---
kind: "section"
citation: "12 U.S.C. § 2277a–10b"
title: "12"
title_heading: "Banks and Banking"
number: "2277a–10b"
heading: "Authority to regulate golden parachute and indemnification payments"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/2277a-10b"
units:
  - "Chapter 23 — Farm Credit System"
  - "Subchapter V — Farm Credit Administration Organization"
  - "Part E — Farm Credit System Insurance Corporation"
---

# §2277a–10b. Authority to regulate golden parachute and indemnification payments

- (a) **Definitions—** In this section:
  - (1) **Golden parachute payment—** The term “golden parachute payment”—
    - (A) means a payment (or any agreement to make a payment) in the nature of [compensation](/usc/12/2279bb.md?p=1) for the benefit of any [institution](/usc/12/2271.md?p=3)-related party under an obligation of any Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3) that—
      - (i) is contingent on the termination of the party’s relationship with the [institution](/usc/12/2271.md?p=3); and
      - (ii) is received on or after the date on which—
        - (I) the [institution](/usc/12/2271.md?p=3) is insolvent;
        - (II) a conservator or receiver is appointed for the [institution](/usc/12/2271.md?p=3);
        - (III) the [institution](/usc/12/2271.md?p=3) has been assigned by the Farm [Credit](/usc/12/5481.md?p=7) Administration a composite CAMEL rating of 4 or 5 under the Farm [Credit](/usc/12/5481.md?p=7) Administration Rating System, or an equivalent rating; or
        - (IV) the [Corporation](/usc/12/2277a.md?p=2) otherwise determines that the [institution](/usc/12/2271.md?p=3) is in a troubled condition (as defined in regulations issued by the [Corporation](/usc/12/2277a.md?p=2)); and
    - (B) includes a payment that would be a golden parachute payment but for the fact that the payment was made before the date referred to in [subparagraph (A)(ii)](#a-1-A-ii) if the payment was made in contemplation of the occurrence of an event described in any subclause of [subparagraph (A)](#a-1-A); but
    - (C) does not include—
      - (i) a payment made under a retirement plan that is qualified (or is intended to be qualified) under [section 401 of title 26](/usc/26/401.md) or other nondiscriminatory benefit plan;
      - (ii) a payment made under a bona fide supplemental executive retirement plan, deferred [compensation](/usc/12/2279bb.md?p=1) plan, or other arrangement that the [Corporation](/usc/12/2277a.md?p=2) determines, by regulation or order, to be permissible; or
      - (iii) a payment made by reason of the death or disability of an [institution](/usc/12/2271.md?p=3)-related party.
  - (2) **Indemnification payment—** The term “indemnification payment” means a payment (or any agreement to make a payment) by any Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3) for the benefit of any [person](/usc/12/5481.md?p=19) who is or was an [institution](/usc/12/2271.md?p=3)-related party, to pay or reimburse the [person](/usc/12/5481.md?p=19) for any liability or legal expense with regard to any administrative proceeding or civil action instituted by the Farm [Credit](/usc/12/5481.md?p=7) Administration that results in a final order under which the [person](/usc/12/5481.md?p=19)—
    - (A) is assessed a civil money penalty; or
    - (B) is removed or prohibited from participating in the conduct of the affairs of the [institution](/usc/12/2271.md?p=3).
  - (3) **Institution-related party—** The term “[institution](/usc/12/2271.md?p=3)-related party” means—
    - (A) a [director](/usc/12/2279bb.md?p=3), officer, employee, or agent for a Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3) or any conservator or receiver of such an [institution](/usc/12/2271.md?p=3);
    - (B) a stockholder (other than another Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3)), consultant, joint venture partner, or any other [person](/usc/12/5481.md?p=19) determined by the Farm [Credit](/usc/12/5481.md?p=7) Administration to be a participant in the conduct of the affairs of a Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3); and
    - (C) an independent contractor (including any attorney, appraiser, or accountant) that knowingly or recklessly participates in any [violation](/usc/12/2271.md?p=2) of any law or regulation, any breach of fiduciary duty, or any [unsafe or unsound practice](/usc/12/2271.md?p=5) that caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3).
  - (4) **Liability or legal expense—** The term “liability or legal expense” means—
    - (A) a legal or other professional expense incurred in connection with any claim, proceeding, or action;
    - (B) the amount of, and any cost incurred in connection with, any settlement of any claim, proceeding, or action; and
    - (C) the amount of, and any cost incurred in connection with, any judgment or penalty imposed with respect to any claim, proceeding, or action.
  - (5) **Payment—** The term “payment” means—
    - (A) a direct or indirect transfer of any funds or any asset; and
    - (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—
      - (i) the determination, after that date, of the liability for the payment of the amount; or
      - (ii) the liquidation, after that date, of the amount of the payment.
- (b) **Prohibition—** The [Corporation](/usc/12/2277a.md?p=2) may prohibit or limit, by regulation or order, any golden parachute payment or indemnification payment by a Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3) (including any conservator or receiver of the Federal Agricultural [Mortgage](/usc/12/1707.md?p=a) [Corporation](/usc/12/2277a.md?p=2)) in troubled condition (as defined in regulations issued by the [Corporation](/usc/12/2277a.md?p=2)).
- (c) **Factors to be taken into account—** The [Corporation](/usc/12/2277a.md?p=2) shall prescribe, by regulation, the factors to be considered by the [Corporation](/usc/12/2277a.md?p=2) in taking any action under [subsection (b)](#b). The factors may include—
  - (1) whether there is a reasonable basis to believe that an [institution](/usc/12/2271.md?p=3)-related party has committed any fraudulent act or omission, breach of trust or fiduciary duty, or insider abuse with regard to the Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3) involved that has had a material effect on the financial condition of the [institution](/usc/12/2271.md?p=3);
  - (2) whether there is a reasonable basis to believe that the [institution](/usc/12/2271.md?p=3)-related party is substantially responsible for the insolvency of the Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3), the appointment of a conservator or receiver for the [institution](/usc/12/2271.md?p=3), or the [institution](/usc/12/2271.md?p=3)’s troubled condition (as defined in regulations prescribed by the [Corporation](/usc/12/2277a.md?p=2));
  - (3) whether there is a reasonable basis to believe that the [institution](/usc/12/2271.md?p=3)-related party has materially violated any applicable law or regulation that has had a material effect on the financial condition of the [institution](/usc/12/2271.md?p=3);
  - (4) whether there is a reasonable basis to believe that the [institution](/usc/12/2271.md?p=3)-related party has violated or conspired to violate—
    - (A) section [215](/usc/18/215.md), [657](/usc/18/657.md), [1006](/usc/18/1006.md), [1014](/usc/18/1014.md), or [1344](/usc/18/1344.md) of title 18; or
    - (B) section [1341](/usc/18/1341.md) or [1343](/usc/18/1343.md) of title 18, affecting a Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3);
  - (5) whether the [institution](/usc/12/2271.md?p=3)-related party was in a position of managerial or fiduciary responsibility; and
  - (6) the length of time that the party was related to the Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3) and the degree to which—
    - (A) the payment reasonably reflects [compensation](/usc/12/2279bb.md?p=1) earned over the period of employment; and
    - (B) the [compensation](/usc/12/2279bb.md?p=1) represents a reasonable payment for services rendered.
- (d) **Certain payments prohibited—** No Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3) may prepay the salary or any liability or legal expense of any [institution](/usc/12/2271.md?p=3)-related party if the payment is made—
  - (1) in contemplation of the insolvency of the [institution](/usc/12/2271.md?p=3) or after the commission of an act of insolvency; and
  - (2) with a view to, or with the result of—
    - (A) preventing the proper application of the assets of the [institution](/usc/12/2271.md?p=3) to creditors; or
    - (B) preferring 1 creditor over another creditor.
- (e) **Rule of construction—** Nothing in this section—
  - (1) prohibits any Farm [Credit](/usc/12/5481.md?p=7) [System institution](/usc/12/2271.md?p=3) 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](/usc/12/2271.md?p=3) described in [subsection (a)(2)](#a-2); or
  - (2) limits the powers, functions, or responsibilities of the Farm [Credit](/usc/12/5481.md?p=7) Administration.

## Source credit

(Pub. L. 92–181, title V, § 5.61B, as added Pub. L. 104–105, title II, § 218, Feb. 10, 1996, 110 Stat. 181.)