<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<TABLE>
Non-Voting
Voting Common Stock Common Stock(2)
Class A Percent Class C Percent
<S> <C> <C> <C> <C>
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%
</TABLE>
____________________
(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
<PAGE>
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.
<TABLE>
Long-Term
Compensation
Awards
Annual Compensation Securities
Fiscal Underlying All Other
Name and Principal Year Salary(6) Bonus Options Compensation(7)
Position
<S> <C> <C> <C> <C> <C>
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
</TABLE>
__________________
(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.
<PAGE>
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.
<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
<S> <C> <C> <C> <C>
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
</TABLE>
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.
<PAGE>
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.
<TABLE>
<S> <C> <C> <C>
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
</TABLE>
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.
<TABLE>
<CAPTION>
Percent Percent
of Total of Total
Number of Shares Voting Shares Shares Held
Name and Address Beneficially Owner Outstanding* By Class**
<S> <C> <C> <C>
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
</TABLE>
_____________________
* 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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
[ ] 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
<PAGE>
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.
<PAGE>
[ ] 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
