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Form 990 concerns compensation of CEO and Directors. This is the portion of the annual report in which the co-op fully discloses salaries, benefits, and miscellaneous compensation and any business conducted by directors or close relatives with the cooperative. The annual report is summarized in the August issue of Watts Happening which is mailed to members’ homes and is available on the co-op’s website. The newsletter states that members may receive a copy of the complete annual report (including Form 990) by contacting the co-op.

Following is information to help you better understand CEO and director compensation data from the annual IRS 990 report.

Board Member Compensation
At Red River Valley REA, the co-op pays the premiums for members of the Board of Directors to be covered by benefit plans of the co-op. These include major medical insurance and life insurance.

Currently, the premium monthly cost for major medical insurance is $956 for the director; $1,714 for director and spouse or $2,411 for director and 3 or more dependents.  The premium monthly cost for life insurance is $14. The director receives an IRS Form 1099 statement to pay taxes on these benefits and that is why the cost of coverage is listed on the Form 990 under the heading of “reportable compensation.”

In addition, directors receive per diem on days they attend Board meetings or functions. The per diem rate is $300. The Board holds regular monthly meetings. Some Board members travel to represent Red River Valley REA at meetings of the Western Farmers Electric Cooperative Board and the Oklahoma Association of Electric Cooperative Board. Per diem applies to those days of travel and attendance. Board members attend offsite training seminars to become certified Board members. Per diem applies in those instances.

Adding together the cost of major medical coverage, life insurance coverage, and per diem, a director’s “reportable compensation” as reported on Form 990 will typically range from $25,000 to $35,000 per year.

Only the per diem (about $3,600-$4,200 a year) is a cash payment to the director.

Chief Executive Officer Compensation
The CEO’s compensation at Red River Valley is below the average compensation paid to all other CEOs of electric cooperatives in Oklahoma. He has been CEO for 19 years. He has been an employee of two electric cooperatives for a total of 39 years.

Over recent years the CEO’s W2 income from Red River Valley REA was as follows:

2017: $169,237 2016: $157,149 2015: $151,031 2014: $138,227

2013: $133,608 2012: $131,041 2011: $116,919 2010: $110,553

Other compensation shown on Form 990 for the CEO relates to retirement.  The IRS requires the employer to show on the Form 990 the annual change in the present value of a lump sum payment by the National Rural Electric Cooperative Association pension plan should the CEO elect that form of retirement payment.  In 2014 the CEO elected to take his retirement benefit under the lump sum payment option. The payment was equivalent to a $76,000 a year annuity over the CEO’s expected remaining life, based on the uniform formula for calculating retirement payments that applies to all members of the NRECA pension plan.

The local co-op does not pay this benefit. The co-op’s actual outlay was approximately 25% of the employee’s annual salary submitted as premiums to NRECA over the employee’s first 30 years with the co-op.

In summary, the only cash compensation paid by Red River Valley REA to its CEO is the W2 base pay shown above.

Business Transactions Involving a Director or Close Family Member
From time to time the co-op engages in a business transaction involving a director or a close family member of a director. These transactions are disclosed on the Form 990 (Schedule L). In each case, the business transaction was consummated with the party after price checking or public bidding resulted in lowest cost to the co-op for performing the transaction.  

About the Directors and the CEO
Nine directors of Red River Valley REA are customer/owners of the cooperative like the membership, not outsiders. Directors are elected by the members of the co-op for three-year terms, after which the office is once again open and able to be filled by another member or the incumbent, whichever files and is duly elected. For the past 20 years, all Board seats for which there was no incumbent running have had multiple candidates.  These seats have been filled through election by members rather than by appointment of the existing Board. Board elections are held at the Annual Meeting of the members of the cooperative.

The Board of Directors holds regular monthly meetings at the co-op headquarters at 1 PM on the fourth Tuesday of the month. The co-op bylaws, approved by the cooperative’s membership, neither discourage nor prevent members from attending.

The directors act as agents on behalf of the customer/owners of the cooperative with the responsibility to protect investments, grow the business, and improve profitability. Directors invest their personal time in studying, meeting, or travel on behalf of the membership. They are responsible for the performance of the business and pay the same rates and charges as other members. They hire and evaluate the CEO.

Questions?
Please contact the members of the Board of Directors or the CEO if you have questions about information presented in this statement or the Form 990s of the cooperative.