The Corporation may prohibit or limit, by regulation or order, any golden parachute payment or indemnification payment by a Farm Credit System institution (including any conservator or receiver of the Federal Agricultural Mortgage Corporation) in troubled condition (as defined in regulations issued by the Corporation).
12 U.S. Code § 2277a–10b - Authority to regulate golden parachute and indemnification payments
(a) DefinitionsIn this section:
(1) Golden parachute paymentThe term “golden parachute payment”—
(A) means a payment (or any agreement to make a payment) in the nature of compensation for the benefit of any institution-related party under an obligation of any Farm Credit System institution that—
(ii) is received on or after the date on which—
the institution has been assigned by the Farm Credit Administration a composite CAMEL rating of 4 or 5 under the Farm Credit Administration Rating System, or an equivalent rating; or
(C) does not include—
(2) Indemnification paymentThe term “indemnification payment” means a payment (or any agreement to make a payment) by any Farm Credit System institution for the benefit of any person who is or was an institution-related party, to pay or reimburse the person for any liability or legal expense with regard to any administrative proceeding or civil action instituted by the Farm Credit Administration that results in a final order under which the person—
(3) Institution-related partyThe term “institution-related party” means—
a director, officer, employee, or agent for a Farm Credit System institution or any conservator or receiver of such an institution;
a stockholder (other than another Farm Credit System institution), consultant, joint venture partner, or any other person determined by the Farm Credit Administration to be a participant in the conduct of the affairs of a Farm Credit System institution; and
an independent contractor (including any attorney, appraiser, or accountant) that knowingly or recklessly participates in any violation of any law or regulation, any breach of fiduciary duty, or any unsafe or unsound practice that caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the Farm Credit System institution.
(4) Liability or legal expenseThe term “liability or legal expense” means—
a legal or other professional expense incurred in connection with any claim, proceeding, or action;
the amount of, and any cost incurred in connection with, any settlement of any claim, proceeding, or action; and
(5) PaymentThe term “payment” means—
(B) any segregation of any funds or assets for the purpose of making, or under an agreement to make, any payment after the date on which the funds or assets are segregated, without regard to whether the obligation to make the payment is contingent on—
the determination, after that date, of the liability for the payment of the amount; or
the liquidation, after that date, of the amount of the payment.
(c) Factors to be taken into accountThe Corporation shall prescribe, by regulation, the factors to be considered by the Corporation in taking any action under subsection (b). The factors may include—
whether there is a reasonable basis to believe that an institution-related party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the Farm Credit System institution involved that has had a material effect on the financial condition of the institution;
whether there is a reasonable basis to believe that the institution-related party is substantially responsible for the insolvency of the Farm Credit System institution, the appointment of a conservator or receiver for the institution, or the institution’s troubled condition (as defined in regulations prescribed by the Corporation);
whether there is a reasonable basis to believe that the institution-related party has materially violated any applicable law or regulation that has had a material effect on the financial condition of the institution;
(4) whether there is a reasonable basis to believe that the institution-related party has violated or conspired to violate—
whether the institution-related party was in a position of managerial or fiduciary responsibility; and
(d) Certain payments prohibitedNo Farm Credit System institution may prepay the salary or any liability or legal expense of any institution-related party if the payment is made—
in contemplation of the insolvency of the institution or after the commission of an act of insolvency; and
(e) Rule of constructionNothing in this section—
prohibits any Farm Credit System institution from purchasing any commercial insurance policy or fidelity bond, so long as the insurance policy or bond does not cover any legal or liability expense of an institution described in subsection (a)(2); or
The following state regulations pages link to this page.