Annual Report - CoBank

Information regarding preferred stock and common stockat December 31, 2011 is shown below.Preferred and Common StockStockPreferred Class A Class AShares Authorized (000) n/a (1) Unlimited UnlimitedShares Outstanding (000) 14,000 997 15,546Voting or Nonvoting Nonvoting Nonvoting VotingPar / Face Value(per share) $ 50(1)$ 100 $ 100(1)Shares authorized and par/face value can vary by issuance.Holders of equities may not pledge, hypothecate orotherwise grant a security interest in such equities except asconsented to by the Bank under FCA regulations. We have astatutory first lien on CoBank common stock. Only preferredstock pays dividends.In case of liquidation or dissolution, preferred stock,common stock and unallocated retained earnings would bedistributed to shareholders, after the payment of all liabilitiespursuant to FCA regulations, in the following order:(1) retirement of all Series A and Series B preferredstock at par plus all accrued but unpaid dividends,and of all Series C and Series D preferred stock at parplus all accrued but unpaid dividends for the thencurrent dividend period;(2) retirement of all common stock at par;(3) retirement of all patronage surplus (a component ofunallocated retained earnings) in amounts equal tothe face amount of the applicable nonqualifiedwritten notices of allocation or such other notice; and(4) remaining unallocated retained earnings and reservesshall be paid to the holders of common stock inproportion to patronage to the extent possible.Note 8 – Employee Benefit Plans andIncentive Compensation PlansEmployee Benefit PlansWe have employer-funded, qualified defined benefitpension plans, which are noncontributory and coveremployees hired prior to January 1, 2007. Depending on thedate of hire, benefits are determined either by a formula basedon years of service and final average pay, or by theaccumulation of a cash balance with interest credits andcontribution credits based on years of service and eligiblecompensation. Effective January 1, 2007, the Bank closed theremaining qualified defined benefit pension plan to newparticipants.We also have a noncontributory, unfunded nonqualifiedsupplemental executive retirement plan (SERP) coveringcertain senior officers as of December 31, 2011, and specifiedother senior managers, as well as a noncontributory, unfundednonqualified executive retirement plan (ERP) designed toprovide enhanced retirement benefits to two senior officersemployed pursuant to employment agreements. The definedbenefit pension plans, SERP and ERP are collectively referredto as Retirement Plans. We hold assets in a trust fund relatedto our SERP and ERP; however, such funds remain Bankassets and are not included as plan assets in the accompanyingdisclosures.We have a 401(k) retirement savings plan pursuant towhich we match a certain percentage of employees’ electivecontributions. In addition, under this plan, employees hired onor after January 1, 2007 receive additional, non-electiveemployer defined contributions. For eligible senior managers,including our senior officers, we also have a nonqualifieddeferred compensation plan, which includes benefits notprovided under the employee savings plan due to certainInternal Revenue Code limitations. Our contributions to the401(k) retirement savings plan, which are recorded asemployee compensation expense, were $4.7 million,$3.9 million and $3.8 million for 2011, 2010 and 2009,respectively.All retirement-eligible employees are also currentlyeligible for other postretirement benefits, which primarilyinclude access to health care benefits. Substantially allparticipants pay the full premiums associated with these otherpostretirement health care benefits. Participant contributionsare adjusted annually.CoBank 2011 Annual Report87