Document:

Document

EXHIBIT 10.24

November 30, 2017
Effective upon FHFA Non-Objection to 2018 EICP Targets

Federal Home Loan Bank of Topeka
Non-NEO Executive Incentive Compensation Plan Targets
Goal Metrics, Metric Performance Ranges, Participant Eligibility and Metric Weights

This document specifies goal metrics, metric performance ranges/objectives, and metric weights for the participants (Participants) in the Non-NEO Executive Incentive Compensation Plan (Plan).
 
The Plan targets contained in this document specifically cover the 2018 Base Performance Period (January 1, 2018 through December 31, 2018) and the 2019-2021 Deferral Performance Period (January 1, 2019 through December 31, 2021).

A.2018 Base Performance Period Metrics. The following goal metrics are assigned to the Participants under the Plan. All calculations including interest rates will be rounded to two decimal places.

1.Adjusted Return Spread on Total Regulatory Capital
Definition: The spread between: (a) adjusted net income divided by daily average total regulatory capital and (b) the daily average Overnight Federal funds effective rate (Fed Effective).

Measure:
Adjusted net income is defined as follows:
◦Net income calculated under generally accepted accounting principles (GAAP)
◦Plus recorded AHP assessments
◦Excluding the impact or adjustment required because of Accounting Standards Codification 815 (ASC 815)
◦Plus dividends on redeemable Class A and Class B Common Stock treated as interest expense under ASC 450
◦Minus prepayment fees
◦Minus/plus realized or unrealized gains/losses on securities (excludes any charges for other-than-temporary impairment of securities)
◦Minus/plus gains/losses on mortgage loans held for sale
◦Minus/plus gains/losses on early retirement of debt and related derivatives
◦Minus/plus any amortization/accretion of premium/discount on unswapped securities in the FHLBank’s trading portfolio and any investment that is tied to an economic swap where an upfront fee was not received (not amortized/accreted under GAAP)
◦Less a calculated 10% AHP assessment

Performance Range:

						
		Annual Performance Range
	Threshold	5.06%

	Target	6.14%

	Optimum	7.22%

2018 Non-NEO EICP Targets
Page 2 of 6

2.Net Income after Capital Charge
Definition: The dollar amount of adjusted net income as defined in the above metric which exceeds the cost of the required return on capital.

Measure: Adjusted income as defined in the Net Income after Capital Charge Definition above, less required return on capital. The required return on capital is the sum of the outstanding regulatory Class B Common Stock times the average of three-month LIBOR plus 1.00 percent for each day during the year plus the sum of regulatory Class A Common Stock and retained earnings times the average of three-month LIBOR for each day during the year.

Performance Range:

						
		Annual Performance Range
	Threshold	$108,178,000

	Target	$135,222,000

	Optimum	$162,266,000

3.Retained Earnings
Definition: The dollar amount of GAAP Retained Earnings as of 12/31/2018.

Measure: Retained earnings as defined above as reported on the 12/31/2018 balance sheet.

Performance Range:

						
		Annual Performance Range
	Threshold	$916,427,000

	Target	$947,698,000

	Optimum	$978,969,000

4.Diversity and Inclusion

Definition: FHLBank’s Diversity and Inclusion (D&I) initiative is defined as the advancement of D&I, to the maximum extent possible in balance with financially safe and sound business practices, through inclusion and utilization of diverse-owned business and individuals within its workforce, as defined in the D&I Policy, in all business activities of FHLBank. 

Measure: As a minimum requirement to achieving this goal, the Office of Inclusion must sponsor at least:
◦Eight D&I Awareness Opportunities; and
◦Four D&I Training Opportunities.

Once this threshold requirement is met, the calculation of the D&I Incentive Award shall be measured by dividing the total number of FHLBank employees (excluding summer interns) who attended at least: (1) one D&I Awareness Opportunity; and (2) one D&I Training Opportunity during the Base Performance Period by the total number of individuals employed by FHLBank (excluding summer interns) at any time during the Base Performance Period.

2018 Non-NEO EICP Targets
Page 3 of 6

Performance Ranges:

						
		Percentage

	Threshold	40%

	Target	60%

	Optimum	80%

D&I Awareness Opportunities are defined as follows: 
An FHLBank-wide event approved in advance by the Director of Human Resources and Inclusion (HRI) that educates employees on D&I, or encourages it among them. These opportunities are typically lunch and learn events hosted by FHLBank’s Inclusion, Diversity, and Equality Advisory Council and range in topics from various cultures, religions, and holidays to education on marginalized communities.

D&I Training Opportunities are defined as follows:
An FHLBank-wide training approved in advance by the Director of HRI with the purpose of increasing knowledge of and competencies in content and principles regarding D&I. These opportunities can include, for example, workshops on the business case for D&I, recognizing and managing various biases, and bridging generational gaps within the workplace.

5.Risk Management – Market, Credit and Liquidity Risks
Definition: Management of FHLBank risks as determined by the weighted average rating by the board of directors in an annual evaluation of the Risk Appetite metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk categories are market, credit and liquidity risks.

Performance Range:

						
		Score
	Threshold	3.0
	Target	4.0
	Optimum	5.0

Risk Management Metric Weights: The following metric weight for each goal metric is assigned to the Participants:

						
	Risk Management Category	Weighting
	Liquidity Risk	30%
	Market Risk	40%
	Credit Risk	30%
	Total	100%

2018 Non-NEO EICP Targets
Page 4 of 6

6.Risk Management – Compliance, Business and Operations Risks
Definition: Management of FHLBank risks as determined by the weighted average rating by the board of directors in an annual evaluation of the Risk Appetite metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk categories are compliance, business and operations risks.

Performance Range:

						
		Score
	Threshold	3.0
	Target	4.0
	Optimum	5.0

Risk Management Metric Weights: The following metric weight for each goal metric is assigned to the Participants:

						
	Risk Management Category	Weighting
	Compliance Risk	30%
	Business Risk	35%
	Operations Risk	35%
	Total	100%

2018 Non-NEO EICP Targets
Page 5 of 6

B.2019-2021 Deferral Performance Period Metrics.
These metrics apply to the 2019-2021 Deferral Performance Period.

												
	Minimum Requirement for Receiving a Final Deferred Incentive Award
	In order for Participants to be eligible to receive a Final Deferred Incentive Award for the 2019-2021 Deferral Performance Period, FHLBank must have a Market Value of Equity (MVE) of not less than 100 percent of FHLBank’s Total Regulatory Capital Stock (TRCS) outstanding (as defined in FHLBank’s Risk Management Policy), as of the last day of the Deferral Performance Period. Upon determining FHLBank has achieved this minimum requirement, the calculation of the Final Deferred Incentive Award amounts shall be measured by evaluating the following:
		Threshold	Target	Optimum
	Total Return(1)
	10/11 or 11/11 vs FHLBanks	5/11 vs FHLBanks	2/11 or 1/11 vs FHLBanks
	Deferred Incentive			
	Performance Measure Percentage	75%	100%	125%
	Weighting	0.50	0.50	0.50
	Dollar Value (Deferred Incentive x Performance Measure Percentage x Weight)	$	$	$
				
	MVE / Total Regulatory Capital (TRC)(2) 
	10/11 or 11/11 vs FHLBanks	5/11 vs FHLBanks	2/11 or 1/11
vs FHLBanks

	Deferred Incentive			
	Performance Measure Percentage	75%	100%	125%
	Weighting	0.50	0.50	0.50
	Dollar Value (Deferred Incentive x Performance Measure Percentage x Weight)	$	$	$
	Final Deferred Incentive Award (Dollar value for Total Return + Dollar Value for MVE/TRC)
			

Footnotes:
1)Total Return. Total Return equals the Total Dividends, plus the Change in Retained Earnings, divided by the Average Total Regulatory Capital (TRC) over the three-year period. Total Dividends is defined as all dividends paid on all capital stock during the three-year period; Change in Retained Earnings is defined as the change in retained earnings from 12/31/2018 to 12/31/2021; and Average TRC is defined as the average daily ending balance of Regulatory Capital for dates starting with 01/01/2019 and ending 12/31/2021. TRC is defined as total capital stock plus total retained earnings plus subordinated debt plus mandatorily redeemable capital stock. TRC will also include any additional capital from mergers that will be reported in the CRS statement of condition.  For performance comparison purposes, FHLBank Topeka will be ranked against the other FHLBanks, with the highest total return being the best performance, and ranking 1st out of the 11 FHLBanks.
2)MVE/TRC. Using amounts reported on the Trendbook Analysis from the FHFA Call Report System (CRS), MVE/TRC is calculated by dividing base case MVE by TRC (as defined above) calculated at the end of the Deferral Performance Period. For performance comparison purposes, FHLBank Topeka will be ranked against the other FHLBanks, with the highest MVE/TRC being the best performance, and ranking 1st out of the 11 FHLBanks.

2018 Non-NEO EICP Targets
Page 6 of 6

C.Total Base Opportunity and Participant Levels.

Total Base Opportunity Matrix
(As a percentage of base)

												
	Participant	Total Base Opportunity
		Threshold	Target	Optimum
	Dan Hess (CBO)	25	50	75
	Martin Schlossman (CRO)	25	50	75
	Denise Cauthon (CAO)	25	50	75

* In the event FHLBank’s performance during the Base Performance Period results in the achievement of a Total Base Opportunity that exceeds 100% of a Participant’s base salary at the start of the Base Performance Period, the Total Base Opportunity shall be capped at 100% of the Participant’s base salary.

D. Base Opportunity Metric Weights. The following metric weight for each goal metric is assigned to the Participants:
												
	Objective	CRO	CBO	CAO
	1)Adjusted Return Spread on Regulatory Total Capital
	10%	20%	15%
	1)Net Income after Capital Charge
	10%	20%	15%
	1)Retained Earnings
	10%	10%	10%
	1)Diversity and Inclusion
	10%	10%	10%
	1)Risk Management- Market, Credit, Liquidity
	30%	20%	25%
	1)Risk Management-  Compliance, Business, Operations 
	30%	20%	25%
	Total	100%	100%	100%Document

EXHIBIT 10.25

November 29, 2018
Effective upon FHFA Non-Objection to 2019 EICP Targets

Federal Home Loan Bank of Topeka
Non-NEO Executive Incentive Compensation Plan Targets
Goal Metrics, Metric Performance Ranges, Participant Eligibility and Metric Weights

This document specifies goal metrics, metric performance ranges/objectives, and metric weights for the participants (Participants) in the Non-NEO Executive Incentive Compensation Plan (Plan).
 
The Plan targets contained in this document specifically cover the 2019 Base Performance Period (January 1, 2019 through December 31, 2019) and the 2020-2022 Deferral Performance Period (January 1, 2020 through December 31, 2022).

A.2019 Base Performance Period Metrics. The following goal metrics are assigned to the Participants under the Plan. All calculations including interest rates will be rounded to two decimal places.
1.Adjusted Return Spread on Total Regulatory Capital
Definition: The spread between (a) adjusted net income divided by the daily average total regulatory capital and (b) the average daily Overnight Federal funds effective rate (Fed Effective).
Measure:
Adjusted net income is defined as follows:
◦Net income calculated under generally accepted accounting principles (GAAP)
◦Plus the recorded AHP assessments
◦Excluding the impact or adjustment required because of the Accounting Standards Codification 815 (ASC 815)
◦Plus the dividends on redeemable Class A and Class B Common Stock treated as interest expense under ASC 450
◦Minus the prepayment fees
◦Minus/plus the realized or unrealized gains/losses on securities (excludes any charges for other-than-temporary impairment of securities)
◦Minus/plus the gains/losses on mortgage loans held for sale
◦Minus/plus the gains/losses on early retirement of debt and related derivatives
◦Minus/plus any amortization/accretion of premium/discount on unswapped securities in the FHLBank’s trading portfolio and any investment that is tied to an economic swap where an upfront fee was not received (not amortized/accreted under GAAP)
◦Less a calculated 10% AHP assessment
Performance Range:
						
		Annual Performance Range
	Threshold	 3.91%

	Target	 4.73%

	Optimum	 5.54%

2.    GAAP Return Spread on Total Regulatory Capital
Definition: The spread between: (a) GAAP net income divided by the daily average total regulatory capital; and (b) the Fed Effective rate. 
Measure: 
◦Net income calculated under GAAP.
◦Daily average total regulatory capital. 
◦Divide GAAP net income by daily average total regulatory capital to calculate a return.
◦Subtract the average daily Overnight Federal funds effective rate (Fed Effective) from the GAAP return.

2019 Non-NEO EICP Targets
Page 2 of 6

Performance Ranges:
						
		Annual Performance Range
	Threshold	3.51%

	Target	4.73%

	Optimum	5.94%

3.    Adjusted Net Income after Capital Charge
Definition: The dollar amount of adjusted net income as defined in the above metric that exceeds the cost of the required return on capital.

Measure: Adjusted income as defined in the Net Income after Capital Charge Definition above, less required return on capital. The required return on capital is the sum of the outstanding regulatory Class B Common Stock times the average of three-month LIBOR plus 1.00 percent for each day during the year plus the sum of regulatory Class A Common Stock and retained earnings times the average of three-month LIBOR for each day during the year. 

Performance Range:
						
		Annual Performance Range
	Threshold	$77,588,000

	Target	$96,985,000

	Optimum	$116,382,000

4.    GAAP Net Income after Capital Charge
Definition: The dollar amount of GAAP net income that exceeds the cost of the required return on capital. 

Measure: GAAP net income, less required return on capital. The required return on capital is the sum of the outstanding regulatory Class B Common Stock times the average of three-month LIBOR plus 1.00 percent for each day during the year plus the sum of regulatory Class A Common Stock and retained earnings times the average of three-month LIBOR for each day during the year.

Performance Ranges:
						
		Annual Performance Range
	Threshold	$67,889,000

	Target	$96,985,000

	Optimum	$126,080,000

5.    Member Product Utilization
Definition: Member product utilization is defined as the weighted average 2019 attainment in member utilization in each of three product categories: (1) Line of Credit or advances; (2) MPF Program; and (3) Letters of Credit.  

2019 Non-NEO EICP Targets
Page 3 of 6

Measure:  Product utilization is calculated by dividing the number of members at the end of the year that qualify as a user of one of the three products (as defined below) at any time during the current year (2019) by the number of members at the end of the current year (2019). The individual product utilization is compared  to the target level to arrive at the level of attainment for each of the three products.  The percentage attainment to target for each product is then multiplied by the weight assigned to each product to arrive at the overall weighted product utilization goal attainment.   

Products and Weighting:
Line of Credit or advances – Weight 50%
A member that uses the line of credit and has an outstanding balance for a total of 5 days during the year or who takes one (or more) new  advance for a term of 3 or more days (short-term fixed rate, regulator fixed rate, symmetrical fixed rate, callable, member option, amortizing fixed rate, adjustable, convertible, structured advance or forward settle advance that settles during the year) during the year will quality as a using an advance related product.   

MPF Program – Weight 25%
A participating financial institution (PFI) that delivers at least one loan during the year into any one or more of the MPF products will qualify as using the MPF program.  

Letters of Credit – Weight 25%
A member that applies for and we issue to them at least one new Letter of Credit during the year will qualify as using the Letter of Credit product.   

Performance Range:
												
		Product Utilization %
	Product	Threshold	Target	Optimum
	Line of Credit or Regular Advance	66.0%	70.5%	75.0%
	MPF Program	23.5%	25.0%	26.5%
	Letters of Credit	28.0%	30.5%	33.0%

6.    Diversity and Inclusion
Definition: FHLBank’s Diversity and Inclusion (D&I) initiative is defined as the advancement of D&I, to the maximum extent possible in balance with financially safe and sound business practices, through inclusion and utilization of diverse-owned business and individuals within its workforce, as defined in the D&I Policy, in all business activities of FHLBank. 

Measure: Points are awarded by achievement of the following. One point is awarded for each:
•Attain a workforce ratio of at least 11.0% business partners of color as of 12/31/2019.
•Increase the number of viable diverse suppliers registered to do business with FHLBank in Supplier Gateway by 3%. 
•80% of business partners attend one D&I Awareness Activity. 
•80% of business partners complete one D&I Training.
•Participate in 15 outreach opportunities with potential diverse directors and/or in Workforce, Vendors, Capital Markets and/or with members. 

2019 Non-NEO EICP Targets
Page 4 of 6

Performance Ranges:
						
		Points
	Threshold	3 out of 5 points
	Target	4 out of 5 points
	Optimum	5 out of 5 points

Viable diverse suppliers are those that provide a good or service on the Commodities List found on the Supplier Gateway website, are registered to do business with FHLBank in Supplier Gateway and can be located/headquartered anywhere in the United States. 

D&I Awareness Opportunities are FHLBank-wide events approved in advance by the Director of Human Resources and Inclusion (HRI) that educates employees on D&I, or encourages it among them. These opportunities are typically lunch and learn events hosted by FHLBank’s Inclusion, Diversity, and Equality Advisory Council and range in topics from various cultures, religions, and holidays to education on marginalized communities.

D&I Training Opportunities are FHLBank-wide training approved in advance by the Director of HRI with the purpose of increasing knowledge of and competencies in content and principles regarding D&I. These opportunities can include, for example, workshops on the business case for D&I, recognizing and managing various biases, and bridging generational gaps within the workplace.

Outreach opportunities can be conducted by any member of FHLBank staff and must approved in advance by the Director of HRI. More than one member of FHLBank’s staff can participate in a single outreach opportunity. Outreach opportunities include, for example, an in-person meeting with a diverse individual who might be a good candidate for FHLBank’s board of directors and/or a meeting with a trade association to provide education on FHLBank’s desire for a diverse board; an in-person meeting with a diverse-owned supplier or having a booth at a diverse-owned supplier fair; participating in in-person meetings with a diverse-owned broker dealer or participating in the diverse-owned broker-dealer meeting; or participating in a career fair at a college or university that serves a predominantly diverse population or providing a presentation to a classroom at such a college or university. 

7.  Risk Management – Market, Credit and Liquidity Risks
Definition: Management of FHLBank risks as determined by the weighted average rating by the board of directors in an annual evaluation of the Risk Appetite metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk categories are market, credit and liquidity risks. 

Performance Ranges
						
	

	Score

	Threshold
	4.0

	Target
	4.5

	Optimum 
	5.0

Risk Management Metric Weights: The following metric weight for each goal metric is assigned to the Participants:

2019 Non-NEO EICP Targets
Page 5 of 6

						
	Risk Management Category
	Weighting

	Liquidity Risk 
	30%

	Market Risk 
	40%

	Credit Risk 
	30%

	Total
	100%

8.    Risk Management – Compliance, Business and Operations Risks
Definition: Management of FHLBank risks as determined by the weighted average rating by the board of directors in an annual evaluation of the Risk Appetite metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk categories are compliance, business and operations risks. 

Performance Ranges 
						
	

	Score

	Threshold
	3.0

	Target
	4.0

	Optimum 
	5.0

Risk Management Metric Weights: The following metric weight for each goal metric is assigned to the Participants:
						
	Risk Management Category
	Weighting

	Compliance Risk 
	30%

	Business Risk 
	35%

	Operations Risk 
	35%

	Total
	100%

B.2020-2022 Deferral Performance Period.
In order for Participants to be eligible to receive a Final Deferred Incentive Award for the 2020-2022 Deferral Performance Period, FHLBank must have a Market Value of Equity (MVE) of not less than 100 percent of FHLBank’s Total Regulatory Capital Stock (TRCS) outstanding (as defined in FHLBank’s Risk Management Policy), as of the last day of the Deferral Performance Period. Upon determining FHLBank has achieved this minimum requirement, the calculation of the Final Deferred Incentive Award shall be calculated by applying a six percent interest credit, compounded annually, to the Deferred Incentive. 

C.Total Base Opportunity and Participant Levels.

Total Base Opportunity Matrix
(As a percentage of base)

2019 Non-NEO EICP Targets
Page 6 of 6

												
	Participant	Total Base Opportunity 1

		Threshold	Target	Optimum
	Dan Hess (CBO)	25	50	75
	Martin Schlossman (CRO)	25	50	75
	Denise Cauthon (CAO)	25	50	75

1 In the event FHLBank’s performance during the Base Performance Period results in the achievement of a Total Base Opportunity that exceeds 100% of a Participant’s base salary at the start of the Base Performance Period, the Total Base Opportunity shall be capped at 100% of the Participant’s base salary.

D.Base Opportunity Metric Weights. The following metric weight for each goal metric is assigned to the Participants:
						
	Objective	Weight
	1. Adjusted Return Spread on Total Regulatory Capital
	15%
	2. GAAP Return Spread on Total Regulatory Capital
	5%
	3. Adjusted Net Income after Capital Charge
	15%
	4. GAAP Net Income after Capital Charge
	5%
	5. Member Product Utilization
	10%
	6. Diversity and Inclusion
	10%
	7. Risk Management - Market, Credit, Liquidity
	20%
	8. Risk Management - Compliance, Business, Operations 
	20%
	Total	100%

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00342-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00342-of-00352.parquet"}]]