2022-11-22T14:59:52-06:00 2020-12-31 990 2020-01-01 530116145 NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION NATI 7039075960 4301 WILSON BLVD FIN8-110 ARLINGTON VA 22203 VENEICIA LOCKHART SVP FINANCE 7039075960 2022-11-22 VENEICIA LOCKHART XXX-XX-XXXX 3 AAL1 IAL1 2020 2022-09-23 18:48:47Z JIM MATHESON 4301 WILSON BLVD FIN8-110 ARLINGTON VA 22203 192042644 0 X NRECA.COOP X 1942 DC MEMBERSHIP ASSOCIATION DEDICATED TO REPRESENTING THE NATIONAL INTEREST OF COOPERATIVE ELECTRIC UTILITIES AND THE CONSUMERS THEY SERVE. NRECA HAS MORE THAN 900 VOTING MEMBERS, A MAJORITY OF WHICH ARE ELECTRIC COOPERATIVES THAT SERVE 42 MILLION CONSUMERS IN 48 STATES. 48 48 781 0 6623793 583789 0 0 188091685 168938514 515413 408068 14172691 14659518 202779789 184006100 0 0 0 0 129189815 125566391 0 0 0 72823663 57961428 202013478 183527819 766311 478281 213534090 229873296 120060262 135761393 93473828 94111903 X (CONTINUED IN SCHEDULE O) NRECA'S PURPOSE IS TO ENGAGE IN THE COMPILATION AND DISSEMINATION OF INFORMATION WITH RESPECT TO RURAL ELECTRIFICATION AND THE FURNISHING OF OTHER SERVICES TO RURAL ELECTRIC COOPERATIVES AND OTHERS IN CONNECTION WITH THE COORDINATION, ADVANCEMENT, AND DEVELOPMENT OF RURAL ELECTRIFICATION IN THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, FOR THE PRIMARY AND MUTUAL BENEFIT OF THE VOTING MEMBERS OF THE ASSOCIATION AND THEIR CONSUMER-MEMBERS. NRECA'S MISSION IS TO PROMOTE, SUPPORT AND PROTECT THE COMMUNITY AND BUSINESS INTERESTS OF ELECTRIC COOPERATIVES. 0 0 REGULATORY, LEGAL, AND LEGISLATIVE: NRECA PROVIDES SUPPORT SERVICES TO VOTING MEMBERS RELATED TO COMPLIANCE, LEGAL, AND REGULATORY ISSUES. IN ADDITION, NRECA EDUCATES AND ADVOCATES TO MEMBERS OF CONGRESS AND THEIR STAFF, FEDERAL AGENCIES, AND THE ADMINISTRATION ON POLICY ISSUES IMPACTING NRECA VOTING MEMBERS AND THE 42 MILLION CONSUMER-MEMBERS SERVED BY NRECA VOTING MEMBERS, AND KEEPS OUR MEMBERSHIP INVOLVED WITH THE LEGISLATIVE PROCESS. CONSULTING, TRAINING, AND CONFERENCES: NRECA PROVIDES VOTING MEMBERS WITH ESSENTIAL INDUSTRY SPECIFIC TRAINING AS WELL AS DIRECTOR, MANAGER, AND EMPLOYEE TRAINING; CONSULTING RELATED TO THE ORGANIZATION AND PROCESS IMPROVEMENTS, AND INDUSTRY AND TECHNOLOGICAL CHANGES; AND CONFERENCES AND MEMBERSHIP MEETINGS, PROMOTING COLLABORATION AND NETWORKING. MULTIPLE EMPLOYER BENEFIT PLAN ADMINISTRATION: NRECA PROVIDES PLAN ADMINISTRATION SERVICES ON A COST REIMBURSABLE BASIS TO THREE MULTIPLE EMPLOYER BENEFIT PROGRAMS IN WHICH MOST NRECA VOTING MEMBERS, AND SOME NRECA NONVOTING MEMBERS, CAN PARTICIPATE. THEY CONSIST OF TWO RETIREMENT PROGRAMS, THE NRECA RETIREMENT SECURITY PLAN, WHICH IS A DEFINED BENEFIT PENSION PLAN, AND THE NRECA 401(K) PENSION PLAN, WHICH IS A DEFINED CONTRIBUTION PENSION PLAN. BOTH PLANS ARE TAX QUALIFIED BENEFIT PLANS UNDER THE INTERNAL REVENUE CODE AND ARE REGULATED BY THE EMPLOYEE RETIREMENT INCOME SECURITY ACT. THESE TWO PLANS SERVE MORE THAN 60,000 ACTIVE AND RETIRED EMPLOYEES OF MOST NRECA VOTING MEMBERS AND SOME NRECA NONVOTING MEMBERS. THE THIRD PLAN IS THE NRECA GROUP BENEFITS PROGRAM, WHICH IS A VEBA TRUST THAT PROVIDES MEDICAL, DENTAL, VISION, AND DISABILITY COVERAGE, AND WHICH PROVIDES LIFE, AD&D, AND BUSINESS TRAVEL ACCIDENT INSURANCE, TO MOST NRECA VOTING MEMBERS AND SOME NRECA NONVOTING MEMBERS. THIS VEBA TRUST IS EXEMPT FROM INCOME TAX UNDER IRC SECTION 501(C)(9). 0 0 0 1 0 0 0 1 0 1 1 0 1 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 1 349 0 781 1 1 1 0 0 0 0 0 1 0 X 48 48 1 0 0 0 1 1 1 1 1 0 0 1 1 1 1 1 1 1 1 0 VA X X VENEICIA LOCKHART 7039075960 4301 WILSON BLVD FIN8-110 ARLINGTON VA 222031860 ANTHONY ANDERSON SECRETARY-TREASURER 3.00 1.00 X X 41000 0 0 BARRY BERNSTEIN DIRECTOR 2.00 X 19000 0 0 BRYAN CASE DIRECTOR 5.20 0.80 X 24750 0 0 CAROL SHARP DIRECTOR 1.00 X 19000 0 0 CAROLYN TURNER DIRECTOR 1.00 X 13500 0 0 CHARLES SIMMONS DIRECTOR 4.00 X 14250 0 0 CHRIS CHRISTENSEN VICE PRESIDENT 2.00 1.00 X X 48250 0 0 CHRISTOPHER HAMON DIRECTOR 4.00 1.00 X 20500 0 0 CURTIS NOLAN DIRECTOR 4.60 0.40 X 21750 0 0 CURTIS WYNN PRESIDENT 7.00 1.00 X X 65250 0 0 DANIEL SAULSGIVER DIRECTOR 2.60 0.40 X 13750 0 0 DAVID HEMBREE DIRECTOR 4.00 X 9750 0 0 DAVID IHA DIRECTOR 5.00 X 20250 0 0 DAVID SPRADLIN DIRECTOR 4.60 0.40 X 25500 0 0 FREDERICK NELSON DIRECTOR 3.00 X 18250 0 0 GALEN MILLS DIRECTOR 4.00 X 16500 0 5000 GENE HERRITT DIRECTOR 4.00 X 7250 0 10000 INGRID KESSLER DIRECTOR 2.60 0.40 X 9750 0 9000 JEFFERY ARNOLD DIRECTOR 9.00 X 18250 0 0 JEFFERY WRIGHT DIRECTOR 3.00 X 13750 0 0 JEFFREY PETERSON DIRECTOR 3.00 X 15000 0 0 JOHN LEE DIRECTOR 1.00 X 8250 0 0 JOSEPH MARTIN DIRECTOR 3.00 X 19250 0 0 KELLEY SMITH DIRECTOR 5.00 X 20750 0 0 KENNETH COLBURN DIRECTOR 6.60 0.40 X 26000 0 0 KERRY KELTON DIRECTOR 6.60 0.40 X 20500 0 0 KEVIN DODDRIDGE DIRECTOR 2.00 X 25250 0 0 LYNN JACOBSON DIRECTOR 4.60 0.40 X 23250 0 11500 MARION DENGER DIRECTOR 3.00 X 22500 0 0 MARK HOFER DIRECTOR 7.60 0.40 X 17500 0 0 MEERA KOHLER DIRECTOR 5.60 0.40 X 22500 0 0 MEL COLEMAN DIRECTOR 3.60 0.40 X 30000 0 0 MICHAEL BROWN DIRECTOR 3.00 X 12750 0 0 MICHAEL WILLIAMS DIRECTOR 5.60 0.40 X 18000 0 0 NORRIS FOWLER DIRECTOR 2.00 X 10000 0 0 OLIN DAVIS DIRECTOR 2.00 X 9500 0 0 PATRICK MORSE DIRECTOR 4.00 X 14750 0 0 PHIL CARSON DIRECTOR 4.60 0.40 X 29000 0 0 RANDALL KLEAVING DIRECTOR 1.00 X 22250 0 0 RANDY PAPENHAUSEN DIRECTOR 5.00 X 22500 0 0 REUBEN RITTHALER DIRECTOR 1.00 X 26000 0 0 SCOTT HALLOWELL DIRECTOR 4.00 X 19000 0 0 STEVEN WALTER DIRECTOR 6.00 1.00 X 23250 0 0 TERRY PARTIN DIRECTOR 1.00 X 13750 0 0 THOMAS MADSEN DIRECTOR 3.00 X 24500 0 0 THOMAS MCQUISTON DIRECTOR 3.60 0.40 X 20500 0 0 TIMOTHY SMITH DIRECTOR 7.60 0.40 X 0 0 0 TIMOTHY VELDE DIRECTOR 4.60 0.40 X 15250 0 0 JEFFREY CONNOR CHIEF OPERATING OFFICER 45.80 1.20 X 686675 0 139984 JIM MATHESON CHIEF EXECUTIVE OFFICER 47.60 0.40 X 1955365 0 317443 VENEICIA LOCKHART ASST TREAS; SVP, FINANCE 46.80 1.20 X 438176 0 238192 PETER BAXTER SVP, INSURANCE & FINANCE 55.20 0.80 X 909207 0 271809 WAYNE MCGURK SVP & CIO INFORMATION TECH 49.00 X 525179 0 95957 DANIELLE SIEVERLING CHIEF RISK AND COMPLIANCE OFFICER 52.00 X 455422 0 97099 JIM SPIERS SVP, BUSINESS AND TECH. ST 40.00 X 461657 0 116879 JOHN SZCZUR VP, INVESTMENT STRAT. & PE 45.00 X 1472034 0 118034 LOUIS FINKEL SVP GOVERNMENT RELATIONS 50.00 X 567653 0 72111 RICHARD MEYER SVP, GENERAL COUNSEL 48.00 X 529669 0 126895 BRYAN WOLFE FORMER DIRECTOR 0.00 X 14500 0 0 GREG WHITE FORMER DIRECTOR 1.00 X 10500 0 0 KEITH ROSS FORMER DIRECTOR 0.00 X 12000 0 0 RONALD SCHWARTAU FORMER DIRECTOR 0.00 X 13250 0 6000 WILLIAM HART FORMER DIRECTOR 0.00 X 10250 0 0 9033537 0 1635903 466 1 1 0 MICROSOFT LICENSING GP 6100 NEIL ROAD STE 210 RENO NV 89511 SOFTWARE CONSULTING SERVICES 1132218 LOCKTON COMPANIES 1801 K ST NW STE 200 WASHINGTON DC 20006 INSURANCE SERVICES 904534 SLALOM LLC 821 2ND AVENUE STE 1900 SEATTLE WA 98104 SOFTWARE CONSULTING SERVICES 791750 COPPER RIVER INFORMATION TECHNOLOGY LLC 1577 C STREET STE 201 ANCHORAGE AK 99501 IT CONSULTING SERVICES 759379 GUIDEPOINT SECURITY LLC 2201 COOPERATIVE WAY STE 225 HERNDON VA 20171 IT SECURITY CONSULTING SERVICES 627356 26 REIMBURSED COSTS 524292 120909011 120909011 MEMBERSHIP DUES 900099 31977120 31977120 TRAINING & PROFESSIONAL SERVICES 541900 4325907 2312001 2013906 ADVERTISING INCOME 511120 2201487 2201487 SUBSCRIPTION INCOME 511120 1086606 1086606 8438383 6611583 1826800 168938514 408068 408068 581600 581600 12299160 8036544 4262616 4262616 4262616 MEETINGS & CONFERENCES 541900 9815302 9815302 9815302 184006100 172711623 6623793 4670684 5916757 79484151 22066296 11813568 6285619 190582 2011416 80150 245000 9293263 388768 2961203 2728227 2360461 1671817 3885614 5921117 517292 ELECTRONIC SUBSCRIPTION 5405018 EQUIPMENT MAINTENANCE 3552931 CONTRACTED PERSONNEL 1604447 UBIT 580080 14564042 183527819 12666258 33430234 40814625 58855121 4480 6307811 9578202 172657058 77451630 85655243 95205428 36949942 166302 18290949 18898558 12849262 13734971 213534090 229873296 16645410 23102033 73584668 82971520 543067 543067 29287117 29144773 120060262 135761393 X 0 0 0 0 93473828 94111903 93473828 94111903 213534090 229873296 X 478281 159796 X X 0 1 X 1 1 1 0 0 0 33577772 2651526 2651526 3357777 -706251 0 1 X 11916966 11916966 91899664 38735925 53163739 25753217 13156434 12596783 43087211 25559271 17527940 95205428 18071251 C CAPITAL TERM CERTIFICATES 827307 C 18898558 PATRONAGE CAPITAL CERTIFICATES 552201 DEFERRED COMPENSATION FUND (EMPLOYEES) 12620348 TENANT ESCROW 543067 EMPLOYEE AND EXECUTIVE OPTION PURCHASE PLAN 19355 13734971 POST RETIREMENT BENEFITS OTHER THAN PENSIONS 16384172 DEF COMP FUND (EMPLOYEES) 12620348 EMPLOYEE & EXEC OPT PLAN 18822 OTHER RESTRICTED FUNDS 121431 29144773 X 231559027 47552927 47552927 184006100 0 184006100 228044178 44516359 44516359 183527819 0 183527819 PART IV, LINE 2B: SECURITY DEPOSITS/ESCROW AMOUNTS ARE HELD FOR BUILDING TENANTS PART X, LINE 2: THE ASSOCIATION HAS ADOPTED THE ACCOUNTING STANDARD ON ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES, WHICH ADDRESSES THE DETERMINATION OF WHETHER TAX BENEFITS CLAIMED OR EXPECTED TO BE CLAIMED ON A TAX RETURN SHOULD BE RECORDED IN THE CONSOLIDATED FINANCIAL STATEMENTS. UNDER THIS GUIDANCE, THE ASSOCIATION MAY RECOGNIZE THE TAX BENEFIT FROM AN UNCERTAIN TAX POSITION ONLY IF IT IS MORE LIKELY THAN NOT THAT THE TAX POSITION WILL BE SUSTAINED ON EXAMINATION BY TAXING AUTHORITIES, BASED ON THE TECHNICAL MERITS OF THE POSITION. THE TAX BENEFITS RECOGNIZED IN THE CONSOLIDATED FINANCIAL STATEMENTS FROM SUCH A POSITION ARE MEASURED BASED ON THE LARGEST BENEFIT THAT HAS A GREATER THAN 50% LIKELIHOOD OF BEING REALIZED UPON ULTIMATE SETTLEMENT. THE GUIDANCE ON ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES ALSO ADDRESSES DE-RECOGNITION, CLASSIFICATION, INTEREST AND PENALTIES ON INCOME TAXES, AND ACCOUNTING IN INTERIM PERIODS. THE ASSOCIATION HAS ANALYZED ITS TAX POSITIONS TAKEN ON TAX RETURNS FOR ALL OPEN TAX YEARS AND HAS CONCLUDED THAT NO ADDITIONAL PROVISION OR BENEFIT EXISTS AND NO AMOUNTS ARE RECORDED FOR INTEREST OR PENALTIES. THE ASSOCIATION IS NO LONGER SUBJECT TO INCOME TAX EXAMINATIONS BY TAX AUTHORITIES FOR YEARS BEFORE 2017. PART XI, LINE 2D - OTHER ADJUSTMENTS: REV FROM SUBS NOT INCLUDED IN FORM 990 LESS TENANT EXPENSES ON PART VIII, 6B 47,552,927. PART XII, LINE 2D - OTHER ADJUSTMENTS: EXP FROM SUBS NOT INCLUDED IN FORM 990 PLUS TENANT EXPENSES ON PART VIII, 6B 44,516,359. X X 1 1 X X X X X 0 1 0 JIM MATHESON CHIEF EXECUTIVE OFFICER 1273851 0 619230 0 62284 0 279991 0 37452 0 2272808 0 0 0 JOHN SZCZUR VP, INVESTMENT STRAT. & PE 363141 0 841466 0 267427 0 85123 0 32911 0 1590068 0 0 0 PETER BAXTER SVP, INSURANCE & FINANCE 612253 0 270200 0 26754 0 233590 0 38219 0 1181016 0 0 0 JEFFREY CONNOR CHIEF OPERATING OFFICER 561305 0 110200 0 15170 0 103949 0 36035 0 826659 0 0 0 VENEICIA LOCKHART ASST TREAS; SVP, FINANCE 384465 0 42000 0 11711 0 207727 0 30465 0 676368 0 0 0 RICHARD MEYER SVP, GENERAL COUNSEL 421670 0 46400 0 61599 0 86425 0 40470 0 656564 0 0 0 LOUIS FINKEL SVP GOVERNMENT RELATIONS 493444 0 72500 0 1709 0 38341 0 33770 0 639764 0 0 0 WAYNE MCGURK SVP & CIO INFORMATION TECH 451217 0 69200 0 4762 0 65953 0 30004 0 621136 0 0 0 JIM SPIERS SVP, BUSINESS AND TECH. ST 378521 0 41200 0 41936 0 86602 0 30277 0 578536 0 0 0 DANIELLE SIEVERLING CHIEF RISK AND COMPLIANCE OFFICER 313351 0 45935 0 96136 0 91410 0 5689 0 552521 0 0 0 RONALD SCHWARTAU FORMER DIRECTOR 13250 0 0 0 0 0 6000 0 0 0 19250 0 0 0 BRYAN WOLFE FORMER DIRECTOR 14500 0 0 0 0 0 0 0 0 0 14500 0 0 0 KEITH ROSS FORMER DIRECTOR 12000 0 0 0 0 0 0 0 0 0 12000 0 0 0 GREG WHITE FORMER DIRECTOR 10500 0 0 0 0 0 0 0 0 0 10500 0 0 0 WILLIAM HART FORMER DIRECTOR 10250 0 0 0 0 0 0 0 0 0 10250 0 0 0 PART I, LINE 1A TRAVEL FOR COMPANIONS - ACCORDING TO NRECA BOARD POLICY, THE SPOUSES OF THE PRESIDENT AND CEO CAN ACCOMPANY THEM ON A TRIP WHEREVER THERE WILL BE OFFICIAL FUNCTIONS FOR WHICH SPOUSES ARE RESPONSIBLE FOR ATTENDING. TRAVEL COSTS FOR COMPANIONS ARE NOT TREATED AS TAXABLE COMPENSATION TO THE RECIPIENT. TAX IDENTIFICATION AND GROSS UP PAYMENTS: NRECA GROSSES UP PAYMENTS MADE TO STAFF UNDER THE EXECUTIVE 401(K) BONUS PLAN AND ON ELIGIBLE RELOCATION EXPENSES. PART I, LINE 4B PART I, LINE 4B: THE FOLLOWING CURRENT AND FORMER EMPLOYEES RECEIVED PAYMENTS FROM AN EXECUTIVE NONQUALIFIED RETIREMENT PLAN. THESE AMOUNTS ARE INCLUDED AND REPORTED IN PART II, COLUMN B(III): JIM SPIERS ($25,523); RICHARD MEYER ($43,666); JOHN SZCZUR ($257,158); AND DANIELLE SIEVERLING ($90,000) FORM 990, PART VI, SECTION A, LINE 2 BUSINESS RELATIONSHIPS EXIST BETWEEN SOME NRECA OFFICERS AND KEY EMPLOYEES WHO ALSO SERVE AS DIRECTORS OR OFFICERS OF THE FOLLOWING NRECA SUBSIDIARIES AND AFFILIATED ENTITIES: (A) COOPERATING ENERGY SERVICES - 3 OFFICERS (JEFFREY CONNOR, JIM MATHESON, AND VENEICIA LOCKHART) SERVE AS OFFICERS AND/OR DIRECTORS. (B) COOPERATING BENEFIT ADMINISTRATORS - 1 OFFICER (VENEICIA LOCKHART) AND 1 KEY EMPLOYEE (PETER BAXTER) SERVE AS OFFICERS AND/OR DIRECTORS. (C) ELECTRIC COOPERATIVE LIFE INSURANCE COMPANY - 2 OFFICERS (JEFFREY CONNOR AND VENEICIA LOCKHART) AND 1 KEY EMPLOYEE (PETER BAXTER) SERVE AS OFFICERS AND/OR DIRECTORS. (D) NRECA UNITED - 3 OFFICERS (JEFFREY CONNOR, JIM MATHESON, AND VENEICIA LOCKHART) SERVE AS OFFICERS AND DIRECTORS. (E) COOPERATING INSURANCE SERVICES - 1 OFFICER (VENEICIA LOCKHART) AND 1 KEY EMPLOYEE (PETER BAXTER) SERVE AS OFFICERS AND/OR DIRECTORS. FORM 990, PART VI, SECTION A, LINE 6 ALL NRECA VOTING MEMBERS MUST BE ENTITIES WHOSE OPERATIONS ARE CONSISTENT, AS DETERMINED BY THE BOARD OF DIRECTORS, WITH THE INTERNATIONAL COOPERATIVE ALLIANCE COOPERATIVE PRINCIPLES AND THE OBJECTIVES OF NRECA AND FALL INTO ONE OF THE FOLLOWING THREE CATEGORIES: (1) DISTRIBUTION (ELECTRIC DISTRIBUTION COOPERATIVES OR NONPROFIT ASSOCIATIONS, NONPROFIT CORPORATIONS, PUBLIC UTILITY DISTRICTS, OR GOVERNMENT CORPORATIONS OR AUTHORITIES LOCATED IN A STATE, TERRITORY, POSSESSION OR COMMONWEALTH OF THE U.S. AND PRIMARILY ENGAGED IN FURNISHING ELECTRICITY AT RETAIL TO THEIR CONSUMERS); (2) GENERATION AND TRANSMISSION (COOPERATIVES OR NONPROFIT ASSOCIATIONS, NONPROFIT CORPORATIONS, OR PUBLIC UTILITY DISTRICTS LOCATED IN A STATE, TERRITORY, POSSESSION OR COMMONWEALTH OF THE U.S. AND PRIMARILY ENGAGED IN THE MARKETING, GENERATION AND/OR TRANSMISSION OF WHOLESALE BULK ELECTRICITY FOR SALE TO OTHERS FOR THE PURPOSE OF RESALE); AND (3) SERVICE MEMBERS (ORGANIZATIONS NOT ACTUALLY ENGAGED IN THE MARKETING, GENERATION, TRANSMISSION OR DISTRIBUTION OF ELECTRICITY, BUT A SIGNIFICANT NUMBER OF WHOSE VOTING MEMBERS CONSIST OF NRECA DISTRIBUTION, OR GENERATION AND TRANSMISSION VOTING MEMBERS). FORM 990, PART VI, SECTION A, LINE 7A NRECA VOTING MEMBERS ARE DESCRIBED IN THE SCHEDULE O, PART VI, SECTION A, LINE 6 DESCRIPTION. THE NRECA VOTING MEMBERS LOCATED IN EACH STATE ELECT A MEMBER OF THE NRECA BOARD OF DIRECTORS EVERY TWO YEARS. NRECA HAS TEN GEOGRAPHIC REGIONS WITHIN THE UNITED STATES. THE NRECA BOARD OF DIRECTORS HAS AN EXECUTIVE COMMITTEE THAT INCLUDES A DIRECTOR ELECTED BY THE DIRECTORS FROM EACH REGION. WHEN A NRECA DIRECTOR POSITION BECOMES VACANT FOR ANY REASON OTHER THAN REMOVAL, THE NRECA DIRECTOR WHO REPRESENTS THE REGION ON THE NRECA BOARD OF DIRECTORS EXECUTIVE COMMITTEE (OR, IF THE PREVIOUS NRECA DIRECTOR WAS THE MEMBER OF THE EXECUTIVE COMMITTEE, THEN THE NRECA PRESIDENT) SHALL CONSULT WITH VOTING MEMBERS LOCATED IN THE STATE AND APPOINT A NEW NRECA DIRECTOR FOR THE UNEXPIRED TERM OR UNTIL THE VOTING MEMBERS LOCATED IN THE STATE ELECT A NEW NRECA DIRECTOR FOR THE UNEXPIRED TERM. IF A POSITION BECOMES VACANT THROUGH REMOVAL, THEN THE VOTING MEMBERS LOCATED IN THE STATE FROM WHICH THE DIRECTOR WAS REMOVED ELECT THE NEW DIRECTOR FOR THE UNEXPIRED TERM. FORM 990, PART VI, SECTION A, LINE 7B THE FOLLOWING GOVERNANCE DECISIONS REQUIRE THE APPROVAL OF NRECA VOTING MEMBERS: (1) ARTICLES OF INCORPORATION AMENDMENTS; (2) BYLAW ADOPTION, AMENDMENT, OR REPEAL, WHICH INCLUDES CHANGES TO THE METHODS OF CALCULATING THE DUES OF DISTRIBUTION MEMBERS, OF GENERATION AND TRANSMISSION MEMBERS, AND OF STATEWIDE MEMBERS; (3) EXPULSION OF NRECA MEMBERS; (4) REMOVAL OF A NRECA DIRECTOR IS SUBJECT TO THE APPROVAL OF NRECA VOTING MEMBERS LOCATED IN THE STATE FROM WHICH THE DIRECTOR WAS ELECTED; (5) A SALE, LEASE, EXCHANGE, OR CERTAIN DISPOSITIONS OF ASSETS LEAVING THE ASSOCIATION WITHOUT A SIGNIFICANT CONTINUING BUSINESS ACTIVITY; (6) MERGER; (7) DOMESTICATION IN A FOREIGN JURISDICTION; AND (8) DISSOLUTION. EACH NRECA VOTING MEMBER HAS ONE VOTE. FORM 990, PART VI, SECTION B, LINE 11B THE DIRECTOR OF CORPORATE ACCOUNTING AND SENIOR VP OF FINANCE REVIEW THE FORM 990 AND SUPPORTING WORK PAPERS IN DETAIL. THE FORM 990 IS THEN PROVIDED TO THE NRECA BOARD OF DIRECTORS THROUGH THEIR ELECTRONIC BOARD PORTAL FOR THEIR REVIEW AND COMMENTS IN ADVANCE OF THE RETURN BEING FILED. FORM 990, PART VI, SECTION B, LINE 12C EACH KEY EMPLOYEE IS SUBJECT TO A CONFLICT OF INTEREST POLICY AND REQUIRED TO ANNUALLY COMPLETE AND SUBMIT A CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM TO THE FINANCE DEPARTMENT. IN ADDITION TO THE CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM, EACH KEY EMPLOYEE ANNUALLY SUBMITS A FORM 990 QUESTIONNAIRE TO THE SENIOR VP OF FINANCE. EACH DIRECTOR IS ALSO REQUIRED TO ANNUALLY COMPLETE AND SUBMIT A CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM. DIRECTOR FORMS DISCLOSING ANY MATERIAL FACT KNOWN TO THE DIRECTOR REGARDING ANY POTENTIAL OR ACTUAL VIOLATION OF THE POLICY ARE SUBMITTED TO THE OFFICE OF GENERAL COUNSEL, NRECA PRESIDENT, NRECA VICE PRESIDENT, AND NRECA SECRETARY-TREASURER. UPON REQUEST OF THE PRESIDENT, EXECUTIVE COMMITTEE, OR ANY FIVE DIRECTORS, A SPECIAL COMMITTEE COMPRISED OF THE EXECUTIVE COMMITTEE MEMBERS OR THE BOARD DETERMINES WHETHER A DIRECTOR COMPLIES WITH THE POLICY. IN MAKING THIS DETERMINATION, THE COMMITTEE OR BOARD NOTIFIES THE DIRECTOR, WITH ASSISTANCE FROM THE OFFICE OF GENERAL COUNSEL. THE COMMITTEE INVESTIGATES AND DETERMINES WHETHER THE DIRECTOR COMPLIES WITH THE POLICY. IF THE COMMITTEE DETERMINES THE DIRECTOR DOES NOT COMPLY WITH THE POLICY, THE COMMITTEE MAKES A RECOMMENDATION TO THE BOARD AND THE BOARD WILL DETERMINE WHETHER THE DIRECTOR COMPLIES WITH THE POLICY. THE DIRECTOR MAY COMMENT, AND THE DIRECTOR MAY BE REQUIRED TO BE ABSENT DURING CONSIDERATION. IF THE BOARD DETERMINES THAT A DIRECTOR FAILS TO COMPLY WITH THE POLICY, THEN, UNLESS THE BOARD DETERMINES OTHERWISE FOR GOOD CAUSE, OR THE DIRECTOR COMPLIES WITH THE POLICY WITHIN 30 DAYS, THE DIRECTOR IS DISQUALIFIED AND NO LONGER A DIRECTOR. IN ADDITION TO THE CONFLICT OF INTEREST CERTIFICATION AND DISCLOSURE FORM, EACH DIRECTOR ALSO ANNUALLY COMPLETES AND SUBMITS A FORM 990 QUESTIONNAIRE. FORM 990, PART VI, SECTION B, LINE 15 LINE 15A (CEO COMPENSATION): THE CEO EVALUATION COMMITTEE OF THE BOARD IS RESPONSIBLE FOR MAKING RECOMMENDATIONS TO THE BOARD CONCERNING FORMAT AND METHODS TO PROPERLY EVALUATE THE PERFORMANCE OF THE CEO. AN OUTSIDE CONSULTANT (I.E., QUATT ASSOCIATES) REVIEWS INDEPENDENT COMPENSATION STUDIES ANNUALLY TO VERIFY THE CEO'S COMPENSATION IS WITHIN A COMPETITIVE RANGE FOR THE CEO'S OF COMPARABLE ORGANIZATIONS AND PROVIDES THIS INFORMATION TO THE COMMITTEE. THE COMMITTEE REVIEWS COMPETITIVE CEO COMPENSATION SURVEY DATA PROVIDED BY THE OUTSIDE CONSULTANTS AND DEVELOPS A SALARY AND BONUS RECOMMENDATION THAT IS PRESENTED TO THE FULL BOARD. THE BOARD REVIEWS AND APPROVES THE CEO'S COMPENSATION ANNUALLY. LINE 15B (OTHER OFFICERS/KEY EMPLOYEE COMPENSATION): NRECA'S HUMAN RESOURCES DEPARTMENT HAS A MARKET PAY TOOL THAT USES CURRENT PAY DATA FROM PURCHASED COMPENSATION STUDIES TO ANALYZE SALARIES FOR POSITIONS WITHIN THE ORGANIZATION. NRECA HAS WRITTEN POLICIES AND PROCEDURES GOVERNING ITS SALARY INCREASE PROCESS. THE SALARY INCREASE PROCESS IS INTENDED TO ENABLE MANAGERS TO MAKE RATIONAL DECISIONS CONCERNING SALARY ACTIONS WITHIN THE ASSOCIATION'S BUDGETING CONSTRAINTS. HOWEVER, IT DOES NOT GUARANTEE AN INCREASE TO ANY EMPLOYEE. THE SALARY PROCESS IS COMPRISED OF THE FOLLOWING STEPS: (1) APPROVAL OF NRECA'S SALARY BUDGET BY THE NRECA BOARD OF DIRECTORS; (2) RECOMMENDATION OF SALARY INCREASES OR LUMP SUM AWARDS FOR INDIVIDUAL EMPLOYEES BASED UPON PERFORMANCE/CONTRIBUTION; (3) ANALYSIS, REVIEW, AND APPROVAL OF SALARY INCREASE RECOMMENDATIONS BY HUMAN RESOURCES AND THE CHIEF EXECUTIVE OFFICER; AND (4) COMMUNICATION OF SALARY INCREASE DECISIONS TO STAFF. FORM 990, PART VI, SECTION C, LINE 19 THE NRECA ARTICLES OF INCORPORATION, BYLAWS, ANNUAL REPORT, MOST RECENT FORM 990, AND EXPANDED FINANCIAL STATEMENTS ARE AVAILABLE TO THE PUBLIC ON COOPERATIVE.COM. NRECA DISTRIBUTES A COPY OF ITS ANNUAL REPORT TO EACH NRECA VOTING MEMBER. THE NRECA AUDITED FINANCIAL STATEMENTS ARE AVAILABLE TO NRECA VOTING MEMBERS ON THE MEMBER-ONLY SECTION OF COOPERATIVE.COM. NRECA NOTIFIES VOTING MEMBERS WHEN THE AUDITED FINANCIAL STATEMENTS FOR THE PRECEDING FISCAL YEAR HAVE BEEN POSTED ON COOPERATIVE.COM. THE NRECA CONFLICT OF INTEREST POLICY AND AUDITED FINANCIAL STATEMENTS ARE NOT AVAILABLE TO THE PUBLIC. FORM 990, PART XI, LINE 9: NET INCOME OF SUBSIDIARIES 159,796. FORM 990, PART XII, LINE 2C: THIS PROCESS HAS NOT CHANGED FROM THE PRIOR YEAR. 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