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EXHIBIT 4.2

Description of Registrant’s Securities Registered Under Section 12 of the Securities Exchange Act of 1934

As of December 31, 2021, the Federal Home Loan Bank of Chicago (the “Bank”) has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): Class B Stock, par value $100 per share (the “Class B Stock”), which is registered under Section 12(g) of the Exchange Act.

The Bank’s Capital Plan, effective as May 3, 2021 (the “Capital Plan”), sets forth the capital structure of the Bank. Before implementing any amendments to the Capital Plan, the Bank must obtain the approval of a majority of the Board of Directors, as well as the approval of the Federal Housing Finance Agency (the “FHFA”). The Bank will provide at least 30 days prior written notice to its stockholders before any amendment to the Capital Plan becomes effective.

The following description of the Bank’s Class B Stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to the Federal Home Loan Bank of Chicago Charter, the Federal Home Loan Bank of Chicago Bylaws and the Capital Plan, each of which is incorporated by reference as an exhibit to the Bank’s 2021 Annual Report on Form 10-K, as well as the Federal Home Loan Bank Act, as amended (the “FHLB Act”) and FHFA regulations.

Under the Capital Plan, the Bank issues a single class of capital stock to its members: Class B Stock, which consists of two sub-classes of stock, Class B1 Stock and Class B2 Stock. Under the Capital Plan, each member is required to own Class B Stock in an amount equal to the greater of a membership stock requirement or an activity stock requirement. Class B1 Stock is available to support a member's activity stock requirement. Any additional amount of stock necessary for the total amount of Class B stock held to equal a member’s minimum investment amount will be classified as Class B2 membership stock. Members purchase Class B2 membership stock to satisfy their membership stock requirement with the Bank. Stock held in excess of a member’s minimum investment requirement is classified as Class B2 excess capital stock (“Excess Stock”). See the Capital Resources section of the Bank’s 2021 Annual Report on Form 10-K for a description of the ranges of capital stock requirements permitted under the Capital Plan and capital stock requirements as of the end of 2021. Additionally, the Board of Directors of the Bank has a right to call for additional capital stock purchases by members, as a condition of continuing membership, as needed for the Bank to satisfy its statutory and regulatory capital requirements.
    
•    Ownership Limitations. Class B Stock may only be issued to, and held by, members and former members.

•    Par Value. The par value of Class B Stock is $100 per share. Class B Stock may only be issued, transferred, redeemed or repurchased at its stated par value.
    
•    Dividends. Holders of Class B Stock (“Class B Stockholders”) are entitled to non-cumulative dividends if, as, and when declared by the Board of Directors of the Bank. For a description of the Bank’s retained earnings and dividend policy and the current restrictions on the payment of dividends, see the Retained Earnings & Dividends section of the Bank’s 2021 Annual Report on Form 10-K.
    
•    Redemption & Repurchase & Transfer of Class B Stock. Class B Stock is not publicly traded and no market mechanism exists for the exchange of Class B Stock outside of the Bank’s cooperative structure. Class B Stock is subject to redemption upon the expiration of a five-year redemption notice period. Only Excess Stock is subject to redemption. Excess Stock of a member that has submitted a notice to withdraw from membership, or Excess Stock held by a former member whose membership has been terminated may be redeemed at the end of the applicable redemption period. Further, the Bank may elect to repurchase Excess Stock from time to time at its sole discretion without regard to the five-year redemption period.

FHFA regulations and the Capital Plan prohibit the Bank from redeeming or repurchasing Class B Stock in certain instances, including where it would cause the Bank to fail to meet its minimum capital requirements or cause the member or former member to fail to maintain its minimum investment requirement. See Capital Resources-Capital Rules of the Bank’s 2021 Annual Report on Form 10-K for additional details on statutory and regulatory restrictions on repurchases and redemptions.

With the Bank’s prior approval, a member (or former member) may transfer any Excess Stock to another member or to an institution that has satisfied all conditions to become a member (other than the prospective member’s stock purchase requirement).

    

•    Voting Rights. The voting rights of Class B Stockholders are set forth in the FHLB Act and regulations of the FHFA. Members (and, as applicable, former members) are entitled to vote their Class B Stock for each member directorship in their state and for each independent directorship that is to be filled in an election.

Members are also entitled to vote in connection with other matters as authorized or required by applicable law in existence at the time of such event. See Item 10. Directors, Executive Officers, and Corporate Governance – 2021 Director Election of the Bank’s 2021 Annual Report on Form 10-K for details on voting rights and process with regard to the election of member and independent directors of the Bank.
    
•    Liquidation Rights. In the event that the Bank is liquidated, the rights of the Class B Stockholders would be determined in accordance with the Capital Plan, subject to any rights or authority granted FHFA to issue any regulation or order or to take any other action that may affect or otherwise alter the rights or privileges of the Class B Stockholders in a liquidation.

•    Modification of Rights. The Bank is subject to the FHLB Act and the regulations, guidance, and orders adopted thereunder by the FHFA. From time to time, Congress has amended the FHLB Act, and the FHFA has amended its regulations or issued orders or guidance, in ways that have significantly affected the rights and obligations of the Bank and the Class B Stockholders. It is possible that legislative or regulatory changes in the future could further modify the rights of the Class B Stockholders.Document

                              EXHIBIT 10.13

2022 Board of Directors Compensation Policy

POLICY TITLE:    2022 Board of Directors Compensation Policy
APPROVED BY:    Board of Directors
APPROVAL DATE:     October 21, 2021

I.   TABLE OF CONTENTS

						
	II.    INTRODUCTION
	1

	III.    COMPENSATION POLICY METHODOLOGY
	1

	IV.    PAYMENT STRUCTURE
	2

	V.    PERFORMANCE AND ATTENDANCE STANDARDS
	4

	VI.    DEFERRAL OF COMPENSATION
	5

	VII.    EXPENSES
	5

	VIII.    POLICY INTERPRETATION
	6

	IX.    COMPLIANCE WITH LEGAL REQUIREMENTS
	6

II.  INTRODUCTION

Section 1261.21 of the Rules and Regulations of the Federal Housing Finance Agency requires the Board of Directors to adopt a written policy to provide for the payment of reasonable compensation to Bank Directors for the performance of their duties as members of the Board of Directors. Pursuant to that regulation, this 2022 Board of Directors' Compensation Policy ("Policy") sets forth the activities and functions for which attendance is necessary and appropriate and may be compensated, and sets forth the methodology for determining the amount of compensation to be paid. This Policy shall be reviewed annually by the Human Resources & Compensation Committee. 

III. COMPENSATION POLICY METHODOLOGY

The goal of the Policy is to appropriately compensate the Directors for actual attendance and participation at the meetings of the Board of Directors and the committees of the Board and also for work performed on behalf of the Board of Directors and the Bank apart from such meetings.  

The compensation provided in this Policy was determined after a review of comparative compensation studies by third parties with expertise in the compensation of Directors (McLagan “Director Compensation Report” May 2019) and the compensation paid to Directors of other Federal Home Loan Banks (“FHLBanks”) in 2021.

IV.      PAYMENT STRUCTURE

Members of the Board will receive the following maximum annual payments as designated for their position, as further calculated pursuant to this Policy.

									
	Position	Maximum Annual Compensation

	Position Duties
	Chairperson	$150,000	Preside at the meetings of the Board of Directors and the Executive & Governance Committee and attend other committee meetings.  Represent the Bank at the Council of FHLBanks. 

	Vice Chairperson	$135,000	Attend meetings of the Board and other committee meetings, as well as chair meetings of the Board in the Chairperson’s absence.  Represent the Bank at the Council of FHLBanks.

	Audit Committee Chairperson	$135,000	Attend meetings of the Board and meetings of committees to which such Director is appointed, as well as chair meetings of the Audit Committee. 

	Human Resources and Compensation Committee Chairperson	$127,000	Attend meetings of the Board and meetings of committees to which such Director is appointed, as well as chair meetings of the Human Resources and Compensation Committee. 
	Risk Management Committee Chairperson	$127,000	Attend meetings of the Board and meetings of committees to which such Director is appointed, as well as chair meetings of the Risk Management Committee. 
	Committee Chairperson	$122,000	Attend meetings of the Board and meetings of committees to which such Director is appointed, as well as chair meetings of committees to which such Directors is appointed Chairperson.  

	Director	$110,000	Attend meetings of the Board and meetings of committees to which such Director is appointed.

In order to compensate Directors for their time while serving as Directors, a Director shall receive one quarter of their Maximum Annual Compensation following the end of each quarter. The payment shall compensate Directors for their time preparing for and attending in-person and virtual meetings, attending Bank-sponsored member meetings and events, attending Community Investment Advisory Council meetings, attending FHLBank System meetings, Board training, activities that provide information pertinent to the Bank or service on the Board of Directors that are learning opportunities (“enrichment”) (i.e. Board of Directors speaker sessions) and other activities related to service on the Board of Directors. 

In the event that a Director serves on the Board for only a portion of a calendar year, or only serves as Chairperson of the Board, Vice Chairperson of the Board, or a Committee Chair for a portion of a calendar year, then the Maximum Annual Compensation to which such Director is entitled for that calendar year shall be adjusted accordingly on a pro-rata basis based on the number of days served divided by the number of days in the year.

A Director’s Maximum Annual Compensation is subject to their performance and attendance as outlined in Section V of this Policy.

V.  PERFORMANCE AND ATTENDANCE STANDARDS

The following performance criteria shall be considered in assessing a Director’s performance:

1.    Did the Director satisfy the attendance standard (described below) for Board and committee meetings during the specific assessment period?

2.    Did the Director attend most of his or her scheduled in-person meetings in person?

3.    Was the Director prepared for meetings? 

4.    Did the Director demonstrate knowledge of Bank policies and other relevant governance documents?

5.    Did the Director demonstrate understanding of the FHLBank System? 

6.    Did the Director actively participate in meetings? 

7.    Did the Director participate in education, enrichment and training opportunities, excluding “Bank-related events” described in number 11 below, during the specific assessment period?
8.    Did the Director make decisions or suggestions that support the Bank’s mission and vision?
9.    Did the Director support Board decisions, even if he or she did not agree with the decision?

10.    Did the Director maintain confidentiality of the discussions at meetings? 
11.    Did the Director participate in Bank-related events (i.e., FHLBank System meetings, member meetings, Bank-sponsored conferences, etc.)?
    
Each Director shall fulfill his or her responsibilities by regularly and consistently attending meetings of the Board of Directors and any assigned committees.  The Board's attendance standard shall be to attend in person or virtually at least 75% of the total meetings of the Board and assigned committees, measured annually.  

The Chairperson of the Board, Vice Chairperson of the Board and Chairperson of the Human Resources & Compensation Committee (each, a “Reviewer”) shall evaluate each Director’s attendance and performance bi-annually, prior to the release of the second quarter and fourth quarter payments.  The Reviewers may elect to reduce, suspend or eliminate the second and/or fourth quarter payment to any Director who does not fulfill his or her responsibilities by failing to meet the majority of the performance criteria set forth above.  A Director’s second quarter payment may also be reduced or suspended if it is deemed that the Director’s attendance at meetings of the full Board or committees to which the Director is appointed is not adequate.  

A Director’s fourth quarter payment will be eliminated if it is determined at the end of the calendar year that a Director has attended fewer than 75% of the combined meetings of the full Board and committees (including in-person and virtual) on which the Director serves during such year and for the time period served. 

In the event that a Director departs the Board prior to the end of a calendar year, the Reviewers shall evaluate the Director’s attendance and performance following the Director’s departure and prior to the release of the Director’s final payment, regardless of whether such review falls within the bi-annual review schedule for all Directors.  The Reviewers may elect to reduce or eliminate the final payment if it is determined that the Director did not fulfill his or her responsibilities by failing to meet the majority of the performance criteria set forth above.  The Director’s final payment will be eliminated if it is determined that the Director failed to attend 75% of the combined meetings of the Board of Directors and any assigned committees based on the number of meetings of the full Board and committees on which the Director served during the year and for the time period served. 

Actions to reduce, suspend or eliminate a compensation payment requires a majority vote of the Reviewers except in the case where a Reviewer has recused themselves from the evaluation process.  The Reviewers will each recuse themselves from evaluating their own attendance and performance.  Any decision to reduce, suspend or eliminate a compensation payment, consistent with the terms of this Policy, must be unanimous among the other two Reviewers.  In the event the Vice Chairperson of the Board is also the Chairperson of the Human Resources & Compensation Committee, the decision to reduce, suspend or eliminate a compensation payment to the individual, consistent with the terms of this Policy, will be at the sole discretion of the Chairperson of the Board.

The Reviewers may designate a Director’s absence for a good cause from a scheduled meeting as an “excused absence.”  An “excused absence” shall be recorded as a Director in attendance for the 75% attendance standard.  Examples of what may be an “excused absence” include, but are not limited to, a medical condition of the Director or their immediate family or an unexpected business conflict pertaining to the Director’s primary business.

VI.      DEFERRAL OF COMPENSATION

A Director may elect to defer compensation paid under this Policy in accordance with the Federal Home Loan Bank of Chicago Board of Directors Deferred Compensation Plan, effective September 1, 2013.

VII.     EXPENSES

Each Director will be reimbursed for necessary and reasonable travel, subsistence and other related expenses incurred in connection with the performance of their official duties (including virtual meetings or in-person meetings called at the request of the Federal Housing Finance Agency or other FHLBank System body) as are payable to senior officers of the Bank under the Bank’s Employee Reimbursement Policy.

Directors are authorized to purchase upgrades for air travel from economy to business class or economy plus only.  This does not include upgrades to first class.  Air travel upgrades shall not exceed $200 per flight.

Pursuant to IRS tax code, certain Director expenses paid for by the Bank that do not qualify as a business-related expense will be recorded as other income and reported on a Director’s 1099 tax form for the appropriate reporting period.  

Each Director is responsible for all expenses incurred in conjunction with spousal travel. 

VIII.    POLICY INTERPRETATION

The Bank’s Corporate Secretary is authorized to interpret the provisions of this Policy and to address situations not anticipated by this Policy, consistent with all applicable regulatory requirements and statutes.

IX.      COMPLIANCE WITH LEGAL REQUIREMENTS

This Policy shall be in compliance with Section 7(i) of the Federal Home Loan Bank Act (12 U.S.C. §1427(i)), as amended, and any regulations issued by the Federal Housing Finance Agency, including 12 C.F.R. Part 1261.

    

This 2022 Board of Directors Compensation Policy is effective as of January 1, 2022.

APPROVED BY THE BOARD
OF DIRECTORS ON THIS
21ST DAY OF OCTOBER, 2021

/s/ Laura M. Turnquest

Its Corporate Secretary

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