Exhibit 10.1

 

2021 BOARD OF DIRECTORS COMPENSATION POLICY

 

October 30, 2020

(Effective January 1, 2021)

 

 

Policy Information

 

Document Title:

2021 Board of Directors Compensation Policy

Content Owner:

Director of Human Resources and Inclusion (HRI)

Certification of Compliance Contact:

N/A

Policy Category:

FHLBank Policy

FHLBank-Level Approver:

President and Chief Executive Officer (CEO)

Board-Level Approver:

Full Board (Compensation, Human Resources and Inclusion)

Review Frequency:

Annually

Initial Effective Date:

01/01/2010

Last CEO Approval Date:

10/30/2020

Next Review Date:

10/2021

 

 

 

 

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Introduction

 

This FHLBank Policy (Policy), governed by the board of directors (board),
governs the compensation of individuals serving as directors of the Federal Home
Loan Bank of Topeka (FHLBank). Section 7(i) of the Federal Home Loan Bank Act
and 12 U.S.C. §1261.22 require the board annually to adopt a written
compensation policy to provide for the payment of reasonable compensation and
expenses to the directors for the time required of them in performing their
duties as directors.

 

Purpose

 

Directors should be reasonably compensated for the time and effort exerted in
the performance of their duties as a director of FHLBank. This Policy
establishes reasonable compensation for the activities and functions for which
director attendance or participation is necessary and provides compensation
reflecting the total amount of time a director has spent on FHLBank business.
Differentials in meeting attendance fees for the chair, vice chair and the
various committee chairs shall reflect the additional responsibility assumed by
these directors.

 

Policy

Compensation. The Maximum Annual Compensation for FHLBank directors shall be as
follows:

 

Position

Maximum Annual Compensation1

Chair of Board

$ 142,500

Vice Chair of Board

$ 122,500

Committee Chair

$ 122,500

Director

$ 112,500

 

An individual serving as chair of the board shall not be entitled to annual
compensation in excess of the amount to which the individual is entitled for
such service due to concurrent service as a committee chair. An individual
serving as vice chair of the board shall be entitled to an increase of $5,000 in
his or her Maximum Annual Compensation in the event the individual serves as
both vice chair of the board and a committee chair.

 

In order to compensate directors for their time while serving as directors, a
director shall receive one quarter of the Maximum Annual Compensation following
the end of each calendar quarter. The payment is intended to compensate
directors for their time preparing for and attending board and committee
meetings and fulfilling the other obligations of a director of FHLBank. In the
event that a director serves on the board for only a portion of a calendar year,
or only serves as chair of the board, vice chair of the board, or a committee
chair for a portion of a calendar year, then the Maximum Annual Compensation to
which the director is entitled for that calendar year shall be adjusted
accordingly on a pro-rata basis (to be calculated based on the number of days
the director served on the board during the calendar year).

 

The Maximum Annual Compensation amounts are based on an evaluation of McLagan
market research data, including the appropriate peer group and peer positioning,
a fee comparison among the FHLBanks and the board’s assessment of appropriate
and comparable pay that will allow the FHLBank to recruit and retain highly
qualified directors.

 

Directors may choose to defer compensation as further described in FHLBank’s
Benefit Equalization Plan.

 

 

1 

In addition to the Maximum Annual Compensation, a director may also realize the
benefit of reasonable spouse/partner/significant other/family guest travel
expenses that qualify as perquisites as set forth in the Directors and Executive
Officers Travel Policy, for one meeting per calendar year, as designated by the
chair of the board.

 

 

 

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Peer Group. The FHLBank’s peer group is defined by organizations with which the
FHLBank competes for business and/or talent. The primary peer group for
FHLBank’s directors is U.S. banks with assets of $10 billion to $20 billion,
representing banks, like FHLBank, subject to enhanced regulatory requirements
including incentive compensation requirements under Section 956 of the
Dodd-Frank Act. FHLBank also reviews director compensation of other FHLBanks,
Fannie Mae, Freddie Mac and Office of Finance for reference points when
evaluating director compensation, but does not consider such entities part of
the peer group.

 

Pay Positioning. FHLBank will consider the 25th, 50th and 75th percentiles when
establishing director compensation. However, FHLBank will generally compensate
directors between the 25th and 50th percentile of the market data.

 

Adjustments in Compensation. Only fees that reflect performance of official
FHLBank business shall be paid to a director. This Policy is structured to allow
decreases in compensation to reflect lesser attendance or performance at board
or committee meetings during a given year.

 

If it is determined at the end of the calendar year that a director has attended
less than 75 percent of the meetings of the board and the meetings of the
committees to which the director is assigned (including any meetings held via
conference call), combined, during such year, the director will not receive the
one quarter of the Maximum Annual Compensation scheduled to be paid for the
fourth quarter of such calendar year. Participation via conference call will not
count as attendance for in person meetings of the board or a committee.
Exceptions to this paragraph may be granted by the chair of the Compensation,
Human Resources and Inclusion committee (CHRIC) or, in the case of considering
attendance by the chair of the CHRIC, an exception may be granted by the chair
of the board.

 

Further, the chair of the CHRIC shall have the authority, in his or her sole
discretion, to recommend that the board reduce the compensation of any director
to reflect lesser performance at board or committee meetings during a given
year. The chair of the board shall have the authority, in his or her sole
discretion, to recommend that the board reduce the compensation of the chair of
the CHRIC to reflect lesser performance at board or committee meetings during a
given year. If the chair of the CHRIC or the chair of the board, as appropriate,
determines that the compensation paid to a director does not reflect the
director’s performance of official FHLBank business, the chair of the CHRIC or
the chair of the board, as appropriate, may recommend that the board authorize a
clawback of that director’s compensation in an amount to be determined by the
board.

 

On a quarterly basis, the chair of the CHRIC and the chair of the board shall
review attendance records, as prepared by the corporate secretary, and shall use
those records, in addition to considering director performance, when determining
whether to recommend the board reduce or clawback a director’s compensation.

 

Number of Meetings. The board shall hold at least six regular board meetings per
year. Special meetings of the board may be held as provided in the FHLBank’s
Bylaws.

 

Reimbursement of Expenses. Directors shall be entitled to reimbursement for all
necessary and reasonable travel, subsistence and other related expenses incurred
in connection with the performance of their official duties as provided in the
Directors and Executive Officers Travel Policy, except that directors may not be
paid for gift or entertainment expenses.

 

Policy Review

 

This Policy shall be reviewed annually and revised as needed by the Director of
HRI. Following such review, the Policy shall be submitted for review by the
Executive Team and approval by the President and CEO. In the event of any
revisions to the Policy, such revisions shall be submitted for review and
approval by the CHRIC and the board, which shall occur no less than annually.