FEDERAL AGRICULTURAL MORTGAGE CORPORATION
Farmer Mac
919 18th Street, N.W.
Suite 200
Washington, D.C. 20006
----------------
TO HOLDERS OF FARMER MAC
NON-VOTING COMMON STOCK
April 28, 1997
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 1997
Annual Meeting of Stockholders of the Corporation to be held on Thursday, June
12, 1997, at 9:00 a.m. local time at the Embassy Suites Hotel, 1250 22nd St.,
N.W., Washington, D.C. 20037.
Although the type of stock you hold does not entitle you to vote at the
meeting and, accordingly, NO PROXY IS REQUESTED, we hope you will be able to
attend and suggest you read the enclosed Notice of Annual Meeting, Proxy
Statement and Annual Report, which will provide you with information about your
Corporation and the meeting. If you plan to attend the meeting, please advise
Farmer Mac's Corporate Secretary at the above address.
We look forward to seeing you on June 12.
Sincerely,
/s/ Eugene Branstool
Eugene Branstool
Chairman of the Board
<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 28, 1997
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 1997
Annual Meeting of Stockholders of the Corporation to be held on Thursday, June
12, 1997, 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 1996 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 12.
Sincerely,
/s/ Eugene Branstool
Eugene Branstool
Chairman of the Board
<PAGE>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
----------------
NOTICE OF ANNUAL MEETING
April 28, 1997
Notice is hereby given that the 1997 Annual Meeting of Stockholders of the
Federal Agricultural Mortgage Corporation ("Farmer Mac" or the "Corporation")
will be held on Thursday, June 12, 1997, 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 by the Audit Committee of KPMG Peat
Marwick LLP as the Corporation's independent auditors for the year
1997;
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 24, 1997 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,
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
Directors Appointed by the President of the United States............7
Stock Ownership of Directors and Executive Officers .......................8
Executive Officers........................................................10
Compensation of Directors and Executive Officers..........................11
- -- Compensation of Directors..............................................11
- -- Compensation of Executive Officers.....................................12
General.............................................................12
Compensation Committee Report on Executive Compensation.............12
Compensation Committee Interlocks and Insider Participation.........16
Summary Compensation Table..........................................17
Option Grants During 1996...........................................18
Option Exercises and Year End Value.................................19
Employment Agreements.............................................. 20
Certain Relationships and Related Transactions......................20
Performance Graph...................................................22
Stock Option Plans..................................................24
Defined Contribution Pension Plan...................................25
401(k) Savings Plan.................................................25
Item No. 2: Selection of Independent Auditors............................25
Other Matters.............................................................26
Principal Stockholders of Voting Common Stock.............................27
Compliance with Section 16(a) of the Securities Exchange Act of 1934......28
Solicitation of Proxies...................................................28
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 12, 1997
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
12, 1997 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 28, 1997.
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 LLP
as independent auditors for the Corporation for 1997. 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.
<PAGE>
The Board of Directors has fixed April 24, 1997 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 990,200 shares of Class A Voting Common Stock and 500,301 shares of
Class B Voting Common Stock, which constitute the only outstanding capital stock
of the Corporation entitled to vote at the Meeting. See "Principal 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. 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 1997 Annual Meeting of
Stockholders were required to be received by the Secretary of the Corporation
prior to December 31, 1996 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 1998 Proxy Statement, proposals of
stockholders must be received by the Secretary of the Corporation prior to
December 30, 1997.
Board of Directors Meetings and Committees
The Board of Directors conducted a total of seven regular meetings since
the last annual meeting in June 1996. 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 "Directors Appointed by the President of the United States" 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.
<PAGE>
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. Four 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 respective
successors have been duly elected and qualified.
The Act further provides that the President of the United States will
appoint five members to the Board of Directors with the advice and consent of
the United States Senate (the "Appointed Members"). As noted under "Directors
Appointed by the President of the United States" below, one of the Appointed
Members was confirmed by the Senate on September 30, 1988, two were confirmed on
October 4, 1994, one was confirmed on May 24, 1995 and the other was appointed
by the President of the United States on April 12, 1996, during a recess of the
Senate. The Board of Directors, after the election at the Meeting, will consist
of the Appointed Members named under "Directors Appointed by the President of
the United States" below and the ten members who are elected by the holders of
Voting Common Stock. The Appointed Members serve at the pleasure of the
President of the United States.
In order to facilitate the selection of director nominees, the Board of
Directors utilizes a nominating committee 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.
Hemingway and David Nolan; and Class B directors Messrs. McCarthy and Nelson.
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 duly elected and
qualified.
For the 1998 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(s) 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, 71, has been a member of the Board of Directors of the Corporation
since June 9, 1994, and is a member of the Audit 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, 50, has been a member of the Board of Directors of the
Corporation since June 13, 1996, and is a member of the Compensation Committee
and the Nominating Committee. He 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.
Mitchell A. Johnson, 55, is President of MAJ Capital Management, Inc., an
investment management firm which he founded in 1994 following his retirement
from the Student Loan Marketing Association (Sallie Mae), the nation's largest
provider of college education financing. During his 21 years with Sallie Mae,
Mr. Johnson held numerous positions within that organization including, for the
seven years preceding his retirement, Senior Vice President, Corporate Finance.
Mr. Johnson was the first President and one of the founding members of the
Washington Association of Money Managers and is a Trustee of the District of
Columbia Retirement Board among other community activities.
Robert J. Mulder, 53, has been a member of the Board of Directors of the
Corporation since June 13, 1996, and is a member of the Program Development
Committee. He 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 and is President and Chief Executive Officer of California
Independent Bancorp, the bank's holding company. Mr. Mulder is a former member
of the California Bankers Association and a current member of the California
Bankers Council of the IBAA. He also serves on the IBAA's National
Agriculture-Rural America Committee.
David J. Nolan, 72, has been a member of the Board of Directors of the
Corporation since June 13, 1996, and serves as chairman of the Program
Development Committee and is a member of the Executive Committee and the
Nominating Committee. He had been President, Chief Executive Officer and
Chairman of the Board of Directors of Central National Bank, Canajoharie, New
York, from 1981 until his retirement in 1994, 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.
Class B Nominees
Kenneth E. Graff, 50, has served in the dual capacity as President of the
Central Coast Federal Land Bank Association, FLCA and the Central Coast
Production Credit Association (both located in Arroyo Grande, California) since
late 1987. Mr. Graff was previously employed by the Farm Credit Banks of
Sacramento in various capacities from 1976 to 1987, most recently as Senior Vice
President. From March 1989 until June 1991, Mr. Graff served as a Class B member
of the Farmer Mac Board of Directors.
James A. McCarthy, 67, has been a member of the Board of Directors of the
Corporation since June 9, 1994, and is a member of the Executive Committee, 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, 47, has been a member of the Board of Directors of the
Corporation since June 13, 1996, and is a member of the Finance Committee and
the Nominating Committee. He 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., 52, 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, 46, has been a member of the Board of Directors of the
Corporation since June 8, 1995, and serves as chairman 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.
Directors Appointed by the President of the United States
Charles Eugene Branstool, 60, 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.
Lowell L. Junkins, 52, has been a member of the Board of Directors of the
Corporation since June 12, 1996, and is a member of the Audit Committee and the
Public Policy Committee. He was appointed to the Board of Directors by President
Clinton in April 1996 while the Senate was in recess. In January 1997, President
Clinton renominated Mr. Junkins to be an Appointed Member of the Board; on April
10, 1997, the Senate conducted a confirmation hearing on his renomination and,
if confirmed by the Senate, as anticipated, his Board tenure would extend beyond
the limits of the recess appointment, which would otherwise expire at the
conclusion of the first session of the 105th Congress (year-end 1997). From 1974
through 1986, Mr. Junkins served as an Iowa State Senator, including as majority
leader from 1981 to 1986. He owns and operates Hillcrest Farms in Montrose,
Iowa, where he served as Mayor from 1971 to 1972. Mr. Junkins works as a public
affairs consultant for Junkins-Hultman Associates in Des Moines, Iowa.
Marilyn Peters, 67, has been a member of the Board of Directors of the
Corporation since October 12, 1994, and serves as chairman of the Public Policy
Committee and is a member of 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, 70, 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 is a member of the Public Policy Committee, 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., 76, 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.
Stock Ownership of Directors and Executive Officers
As of the record date, April 24, 1997, the following members of the Board
of Directors, Nominees for election as directors and executive officers of the
Corporation might be deemed to be "beneficial owners" of equity securities of
the Corporation, as defined by the rules of the Securities and Exchange
Commission; those members, Nominees and executive officers not listed below
would not be deemed to be beneficial owners, since they do not own any equity
securities of the Corporation. 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 executive officer owns, directly or indirectly,
any shares of any class of the Corporation's Voting Common Stock. Furthermore,
Appointed Members may not be officers or directors of financial institutions or
Farm Credit System institutions; 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. For information about the
beneficial owners of 5% or more of the Voting Common Stock of the Corporation,
see "Principal Stockholders of Voting Common Stock."
<PAGE>
<TABLE>
<CAPTION>
Voting Common Stock Non-Voting Common
Stock1
<S> <C> <C> <C> <C>
Class A Percent Class C Percent
Michael T. Bennett ------ ------ 29,944 1.1%
Thomas R. Clark ------ ------ 31,281 1.2%
Nancy E. Corsiglia ------ ------ 31,217 1.2%
John C. Dean2 800 * 800 *
Christopher A. Dunn ------ ------ 19,338 *
Henry D. Edelman ------ ------ 70,177 2.6%
W. David Hemingway3 322,000 32.5% 338 *
Mitchell A. Johnson ------ ------ 500 *
Charles M. Lewis ------ ------ 5,197 *
All directors and
executive officers as a 322,800 32.6% 188,792 7.0%
group
- ---------------
* Less than 1%
</TABLE>
- --------------------
1 Includes shares of Class C Non-Voting Common Stock that may be acquired
within 60 days through the exercise of stock options as follows: Mr. Edelman,
66,520 shares; Mr. Bennett, 29,944 shares; Mr. Clark, 25,193 shares; Ms.
Corsiglia, 30,166 shares; Mr. Dunn, 18,342 shares; Mr. Lewis, 4,862; and all
directors and officers as a group, 175,027 shares. See "Stock Option Plans"
below.
2 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.
3 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. Of the 338 shares of Class C Non-Voting Common Stock, 273
shares are owned by Mr. Hemingway's two sons.
<PAGE>
Executive Officers
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Capacity in which Served and Five-Year History
Henry D. Edelman 48 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 39 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 49 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 41 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 39 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 LLP, 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 71 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.
</TABLE>
<PAGE>
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, Hemingway, McCarthy and Wheeler. No
member of the Committee is an officer or employee of the Corporation. Since the
last annual meeting, the Compensation Committee has met three 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;4 (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 1996 was approximately $169,000. The 1997 stock option plan adopted
by the Board in early 1997 anticipates the automatic annual grant to directors
of options to purchase 2,000 shares of Class C Non-Voting Common Stock, with the
first such grant to occur on the business day following the Meeting and with
subsequent grants to occur on each successive annual date thereafter, with the
option price to be determined as of such date. See "Compensation of Executive
Officers -- Stock Option Plans -- 1997 Plan."
- -- 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 discussion of compensation
committee interlocks and insider participation in Farmer Mac transactions; (iii)
a summary description in tabular form of executive compensation; (iv) a summary
of aggregate option holdings; (v) a description of the executive officers'
employment agreements; (vi) a discussion of certain relationships and related
transactions with directors; (vii) a comparison of stock performance to market
indices; and (viii) a description of the Corporation's benefit plans, including
the pension and stock option plans.
- -------------------
4 Through year-end 1996, Mr. Dean had waived his right to receive an annual
retainer.
<PAGE>
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. The Farmer Mac Board realized that the
task of establishing a new secondary market for agriculture would be difficult,
particularly in light of certain statutory constraints on its operations that
were not in the charters of Fannie Mae or Freddie Mac. Farmer Mac could not
purchase loans directly from lenders and it could only place its guarantee on
securities backed by pools of loans enhanced by a subordinated interest or a
reserve fund. From the outset, the Board of Directors and its Compensation
Committee recognized that the accomplishment of Farmer Mac's mission would
require that it attract, retain and motivate highly qualified personnel capable
of addressing the formidable tasks necessary to accomplish the Corporation's
mission, and to persevere in their efforts through what would likely be a number
of difficult and uncertain years. Under the circumstances, it was necessary for
Farmer Mac to undertake to compensate those employees in a manner consistent
with comparable positions at similar companies notwithstanding limitations on
growth posed by the statutory constraints.
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 to
date, with modifications, was to adopt an approach to executive compensation
that relied upon both subjective (qualitative) and objective (quantitative)
evaluation criteria. That approach measured performance primarily on the basis
of 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. Historically,
those criteria had related to efficient pricing of Farmer Mac guaranteed
securities and expansion of the pooler and seller networks. Recognizing the
urgent need for legislative changes to Farmer Mac's charter and for business
volume under a revised charter, the Board and management established three
critical objectives for the 1995-96 business planning year (June 1, 1995 to May
31, 1996): (1) revisions to the Farmer Mac charter; (2) specific volume targets
for new guarantee obligations; and (3) continuing improvements to internal
controls. The achievement of those objectives was designated by the Compensation
Committee as the principal criteria for executive compensation for that planning
year.
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 Compensation Committee retained the services of
Towers Perrin, an independent compensation consultant, in mid-1995. That
consultation indicated that, with certain increases, Farmer Mac's salary
policies were generally competitive, but that its annual and long-term
compensation policies needed to be revised to emphasize the creation of a
greater management equity stake in Farmer Mac's future. Over the next twelve
months, the Committee worked closely with Towers Perrin to develop the
recommended revisions. Those efforts culminated in the adoption of: (i) a
management performance evaluation form that evaluated more particularly each
member of management's performance against the achievement of business plan
objectives; and (ii) a non-cash compensation program pursuant to which stock
grants and/or stock options would be awarded as part of an individual's annual
compensation.
Method of Determining Management Compensation Historically and for the
1995-96 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 other comparable private sector 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 23.
The Compensation Committee considers the total compensation of the CEO in
executive session, and then includes 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 makes 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.
The Compensation Committee evaluated the performance of the senior
management for the 1995-96 plan year by reviewing the contribution of each
individual to the accomplishment of the strategies and objectives under the
1995-96 business plan, consistent with the recommendations of Towers Perrin. 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 involved 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 legislative revisions to Farmer Mac's statutory charter and the opening of a
cash window for the purchase of agricultural mortgages as highly significant,
though non-financial, accomplishments from a stockholder perspective during the
1995-96 plan year. Those business developments, together with financial results
demonstrating stability in the financial condition of Farmer Mac from 1995 to
1996 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, with each factor being accorded more or less equal
weight, except for achievement of the legislative charter revisions, which was
given somewhat more weight than the others. On that basis, the Compensation
Committee approved (subject to Board ratification) the compensation to senior
management disclosed herein.
The proportion of the total compensation package representing incentive
compensation for the 1995-96 plan year was 26% for the CEO and ranged between
13% and 19% for other senior management. In accordance with the recommendation
of Towers Perrin, a portion of incentive compensation ranging from 67% to 88%
represented stock grants and stock option awards. The basis for determining
incentive compensation was the Compensation Committee's evaluation 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 1995-96 plan year.
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 1995-96 plan year, Mr. Edelman received a base salary of
$273,000 and was awarded incentive compensation with a total value of $96,000.
With respect to the incentive compensation component of Mr. Edelman's total
compensation, he received options to purchase 39,780 shares of Farmer Mac Class
C Non-Voting Common Stock (options, valued at $48,000 as of the grant date, to
purchase 13,260 shares of stock vested immediately upon grant; the remaining
options vest one-half on each of May 31, 1997 and May 31, 1998) and, with
respect to the remaining $48,000, he requested and received 60% in Farmer Mac
Class C Non-Voting Common Stock (valued at $28,800 as of the date of award) and
the remainder in cash.
The Compensation Committee members believe that both the design of Farmer
Mac's compensation structure, as revised with the assistance of its outside
compensation consultant, and the actual total compensation levels, as described
herein, reflected careful consideration of what was reasonable and fair from
both management and stockholder perspectives.
Compensation Committee
C. Eugene Branstool, Chairman
W. David Hemingway
James A. McCarthy
G. Clyde Southern
Clyde A. Wheeler
<PAGE>
Compensation Committee Interlocks and Insider Participation
Directors Branstool, Hemingway, McCarthy, Southern and Wheeler comprise
the Corporation's Compensation Committee. None of these directors is or has been
an officer or employee of the Corporation.
Director Hemingway, a Class A director, is an Executive Vice President of
the Investment Division of Zions First National Bank ("Zions"), the owner of
322,000 shares (or 32.5%) of Farmer Mac's Class A Voting Common Stock. Zions has
entered into a letter agreement with Farmer Mac expressing its intent to
originate and purchase Qualified Loans for sale into the Farmer Mac I program.
Zions has entered into contracts with Farmer Mac pursuant to which Zions will
provide central servicing and loan review and underwriting services to Farmer
Mac with respect to certain Qualified Loans, including (with respect to central
servicing) those sold by Zions to Farmer Mac. In addition, Zions serves as a
dealer in Farmer Mac's discount note program and is an active participant in the
Farmer Mac II program.
<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, 1996.
<TABLE>
<CAPTION>
Long -Term
Compensation
Awards
-------------
Securities
Fiscal Annual Underlying All Other
Compensation ($)
------------------
Name and Principal Year Salary Bonus Options Compensation($)5
Position
- --------------------------- -------- --------- -------- -- ------------- -------------
<S> <C> <C> <C> <C> <C>
Henry D. Edelman, 1996 309,019 48,000 39,780 33,193
President and
Chief Executive Officer 1995 250,000 0 -- 33,160
1994 250,000 85,000 -- 32,923
Michael T. Bennett, Vice 1996 181,843 9,000 14,916 28,630
President --
General Counsel and 1995 154,500 20,000 -- 28,565
Secretary
1994 150,000 25,000 -- 28,350
Thomas R. Clark, Vice 1996 181,451 14,100 15,579 29,370
President --
Corporate Relations 1995 149,000 25,000 -- 29,333
1994 145,000 40,000 -- 28,152
Nancy Corsiglia, Vice 1996 181,451 13,800 15,249 28,106
President --
Business Development 1995 149,000 25,000 -- 27,955
and Treasurer 1994 145,000 40,000 -- 26,950
Christopher A. Dunn, Vice 1996 175,861 12,075 20,013 28,222
President --
Mortgage-Backed 1995 141,400 27,500 -- 29,591
Securities
1994 137,500 42,500 -- 25,253
</TABLE>
- ------------------
5 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."
<PAGE>
- --------------------------------------------------------------------------------
Option Grants During 1996
- --------------------------------------------------------------------------------
The table below sets forth, as to each of the named executive officers,
the following information with respect to option grants during 1996 and the
potential realizable value of such option grants: (i) the number of shares of
Class C Non-Voting Common Stock underlying options granted during 1996; (ii) the
percentage that such options represent of all options granted to employees
during that year; (iii) the exercise price; (iv) the expiration date; and (v)
the present value, as of the grant date, of the options under the option pricing
model discussed below.
<TABLE>
<CAPTION>
% of Total
Options
Number of Granted to Hypothetical
Options Employees Exercise Price Expiration Value at
Name Granted6 in Year ($/Share) Date Grant Date7
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Henry D. Edelman 39,780 35.26 7.875 6/13/06 $148,379
Michael T. Bennett 14,916 13.22 7.875 6/13/06 55,637
Thomas R. Clark 15,579 13.81 7.875 6/13/06 58,110
Nancy E. Corsiglia 15,249 13.52 7.875 6/13/06 56,879
Christopher A. 20,013 17.74 7.875 6/13/06 74,648
Dunn
</TABLE>
- -----------------
6 Options granted in 1996 became exercisable in stages, with 1/3 vesting on
June 13, 1996, and one-half of the remainder vesting on each of May 31, 1997
and May 31, 1998.
7 The hypothetical value at grant date of options granted during 1996 has
been estimated on the date of the grant using the Black Scholes option pricing
model with the following assumptions: a dividend yield of 0.0%; an expected
volatility of 42.8%; a risk free interest rate of 6.7%; and an expected life of
5 years.
<PAGE>
Option Exercises and Year End Value
The following table sets forth certain information relating to stock
options exercised during 1996 by, and the number and value of unexercised stock
options previously granted to, the individuals named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
Number of
Securities Value of Unexercised
Underlying In-the-Money Options
Unexercised at Year-End 8
Options
at Year-End
Shares Value Exercisable/ Exercisable/
Name Acquired Realized Unexercisable Unexercisable
on Exercise
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Henry D. Edelman -- $-- 53,260 / 26,520 $1,270,922 / $606,645
Michael T. Bennett -- -- 24,972 / 9,944 597,534 / 227,469
Thomas R. Clark -- -- 25,193 / 10,386 602,590 / 237,580
Nancy E. Corsiglia -- -- 25,083 / 10,166 600,074 / 232,547
Christopher A. Dunn -- -- 11,671 / 13,342 273,549 / 305,198
</TABLE>
- -------------------
8 For purposes of this calculation, the value of the unexercised options is
determined by multiplying the number of options by the difference between the
exercise price and the closing price for the class C Non-Voting Common Stock on
December 31, 1996.
<PAGE>
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 four 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.
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.
- -------------------
9 The Agreements with each of the executive officers expire June 1 of the
following years: H.D. Edelman, 2001; M.T. Bennett, T.R. Clark, N.E. Corsiglia
and C.A. Dunn, 1999.
<PAGE>
Certain Relationships and Related Transactions
John Dan Raines, Jr., a Class B director of Farmer Mac, is a member of the
Board of Directors of AgFirst Farm Credit Bank ("AgFirst"), a System Institution
with which Farmer Mac and Fannie Mae have entered into a joint arrangement for
the pooling of Rural Housing Qualified Loans. Under the arrangement, AgFirst
purchases eligible Rural Housing Qualified Loans for pooling through the Farmer
Mac I program and Farmer Mac-guaranteed 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. To date, no such Farmer Mac-guaranteed
securities have been issued thereunder.
Michael C. Nolan, a former Class A director of Farmer Mac who resigned
from the Board on April 15, 1997, is a Senior Managing Director of Bear, Stearns
& Co. Inc., an underwriter of Farmer Mac-guaranteed securities and a dealer in
Farmer Mac's medium term notes and discount notes programs.
From time to time, Farmer Mac purchases Qualified Loans under the Farmer
Mac I program and Guaranteed Portions under the Farmer Mac II program from
institutions which own five percent or more of a class of Voting Common Stock or
which have an officer or director who is a director on the Farmer Mac Board.
These transactions are conducted in the ordinary course of business, with terms
and conditions comparable to those applicable to lenders unaffiliated with
Farmer Mac. The principal amount of Qualified Loans purchased by Farmer Mac
under the Farmer Mac I program through its cash window in 1996 from
director-affiliated institutions is an insignificant portion of such program.
Farmer Mac purchased five loans having an aggregate principal amount of
$1,302,000 from Zions First National Bank, Salt Lake City, Utah ("Zions"). Zions
is the holder of approximately 32.5% of Farmer Mac's Class A Voting Common Stock
and W. David Hemingway, a Class A director of Farmer Mac, is Executive Vice
President of the Investment Division of Zions. In 1996, Farmer Mac also
purchased: two loans having an aggregate principal amount of $350,000 from
Feather River State Bank ("FRSB"), Yuba City, California (Robert J. Mulder, a
Class A director of Farmer Mac, is President and Chief Executive Officer of
FRSB); and one loan having a principal amount of $80,000 from Glenwood State
Bank, Glenwood, Iowa (John C. Dean, a Class A director of Farmer Mac, is the
Chief Executive Officer and Chairman of the Board of Glenwood State Bank). The
principal amount of Guaranteed Portions purchased by Farmer Mac under the Farmer
Mac II program from director-affiliated institutions or five percent or greater
shareholders was less than 15% of that program's volume in 1996. During 1996,
Farmer Mac entered into Farmer Mac II transactions with Zions involving the
purchase of Guaranteed Portions by Farmer Mac or the issuance of Farmer Mac II
guaranteed securities backed by Guaranteed Portions in an aggregate principal
amount of $10,945,600 (11.8% of the program's total). In 1996, Farmer Mac also
purchased: $2,688,000 principal amount of Guaranteed Portions (2.9% of the
program's total) from Central National Bank, Canajoharie, New York (David J.
Nolan, a Class A director of Farmer Mac, is a member of the Board of Directors
and had been President and Chief Executive Officer and Chairman of the Board of
Central National Bank); and $766,800 principal amount of Guaranteed Portions
(0.8% of the program's total) from FRSB.
In addition to its participation in the Farmer Mac programs, Zions also
acts as a dealer in Farmer Mac's discount note program and acts as a central
servicer and contract underwriter for Farmer Mac in the Farmer Mac I program.
In June 1996, Farmer Mac purchased $121 million aggregate principal amount
of Qualified Loans from Western Farm Credit Bank ("WFCB") (the holder of 11% of
Farmer Mac's Class B Voting Common Stock) in two separate transactions. These
purchases occurred under the Strategic Alliance Agreement between WFCB and
Farmer Mac, with the price paid by Farmer Mac for the loans being based on the
price offered to Farmer Mac by capital markets investors for the Farmer
Mac-guaranteed securities backed by those loans. Also in late 1996, Farmer Mac
and WFCB engaged in discussions that led to the settlement in early 1997 of the
litigation Farmer Mac had commenced in the fall of 1996 against WFCB under the
Strategic Alliance Agreement. In connection with the dispute underlying the
litigation, James M. Cirona, the President and Chief Executive Officer of WFCB,
resigned his position as a Class B director on the Farmer Mac Board in July
1996. As part of the settlement, the parties terminated the Strategic Alliance
Agreement and agreed to other terms, including: the waiver by Farmer Mac of
certain restrictions in the Agreement that had limited the ability of WFCB to
sell the approximately 63,000 shares of Farmer Mac Class C Non-Voting Common
Stock sold or optioned to WFCB under the Agreement; and the repurchase by Farmer
Mac of the approximately 93,000 shares of Class B Voting Common Stock sold to
WFCB under the Agreement. While other terms of the settlement are subject to a
confidentiality agreement between Farmer Mac and WFCB, the settlement did not
have a material adverse effect on Farmer Mac's financial condition.
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 Stock
Market,10 although, through January 1996, each Class traded at a level
approximately one-half the price of a Class A Unit prior to the Separation
Date.11 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.
- -------------------
10 The Class A Voting Common Stock is listed on the Nasdaq SmallCap tier of
the Nasdaq Stock Market (trade symbol - FAMCA) and the Class C Non-Voting
Common Stock is listed on the Nasdaq National Market (trade symbol - FAMCK).
11 Since February 1996, following the passage of the legislation revising
Farmer Mac's statutory charter, per share prices of Class A and Class C Stock
have traded at different levels.
<PAGE>
The following graph compares the performance of Farmer Mac's Class A
Voting Common Stock (initially purchased as part of a Class A Unit) with the
performance of the NASDAQ US Stock Market Index ("NASDAQ US Index") and the
Standard & Poor's Financial Index ("S & P Financial Index") over the period from
December 31, 1991 to December 31, 1996. The graph assumes that $100 was invested
on December 31, 1991 in each of Farmer Mac Class A Units; 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 (assuming the value of a
share of Class A Voting Common Stock represented 50% of the price of a Class A
Unit) reflects one-half of the per unit price of a Class A Unit. Since the
Separation Date, the graph reflects the per share price of the Class A Voting
Common Stock. [GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Graph Data
<S> <C> <C> <C>
1990 100 100 100
1991 161 43 158
1992 187 44 185
1993 214 48 224
1994 210 48 212
1995 296 45 264
1996 365 317 348
</TABLE>
<PAGE>
Stock Option Plans
General. The purpose of Farmer Mac's stock option plans is to encourage
stock ownership by directors, officers and other key employees, to provide an
incentive for such individuals to expand and improve the business of Farmer Mac
and to assist Farmer Mac in attracting and retaining key personnel. The use of
stock options is an attempt to align more closely the long-term interests of
employees with those of Farmer Mac's stockholders by providing those individuals
with the opportunity to acquire an equity interest in Farmer Mac. Farmer Mac's
stock option plans are administered by the Compensation Committee of the Board.
Because individuals are prohibited by law from owning shares of Voting Common
Stock, the Corporation uses unrestricted Class C Non-Voting Common Stock for the
purpose of granting options under its stock option plans. Under the plans, the
option price is required to be paid in cash, and no 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.
1992 Plan. In 1992, the Board adopted a Stock Option Plan (the "1992
Plan") for key management employees. The 1992 Plan provided for the issuance of
nonqualified stock options on Class C Non-Voting Common Stock at an original
option price of $15 per share, subject to adjustment pursuant to the plan's
anti-dilution provision, 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. Options
covering 105,000 shares were granted under the 1992 Plan and have an adjusted
option price of $6.56 per share.
If a participant leaves Farmer Mac for any reason, including retirement,
all of that participant's rights to exercise any option under the 1992 Plan
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.
1996 Plan. In 1996, the Board adopted a second Stock Option Plan (the
"1996 Plan") for key management employees. The 1996 Plan provided for the
issuance of nonqualified stock options on Class C Non-Voting Common Stock at an
option price of $7.875 per share, subject to adjustment pursuant to the plan's
anti-dilution provision, with a term of 10 years from the date of grant. The
1996 Plan specified that the maximum number of shares of Class C Non-Voting
Common Stock that may be optioned and sold was 112,830. Options covering all
112,830 shares were granted under the 1996 Plan in stages, with one-third
vesting on June 13, 1996, May 31, 1997 and May 31, 1998, respectively. See
"Compensation of Executive Officers -- Option Grants During 1996."
If a participant leaves Farmer Mac for any reason, including retirement,
all of that participant's rights to exercise any option under the 1996 Plan
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.
1997 Plan. In early 1997, the Board adopted a Stock Option Plan (the "1997
Plan") for directors, officers and key employees. The 1997 Plan provides for the
issuance of a maximum of 250,000 nonqualified stock options on Class C
Non-Voting Common Stock at an option price determined as of the date of the
option grant, with a term of 10 years from the date of grant. As of April 24,
1997, no options had been granted under the 1997 Plan, although the plan
anticipates the automatic annual grant to directors of 10-year options to
purchase 2,000 shares of Class C Non-Voting Common Stock, with the first such
grant to occur on the business day following the Meeting and with subsequent
grants to occur on each successive annual date thereafter, with the option price
to be determined as of such date.
If a participant leaves Farmer Mac for any reason, including retirement,
all of that participant's rights to exercise any option under the 1997 Plan
terminate on the earlier of the option expiration date or 90 days after
termination of employment (one year in the case of death or disability), 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 $160,000) and (b) 5.7% of the amount equal to the
employee's base salary (not to exceed $160,000) less the Social Security Taxable
Wage Base (which, for 1996, was $62,700).
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 ($9,500 for
1996). 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. Rhodes (Chairman), Dean and Junkins, met five times.
In accordance with the By-Laws, the Audit Committee has unanimously
recommended KPMG Peat Marwick LLP as the Corporation's independent auditors for
the fiscal year ending December 31, 1997. 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 LLP 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 LLP 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 1996. In addition to auditing the
Corporation's financial statements, KPMG Peat Marwick LLP 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 LLP also assists the Corporation on various tax
and financial matters unrelated to the audits. Such services have been provided
at usual and customary rates for similar services.
Representatives of KPMG Peat Marwick LLP are expected to attend the
Meeting. They will have the opportunity to make a statement if they desire to do
so, and will be available to answer appropriate questions from stockholders
present at the Meeting.
The Board of Directors recommends a vote FOR the proposal to ratify the
selection of KPMG Peat Marwick LLP as independent auditors for the Federal
Agricultural Mortgage Corporation for 1997. 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 the members' 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.
<PAGE>
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
outstanding shares of the related class of Voting Common Stock or 5% or more of
the total outstanding shares of Voting Common Stock.
<TABLE>
<CAPTION>
Number Percent of TotalPercent of Total
of Shares Voting Shares Shares Held
Name and Address Beneficially Owner Outstanding* By Class**
<S> <C> <C> <C>
AgAmerica, FCB12 86,274 shares of .79% 17.24%
Spokane, WA 99220 Class B Voting Common
Stock
AgFirst Farm Credit Bank13 84,204 shares of Class .65% 16.83%
Columbia, SC 29202 B Voting Common Stock
AgriBank, FCB 148,441 shares of 9.96% 29.67%
St. Paul, MN 55101-1849 Class B Voting Common
Stock
CoBank 30,136 shares of Class 2.02% 6.02%
Denver, CO 80217-5110 B Voting Common Stock
Farm Credit Bank of Texas14 38,503 shares of Class 2.58% 7.70%
Austin, TX 78761 B Voting Common Stock
Farm Credit Bank of Wichita115 45,223 shares of Class 3.03% 9.04%
Wichita, KS 67201 B Voting Common Stock
Western Farm Credit Bank 55,250 shares of 3.71% 11.04%
Sacramento, CA 95813 Class B Voting Common
Stock
Zions First National Bank16 322,000 shares of 20.34% 32.53%
Salt Lake City, UT 84111 Class A Voting Common
Stock
</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.
12 John G. Nelson, III, currently a member of the Board of Directors and a
Class B Nominee, is a director of AgAmerica, FCB.
13 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.
14 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.
15. 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.
16. W. David Hemingway, currently a member of the Board of Directors and 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 1934Compliance
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 1996; except
that a Form 4 was filed late by Western Farm Credit Bank with respect to 10
transactions during the month of October 1996 involving the sale of Farmer Mac
Class C Non-Voting Common 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 28, 1997 Washington, D.C.
<PAGE>
APPENDIX A
CLASS A FEDERAL AGRICULTURAL MORTGAGE CORPORATION CLASS A
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, JUNE 12, 1997
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 Corporation
to be held June 12, 1997, and at any and all adjournments thereof.
The Board of Directors unanimously recommends a vote FOR the proposals.
In their discretion, the Proxies are authorized to vote on such other matters
as may properly come before the meeting. THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS and, when properly executed, will be voted as
instructed herein. If no instructions are given, this proxy will be voted
FOR proposals 1 and 2.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owners should each sign personally. Trustees, custodians and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If the shareholder is a
corporation, the signature should be that of an authorized officer who should
indicate his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
<TABLE>
<CAPTION>
<S> <C>
X Please mark votes as in example 1. Election of Directors.
With- For All
For hold Except
[ ] [ ] [ ]
Class A Nominees:
FEDERAL AGRICULTURAL
MORTGAGE CORPORATION John C. Dean,
David W. Hemingway,
CLASS A Mitchell A. Johnson,
Robert J. Mulder
RECORD DATE SHARES: and David J. Nolan
NOTE: 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(s).
Your shares will be voted for the
remaining nominee(s).
For Against Abstain
[ ] [ ] [ ]
2. Proposal to approve
the appoinment of KPMG
Peat Marwick LLP as
independent auditors for
the Corporation for the
fiscal year ending
December 31, 1997.
Please be sure to sign and date Box
this Proxy. Date Mark box at right if an address [ ]
change or comment has been noted
on the reverse side of this card.
Stockholder sign here
Co-owner sign here
DETACH CARD
</TABLE>
<PAGE>
APPENDIX B
CLASS B FEDERAL AGRICULTURAL MORTGAGE CORPORATION CLASS B
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, JUNE 12, 1997
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 Corporation
to be held June 12, 1997, and at any and all adjournments thereof.
The Board of Directors unanimously recommends a vote FOR the proposals.
In their discretion, the Proxies are authorized to vote on such other matters
as may properly come before the meeting. THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS and, when properly executed, will be voted as
instructed herein. If no instructions are given, this proxy will be voted
FOR proposals 1 and 2.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owners should each sign personally. Trustees, custodians and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If the shareholder is a
corporation, the signature should be that of an authorized officer who should
indicate his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
<TABLE>
<CAPTION>
<S> <C>
X Please mark votes as in example 1. Election of Directors.
With- For All
For hold Except
[ ] [ ] [ ]
Class B Nominees:
FEDERAL AGRICULTURAL
MORTGAGE CORPORATION Kenneth E. Graff,
James A. McCarthy,
John G. Nelson III,
CLASS B J. Dan Raines, Jr.
and Darryl W. Rhodes
RECORD DATE SHARES:
NOTE: 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(s).
Your shares will be voted for the
remaining nominee(s).
For Against Abstain
[ ] [ ] [ ]
2. Proposal to approve
the appoinment of KPMG
Peat Marwick LLP as
independent auditors for
the Corporation for the
fiscal year ending
December 31, 1997.
Please be sure to sign and date Box
this Proxy. Date Mark box at right if an address [ ]
change or comment has been noted
on the reverse side of this card
Stockholder sign here
Co-owner sign here
DETACH CARD
</TABLE>
<PAGE>
