at-the-market stock options,
is
provided as a means of motivating and rewarding outstanding performance by
executives as a group that lead to the creation of stockholder value creation
over a term typically spanning several business plan years, and retaining them
in the Corporation’s employ over the longer term.
Option
awards are made at the Board meeting held in conjunction with the annual meeting
of stockholders and the exercise price is the closing price on the date of
award. The number of options granted in 2006 was a function of the market data,
the executive’s individual rating, the 90-day average stock price preceding the
date of grant, and the calculated Black-Scholes value of a single option as
a
percent of stock price. Options vest one-third per year commencing one year
from
the grant date.
Retirement
Plans.
Farmer
Mac provides retirement benefits through a Money Purchase Plan, pursuant to
which the Corporation annually contributes between 13.2 percent and
18.9 percent of each employee’s base compensation. Farmer Mac also offers a
401(k) plan to which employees may make retirement contributions, but to
which the Corporation makes no contributions. Farmer Mac does not maintain
any
supplemental retirement plan for executives.
Other
Benefits.
The
Corporation provides a term life insurance policy with a face amount
approximately equal to two years’ base compensation for the chief executive
officer and one year’s base compensation for each of the other named executive
officers, as well as long-term disability insurance. Named executive officers
also participate in Farmer Mac’s other benefit plans on the same
23
terms
as
other employees. These plans include medical and dental insurance and a $50,000
group term life insurance policy.
Mix
of
Pay.
In
addition to determining the base salary, cash incentive pay and non-cash
incentive pay on the distinct bases described above, the Committee further
compares total cash compensation (the sum of base salary and cash incentive
pay) of the named executive officers to that of officers at comparator
companies, and does likewise for total direct compensation (the sum of base
salary, cash incentive pay and non-cash incentive pay). This ensures that the
proportional relationships among the compensation elements at Farmer Mac is
consistent with those at comparator companies.
Payments
in Connection with Any Change-in-Control
Farmer
Mac’s Congressional charter is written in a way that substantially precludes any
change-in-control through voting rights associated with its Class A and B voting
common stock. Accordingly, no provision is made for payments to named executive
officers in connection with any change-in-control.
Post-Employment
Compensation
Mr.
Edelman and Ms. Corsiglia have employment contracts that provide severance
pay
should they be terminated involuntarily not for cause, die or become disabled.
Such provisions recognize the regulatory and political environment in which
Farmer Mac operates, with consequent job insecurity.
The
amount is the lesser of (a) two times base salary or (b) base salary paid
through the contract termination date (July 1, 2011 in the case of Mr. Edelman,
July 1, 2010 in the case of Ms. Corsiglia). Upon disability, severance
would be reduced by any disability payments already received. Noncompete and
nonsolicitation provisions apply.
Impact
of Accounting and Tax Treatments on Compensation Awards
Farmer
Mac does not take into consideration the impact of accounting and tax treatments
of compensation to named executive officers in determining their compensation.
Farmer Mac’s compensation program does, however, discount the impact of FAS 133
and FAS 123R in the determination of income for compensation purposes.
Section
162(m) of the Internal Revenue Code of 1986, as amended, has had no impact
because, through 2006, no employee of Farmer Mac has received annual
remuneration (as defined in that section) in excess of
$1 million.
24
Farmer
Mac’s Policies Regarding Stock Ownership and Trading
Farmer
Mac has no policies that require a particular level of stock ownership by named
executive officers. Farmer Mac has a policy on insider trading by all employees,
including named executive officers, that requires compliance with securities
laws and Farmer Mac policies on insider trading (including “windows” for sale of
stock and the adoption of Rule 10b5-1 plans) and prohibits trading in
options on Farmer Mac securities.
|
—
|
Compensation
Committee Report
|
Notwithstanding
anything to the contrary set forth in any of Farmer Mac’s documents with respect
to the offer or sale of securities (“Offering Circulars”) or any previous
corporate filings under the Securities Act of 1933 or Securities Exchange Act
of
1934, the Compensation Committee Report on Executive Compensation will not
be
deemed to be incorporated by reference into any Offering Circular or any filing
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent Farmer Mac specifically incorporates such information by
reference, and will not otherwise be deemed to have been or to be filed under
such Acts.
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis contained herein with management, and, based on that review and
discussion, has recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the proxy statement and annual
report.
Compensation
Committee
Dennis
L.
Brack, Chairman
Fred
L.
Dailey Mitchell
A.
Johnson
Ralph
W.
Cortese Paul
A.
DeBriyn
|
—
|
Compensation
Committee Interlocks and Insider
Participation
|
Directors
Brack, Cortese, Dailey, DeBriyn, and Johnson comprise the Corporation’s
Compensation Committee. None of these directors is, or has been, an officer
or
employee of the Corporation, and none had any relationship requiring disclosure
by Farmer Mac as a “related person transaction” under SEC rules. None of Farmer
Mac’s executive officers serve, or have served, as a member of the Board or the
Compensation Committee or as a director of another entity.
|
—
|
Compensation
of Directors
|
The
directors are required to spend a considerable amount of time preparing for,
as
well as participating in, Board and Committee meetings. In addition, they are
often called upon for their counsel between meeting dates. For those services,
each director receives the following compensation: (a) an annual retainer
of $14,000 ($19,000 for the chairman of the Audit Committee and $21,500 for
the
Chairman of the Board); (b) $1,000 per day, plus expenses, for each meeting
of
the Board and each Committee meeting (if on a day other than that of the Board
meeting) attended; and (c) with the prior
25
approval
of the President of the Corporation, $1,000 per day, plus expenses, for certain
other meetings and conferences with borrowers, lenders or other groups
interested in the Farmer Mac program in which they participate. The
total
cash compensation received by all members of the Board of Directors in 2006
was
approximately $462,000. Since June 13, 1997, each director has been granted
options annually to purchase shares of Class C Non-Voting Common Stock under
the
Corporation’s 1997 Incentive Plan, with each such grant occurring on the date of
each Annual Meeting of Stockholders and with the option price being determined
as of such date. The 6,000 options granted to each member of the Board of
Directors in 2006 had a fair value of $50,1873
at the
grant date. The total compensation, cash and options received by all members
of
the Board of Directors in 2006 was approximately $1,214,592.
_____________________________________________
3 The
fair
value at grant date of options granted during 2006 has been estimated using
the
Black-Scholes option pricing model with the following assumptions: a dividend
yield of 1.6%; an expected volatility of 36.9%; a risk-free interest rate of
5.0%; and an expected life of 4 years.
26
The
following table sets forth the compensation received by each Farmer Mac director
in 2006:
|
Name
|
Fees
Earned or Paid in Cash
($)4
|
Option
Awards
($)5,
6
|
Total
($)
|
|
Julia
Bartling
|
28,500
|
33,495
|
61,995
|
|
Dennis
Brack
|
30,000
|
33,495
|
63,495
|
|
Ralph
Cortese
|
29,000
|
33,495
|
62,495
|
|
Fred
Dailey
|
41,708
|
33,495
|
75,203
|
|
Grace
Daniel
|
26,500
|
33,495
|
59,995
|
|
Paul
DeBriyn
|
44,583
|
33,495
|
78,078
|
|
Dennis
Everson
|
29,000
|
33,495
|
62,495
|
|
Ernest
Hodges
|
29,000
|
20,3357
|
49,335
|
|
Mitchell
Johnson
|
29,000
|
33,495
|
62,495
|
|
Lowell
Junkins
|
24,000
|
33,495
|
57,495
|
|
Timothy
Kenny
|
33,250
|
33,495
|
66,745
|
|
Glen
Klippenstein
|
29,000
|
33,495
|
62,495
|
|
Charles
Kruse
|
28,250
|
33,495
|
61,745
|
|
John
Nelson
|
29,000
|
33,495
|
62,495
|
|
John
Dan Raines
|
31,000
|
33,495
|
64,495
|
4 Includes
amounts the following directors voluntarily used to purchase, at market value,
newly issued Class C Common Stock in lieu of receiving some or all of their
retainer in cash: Dennis Brack ($7,759); Ralph Cortese ($3,116); Paul DeBriyn
($16,341); Dennis Everson ($3,220); Glen Klippenstein ($7,827); Timothy Kenny
($16,466); Charles Kruse ($16,466); and John Nelson ($1,514).
5For
Mr.
Hodges, the amount is the sum of the values of the portions of the 2005 and
2006
option grants that vested in 2006 for compensation expense accrual purposes.
For
all other directors, the amount is the sum of the values of the portions
of the
2004, 2005, and 2006 option grants that vested in 2006 for compensation expense
accrual purposes. Although a portion of the 2006 option grants are treated
as
vested for compensation expense accrual purposes, these grants vest one-third
on
May 31, 2007, 2008 and 2009.
6 As
of December 31, 2006, Ms. Bartling and Messrs Everson and Hodges (through
options he assigned to his employer) each had outstanding options to purchase
an
aggregate of 12,000 shares of Farmer Mac Class C Non-Voting Common Stock;
Mr.
Raines had outstanding options to purchase an aggregate of 17,000 shares
of
Farmer Mac Class C Non-Voting Common Stock; Messrs. Cortese, Kenny and
Klippenstein each had outstanding options to purchase an aggregate of 18,000
shares of Farmer Mac Class C Non-Voting Common Stock; Ms. Daniel and Mr.
Dailey
each had outstanding options to purchase an aggregate of 24,000 shares of
Farmer
Mac Class C Non-Voting Common Stock; and Messrs. Brack, DeBriyn, Johnson,
Junkins, Kruse and Nelson each had outstanding options to purchase an aggregate
of 29,000 shares of Farmer Mac Class C Non-Voting Common
Stock.
7Immediately
upon grant of any options to him, Mr. Hodges assigns those options to his
employer, Sacramento Valley Farm Credit, ACA, of which he is President and
Chief
Executive Officer.
27
— Compensation
of Executive Officers
Summary
Compensation Table
The
following table sets forth certain information with respect to the compensation
awarded to, earned by, or paid to Farmer Mac’s chief executive officer, chief
financial officer and each of Farmer Mac’s four other most highly compensated
executive officers (the “named executive officers”) for the fiscal year ended
December 31, 2006.
|
Name
|
Fiscal
Year
|
Salary
|
Bonus
|
Option
Awards8
|
All
Other
Compensation9
|
Total
|
|
Henry
D. Edelman
|
2006
|
$526,174
|
$410,605
|
$787,940
|
$69,419
|
$1,794,138
|
|
Nancy
E. Corsiglia
|
2006
|
337,545
|
192,376
|
382,978
|
50,960
|
963,859
|
|
|
|
|
|
|
|
|
|
Timothy
L. Buzby
|
2006
|
232,224
|
91,757
|
150,371
|
65,024
|
539,376
|
|
|
|
|
|
|
|
|
|
Michael
P. Morris10
|
2006
|
205,07711 .
|
—
|
101,876
|
15,789
|
322,742
|
|
|
|
|
|
|
|
|
|
Jerome
G. Oslick
|
2006
|
260,066
|
21,646
|
18,865
|
64,542
|
365,119
|
|
|
|
|
|
|
|
|
|
Tom
D. Stenson
|
2006
|
276,350
|
146,999
|
274,884
|
58,852
|
757,085
|
Option
Grants During 2006
The
table
below sets forth, as to each of the named executive officers, the following
information with respect to option grants during 2006: (1) the grant date of
options granted during 2006; (2) the number of shares of Class C Non-Voting
Common Stock underlying options granted during 2006; (3) the exercise price
of such options; and (4) the grant date fair value of such options under
the Black-Scholes option pricing model.
8 Comprised
of amounts related to option grants that vested in 2006 for compensation
expense
accrual purposes: for Mr. Edelman, $224,780 with respect to options granted
in 2004, $336,373 with respect to options granted in 2005 and $226,787 with
respect to options granted in 2006; for Mr. Buzby, $43,569 with respect to
options granted in 2004, $63,725 with respect to options granted in 2005
and
$43,077 with respect to options granted in 2006; for Ms. Corsiglia, $118,074
with respect to options granted in 2004, $158,243 with respect to options
granted in 2005 and $106,661 with respect to options granted in 2006; for
Mr.
Stenson, $80,890 with respect to options granted in 2004, $114,833 with respect
to options granted in 2005 and $79,161 with respect to options granted in
2006;
for Mr. Morris, $16,763 with respect to options granted in 2004 and $85,113
with
respect to options granted in 2005; and for Mr. Oslick, $18,865 with respect
to
options granted in 2006. Although
a portion of the 2006 option grants are treated as vested for compensation
expense accrual purposes, these grants vest one-third on May 31, 2007, 2008
and
2009.
9 Includes
contributions to the Corporation’s defined contribution pension plan in the
amount of $36,211 for 2006 on behalf of each of the named executive officers
other than Mr. Morris on behalf of whom no such contribution was made, as
well
as health, disability and life insurance premium payments paid on behalf
of each
of the named executive officers. See “Employment Agreements.”
10 Mr.
Morris’ employment with Farmer Mac terminated June 30, 2006.
11 Includes
$161,250 paid to Mr. Morris in connection with the termination of his employment
at Farmer Mac.
28
|
Name
|
Grant
Date
|
Number
of
Securities
Underlying
Options
Granted12
|
Exercise
Price
($/Share)
|
Grant
Date
Fair
Value of Option
Awards13
|
|
Henry
D. Edelman
|
June
1, 2006
|
121,312
|
$26.36
|
$1,290,538
|
|
Nancy
E. Corsiglia
|
June
1, 2006
|
57,055
|
26.36
|
606,961
|
|
Timothy
L. Buzby
|
June
1, 2006
|
23,043
|
26.36
|
245,135
|
|
Michael
P. Morris
|
—
|
—
|
—
|
—
|
|
Jerome
G. Oslick
|
June
1, 2006
|
10,091
|
26.36
|
107,350
|
|
Tom
D. Stenson
|
June
1, 2006
|
42,345
|
26.36
|
450,473
|
12 Options granted in 2006 expire 10 years from the grant date and are exercisable in installments: one-third vests on each of May 31, 2007, May 31, 2008 and May 31, 2009.
13 The
fair
value at grant date of options granted during 2006 has been estimated
using the
Black-Scholes option pricing model with the following assumptions: a
dividend
yield of 1.6%; an expected volatility of 36.9%; a risk-free interest
rate of
5.0%; and an expected life of 7 years.
29
Outstanding
Option Awards at Year End
The
following table sets forth certain information relating to stock options
previously granted to the named executive officers.
|
Name
|
Number
of Shares Underlying Unexercised
Options
#
Exercisable
|
Number
of Shares Underlying Unexercised
Options
#
Unexercisable14
|
Option
Exercise Price
|
Option
Expiration Date
|
|
Henry
D. Edelman
|
58,956
|
—
|
$20.0000
|
6/4/2008
|
|
|
103,686
|
—
|
22.0833
|
6/3/2009
|
|
|
15,987
|
—
|
15.1250
|
6/1/2010
|
|
|
90,387
|
—
|
31.2400
|
6/7/2011
|
|
|
84,866
|
—
|
29.1000
|
6/6/2012
|
|
|
120,111
|
—
|
22.4000
|
6/5/2013
|
|
|
66,637
|
33,319
|
19.8600
|
8/11/2014
|
|
|
50,682
|
101,366
|
20.6100
|
6/16/2015
|
|
|
—
|
121,312
|
26.3600
|
6/1/2016
|
|
|
|
|
|
|
|
Nancy
E. Corsiglia
|
18,630
|
—
|
20.0000
|
6/4/2008
|
|
|
33,378
|
—
|
22.0833
|
6/3/2009
|
|
|
9,120
|
—
|
15.1250
|
6/1/2010
|
|
|
40,220
|
—
|
31.2400
|
6/7/2011
|
|
|
35,769
|
—
|
29.1000
|
6/6/2012
|
|
|
50,356
|
—
|
22.4000
|
6/5/2013
|
|
|
35,003
|
17,502
|
19.8600
|
8/11/2014
|
|
|
23,843
|
47,686
|
20.6100
|
6/16/2015
|
|
|
—
|
57,055
|
26.3600
|
6/1/2016
|
|
|
|
|
|
|
|
Timothy
L. Buzby
|
3,000
|
—
|
21.1875
|
12/4/2010
|
|
|
4,627
|
—
|
31.0200
|
6/13/2011
|
|
|
13,975
|
—
|
29.1000
|
6/6/2012
|
|
|
21,035
|
—
|
22.4000
|
6/5/2013
|
|
|
12,916
|
6,458
|
19.8600
|
8/11/2014
|
|
|
9,601
|
19,204
|
20.6100
|
6/16/2015
|
|
|
—
|
23,043
|
26.3600
|
6/1/2016
|
|
|
|
|
|
|
|
Michael
P. Morris
|
500
|
—
|
45.0600
|
5/29/2008
|
|
|
500
|
—
|
26.2500
|
5/29/2008
|
|
|
2,500
|
—
|
26.6800
|
5/29/2008
|
|
|
—
|
3,727
|
19.8600
|
5/29/2008
|
|
|
—
|
9,757
|
20.6100
|
5/29/2008
|
|
|
|
|
||
|
14 Unexercisable options that expire in 2014 vest May 31, 2007; unexercisable options that expire in 2015 vest one-half on each of May 31, 2007 and 2008; unexercisable options that expire in 2016 vest one-third on each of May 31, 2007, 2008 and 2009. |
||||
30
|
Name
|
Number
of Shares Underlying Unexercised
Options
#
Exercisable
|
Number
of Shares Underlying Unexercised
Options
#
Unexercisable15
|
Option
Exercise Price
|
Option
Expiration Date
|
|
Jerome
G. Oslick
|
22,483
|
—
|
31.2400
|
6/7/2011
|
|
|
18,410
|
—
|
29.1000
|
6/6/2012
|
|
|
25,750
|
—
|
22.4000
|
6/5/2013
|
|
|
—
|
10,091
|
26.3600
|
6/1/2016
|
|
|
|
|
|
|
|
Tom
D. Stenson
|
26,951
|
—
|
31.2400
|
6/7/2011
|
|
|
25,901
|
—
|
29.1000
|
6/6/2012
|
|
|
35,852
|
—
|
22.4000
|
6/5/2013
|
|
|
23,980
|
11,990
|
19.8600
|
8/11/2014
|
|
|
17,302
|
34,605
|
20.6100
|
6/16/2015
|
|
|
—
|
42,345
|
26.3600
|
6/1/2016
|
Option
Exercises
The
following table sets forth certain information relating to stock options
exercised during 2006 by the named executive officers.
|
Name
|
Number
of
Shares
Acquired
on
Exercise
|
Value
Realized
|
|
Henry
D. Edelman
|
160,778
|
$2,330,709
|
|
Timothy
L. Buzby
|
—
|
—
|
|
Nancy
E. Corsiglia
|
61,722
|
890,800
|
|
Michael
P. Morris
|
13,484
|
104,467
|
|
Jerome
G. Oslick
|
—
|
—
|
|
Tom
D. Stenson
|
31,913
|
417,262
|
Equity
Compensation Plans
The
following table sets forth certain information relating to compensation plans
under which equity securities are authorized to be issued as of December 31,
2006.
|
Plan
category
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options
|
Weighted
average
exercise
price of
outstanding
options
(per
share)
|
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plans
|
|
Equity
compensation plans
not
approved by stockholders
|
2,145,705
|
$23.83
|
454,091
|
___________________________________
15 Unexercisable
options that expire in 2014 vest May 31, 2007; unexercisable options that expire
in 2015 vest one-half on each of May 31, 2007 and 2008; unexercisable options
that expire in 2016
vest
one-third on each of May 31, 2001, 2008, and 2009.
31
General.
The
purpose of Farmer Mac’s stock option plans is to encourage stock ownership by
directors, officers and other key employees, to provide an incentive for such
individuals to expand and improve the business of Farmer Mac and to assist
Farmer Mac in attracting and retaining key personnel.
The use of stock options is an attempt to align more closely the long-term
interests of employees and directors with those of Farmer Mac’s stockholders by
providing those individuals with the opportunity to acquire an equity interest
in Farmer Mac. Farmer Mac’s stock option plans are administered by the
Compensation Committee of the Board. Because individuals are prohibited by
law
from owning shares of Farmer Mac’s Voting Common Stock, the Corporation uses
unrestricted Class C Non-Voting Common Stock for the purpose of granting options
under its stock option plans. Under the plans, the option price is required
to
be paid in cash, and no option holder has any rights as a stockholder with
respect to shares subject to an option until the option price has been paid
and
the shares are issued upon exercise of the option.
1997
Plan.
In
1997, the Board adopted the 1997 Incentive Plan (the “1997 Plan”), a broad-based
option plan for directors, officers and non-officer employees. The 1997 Plan,
as
amended, provides for the issuance of a maximum of 3,750,000 nonqualified stock
options on Class C Non-Voting Common Stock at an option price determined as
of
the grant date, with a term of not more than 10 years from such date. The plan
provides for the automatic annual grant to directors of 5-year options to
purchase 6,000 (split-adjusted) shares of Class C Non-Voting Common Stock,
with
each grant to occur on the day of the annual meeting (including the Meeting),
with the option price to be determined as of such day. Through 2003, options
granted under the 1997 Plan vested one-third on the date of grant, one-third
the
following year and one-third the second following year. Beginning in 2004,
options granted under the 1997 Plan vest one-third in each of the first three
years following the date of option grant. The Board and management have
determined that granting options to qualified non-officer employees would
promote a sense of corporate ownership in the best interest of the Corporation.
Accordingly, the 1997 Plan permits the grant of options to all employees (not
just officers) based on their annual evaluations and to newly-hired
employees.
Prior
to
2004, the Board approved the issuance of shares authorized under the 1997 Plan
to employees and officers, on an individual basis, as annual incentive
compensation in connection with their annual evaluations. For officers, the
stock vested immediately upon grant, but could not be transferred for one year;
for other employees, the stock vested 50 percent after one year and
50 percent after two years. Between 1997 and 2003, the Board approved the
issuance of 220,855 shares of Class C Non-Voting Common Stock as annual
incentive compensation. Farmer Mac has not issued shares of stock as incentive
compensation since June 2003.
If
an
option holder’s employment with Farmer Mac terminates for any reason, including
by reason of retirement, the option holder’s rights to exercise any option under
the 1997 Plan terminate on the earlier of the option expiration date or 90
days
after termination (one year in the case of death or disability). Upon a
termination for “cause,” the options expire immediately. Following the
termination of a director’s service, vested options will remain exercisable
until the earlier of the option expiration date or two years following
termination. The 1997 Plan also provides for accelerated vesting of unvested
options in the event of an option holder’s death or disability.
32
As
of December 31,
2006, options covering 3,295,909 shares (net of cancellations) have been granted
under the 1997 Plan, of which 2,145,705 remain outstanding. As of December
31,
2006, 454,091 shares of Class C Non-Voting Common Stock remained available
for
future issuance of option grants under the 1997 Plan, excluding the shares
underlying outstanding options. Options granted
under the 1997 Plan during 2006 have exercise prices ranging from $24.98 to
$26.65 per share.
Employment
Agreements with Officers
The
Corporation has entered into employment agreements (the “Agreements”) with the
members of senior management (for purposes of this section, the “officers”),
including the named executive officers, in order to provide them with a
reasonable level of job security, while limiting the Corporation’s ultimate
financial exposure. Significant terms of the Agreements address each officer’s
scope of authority and employment, base salary and incentive compensation (shown
as “bonus” in the Summary Compensation Table), benefits, conditions of
employment, termination of employment and the term of employment. Although
the
Agreements generally expire on dates approximately three to four years from
the
present,16 the
Corporation’s exposure to severance pay and other costs of termination are
capped on the basis of the lesser of two years (eighteen months in the case
of
dissolution) or the remaining term of each Agreement.
Under
the
Agreements, the officers are entitled to a base salary and discretionary
incentive compensation. Base compensation for all officers is paid bi-weekly
over the course of each year. The current base salaries for the named executive
officers who, as of April 18, 2007, remain executive officers, are: Mr. Edelman,
$538,247; Mr. Buzby, $237,888; Ms. Corsiglia, $345,290; Mr. Oslick,
$261,305; and Mr. Stenson, $282,691. Awards of incentive compensation are
considered annually at the end of the business planning year and are determined
and payable under the circumstances discussed above in “Compensation Discussion
and Analysis.”
The
Agreements provide that each officer is entitled to certain benefits, such
as
disability insurance, health insurance, dental insurance and life insurance,
which are, in some cases, above the levels provided to employees generally.
See
the Summary Compensation Table for information on other benefits extended to
the
named executive officers.
The
Agreements also provide that an officer’s employment may be terminated “without
cause” upon payment of severance pay consisting of all base salary scheduled to
be paid over the lesser of the remaining term of the Agreement or two years.
If
the Board of Directors adopts a resolution authorizing a dissolution of the
Corporation, the Agreements also may be terminated upon payment of severance
pay
consisting of all base salary scheduled to be paid until the later of the final
date of dissolution or one and one-half years following the effective date
of
the dissolution. Upon termination of employment due to an officer’s death or
disability, the officer will generally be entitled to benefits on the same
basis
as “without cause”; however, the Corporation’s obligations in such instances are
substantially covered by insurance. The Agreements may be terminated by Farmer
Mac
______________________
16 The Agreements with the named
executive officers expire on July 1 of the following years: Henry D.
Edelman, 2011; Timothy L. Buzby, Nancy E. Corsiglia and Tom D.
Stenson, 2010; and Jerome G. Oslick, 2007.
33
for
cause, in which event the officer will be paid only accrued compensation
to the
date of termination.
|
—
|
Certain
Relationships and Related Person
Transactions
|
Review
of Related Person Transactions
The
Board
of Directors has adopted a written Related Person Transactions Approval Policy
that is administered by the Corporate Governance Committee. This policy applies
to any transaction or series of transactions in which Farmer Mac is a
participant, the amount involved exceeds $120,000 and a “related person” has a
direct or indirect material interest. The policy requires each director or
executive officer involved in such a transaction to notify the General Counsel
of each such transaction. Farmer Mac reviews all relationships and transactions
in which the Corporation and its directors and executive officers or their
immediate family members are participants to determine whether such persons
have
a direct or indirect material interest. The Corporation’s legal staff is
primarily responsible for the development and implementation of processes and
controls to obtain information from the directors and executive officers with
respect to related person transactions. Under the policy, the General Counsel
will determine whether a transaction meets the requirements of a “related person
transaction” requiring review by the Corporate Governance Committee.
Transactions that fall within this definition will be referred to the Committee
for approval, ratification or other action. Based on its consideration of all
of
the relevant facts and circumstances, the Corporate Governance Committee will
decide whether or not to approve the transaction and will approve only those
transactions that are in the best interests of the Corporation. If the
Corporation becomes aware of an existing related persons transaction that has
not been approved under this policy, the matter will be referred to the
Corporate Governance Committee, which will then evaluate all options available,
including ratification, revision or termination of the transaction. A related
person transaction entered into without the Committee’s pre-approval will not
violate this policy, or be invalid or unenforceable, so long as the transaction
is brought to the Committee as promptly as reasonably practical after it is
entered into or after it becomes reasonably apparent that the transaction is
covered by this policy. Transactions that are determined to be directly or
indirectly material to Farmer Mac or a related person are disclosed in the
Corporation’s proxy statement as required under SEC rules.
Transactions
with Related Persons in 2006
From
time
to time, Farmer Mac purchases or commits to purchase qualified loans and
USDA-guaranteed portions from, or enters into other business relationships
with,
institutions that own five percent or more of a class of Farmer Mac’s Voting
Common Stock or that have an officer or director who is also a member of Farmer
Mac’s Board of Directors. These transactions are conducted in the ordinary
course of business, with terms and conditions comparable to those applicable
to
entities unaffiliated with Farmer Mac. Although Farmer Mac entered into
transactions with related persons in 2006, it was determined that none of those
transactions resulted in a related person having a direct or indirect material
interest that would require disclosure as a “related person transaction” under
SEC rules. For additional information about transactions between Farmer Mac
and
related persons, see Note 3 to Farmer Mac’s Annual Report on Form 10-K for the
year ended December 31, 2006.
34
The
By-Laws of the Corporation provide that the Audit Committee shall select the
Corporation’s independent auditors “annually in advance of the Annual Meeting of
Stockholders and [that selection] shall be submitted for ratification or
rejection at such meeting.” In addition, the Audit Committee reviews the scope
and results of the audits, the accounting principles being applied, and the
effectiveness of internal controls. The Audit Committee also ensures that
management fulfills its responsibilities in the preparation of the Corporation’s
financial statements. During the fiscal year ended December 31, 2006, the Audit
Committee, which is composed of Messrs. DeBriyn (Chairman), Kenny and Raines
and
Ms. Bartling, met eleven times.
In
accordance with the By-Laws, the Audit Committee has unanimously selected and
recommended to the stockholders Deloitte & Touche LLP as the
Corporation’s independent auditors for the fiscal year ending December 31,
2007. This proposal is put before the stockholders as provided in the By-Laws
and in conformity with the current practice of seeking stockholder approval
of
the selection of independent auditors. The ratification of the appointment
of
Deloitte & Touche LLP as the Corporation’s independent public
accountants requires the affirmative vote of a majority of the shares
represented in person or by proxy at the Meeting and entitled to be voted.
Representatives
of Deloitte & Touche LLP are expected to attend the Meeting. They will
have the opportunity to make a statement if they desire to do so and will be
available to answer appropriate questions from stockholders present at the
Meeting.
The
Board
of Directors recommends a vote FOR the proposal to ratify the selection of
Deloitte & Touche LLP as independent auditors for the Federal
Agricultural Mortgage Corporation for 2006. Proxies solicited by the Board
of
Directors will be so voted unless holders of the Corporation’s Voting Common
Stock specify to the contrary on their proxies, or unless authority to vote
is
withheld.
Audit
Fees
Deloitte
& Touche LLP billed Farmer Mac an aggregate $1,363,215 and $1,293,078
for professional services rendered for the audit of Farmer Mac’s annual
financial statements, the audit of management’s assessment of the effectiveness
of internal control over financial reporting under Section 404 of the
Sarbanes-Oxley Act of 2002, and the reviews of the financial statements included
in Farmer Mac’s quarterly reports on Form 10-Q for 2006 and 2005,
respectively.
Audit-Related
Fees
Deloitte
& Touche LLP billed Farmer Mac an aggregate $595,224 and $84,447 for
assurance and related services that were reasonably related to the performance
of the audit of Farmer Mac’s annual financial statements and the reviews of the
financial statements included in Farmer Mac’s quarterly reports on Form 10-Q in
2006 and 2005, respectively, and are not reported in “Audit
Fees.”
Of
the
billed fees for 2006, $512,967 were fees related to Farmer Mac’s restatement of
its financial
35
statements
on Form 10-K/A as of December 31, 2005, Form 10-Q/A as of March 31, 2006
andForm 10-Q/A as of June 30, 2006. The remaining billed fees for 2006 were
for the issuance of comfort letters, various accounting consultations and
other
technical issues.
Tax
Fees
Deloitte
& Touche LLP billed Farmer Mac an aggregate $38,500 and $28,250 for
professional services rendered for tax compliance, tax advice and tax planning
for 2006 and 2005, respectively. These services were for the preparation of
Farmer Mac’s federal tax returns.
All
Other Fees
Deloitte
& Touche LLP did not bill Farmer Mac for any other fees in 2006 or 2005
other than the audit and review fees, audit-related fees and tax fees referred
to above.
Audit
Committee Pre-Approval Policies
Pursuant
to the Audit Committee Charter and consistent with SEC policies regarding
auditor independence, the Audit Committee considers and pre-approves, as
appropriate, all auditing and permissible non-auditing services provided Farmer
Mac’s independent auditor prior to the engagement of the independent auditors
with respect to such services. One hundred percent of the services provided
by Deloitte & Touche LLP in 2005 and 2006 were pre-approved by the Audit
Committee.
Section
16(a) of the Securities Exchange Act of 1934 requires Farmer Mac’s officers and
directors, and persons who beneficially own more than ten percent of a
registered class of Farmer Mac’s equity securities, to file reports of ownership
and changes in ownership on Forms 3, 4 and 5 with the SEC. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish Farmer Mac with copies of all Forms 3, 4 and 5
filed.
Based
solely on Farmer Mac’s review of its corporate records, which include copies of
forms it has received, and written representations from certain reporting
persons that they were not required to file a Form 5 for specified fiscal years,
Farmer Mac believes that all of its officers, directors and beneficial owners
of
greater than ten percent of any class of equity securities complied with all
Section 16(a) filing requirements and timely filed all reports applicable to
them for transactions during 2006, except that a Form 4 reporting a transaction
involving the exercise of stock options and the sale of the acquired Farmer
Mac
Class C Non-Voting Common Stock in June 2006 by Dennis A. Everson, a director,
was not timely filed.
36
To
our
knowledge, as of the date of this Proxy Statement, the following institutions
are the beneficial owners of either (i) 5 percent or more of the
outstanding shares of Farmer Mac’s Class A Voting Common Stock or Class B Voting
Common Stock, or (ii) 5 percent or more of the total number of outstanding
shares of Farmer Mac’s Voting Common Stock (both Class A and Class
B).
|
Name
and
Address
|
Number
of
Shares
Beneficially
Owned
|
Percent
of Total
Voting
Shares
Outstanding*
|
Percent
of Total
of
Shares Held
By
Class**
|
|
AgFirst
Farm Credit Bank17
1401
Hampton Street
Columbia,
SC 29202
|
84,024
shares of Class B
Voting
Common Stock
|
5.49%
|
16.79%
|
|
AgriBank,
FCB
375
Jackson Street
St.
Paul, MN 55101
|
201,621
shares of Class B
Voting
Common Stock
|
13.17%
|
40.30%
|
|
CoBank,
ACB
5500
South Quebec Street
Greenwood
Village, CO 80111
|
62,980
shares of Class B
Voting
Common Stock
|
4.11%
|
12.59%
|
|
Farm
Credit Bank of Texas18
6210
Highway 290 East
Austin,
TX 78761
|
38,503
shares of Class B
Voting
Common Stock
|
2.52%
|
7.70%
|
|
Matthew
25 Management Corp.
Jenkintown,
PA 19046
|
59,000
shares of Class A
Voting
Common Stock
|
3.85%
|
5.72%
|
|
U.S.
AgBank, FCB
245
North Waco
Wichita,
KS 67201
|
100,273
shares of Class B
Voting
Common Stock
|
6.55%
|
20.04%
|
|
The
Vanguard Group, Inc.
Valley
Forge, PA 19482
|
56,295
shares of Class A
Voting
Common Stock
|
3.68%
|
5.46%
|
|
Zions
First National Bank
One
South Main Street
Salt
Lake City, UT 84111
|
322,100
shares of Class A
Voting
Common Stock
|
21.04%
|
31.25%
|
* The
percentage is determined by dividing the number of shares of Class A or
Class B
Voting Common Stock owned by the total of the number of shares of Class
A and
Class B Voting Common Stock outstanding.
** The
percentage is determined by dividing the number of shares of the class
of Voting
Common Stock owned by the number of shares of that class of Voting Common
Stock
outstanding.
17 John Dan
Raines,
currently a member of the Board of Directors and a Class B Nominee, is
a member
of the board of directors of AgFirst Farm Credit Bank.
18 Ralph
W.
Cortese, currently a member of the Board of Directors and a Class B Nominee,
is
the chairman of the board of directors of Farm Credit Bank of Texas.
37
The
Corporation will pay the cost of the Meeting and the costs of soliciting
proxies, including the cost of mailing the proxy material. The Corporation
has
retained Georgeson Shareholder Communications Inc. to act as the Corporation’s
proxy solicitation firm for a fee of approximately $5,000. In addition to
solicitation by mail, employees of Georgeson Shareholder Communications Inc.
may
solicit proxies by telephone, electronic mail, telegram or personal interview.
Brokerage houses, nominees, fiduciaries and other custodians will be requested
to forward solicitation material to the beneficial owners for shares held of
record by them and will be reimbursed for their reasonable expenses by the
Corporation.
In
addition to the scheduled items of business set forth in this Proxy Statement,
the enclosed proxy confers on the Proxy Committee discretionary authority to
vote the shares represented thereby in accordance with the members’ best
judgment with respect to all matters that may be brought before the Meeting
or
any adjournment or postponement thereof and matters incident to the Meeting.
The
Board of Directors does not know of any other matter that may properly be
presented for action at the Meeting. If any other matters should properly come
before the Meeting or any adjournment or postponement thereof, the Proxy
Committee named in the accompanying proxy intends to vote such proxy in accord
with its best judgment.
Upon
written request, Farmer Mac will furnish, without charge, to each person whose
proxy is being solicited a copy of its Annual Report on Form 10-K for the fiscal
year ended December 31, 2006, as filed with the SEC, including financial
statements thereto. Written requests should be directed to Jerome G. Oslick,
Corporate Secretary, Federal Agricultural Mortgage Corporation, 1133
Twenty-First Street, N.W., Suite 600, Washington, D.C. 20036. A copy of Farmer
Mac’s most recent Form 10-K is also available on the Corporation’s website,
www.farmermac.com, in the “SEC Filings” portion of the “Investors—Equity”
section of the website. Please note that all references to www.farmermac.com
in
this proxy statement are inactive textual references only and that the
information contained on Farmer Mac’s website is not incorporated by reference
into this proxy statement.
_____________________________
The
giving of your proxy will not affect your right to vote your shares personally
if you do attend the Meeting. In any event, it is important that you complete,
sign and return the enclosed proxy card promptly to ensure that your shares
are
voted.
By
order of the Board
of Directors,
/s/
Jerome G.
Oslick
Jerome
G.
Oslick
Corporate
Secretary
April 27, 2007
Washington,
D.C.
38
ANNUAL
MEETING OF STOCKHOLDERS
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION
CLASS
A
COMMON STOCK
June
7,
2007
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
↓
Please
detach along perforated line and mail in the envelope provided. ↓
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
1. Election
of Directors:
NOMINEES:
[
] FOR
ALL
NOMINEES
[
]
Dennis L. Brack
[
] Dennis A. Everson
[
] WITHHOLD
AUTHORITY [
]
Mitchell A. Johnson
FOR
ALL
NOMINEES
[
]
Timothy F. Kenny
[ ]Charles E. Kruse
[
] FOR
ALL
EXCEPT
(See
instructions below)
The
Board of Directors recommends a vote “FOR ALL NOMINEES.”
INSTRUCTION:
To
withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT”
and fill in the circle next to each nominee you wish to withhold, as shown
here:
[x] If
you do
withhold authority to vote for any nominee(s), your votes will be allocated
equally among the remaining nominees unless you specify a different allocation
in the space above.
A-1
|
2.
|
Proposal
to approve the appointment of Deloitte & Touche LLP as independent
auditors for the Corporation for the fiscal year ending December
31,
2007.
|
FOR AGAINST ABSTAIN
[
]
[
]
[
]
The
Board of Directors recommends a vote “FOR” proposal 2.
To
change
the address on your account, please check the box at right and indicate your
new
address in the address space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method. [ ]
Signature
of Stockholder ___________________________________ Date:
____________
Signature
of Stockholder ___________________________________ Date:
____________
|
Note:
|
Please
sign exactly as your name or names appear on this Proxy. When shares
are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title
as
such. If the signer is a corporation, please sign full corporate
name by
duly authorized officer, giving full title as such. If signer is
a
partnership, please sign in partnership name by authorized
person.
|
A-2
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION
PROXY
FOR
ANNUAL MEETING OF STOCKHOLDERS, JUNE 7, 2007
This
Proxy is Solicited on Behalf of the Board of Directors
The
undersigned hereby appoints Henry D. Edelman, Jerome G. Oslick, and
Timothy L. Buzby, and any of them, as Proxies for the undersigned and to
vote all of the shares of Class A Voting Common Stock of the FEDERAL
AGRICULTURAL MORTGAGE CORPORATION (the “Corporation”) that the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Corporation to
be
held on June 7, 2007, and any and all adjournments thereof.
The
Board of Directors unanimously recommends a vote
FOR
the election of all nominees and FOR proposal 2.
In
their discretion, the Proxies are authorized to vote on such other matters
as
may properly come before the meeting. THIS PROXY IS SOLICITED ON BEHALF OF
THE
BOARD OF DIRECTORS and, when properly executed, will be voted as instructed
herein. If no instructions are given, this proxy will be voted FOR the election
of all nominees and FOR proposal 2.
PLEASE
VOTE, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
A-3
ANNUAL
MEETING OF STOCKHOLDERS
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION
CLASS
B
COMMON STOCK
June
7,
2007
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
↓
Please
detach along perforated line and mail in the envelope provided. ↓
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
1. Election
of Directors:
NOMINEES:
[
] FOR
ALL
NOMINEES
[
] Ralph
W. "Buddy" Cortese
[
]
Paul A. DeBriyn
[
]
Michael A. Gerber
[
] WITHHOLD
AUTHORITY [
]
Ernest M. Hodges
FOR
ALL
NOMINEES [
] John
Dan Raines
[
] FOR
ALL
EXCEPT
(See
instructions below)
The
Board of Directors recommends a vote “FOR ALL NOMINEES.”
INSTRUCTION:
To
withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT”
and fill in the circle next to each nominee you wish to withhold, as shown
here:
[x]
If
you do
withhold authority to vote for any nominee(s), your votes will be allocated
equally among the remaining nominees unless you specify a different allocation
in the space above.
A-4
|
2.
|
Proposal
to approve the appointment of Deloitte & Touche LLP as independent
auditors for the Corporation for the fiscal year ending December
31,
2007.
|
FOR AGAINST ABSTAIN
[ ]
[
]
[
]
The
Board of Directors recommends a vote “FOR” proposal 2.
To
change
the address on your account, please check the box at right and indicate your
new
address in the address space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method. [ ]
Signature
of Stockholder ___________________________________ Date:
____________
Signature
of Stockholder ___________________________________ Date:
____________
|
Note:
|
Please
sign exactly as your name or names appear on this Proxy. When shares
are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title
as
such. If the signer is a corporation, please sign full corporate
name by
duly authorized officer, giving full title as such. If signer is
a
partnership, please sign in partnership name by authorized
person.
|
A-5
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION
PROXY
FOR
ANNUAL MEETING OF STOCKHOLDERS, JUNE 7, 2007
This
Proxy is Solicited on Behalf of the Board of Directors
The
undersigned hereby appoints Henry D. Edelman, Jerome G. Oslick, and
Timothy L. Buzby, and any of them, as Proxies for the undersigned and to
vote all of the shares of Class B Voting Common Stock of the FEDERAL
AGRICULTURAL MORTGAGE CORPORATION (the “Corporation”) that the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Corporation to
be
held on June 7, 2007, and any and all adjournments thereof.
The
Board of Directors unanimously recommends a vote
FOR
the election of all nominees and FOR proposal 2.
In
their discretion, the Proxies are authorized to vote on such other matters
as
may properly come before the meeting. THIS PROXY IS SOLICITED ON BEHALF OF
THE
BOARD OF DIRECTORS and, when properly executed, will be voted as instructed
herein. If no instructions are given, this proxy will be voted FOR the election
of all nominees and FOR proposal 2.
PLEASE
VOTE, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
A-6