Board members of Farm Credit East, ACA (“FCE” or “Association”) will lead by example by conducting ourselves with the highest level of integrity, ethics, and professional conduct. The Board shall strive to avoid all actual, potential, or perceived conflicts of interest. The Board will expect the highest level of personal and professional integrity from the Chief Executive Officer (“CEO”), senior management and all staff of the Association.
Board members are expected to be fully prepared and actively engaged at all meetings, including special assignments.
As directed by the Board Chair, directors will work on and attend special assignments including training and Farm Credit System events and functions. In this role, board members will act as representatives of FCE to enhance its public image, reputation and credibility. Also, directors are expected to cultivate networking contacts to enhance the Association’s position in the Northeast farm and business community as well as within the Farm Credit System.
Our Board size is in accordance with Association Bylaws: Thirteen (13) elected directors, and no fewer than two (2) and no more than four (4) appointed directors. The current Board consists of sixteen (16) directors: thirteen (13) elected, two (2) appointed outside directors1 and one (1) appointed customer director. Each director should possess the qualities set out in the Policy on Director Qualifications.
The Board shall meet at least six (6) times per year as scheduled by the Board Chair in conjunction with the CEO. Special meetings may be held as outlined in Association Bylaws. A majority of the directors present at a meeting shall constitute a Quorum as outlined in the Bylaws.
For regularly scheduled Board meetings, an agenda and other documents for consideration are to be provided to all directors approximately one week in advance. For special meetings of the Board, best efforts shall be made to distribute materials as far in advance as possible. A supplemental Board package, containing any additional or revised documents, may be provided to each director at the commencement of each meeting.
Committees may invite any director, member of Association management, or such other persons as it deems appropriate in order to carry out its responsibilities at a meeting. A committee may also exclude from its meetings any persons it deems appropriate to carry out its responsibilities.
All actions taken and a summary of issues discussed at each board meeting will be documented, reported and approved by the Board at the next scheduled Board meeting. The Corporate Secretary of the Association shall be appointed to keep minutes. Meeting minutes shall include a list of the members attending and a description of the items discussed and actions taken and shall be attested to by the Board Chair and the Corporate Secretary. Meeting minutes shall be kept as permanent records of FCE.
Any action taken by the Board in Executive Session shall be reported to the Corporate Secretary and included in the minutes of the board meeting.
1 Two (2) Board members are outside appointed directors having no stockholder-borrower relationship or ties to management. At least one (1) is designated as a financial expert and shall sit on the Audit Committee.
Primary Oversight Responsibilities
- Disclosure of Accurate Information to Stockholders – the stockholders depend on the Board to provide them the accurate and updated information.
- Approval of Strategy, Annual Business Plan, and Major Policy Decisions – the Board must understand and approve where the Association is going, be continually updated on the Association progress towards those objectives, and must plan for the future.
- Evaluation, Compensation, and Succession of the CEO – the Board must monitor and evaluate our Association’s leader to encourage the Association‘s long-term success. The Board is responsible for overseeing the effective operation of the Association by appointing, assessing performance, compensating, disciplining, and succession planning for the CEO. The Board must ensure that it is developing potential internal CEO candidates such that when the time comes, there are good internal choices as well as external candidates to replace the current CEO. Board duties include developing a position description for the CEO.
- Evaluation, Compensation of Senior Management/Compensation policies of FCE – the Board must ensure that the Association’s senior management team and other responsible persons have the appropriate qualities and competencies to meet the expectations set by the Board and are within relevant regulatory guidelines. The Board is responsible for overseeing the compensation structure of the senior management team and the compensation policies of the Association.
- Oversight of the Management of Risks and the Review of Internal Controls – the Board must be satisfied that the assets of the Association are protected and that there are sufficient internal controls including a robust risk management function.
- Effective Board Governance – to excel in our duties, we need to be functioning properly as a Board with strong members possessing the right skills and the right information to thoroughly discuss issues and come to the best decision as a Board of Directors.
- Compliance with the Farm Credit Act and FCA Regulations - the Association is a federal instrumentality regulated by the Farm Credit Administration (“FCA”). The Board must provide oversight to assure that the Association is in compliance with applicable regulations. Board duties include meeting with FCA as part of the examination process.
- Adherence to Cooperative Principles - the Association must continue to operate on a cooperative basis, including a patronage dividend program in compliance with applicable IRS regulations.
As a Board of Directors, it is vital that we remain independent of Association management. To enhance our independence, we have implemented the following:
- The Board and its committees may meet independently of management at any time. The Board routinely spends part of its meeting in Executive Session without management present. Each director can request such a meeting or reserved agenda item by contacting the Board Chair.
- The Board and each committee have the authority to retain and terminate independent professionals, and each has the authority to approve all fees payable to an independent professional. Directors may retain and terminate an independent professional with the prior approval of the Board Chair.
- The Board elects a strong Chair and Vice Chair with a clear mandate to provide leadership for the directors.
- The Board will create committees from time to time and delegate certain functions to them, as set out in their respective charters. The committee charters are reviewed on an annual basis and are updated and amended as often as needed to respond to the evolving regulatory and market environments in which the Association operates.
- The Board will ensure the provision of high-quality information for directors (i.e. New Director Orientation), meaningful presentations during board meetings, access to management, and sufficient time to review material.
- The Board will ask all directors to pursue a director certification under the Premier Governance Series.
- The Board will actively assess the contributions of the Board including committees annually.
- The Board annually reviews and approves the adequacy and form of compensation for directors.
- The Board supports a robust and independent grass roots nomination process to surface quality director candidates to run for election, including best attempts to surface at least two qualified candidates for each open position.
Meeting these objectives requires thorough preparation for meetings, a deep understanding of the issues, strength of character, integrity, an inquiring mind and a solid understanding of the fiduciary role of a director.
Relationship to the Nominating Committee
FCE has an independent Nominating Committee elected annually from eligible stockholders, as established by the bylaws to surface, evaluate, and recommend candidates to run for director in annual Board elections. No sitting director, director candidate, employee or agent of the Association may be elected to the Nominating Committee. This Board is committed to respecting the independence of the Nominating Committee while providing appropriate information/responses to that committee as to needed skill sets and other questions. Also, management is directed to assist the Nominating Committee in fulfilling its duties by supplying member lists, arranging meetings and like duties, while refraining from participation in the deliberations of the Nominating Committee. The Board Chair will be available as a resource to the Nominating Committee. In a year in which the Board Chair is seeking reelection, he/she shall designate another veteran director who is not seeking reelection to serve as a resource to the Nominating Committee.
The Board shall support the goal of the Nominating Committee to provide for diversity in types of agriculture, geography, business experiences, gender, race and age from within the pool of prospective qualified candidates.
The Board is responsible for oversight of strategy and fundamental goals of the Association. This responsibility includes the adoption of a strategic and annual business plan. This process includes assessment of the major opportunities and risk impact of decisions being contemplated, including considering whether any strategic decision is within the Association’s approved risk appetite. The Board duties also include oversight of the implementation of strategic plans and monitoring performance against such plans.
The Board is responsible for ensuring that the appropriate policies and procedures are in place to protect the assets of the Association and to assure its future viability. The Board is also responsible for identifying and monitoring the principal risks of the Association’s business activities and satisfying itself that appropriate policies, procedures, and practices are in place for the effective management of these risks under the Association risk framework. This responsibility includes reviewing and approving the Association capital levels and also involves monitoring the approval and application of the Association’s risk appetite statement, including any exceptions to its key metrics. The Board functions as the Risk Committee and interacts with the Management Risk Committee.
The Board is responsible for establishing the policies under which the Association operates. This includes reviewing and/or updating Association policies based on new/changed regulations promulgated by FCA and in accordance with emerging/changing business needs.
Internal Controls and Management Information Systems
The Board is responsible for overseeing and monitoring the integrity of the Association’s internal controls, management information systems and audit procedures, and overseeing the appropriate operations of the Association including compliance with all applicable regulatory requirements. The Board must satisfy itself that the financial reporting and financial control systems are operating well and in accordance with GAAP.
The Board recognizes that, for this Charter to be useful, it must be kept current and relevant. To that end, the Governance Committee shall be delegated to conduct a review of this Charter at least annually and recommend any changes to the full Board for approval.
Disclosure of the Charter
This Charter will be posted on FCE’s website and also will be available in print to any shareholder requesting it.