-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bo9swxX5m1MpBCPBf8K7gIwxC/8NroHhF+dR8RPTN7pfSaPdrZ5RHL1jnp9Ez9Ls jmPYs9YDtLf39Ix7ZHQQqA== 0000845877-96-000021.txt : 20040503 0000845877-96-000021.hdr.sgml : 20040503 19960429104800 ACCESSION NUMBER: 0000845877-96-000021 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960429 FILED AS OF DATE: 19960429 DATE AS OF CHANGE: 19990831 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL AGRICULTURAL MORTGAGE CORP CENTRAL INDEX KEY: 0000845877 STANDARD INDUSTRIAL CLASSIFICATION: FEDERAL & FEDERALLY-SPONSORED CREDIT AGENCIES [6111] IRS NUMBER: 521578738 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-17440 FILM NUMBER: 96552205 BUSINESS ADDRESS: STREET 1: 1133 21ST STREET, N.W. STREET 2: STE 600 CITY: WASHINGTON STATE: DC ZIP: 20036 BUSINESS PHONE: 2028727700 MAIL ADDRESS: STREET 1: 1133 21ST STREET, N.W. STREET 2: SUITE 600 CITY: WASHINGTON STATE: DC ZIP: 20036 DEF 14A 1 FEDERAL AGRICULTURAL MORTGAGE CORPORATION Farmer Mac 919 18th Street, N.W. Suite 200 Washington, D.C. 20006 ________________ TO HOLDERS OF FARMER MAC VOTING COMMON STOCK April 29, 1996 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 eighth Annual Meeting of Stockholders of the Corporation to be held on Thursday, June 13, 1996, at 9:00 a.m. local time at the Embassy Suites Hotel, 1250 22nd St., 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 1995 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. We look forward to seeing you on June 13. Sincerely, /s/ Eugene Branstool Eugene Branstool Chairman of the Board FEDERAL AGRICULTURAL MORTGAGE CORPORATION ________________ NOTICE OF ANNUAL MEETING April 29, 1996 Notice is hereby given that the eighth Annual Meeting of Stockholders of the Federal Agricultural Mortgage Corporation ("Farmer Mac" or the "Corporation") will be held on Thursday, June 13, 1996, at 9:00 a.m. local time at the Embassy Suites Hotel, 1250 22nd St., N.W., Washington, D.C. 20037. As described in the attached Proxy Statement, the meeting will be held for the following purposes: Item No. 1 to elect ten directors, five of whom will be elected by Class A Stockholders, and five of whom will be elected by Class B Stockholders, to serve until the next annual meeting of stockholders and until their respective successors are elected and qualified; Item No. 2 to ratify the selection of independent auditors for the year 1996; and to consider and act upon any other business that may properly be brought before the meeting or any adjournment thereof. Please read the attached Proxy Statement for complete information on the matters to be considered and acted upon. 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 25, 1996 are entitled to notice of and to vote at the meeting and any adjournment(s) thereof. 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 at the address indicated above, 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 thereon 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/ Michael T. Bennett ____________________________ Michael T. Bennett Corporate Secretary Table of Contents Page Voting Rights 1 Proxy Procedure 2 Proxy Statement Proposals 3 Board of Directors Meetings and Committees 3 Item No. 1: Election of Directors 4 Information about Nominees for Director 5 Class A Nominees 5 Class B Nominees 6 Appointed Members 7 Security Ownership of Directors and Executive Officers 8 Executive Officers 9 Compensation of Directors and Executive Officers 11 - - Compensation of Directors 11 - - Compensation of Executive Officers 11 General 11 Compensation Committee Report on Executive Compensation 12 Summary Compensation Table 17 Option Exercises and Year End Value 18 Employment Agreements 18 Certain Relationships and Related Transactions 19 Performance Graph 21 Stock Option Plan 21 Defined Contribution Pension Plan 22 401(k) Savings Plan 22 Item No. 2: Selection of Independent Auditors 22 Other Matters 23 Principal Stockholders of Voting Common Stock 23 Compliance with Section 16(a) of the Securities Exchange Act of 1934 25 Solicitation of Proxies 25 i FEDERAL AGRICULTURAL MORTGAGE CORPORATION Farmer Mac 919 18th Street, N.W. Suite 200 Washington, D.C. 20006 PROXY STATEMENT For the Annual Meeting of Stockholders to be held on June 13, 1996 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 proxies will be voted at the Annual Meeting of Stockholders of the Corporation (the "Meeting"), to be held on Thursday, June 13, 1996 at 9:00 a.m. local time at the Embassy Suites Hotel, 1250 22nd St., N.W. Washington, D.C. 20037 and at any adjournments or postponements thereof. The Notice of Annual Meeting, this Proxy Statement and the enclosed proxy card are being mailed to stockholders on or about April 29, 1996. The Board of Directors will present for a vote at the Meeting the election of ten members and the ratification of the appointment of KPMG Peat Marwick as independent auditors for the Corporation for 1996. The Board is not aware of any other matter to be presented for a vote at the Meeting. VOTING RIGHTS 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 Class A Voting Common Stock may be held only by banks, insurance companies and other financial entities that are not Farm Credit System institutions. Class B Voting Common Stock may be held only by Farm Credit System institutions. 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. The Board of Directors has fixed April 25, 1996 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 990,000 shares of Class A Voting Common Stock and 593,401 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 Stockholders of Voting Common Stock." The holders of 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. With respect to any matter (other than the election of directors) submitted to a vote of the holders of Voting Common Stock, the Class A Holders and Class B Holders vote together as a single class. PROXY PROCEDURE 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. Unless authority to vote is withheld, proxies will be voted for the election of either the Class A Nominees or the Class B Nominees named herein, whichever is applicable. 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, votes will be cast by the Proxy Committee under the authority granted by the enclosed proxy for such substitute Nominee 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 herein as Class A Nominees and the proxies represented by the Class B Voting Common Stock will be voted in favor of the five Nominees specified herein as Class B Nominees. A proxy submitted by a stockholder may indicate that all or a portion of the shares represented by such proxy are not being voted by such stockholder with respect to a particular matter. This could occur, for example, when a broker is not permitted to vote stock held in street name on certain matters in the absence of instructions from the beneficial owner of the stock. The shares subject to any such proxy that are not being voted with respect to a particular matter (the "non-voted shares") will be considered shares not present and entitled to vote on such matter, although such shares will be counted for purposes of determining the presence of a quorum. Shares voted to abstain as to a particular matter will not be considered non- voted shares. Execution of a proxy will not prevent a stockholder from attending the Meeting, revoking a previously submitted proxy and voting in person. The Proxy Committee, composed of three executive officers of the Corporation, H.D. Edelman, M.T. Bennett and T.R. Clark, will vote all shares of Voting Common Stock represented by proxies signed and returned by stockholders. As authorized by the proxies, 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. Any stockholder who gives a proxy may revoke it at any time before it is voted by notifying the Secretary of the Corporation 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 Michael T. Bennett, Secretary, Federal Agricultural Mortgage Corporation, 919 18th Street, N.W., Suite 200, Washington, D.C. 20006. PROXY STATEMENT PROPOSALS 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 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 stockholders. Proposals of stockholders to be presented at the 1996 Annual Meeting of Stockholders were required to be received by the Secretary of the Corporation prior to December 31, 1995 for inclusion in this Proxy Statement and the accompanying proxy. No such proposals have been received and the Board of Directors knows of no other matters to be presented for action at the Meeting. If any other matters should properly be brought before the Meeting or any adjournment thereof, the Proxy Committee intends to vote such proxy in accord with its members' best judgment. To be eligible for inclusion in the 1997 Proxy Statement and subsequent presentation at the 1997 Annual Meeting of Stockholders, proposals of stockholders must be received by the Secretary of the Corporation prior to December 31, 1996. BOARD OF DIRECTORS MEETINGS AND COMMITTEES The Board of Directors conducted a total of six regular meetings since the last annual meeting in June 1995. Each of the members of the Board of Directors attended 75% or more of the aggregate number of meetings of the Board of Directors and of the committees of which they were members since the last annual meeting. The Board has used a number of committees to assist it in the performance of its duties. The committees currently consist of the following: Audit Committee, Compensation Committee, Executive Committee, Finance Committee, Nominating Committee, Program Development Committee and Public Policy Committee. Each director serves on at least one committee. See "Class A Nominees," "Class B Nominees" and "Appointed Members" for information regarding the committees on which directors serve. See "Item No. 1: Election of Directors," "Compensation of Directors and Executive Officers" and "Item No. 2: Selection of Independent Auditors" for information concerning the Nominating Committee, the Compensation Committee and the Audit Committee, respectively. ITEM NO. 1: ELECTION OF DIRECTORS At the Meeting, ten directors will be elected. 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. Two of the Class A Nominees and four of the Class B Nominees currently are members of the Board of Directors. The directors elected by the Class A Holders and the Class B Holders will hold office until the next annual meeting of the stockholders of the Corporation, or until their successors have been elected and qualify. 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"). As noted under "Appointed Members" below, one of the Appointed Members was confirmed by the Senate on September 30, 1988, two others were confirmed on October 4, 1994 and one other was confirmed on May 24, 1995. The remaining position for a director appointed by the President became vacant on March 13, 1996 as a result of the termination by President Clinton of the services of former Appointed Member Edward Charles Williamson. The Board of Directors, after the election at the Meeting, will consist of the Appointed Members named under "Appointed Members" below and the ten members who are elected by the holders of Voting Common Stock.(1) The Appointed Members serve at the pleasure of the President of the United States. __________________ (1) On October 11, 1995, President Clinton nominated Lowell L. Junkins, Des Moines, Iowa, to be an Appointed Member of the Board of Directors, subject to Senate confirmation. During the Senate's April recess, Mr. Junkins was appointed by President Clinton to serve on the Board of Directors, although he had not been sworn in as of the printing of this Proxy Statement. In order to facilitate the selection of director nominees, the Board of Directors established a single nominating committee in early 1996 consisting of two directors from each of the Board's three constituent groups. The members of the Nominating Committee are: Appointed Members Messrs. Branstool and Southern; Class A directors Messrs. Brandon (not a nominee for re-election) and Nolan; and Class B directors Messrs. Cirona and McCarthy. The Nominating Committee met four times since the last annual meeting. The Nominating 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 Nominating 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 elected and qualify. For the 1997 Annual Meeting of Stockholders, the Nominating Committee will consider nominees recommended by holders of Class A or Class B Voting Common Stock who may submit such recommendations by letter to the Secretary of Farmer Mac. If any of the ten Nominees named below is unable or unwilling to stand as a candidate for the office of director at the date of the Meeting or at any adjournment thereof, the proxies received on behalf of such Nominee will be voted for such substitute Nominee 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. INFORMATION ABOUT NOMINEES FOR DIRECTOR Each of the Nominees has been principally employed in his current position for the past five years unless otherwise noted. CLASS A NOMINEES John C. Dean, 70, has been a member of the Board of Directors of the Corporation since June 9, 1994, and is a member of the Program Development Committee. He is the Chairman of the Board and Chief Executive Officer of Glenwood State Bank, Glenwood, Iowa, a position he has held since 1962. An active farmer, Mr. Dean owns and operates a commercial farm in Mills County, Iowa and a working ranch in central Nebraska. He has held numerous positions with the Independent Bankers Association of America (IBAA), including Chairman of the Agriculture-Rural America Committee and Chairman of the UCC (Article 9) Task Force. Mr. Dean also has been active in the Iowa banking community, serving at various times as an officer and director of both the Iowa Independent Bankers Association and the Iowa Bankers Association. Mr. Dean was a member of the Farmer Mac Appraisal Standards Task Force in 1989. W. David Hemingway, 49, has been Executive Vice President of the Investment Division of Zions First National Bank, Salt Lake City, Utah, since 1984. Prior to that, he held various positions within the investment division, which he assisted in organizing in 1975. He has held numerous positions within the State of Utah, having served as a member of the Great Salt Lake Development Authority and the Utah State Money Management Council of which he served as chairman in 1991. Mr. Hemingway is a member of the Utah Bankers Association, having served as its chairman in 1995. Robert J. Mulder, 52, is President and Chief Executive Officer of Feather River State Bank, Yuba City, California, where he has held various positions within the Bank since 1980. Mr. Mulder is a member of the California Bankers Association, as well as the California Bankers Council of the Independent Bankers Association of America (IBAA). He also serves on the IBAA's National Agriculture-Rural America Committee. David J. Nolan, 71, had been President, Chief Executive Officer and Chairman of the Board of Directors of Central National Bank, Canajoharie, New York, from 1981 until his recent retirement, and currently serves as a member of the Bank's Board of Directors, and as chairman of the Bank's Loan Committee and as a member of its Trust and Investment Committee. Mr. Nolan is a former New York State director of the Farmers Home Administration. He served as a member of the Executive Committee of the Agricultural Bankers Division of the American Bankers Association from 1988 to 1992. Mr. Nolan was a member of the Farmer Mac Credit Underwriting Standards Task Force in 1989. Michael C. Nolan, 40, has been a member of the Board of Directors of the Corporation since June 8, 1995, and is a member of the Finance Committee and the Nominating Committee. He has been a Managing Director with the New York-based investment banking firm of Bear Stearns & Co. Inc. since 1991. From 1984 to 1991, he served as an Investments Representative with the investment firm of Morgan Stanley & Co., Inc. Mr. Nolan earned his B.S. in Agricultural Economics at Cornell University's College of Agriculture and Life Sciences, and is former Chairman (1995) of the Committee on Alumni Trustee Nominations for the University. Mr. Nolan is also the owner and operator of Little Hollow Farms, a small grain crop operation in Cayuga County, New York. CLASS B NOMINEES James M. Cirona, 64, has been a member of the Board of Directors since June 9, 1994, and is Chairman of the Audit Committee and a member of the Executive Committee and the Nominating Committee. He has been the President and Chief Executive Officer of Western Farm Credit Bank since March 1993. From January 1992 until November 1992, Mr. Cirona was Chairman, President and Chief Executive Officer of Homestead Savings, Millbrae, California. From 1983 to 1991, Mr. Cirona was the President and Chief Executive Officer of the Federal Home Loan Bank of San Francisco, the largest of the twelve Federal Home Loan Banks. He also served as a director of the Federal Home Loan Bank of New York from 1981 to 1983, including Vice Chairman in 1982 and Chairman of the Executive Committee in 1983, before moving to San Francisco. From 1977 to 1983 he served as President, Chief Executive Officer and Chairman of the Board of Directors of First Federal Savings and Loan Association of Rochester, New York. James A. McCarthy, 66, has been a member of the Board of Directors of the Corporation since June 9, 1994, and is a member of the Compensation Committee and the Nominating Committee. He is a cotton, grain and sugarcane farmer and cattle feeder in Rio Hondo, Texas. Currently, Mr. McCarthy is a member of the Board of Directors of the Farm Credit Bank of Texas. He is a member of Agriculture Co-Op Development International and has served as a member of the National Commission on Agricultural Finance, the Advisory Board of the Federal Intermediate Credit Bank of Texas and the Board of Directors of the Production Credit Association of South Texas. Mr. McCarthy also serves as an officer and director of several closely held companies engaged in construction, farming, shipping and land acquisition and development. John G. Nelson III, 46, is the owner and manager of a grain farm in Reardan, Washington and an insurance agent offering Farm Bureau insurance. Mr. Nelson is a member of the Farm Bureau, the Washington Wheat Growers and Northwest Farm Credit Services, ACA, as well as several other agricultural organizations. Since 1994, Mr. Nelson has served as a director of AgAmerica, FCB, Spokane, Washington. He also has served as a director of Northwest Farm Credit Services, ACA, and its predecessor PCA. John Dan Raines, Jr., 51, has been a member of the Board of Directors of the Corporation since June 18, 1992, and is a member of the Program Development Committee. He is the owner and operator of Georgia Produce Exchange, Inc., a fresh vegetable sales firm, and Raines Insurance Agency, Inc., a general insurance agency. From 1986 to 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 South Central Farm Credit, ACA, and its predecessor Farm Credit System institution. Darryl W. Rhodes, 45, has been a member of the Board of Directors of the Corporation since June 8, 1995, and is a member of the Audit Committee. He has been the Senior Vice President - Finance of the Farm Credit Bank of Wichita, Kansas, since 1991. From 1986 to 1991, he was a Senior Vice President of the Ninth District Federal Land Bank Association/Production Credit Association, Wichita, Kansas. For 14 years prior to that, he held numerous positions with the Farm Credit Bank of Wichita, including Vice President - Association Supervision. APPOINTED MEMBERS Charles Eugene Branstool, 59, has been a member of the Board of Directors of the Corporation and has served as its Chairman since May 26, 1995. He also serves as Chairman of the Executive Committee, the Compensation Committee and the Nominating Committee and is a member of the Public Policy Committee. His appointment to the Board was confirmed by the United States Senate on May 23, 1995. Mr. Branstool has been a self-employed farmer in Utica, Ohio since 1962. During the period from April 1993 through December 1993, Mr. Branstool served as the Assistant Secretary for Marketing and Inspection Services of the U.S. Department of Agriculture (USDA). Prior to serving with USDA, Mr. Branstool was State Chairman of the Ohio Democratic Party from January 1991 through April 1993. He also served in the Ohio House of Representatives from January 1975 through December 1982, and as a State Senator from January 1983 through December 1990. Marilyn Peters, 66, has been a member of the Board of Directors of the Corporation since October 12, 1994, and is a member of the Public Policy Committee and the Program Development Committee. Her appointment to the Board was confirmed by the United States Senate on October 4, 1994. Mrs. Peters and her husband own farm and ranch land in Marshall County, South Dakota, used for the production of grain crops and cattle. Mrs. Peters is a former teacher and a past member of the Britton Public School Board. In 1985, she was appointed by the Governor of South Dakota to serve on the South Dakota Council on Vocational Education, the South Dakota Private Industry Council and the South Dakota Professional Administrators Practices and Standards Commission. She also has served as a member of the National Association of State Councils on Vocational Education, representing the interest of the agricultural community in the work of the association. Gordon Clyde Southern, 69, has been a member of the Board of Directors of the Corporation since March 2, 1989, and has served as its Vice Chairman since August 1994. He also serves as Chairman of the Public Policy Committee and is a member of the Compensation Committee, the Finance Committee and the Nominating Committee. His appointment to the Board was confirmed by the United States Senate on September 30, 1988. Mr. Southern has been a farmer and President of the Southern Farm Co., Inc. in Steele, Missouri since 1954. He serves as Chairman of the Bootheel Resources Conservation and Development Council and as a member of the Executive Council of the University of Missouri Delta Experiment Station, and is a member of the Lower Mississippi River Valley Flood Control Association. He has served as Presiding Commissioner of Pemiscot County and as Chairman of the Pemiscot County Port Authority. He is currently serving as President of the Pemiscot County Farm Bureau Federation. Clyde A. Wheeler, Jr., 75, has been a member of the Board of Directors of the Corporation since October 12, 1994, and is a member of the Public Policy Committee and the Compensation Committee. His appointment to the Board was confirmed by the United States Senate on October 4, 1994. Mr. Wheeler, a self- employed farmer and rancher, owns and operates with his son the Clear Creek Ranch, a cattle and hay operation in Laverne, Oklahoma. He spent several years in public service, having begun as an administrative assistant to an Oklahoma Congressman in 1951, then as a special assistant to former Secretary of Agriculture Ezra Taft Benson and then as a staff assistant to President Eisenhower. Following his public service career, he spent the next 24 years with Sun Company, Inc. (and its predecessor companies), most recently as corporate Vice President upon his retirement in 1984. In addition to the affiliations set forth above, the Nominees and Appointed Members are active in many local and national trade, commodity, charitable and religious organizations. SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS As of the record date, April 25, 1996, it is believed that the following individuals who are members of the Board of Directors and Nominees for election as directors might be deemed to be "beneficial owners" of equity securities of the Corporation, as defined by the rules and regulations of the Securities and Exchange Commission. The Corporation's Voting Common Stock may be held only by financial institutions and Farm Credit System institutions, and may not be held by individuals. Thus, no officer owns, directly or indirectly, any shares of any class of the Corporation's Voting Common Stock. No Class B Director or Nominee is deemed to be a "beneficial owner" of any equity securities of the Corporation. Furthermore, Appointed Members may not be officers or directors of financial institutions or Farm Credit System institutions; consequently, they may not own Voting Common Stock of the Corporation directly or indirectly. There are no ownership restrictions on the Class C Non-Voting Common Stock. Non-Voting Voting Common Stock Common Stock(2) Class A Percent Class C Percent John C. Dean(3) 800 * 800 * Michael C. Nolan ------ ------ 1,000 * W. David Hemingway(4) 322,000 32.5% 315 * All directors and executive officers as a group 322,000 32.6% 2,115 * _______________ * Less than 1%
____________________ (2) Does not include 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, 40,000 shares; Mr. Bennett, 20,000 shares; Mr. Clark, 20,000 shares; Ms. Corsiglia, 20,000 shares; Mr. Dunn, 5,000 shares; and all directors and officers as a group, 105,000 shares. See "Stock Option Plan" below. (3) As 97% owner of Glenwood Bancorp, which owns 87% of Glenwood State Bank, Glenwood, Iowa (owner of 800 shares each of Class A Voting Common Stock and Class C Non-Voting Common Stock), Mr. Dean may be deemed a beneficial owner of such shares. Mr. Dean disclaims such beneficial ownership. (4) As Senior Investment Officer of Zions First National Bank, Mr. Hemingway, subject to the approval of its President and Chief Executive Officer, may be deemed to have investment control over and the power to vote the 322,000 shares of Class A Voting Common Stock owned by Zions First National Bank and may be deemed to be the beneficial owner of such shares. Mr. Hemingway disclaims such beneficial ownership. The following table sets forth the names and ages of the current executive officers of Farmer Mac and the principal positions held with the Corporation by such executive officers. Name, Age Capacity in which Served and Five-Year History Henry D. Edelman, 47 President and Chief Executive Officer of the Corporation since June 1, 1989. From November 1986 until he joined Farmer Mac, Mr. Edelman was First Vice President for Federal Government Finance of PaineWebber Incorporated, New York, New York. From March 1986 until November 1986, Mr. Edelman was Vice President for Government Finance at Citibank N.A., New York, New York. Previously, Mr. Edelman was Director of Financing, Investments and Capital Planning at General Motors Corporation in New York, New York, where he served in various capacities on the Legal Staff and Financial Staff from 1976 to 1986. Michael T. Bennett, 38 Vice President - General Counsel and Secretary of the Corporation since November 1, 1991. From September 1983 until he joined Farmer Mac, Mr. Bennett was an associate in the Washington, D.C. office of the New York-based law firm of Brown & Wood. Thomas R. Clark, 48 Vice President - Corporate Relations of the Corporation since June 26, 1989. From April 1987 until joining Farmer Mac, Mr. Clark was Minority Counsel to the U.S. Senate Committee on Agriculture, Nutrition and Forestry. From April 1984 until April 1987, he was Deputy Director of the Fruit and Vegetable Division, Agricultural Marketing Service, U.S. Department of Agriculture. Nancy E. Corsiglia, 40 Vice President - Business Development of the Corporation since June 1, 1989 and Treasurer of the Corporation since December 8, 1989. From June 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. Christopher A. Dunn 38, Vice President - Mortgage-Backed Securities of the Corporation since April 5, 1993. From November 1991 until he joined Farmer Mac, Mr. Dunn was a Senior Manager in the Asset Securitization Group at KPMG Peat Marwick, Washington, D.C. From May 1988 to November 1991, he was a Manager-Structured Finance of the Federal Home Loan Mortgage Corporation (Freddie Mac). Charles M. Lewis 70, Vice President - Agricultural Finance of the Corporation since May 2, 1994. From January 1992 until he joined Farmer Mac, Mr. Lewis was a consultant to Farmer Mac and to Feather River State Bank, Yuba City, California, as well as a state lobbyist for the Independent Bankers Association of America. From October 1976 through December 1991, Mr. Lewis was President of Feather River State Bank. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS The Compensation Committee determines, subject to Board of Directors' ratification, the salaries, benefit plans and other compensation of directors and officers of the Corporation. The current members of that committee are Messrs. Branstool (Chairman), Southern, Holthus, McCarthy and Wheeler. No member of the Committee is an officer or employee of the Corporation and no such member is eligible to participate in any of the compensation plans of the Corporation they administer. Since the last annual meeting, the Compensation Committee has met nine times. - - 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, they receive the following compensation: (a) all members of the Board of Directors receive an annual retainer of $10,000, except the Chairman who receives a $15,000 annual retainer;(5) (b) each director receives $500 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 approval of the President, members of the Board are compensated at the same daily rate for certain other meetings and conferences of borrowers, lenders or other groups interested in the Farmer Mac program in which they participate. The total compensation received by all members of the Board of Directors in 1995 was approximately $179,500. ________________ (5) Messrs. Cirona and Dean have waived their rights to receive an annual retainer and Mr. Cirona also has waived his right to receive any attendance fees. - - COMPENSATION OF EXECUTIVE OFFICERS GENERAL This section includes: (i) a report from the Compensation Committee of the Board of Directors on executive compensation; (ii) a summary description in tabular form of executive compensation; (iii) a summary of aggregate option holdings; (iv) a description of the executive officers' employment agreements; (v) a discussion of certain relationships and related transactions with directors; (vi) a comparison of stock performance to market indices; and (vii) a description of the Corporation's benefit plans, including the pension and stock option plans. Notwithstanding anything to the contrary set forth in any of Farmer Mac's documents with respect to the offer or sale of securities ("Offering Circular") or any previous corporate filings under the Securities Act of 1933 or Securities Exchange Act of 1934, neither the Compensation Committee Report on Executive Compensation nor the Performance Graph shall 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 shall not otherwise be deemed to have been or to be filed under such Acts. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Farmer Mac's Compensation Policies. Farmer Mac was created by Congress to establish a secondary market for agricultural and rural housing mortgages much like the secondary market established by the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") for housing mortgages, and thereby provide the farmers, ranchers and rural homeowners of this nation with the same opportunities Fannie Mae and Freddie Mac have provided to homeowners throughout the country. From the outset, the Board of Directors and its Compensation Committee recognized that the accomplishment of those missions would require that Farmer Mac attract and retain highly qualified personnel, and commit itself to compensate them commensurately with what they might earn in comparable positions at similar companies. The Farmer Mac Board recognized that the task of establishing a new secondary market for agriculture would be difficult. Agricultural lending is an industry with a widely dispersed network of primary lenders divided into at least three distinct sectors with dissimilar operating techniques and goals. The common historic thread among the participants in each of those industry sectors has been portfolio lending, and the transition toward securitization could not be expected to be rapid or abrupt. In addition, Farmer Mac was created with certain statutory restraints on its operations that were not in the charters of Fannie Mae or Freddie Mac, in that it could not directly purchase loans and that it could only place its guarantee on securities backed by pools of loans enhanced by a subordinated interest or a reserve fund. Under those circumstances, the challenge facing Farmer Mac was to attract and motivate talented personnel capable of addressing the formidable tasks necessary to accomplish the Corporation's missions, and to encourage them to persevere in their efforts through what would likely be a number of difficult and uncertain years. The solution devised by Farmer Mac's Board of Directors and Compensation Committee in connection with the hiring of the Chief Executive Officer ("CEO") and other senior members of management beginning in June 1989 and continuing (with modifications) to date, was to adopt an approach to executive compensation relying upon both subjective (qualitative) and objective (quantitative) evaluation criteria. That approach relies primarily on measures of performance based on management's accomplishments in implementing business strategies designed to achieve the annual and long-term objectives defined in the Corporation's annual business plan, as approved each year by the Board of Directors. Those strategies have generally included: establishing an efficient loan pricing mechanism through Farmer Mac capable of supporting loan products with competitive rates; establishing an active pooler network that operates ongoing pooling programs; establishing and maintaining internal controls; managing capital; and retaining a highly qualified and motivated management team. The achievement of those strategies, no one of which is given more or less weight than any other, does not necessarily have an immediate or direct effect on the trading price of Farmer Mac's stock. The more subjective approach chosen by the Compensation Committee was preferred over more objective but short-term measures of performance such as profit, return on equity or stock performance, because the Corporation was then (and continues to be) in the developmental stage of establishing a secondary market for agricultural and rural housing mortgages. In general, there was only a limited relationship between Farmer Mac's short-term financial performance and the compensation of any member of senior management. Nor was there any intent to relate compensation to Farmer Mac's stock price performance. Consistent with the Corporation's general approach to measuring management performance for compensation purposes with reference to subjective criteria, the annual compensation packages include so-called "incentive compensation" -- compensation that rewards individual performance in connection with the achievement of non- quantitative goals. The payment of incentive compensation is based upon the Compensation Committee's judgment of the contribution of each member of management in implementing the strategies designed to achieve business plan objectives. The Compensation Committee was disinclined to set volume targets as a basis for determining incentive compensation because Farmer Mac had little, if any, control over the ultimate decision of poolers to sell loans into the secondary market and because of a concern that such targets could lead to an emphasis on volume at the risk of diminished quality. Nevertheless, limited volume targets (intended to reflect the effectiveness of management's efforts to implement the secondary market) were established and included as conditions for payment to management of a portion of incentive compensation. The Compensation Committee did not, however, prioritize the achievement of quantitative over qualitative goals in setting total compensation because the Committee recognized that many of the Corporation's objectives were long-term in nature. Method of Determining Management Compensation Historically and for the 1994-95 Plan Year. In determining an individual's initial compensation, the Compensation Committee considers the level of compensation necessary to attract and retain a person with the required qualifications. Factors considered include the individual's experience, education, accomplishments, reputation and prior compensation, as well as the level of responsibility to be assumed at Farmer Mac. When appropriate, the cost of obtaining comparable services from outside consultants is also taken into account. The Corporation's method of determining annual management compensation has been essentially the same from year to year. In May of each year, at the end of the 12-month business plan cycle ("plan year"), the Compensation Committee, composed entirely of outside directors (as is the entire Board) and including the Chairman of the Board, reviews management's performance in terms of its effectiveness in executing the strategies designed to achieve the objectives defined in the business plan, taking into account the business conditions that prevailed during the preceding plan year. Detailed written performance evaluations are made of the members of senior management other than the CEO, distributed to the Compensation Committee members in advance, and discussed among the members in executive session. The CEO participates in the evaluation of each other senior member of management, but not in his own. As a benchmark for compensation decisions, the Compensation Committee compares the Corporation's compensation practices for its CEO and other senior management with those applicable to middle management at Fannie Mae, Freddie Mac and comparable financial services companies. This comparison is made on both an annual and a multi-year basis, in order to take into account pay levels and rates of increase at Farmer Mac and similar companies. Both Fannie Mae and Freddie Mac are included in the group of companies whose stock performance is reflected in the S&P Financial Index, which is shown in the Performance Graph on page 21. In prior years, the Compensation Committee considered the total compensation of the CEO in executive session, and then included the CEO in its consideration of the total compensation of each of the other members of senior management. Based on those deliberations, the Compensation Committee made compensation decisions (subject to ratification by the Board of Directors) consistent with the Corporation's compensation policies, the terms of the contracts under which the CEO and other senior management are employed, and its ability to attract and retain a management team with the skills and talent necessary to achieve the Corporation's missions. For the 1995 plan year, however, the CEO requested not to be considered for incentive compensation. In an April 1995 letter addressed to the full Board, he noted that "[t]his year. . . Farmer Mac is facing perhaps the greatest challenge of its existence: the need to secure reform legislation without which its future will be highly uncertain. . . . Many people will be watching and assessing Farmer Mac closely in this legislative year, not only in terms of the critical improvement needed in its income potential, but also in terms of its control of expenses. In that regard, I am not unmindful of the visibility of my own incentive compensation and its significance to many of those observers. . . . [A]fter a great deal of thought, I have concluded that it would be in the best interests of Farmer Mac and its stockholders if I were to decline to be considered for or paid any incentive compensation in respect of the June 1, 1994 - May 31, 1995 business planning year, which I hereby do. It is my hope that this action will not only reduce the erosion of Farmer Mac's capital, but also send a clear signal as to my own personal commitment to the success of this corporation and the worthy objectives for which it was created." Accordingly, Mr. Edelman received only his base salary for the 1994-95 plan year and the Compensation Committee did not consider him for incentive compensation. The Compensation Committee evaluated the performance of the other senior management for the 1994-95 plan year (June 1, 1994 to May 31, 1995) by reviewing the contribution of each individual to the accomplishment of the strategies and objectives under the 1994-95 business plan. The Compensation Committee noted that two guarantee transactions had been closed in Farmer Mac I and that Farmer Mac II volume increased approximately 30% from the previous plan year's volume. The committee also evaluated the Corporation's non-financial achievements during the plan year, recognizing that a significant aspect of the development of Farmer Mac involves the establishment of programs that facilitate participation by poolers and provide effective access to the secondary market for stockholders who are loan originators. In that regard, the Compensation Committee considered the strategic alliance agreement entered into with Western Farm Credit Bank during the plan year, and the implementation of the new rural housing loan securitization initiative among Farmer Mac, AgFirst Farm Credit Bank ("AgFirst") and Fannie Mae, as highly significant, though non-financial, accomplishments from a stockholder perspective during the 1994-95 plan year. Those business developments, together with financial results demonstrating stability in the financial condition of Farmer Mac from 1994 to 1995 and management's effectiveness in implementing strategies to minimize the financial impact of loan prepayments, in limiting expenses through cost control measures, and in maximizing revenue through sophisticated investment techniques, were weighed carefully against the limited guarantee activity from poolers, with no one factor given more or less weight than any other. On that basis, the Compensation Committee recommended for approval by the Board the compensation to senior management disclosed herein. The proportion of the total cash compensation package representing incentive compensation for the 1994-95 plan year was 0% for the CEO and ranged between 13% and 17% for other senior management. The basis for determining that compensation was the Compensation Committee's assessment of each individual's performance based on subjective standards including professional competence, motivation, and effectiveness, as well as the individual's contribution to the implementation of strategies designed to achieve the objectives set forth in the business plan for the 1994-95 plan year. After careful deliberation and at the initiative of the Compensation Committee, the Board determined to waive a minimum volume target and grant a portion of the incentive compensation that would otherwise have been dependent on the achievement thereof. Several considerations led to this decision, particularly the negotiation and establishment of the agricultural and rural housing loan pooling arrangements. The Board and Compensation Committee were also disinclined to reduce compensation significantly below prior year levels, which otherwise would have occurred, inasmuch as no year-to- year salary raises or stock options were granted. Basis for Determining Chief Executive Officer's Compensation. Farmer Mac's CEO was hired in June 1989, after having served as financial advisor to the Corporation's interim Board of Directors in connection with Farmer Mac's initial public offering of common stock. The compensation terms for the CEO were set forth in an employment contract, amended from time to time, and based on his years of experience as a successful investment banker, financial advisor to federal government agencies and corporate finance executive and attorney, his prior levels of compensation, his experience with Farmer Mac, the level of responsibilities he would assume at a start-up company and the general level of compensation necessary to attract and retain a person with a comparable background. For the 1994-95 plan year, Mr. Edelman received a base salary of $250,000 and, in accordance with his aforementioned letter, waived consideration for incentive compensation that had totaled $85,000 in the prior year. The Compensation Committee members believe that both the design of Farmer Mac's compensation structure and the actual total compensation levels, as described herein, reflected careful consideration of what was reasonable and fair from both management and stockholder perspectives. Notwithstanding that, as part of its ongoing efforts to evaluate its approach and to refine the Corporation's compensation practices in anticipation of legislative changes to Farmer Mac's authorities, the committee retained the services of Towers Perrin, an independent compensation consultant in 1995. The results of that consultation will be phased in during the 1995-96 plan year and subsequent years and reported in future proxy statements as appropriate. Compensation Committee C. Eugene Branstool, Chairman C.G. Holthus James A. McCarthy G. Clyde Southern Clyde A. Wheeler SUMMARY COMPENSATION TABLE The following table sets forth certain information for each of the last three fiscal years with respect to the compensation awarded to, earned by, or paid to Farmer Mac's Chief Executive Officer and each of Farmer Mac's four other most highly compensated executive officers for the fiscal year ended December 31, 1995. Long-Term Compensation Awards Annual Compensation Securities Fiscal Underlying All Other Name and Principal Year Salary(6) Bonus Options Compensation(7) Position Henry D. Edelman, President 1995 250,000 0 -- 33,160 Chief Executive Officer 1994 250,000 85,000 -- 32,923 1993 230,000 135,000 20,000 35,996 Michael T. Bennett, Vice 1995 154,500 20,000 -- 28,565 President General Counsel 1994 150,000 25,000 -- 28,350 and Secretary 1993 155,000 25,000 -- 22,883 Thomas R. Clark, Vice 1995 149,000 25,000 -- 29,333 President Corporate Relations 1994 145,000 40,000 -- 28,152 1993 140,000 65,000 10,000 22,093 Nancy Corsiglia, Vice 1995 149,000 25,000 -- 27,955 President Business 1994 145,000 40,000 -- 26,950 Development and Treasurer 1993 140,000 65,000 10,000 21,062 Christopher A. Dunn, Vice 1995 141,400 27,500 -- 29,591 President Mortgage-Backed 1994 137,500 42,500 -- 25,253 Securities(8) 1993 98,900 9,200 5,000 13,659
__________________ (6) Effective June 1, 1993, a portion of incentive compensation payable to senior management was reallocated to each such person's base salary. (7) Represents amounts contributed to the defined contribution plan on behalf of the officers named in the table, as well as disability and life insurance premium payments paid on behalf of the officers. See "Defined Contribution Pension Plan" and "Employment Agreements." (8) Mr. Dunn began employment with the Corporation in April 1993. OPTION EXERCISES AND YEAR END VALUE The following table sets forth certain information relating to stock options exercised during 1995 by, and the number and value of unexercised stock options previously granted to, the individuals named in the Summary Compensation Table. Number of Securities Underlying Value of Unexercised Unexercised In-the Options at Money Options Shares Year-End at Year-End on Acquired Value Exercisable/ Exercisable/ Name Exercise Realized Unexercisable Unexercisable Henry D. Edelman -- $ -- 40,000/0 $ 0/0 Michael T. Bennett -- -- 20,000/0 0/0 Thomas R. Clark __ __ 20,000/0 0/0 Nancy E. Corsiglia __ __ 20,000/0 0/0 Christopher A. Dunn -- -- 5,000/0 0/0
EMPLOYMENT AGREEMENTS The Corporation has entered into employment agreements (the "Agreements") with the six members of senior management ("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 expire on dates approximately two to three years from the present,(9) 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 the Agreement. Under the Agreements, executive compensation includes base salary and incentive compensation. Base compensation for all officers is paid bi-weekly over the course of each year. Possible awards of incentive compensation are considered annually at the end of the "plan year" (June 1 to May 31) and are determined and payable under the circumstances discussed above in "Compensation Committee Report on Executive Compensation." The Agreements provide that each officer is entitled to certain benefits, such as disability insurance, health, dental and vision 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 officers. ______________________ (9) The Agreements with each of the executive officers expire June 1 of the following years: H.D. Edelman, 1999; M.T. Bennett, T.R. Clark, N.E. Corsiglia and C.A. Dunn, 1998. 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 final dissolution or one and one-half years. An officer's death or disability would permit termination on the same basis as "without cause," but the Corporation's obligations in such instances are substantially covered by insurance. The Agreements may be terminated by Farmer Mac for "cause," as defined in the Agreements, in which event the officer will be paid only accrued compensation to the date of termination. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS James M. Cirona is President and Chief Executive Officer of Western Farm Credit Bank ("Western"), a Pooler in the Farmer Mac I Program. In November 1994, Farmer Mac and Western entered into a five-year strategic alliance agreement pursuant to which Western has agreed to establish and operate an agricultural loan pooling program open to all Farmer Mac stockholders. As part of its commitment to establish and operate the program, Western has agreed to purchase (at book value) Class B Voting Common Stock and Class C Non-Voting Common Stock to be issued by Farmer Mac in amounts equal to the costs and expenses incurred (or expected to be incurred) in establishing and operating the program, up to a maximum amount of $1.5 million, with a maximum of $500,000 of that amount available for the purchase of Class B Voting Common Stock. Farmer Mac has agreed to provide technical and financial assistance to the program, including purchasing interest-bearing obligations issued by Western in principal amounts corresponding to the cost of purchasing the Class B and Class C Stock. The Notes are repayable, but only out of the segregated assets and property (including profits) of the program and not the assets and property of Western. On January 23, 1996, Western sold a Note in the amount of $557,196 to Farmer Mac and purchased 93,100 shares of Class B Voting Common Stock at $2.47 per share and 44,162 shares of Class C Stock at $7.41 per share (the respective per share book values of the Class B and Class C Stock at the end of the calendar quarter preceding the purchase). As part of its commitment to Farmer Mac, Western also agreed to submit at least $50 million of loans to Farmer Mac for guarantee in a "swap transaction," in return for which it would receive warrants to purchase additional Class C Stock in an amount based on the amount by which the original aggregate principal amount of the loans in the swap transaction exceeded $50 million. The swap transaction closed on February 22, 1995, with a pool containing approximately $71.3 million in principal amount of loans. Warrants were issued to Western on January 31, 1996 to purchase 18,784 shares of Class C Stock at $7.67 per share, expiring February 28, 2005. W. David Hemingway is an Executive Vice President of Zions First National Bank, a dealer in Farmer Mac's discount note program. John Dan Raines, Jr. is a member of the Board of Directors of AgFirst Farm Credit Bank, an entity with whom Farmer Mac and Fannie Mae have entered into a joint arrangement for the pooling of rural housing mortgage loans. Under the arrangement, AgFirst purchases eligible rural housing loans for pooling through the Farmer Mac I Program and the securities issued in connection therewith are to be purchased by Fannie Mae with a guarantee fee payable by AgFirst to Farmer Mac and Fannie Mae. During 1995, Farmer Mac purchased Guaranteed Portions of loans under the Farmer Mac II Program in transactions with institutions related to nominees for election as directors. These transactions were done in the ordinary course of business, with terms and conditions substantially the same as those prevailing for comparable transactions with other persons. They represent an insignificant portion of Farmer Mac's overall business. PERFORMANCE GRAPH Farmer Mac has three classes of Common Stock, Class A and Class B Voting Common Stock and Class C Non-Voting Common Stock (collectively, the "Common Stock"). The Common Stock was issued in Units and, until November 23, 1993, traded as such. A "Class A Unit" consisted of one share of Class A Voting Common Stock and one share of Class C Non-Voting Common Stock. A "Class B Unit" consisted of one share of Class B Voting Common Stock and one share of Class C Non-Voting Common Stock. In accordance with the terms of the initial public offering, the Class C Non-Voting Common Stock separated from the Class A and Class B Units on November 23, 1993 (the "Separation Date"). Since January 1994, the Class A and Class C Common Stock have traded separately on the Nasdaq Small Cap Market tier of the Nasdaq Stock Market, although, through December 1995, each Class traded at a level approximately one-half the price of a Class A Unit prior to the Separation Date.(10) As a result of the limited market for Class B Common Stock and the infrequency of trades therein, the Class B Common Stock does not trade on any market or exchange nor is Farmer Mac aware of any publicly available quotations or prices with respect to Class B Common Stock. The following graph compares the performance of Farmer Mac's Common Stock (initially as a Class A Unit and then, after the Separation Date, as separate Class A and Class C Common Stock) with the performance of the NASDAQ US Stock Market Index ("NASDAQ US Index") and the Standards & Poor's Financial Index ("S & P Financial Index") over the period from December 31, 1991 to December 31, 1995. The graph assumes that $100 was invested on December 31, 1991 in each of Farmer Mac Class A Common Stock; the NASDAQ US Index; and the S & P Financial Index; and that all dividends were reinvested. From December 31, 1991 until the Separation Date, the graph reflects the per unit price of a Class A Unit. Since the Separation Date, the graph reflects the separation-adjusted per share prices of the Class A and Class C Common Stock, each of which traded (through December 1995) at approximately the same per share price (approximately one-half the trading price of a Class A Unit prior to the Separation Date). __________________ (10) Since February 1996, following the passage of the legislation revising Farmer Mac's statutory charter, per share prices of Class C Stock have traded at different levels. Nasdaq US FM S&P-Fin 1990 100 100 100 1991 161 43 158 1992 187 44 185 1993 215 48 224 1994 210 48 212 1995 296 45 264
STOCK OPTION PLAN In 1992, the Board adopted a Stock Option Plan (the "Plan"). The purpose of the Plan is to encourage stock ownership by key management 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 with those of Farmer Mac's stockholders by providing those individuals with the opportunity to acquire an equity interest in Farmer Mac. No options to purchase Class C Non- Voting Common Stock were granted to officers in 1995. The Board has not adopted a director stock option plan. The Plan is administered by the Compensation Committee of the Board. Because individuals are prohibited by law from owning shares of Voting Common Stock, the Corporation uses unrestricted Class C Non-Voting Common Stock for the purpose of granting options under the Plan. The Plan provides for the issuance of "nonqualified" stock options on Class C Non-Voting Common Stock at an option price of $15 per share with a term of 10 years from the date of grant. The Plan was amended in 1993 to increase the maximum number of shares of Class C Non-Voting Common Stock that may be optioned and sold to 115,000. Both the aggregate number of shares of Class C Non-Voting Common Stock available for options under the Plan and the price per share are subject to adjustment to reflect subdivisions or consolidations of shares or any other capital adjustment, payment of a stock dividend or any other increase or decrease in the number of shares outstanding. The option price is payable in cash, and no participant 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 to the participant. If a participant leaves Farmer Mac for any reason, including retirement, all of the participant's rights to exercise any option terminate on the earlier of the option expiration date or 30 days after termination of employment, unless termination was for "cause," in which case the options expire immediately. DEFINED CONTRIBUTION PENSION PLAN Farmer Mac annually contributes a percentage of each employee's base salary to the Corporation's Defined Contribution Pension Plan (the "Pension Plan"). The percentage is equal to the sum of (a) 13.2% of each employee's base salary (not to exceed $150,000) and (b) 5.7% of the amount equal to the employee's base salary (not to exceed $150,000) less the Social Security Taxable Wage Base (which, for 1995, was $61,200). All persons employed by Farmer Mac are eligible to participate in the Pension Plan. The vesting period for the Pension Plan is two years, there is no requirement for a matching contribution by the employee; and there is no defined annual benefit to the employee upon retirement. The "Summary Compensation Table" includes amounts contributed by the Corporation pursuant to the Pension Plan on behalf of the executive officers who are named therein. 401(k) Savings Plan Pursuant to the Corporation's 401(k) Savings Plan (the "Savings Plan"), which is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, participants may increase their retirement savings through tax-deferred contributions. All persons employed by Farmer Mac are eligible to participate. Participants may defer up to 15% of their annual eligible compensation up to the maximum deferral permitted under Federal law ($9,240 for 1995). The Corporation does not contribute any amounts to the Savings Plan. ITEM NO. 2: SELECTION OF INDEPENDENT AUDITORS 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. Since the last annual meeting, the Audit Committee, composed of Messrs. Cirona (Chairman), Brandon (not a nominee for re-election) and Rhodes, met four times. In accordance with the By-Laws, the Audit Committee has unanimously recommended KPMG Peat Marwick as the Corporation's independent auditors for the fiscal year ending December 31, 1996. This proposal is put before the stockholders in conformity with the current practice of seeking stockholder approval of the selection of independent auditors. The ratification of the appointment of KPMG Peat Marwick as the Corporation's independent public accountants requires the affirmative vote of a majority of the shares present in person or by proxy at the Meeting and entitled to be voted. KPMG Peat Marwick acted as the Corporation's independent auditors in connection with the Corporation's audited financial statements for the fiscal years ended December 31, 1989 through 1995. In addition to auditing the Corporation's financial statements, KPMG Peat Marwick also renders related services, such as reviewing the Corporation's quarterly reports to stockholders and other periodic reports required to be filed with the Securities and Exchange Commission. KPMG Peat Marwick also assists the Corporation on various tax and financial matters unrelated to the audits and performs various loan review procedures in connection with the Corporation's guarantee transactions under the Farmer Mac I Program. All such services have been provided at usual and customary rates for similar services. Representatives of KPMG Peat Marwick 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 KPMG Peat Marwick as independent auditors for the Federal Agricultural Mortgage Corporation for 1996. 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. OTHER MATTERS The enclosed proxy confers on the Proxy Committee discretionary authority to vote the shares represented thereby in accordance with their best judgment with respect to all matters that may be brought before the Meeting or any adjournment thereof, in addition to the scheduled items of business, 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 thereof, the persons named in the accompanying proxy intend to vote such proxy in accord with their best judgment. PRINCIPAL STOCKHOLDERS OF VOTING COMMON STOCK It is believed that, as of the date of this Proxy Statement, the following institutions are the beneficial owners of either 5% or more of the total outstanding shares of Voting Common Stock or 5% or more of the outstanding Voting Common Stock held by any class.
Percent Percent of Total of Total Number of Shares Voting Shares Shares Held Name and Address Beneficially Owner Outstanding* By Class** AgAmerica, FCB(11) 86,274 shares of Class B 5.45% 14.54% Spokane, WA 99220 Voting Common Stock AgFirst Farm Credit 84,204 shares of Class B 5.32% 14.19% Bank(12) Voting Common Stock Columbia, SC 29202 AgriBank, FCB 148,441 shares of Class B 9.37% 25.02% St. Paul, MN 55101-1849 Voting Common Stock CoBank 30,136 shares of Class B 1.90% 5.08% Denver, CO 80217-5110 Voting Common Stock Farm Credit Bank of 38,503 shares of Class B 2.43% 6.49% Texas(13) Voting Common Stock Austin, TX 78761 Farm Credit Bank of 45,223 shares of Class B 2.86% 7.62% Wichita(14) Voting Common Stock Wichita, KS 67201 Western Farm Credit 148,350 shares of Class B 9.37% 25.00% Bank(15) Voting Common Stock Sacramento, CA 95813 Zions First National 322,000 shares of Class A 20.34% 32.53% Bank(16) Voting Common Stock Salt Lake City, UT 84111
_____________________ * The percentage is determined by dividing the number of shares of Voting Common Stock owned by the total of the number of shares of 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. (11) John G. Nelson, III, a Class B Nominee, is a director of AgAmerica, FCB. (12) John Dan Raines, Jr., 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. (13) James A. McCarthy, currently a member of the Board of Directors and a Class B. Nominee, is a member of the Board of Directors of the Farm Credit Bank of Texas. (14) Darryl W. Rhodes, currently a member of the Board of Directors and a Class B Nominee, is a Senior Vice President of the Farm Credit Bank of Wichita. (15) James M. Cirona, currently a member of the Board of Directors and a Class B Nominee, is the President and Chief Executive Officer of the Western Farm Credit Bank. (16) W. David Hemingway, a Class A Nominee, is an Executive Vice President of Zions First National Bank. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires Farmer Mac's officers and directors, and persons who 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 Securities and Exchange Commission ("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 its officers, directors, and greater than ten percent beneficial owners complied with all filing requirements applicable to them with respect to transactions during 1995, except that: (a) Form 5s were filed late by AgFirst Farm Credit Bank and Agribank, FCB with respect to Farmer Mac stock acquired by merger of each of those institutions with other institutions that owned Farmer Mac stock; and (b) a Form 3 was filed late by AgAmerica, FCB with respect to Farmer Mac stock acquired by merger of that institution with another institution that owned Farmer Mac stock. Solicitation of Proxies 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 D.F. King & Co., Inc. to act as the Corporation's proxy solicitation firm for a fee of approximately $10,500. In addition to solicitation by mail, employees of D.F. King & Co., Inc. may solicit proxies by telephone, 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 expenses by the Corporation. _____________________________ 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/ Michael T. Bennett ________________________________ Michael T. Bennett Corporate Secretary April 29, 1996 Washington, D.C. APPENDIX A FEDERAL AGRICULTURAL MORTGAGE CORPORATION PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, JUNE 13, 1996 The undersigned hereby appoints Henry D. Edelman, Michael T. Bennett, and Thomas R. Clark, and any of them, as Proxies for the undersigned and to vote all of the shares of the 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 Coporation to be held on June 13, 1996, and any and all adjournments thereof. The Board of Directors unanimously recommends a vote FOR the proposals. In their decision, 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 proposals 1 and 2. PLEASE COMPLETE, SIGN, DATE, AND MAIL IN THE ENCLOSED ENVELOPE. [ ] PLEASE MARK BOXES AS IN THIS EXAMPLE For Withold For All Except 1. Election of Directors [ ] [ ] [ ] Class A Nominees John C. Dean, W. David Hemingway, Rober J. Mulder, David J. Nolan and Michael C. Nolan If you do not wish your shares voted "For" a particular nominee, mark the "For All Except" box and strike a line through the nominee(s) name in the list above. Your shares will be voted for the remaining nominee(s). 2. Proposal to approve the appointment For Against Abstain of KPMG Peat Marwick as independent [ ] [ ] [ ] auditors for the Corporation for the fiscal year ending December 31, 1996. RECORD DATE SHARES: Please be sure to sign and date this Proxy. Date ____________________ Stockholder sign here____________________Co-owner sign here_____________________ DETACH CARD APPENDIX B FEDERAL AGRICULTURAL MORTGAGE CORPORATION PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, JUNE 13, 1996 The undersigned hereby appoints Henry D. Edelman, Michael T. Bennett, and Thomas R. Clark, and any of them, as Proxies for the undersigned and to vote all of the shares of the 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 Coporation to be held on June 13, 1996, and any and all adjournments thereof. The Board of Directors unanimously recommends a vote FOR the proposals. In their decision, 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 proposals 1 and 2. PLEASE COMPLETE, SIGN, DATE AND MAIL IN THE ENCLOSED ENVELOPE. [ ] PLEASE MARK VOTES AS IN THIS EXAMPLE For Withhold For All Except 1. Election of Directors. [ ] [ ] [ ] Class B Nominees: James M. Cirona, James A. McCarthy, John G. Nelson, J. Dan Raines, Jr., and Darryl W. Rhodes If you do not wish your shares voted "For" a particular nominee, mark the "For All Except" box and strike a line through the nominee(s) name in the list above. Your shares will be voted for the remaining nominee(s). 2. Proposal to approve the appointment For Against Abstain of KPMG Peat Marwick as independent [ ] [ ] [ ] auditors for the Corporation for the fiscal year ending December 31, 1996. RECORD DATE SHARES: Please be sure to sign and date this Proxy. Date_____________________________ Stockholder sign here____________________Co-owner sign here____________________ DETACH CARD -----END PRIVACY-ENHANCED MESSAGE-----