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SEVERANCE POLICY

OBJECTIVE

The Bank provides for payment of severance benefits to Eligible Employees upon Involuntary Termination of employment.  

POLICY

Eligibility

Employees involuntarily terminated from employment as described in the definition of Eligible Employee set forth below.  

Notification

Employees are provided a minimum of two weeks’ notice in the event of the termination of their employment. The Bank may, at its discretion, provide salary continuation in lieu of notice.

Separation and Release Agreement 

The Bank will require a signed separation and release agreement between the Bank and the employee relative to any salary, benefits or services offered through this policy. The agreement includes a description of the severance benefits and provides a general release by the employee for any claims against the Bank relative to the separation action as well as any other claims relating to employment with the Bank.

Payments and Benefits Provided  

Salary Continuation

The salary continuation benefit reflects the employee's current salary, position and length of Bank service.  The benefit is calculated as follows:

•Executive Committee and participants in the Bank’s Key Employee Incentive Compensation Plan1  
•4 weeks base salary per year of service
•26-week minimum
•52-week maximum

•Employees (Analyst 4 and above*)
•3 weeks base salary per year of service
•12-week minimum
•36-week maximum

•Employees (Analyst 3 and below)
•2 weeks of base salary per year of service

1 In addition to current participants in the Key Employee Incentive Compensation Plan this also includes any employee who has ever been subject to a deferral of compensation under such Plan or the Chief Internal Auditor Incentive Compensation Plan.

SEVERANCE POLICY

•6 -week minimum
•26-week maximum

Under certain circumstances the Bank may extend salary continuation beyond the described benefit levels.

Years of Service

Years of service are calculated based upon the employee's service years as of the most recent service anniversary.   Any prior service within Bank system is included as service in the calculation of severance benefits.

Payment

Salary continuation payments shall be subject to all required withholdings. The payment schedule for salary continuation payments shall be set forth in the separation and release agreement between the Bank and the employee.  

Benefit Continuation

During the salary continuation period, the Bank will make a monthly payment to the employee as taxable compensation in the amount equivalent to the amount the Bank contributes to its active employees’ medical coverage. The employee may use this amount to apply toward the payment of continued medical coverage from the Bank. The employee is responsible for making payment to the Bank for continued medical coverage. In such case, the medical plan terms, requirements and level of coverage (single, two-party, and family) remain the same as the employee benefit election in effect at the time of the termination of employment.

All terminating employees and their dependents who are participants in the Bank's dental and vision benefits have an option to continue coverage for a specified number of months following termination of their coverage. The employee is responsible for the full cost of such continuing coverage plus a 2% administrative fee. A letter outlining the option of benefit continuation is sent to employees following termination of their active employee coverage.

Any vested retirement and/or thrift plan benefits are handled in the same manner as any employee who separates their employment from the Bank. All terminated employees, regardless of position, receive payment for earned, unused vacation. With respect to incentive compensation, the terms of any applicable incentive compensation plan(s) shall govern any incentive compensation and any incentive compensation payment will be governed by and made in accordance with the terms of such plan(s) not this policy.

Tuition assistance approved and paid by the Bank prior to the termination date need not be reimbursed upon termination.

SEVERANCE POLICY

Outplacement Services

As part of this policy, the Bank may provide the following outplacement services: 

•Executive Committee and participants in the Bank’s Key Employee Incentive Compensation Plan – formal individualized 12-month executive outplacement program
•All Other Employees – appropriate career services or workshops as offered through the approved outplacement vendor 

Outplacement services are required to begin within 30 days of termination. The Bank will not pay cash in lieu of outplacement services.

POLICY ADMINISTRATION

Approval of Exceptions.  Any exceptions to this Policy must be approved by the President and in the case of any exception involving an executive officer by the Human Resources and Diversity and Inclusion Committee of the Board.

Policy Interpretations.  Overall responsibility for this Policy is assigned to the Chief Human Resources Officer including making Policy interpretations. Bank management is responsible for identifying and providing written documentation regarding any reduction in staff. Benefits provided to executive management under this Policy must be reviewed and approved by the Human Resources and Diversity and Inclusion I Committee of the Board of Directors.  

Right to Amend or Terminate.  The Bank reserves the right to amend, modify, or terminate this Policy at any time without notice.

COMPLIANCE MONITORING

As set forth in the Policy Governance Standards.  

APPLICABLE LAWS AND REGULATIONS

12 USC §4501 and 4502
12 C.F.R. Parts 1230 and 1231
26 U.S.C. §409A
26 C.F.R. Part 1.409A
26 U.C.C. Part 105(h)
26 C.F.R. Part 1.105

RELATED POLICIES; PROCEDURES

Human Resources Employee Handbook
Policy Governance Standards

DEFINED TERMS

Executive Committee refers to the Bank’s executive officers.  

SEVERANCE POLICY

Eligible Employees means full-time and part-time employees (>20 hours per week) with a minimum of 6 months of service whose employment with the Bank is discontinued due to, but not limited to, any of the following events: elimination of employee's position, misalignment of skills and/or business needs, general reduction in staff, substantial job modification resulting in employee's inability to qualify or perform the revised job, changing business needs, reorganization of Bank staff, or reassignment of staff requiring relocation of employee's primary residence. Eligible Employee does not include any employee who is terminated for cause [defined to include, without limitation, unsatisfactory job performance, misconduct or intentional neglect of job duties] Such employees are not eligible for benefits under this Policy.

Involuntary Termination is intended to be interpreted consistent with the applicable 409A regulatory definition of “separation from service.”Document

2021 DIRECTORS’ COMPENSATION POLICY

OBJECTIVE

Section 1261.22 of the Rules and Regulations of the Federal Housing Finance Agency require 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 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 Governance and Public Policy Committee.

POLICY

Total Compensation

The compensation paid to Directors shall be in conformity with the guidelines set forth in this Policy. The Policy guidelines on Director Compensation for 2021 are $142,500 for the Chair, $122,500 for the Vice Chair of the Board and for each Committee Chair, and $112,500 for each of the other Directors. Compensation can exceed the guidelines set forth above based on a Director assuming additional responsibilities, such as chairing a Committee or Board meeting.

Quarterly Retainer

In order to compensate Directors for their time while serving as Directors outside of normal Committee and Board meetings, Directors shall be paid a quarterly retainer. The retainer shall compensate Directors for their time preparing for meetings, attending Affordable Housing Advisory Council meetings, attending Bank System meetings, Board training sessions, and other activities outside of normal Committee and Board meetings. The amount of the quarterly retainer varies depending on the responsibilities of the Director as set forth below:

						
	Chairman	$17,500

	Vice Chairman	$15,312

	Committee Chairman	$15,312

	Director	$14,374

Board Meeting Fees

In order to compensate Directors for their time while serving as Directors, each Director that attends a meeting of the Board of Directors (including Committee meetings and participating by telephone) shall be paid a Board Meeting Attendance Fee. The amount of the Board Meeting Attendance Fee varies depending on the role served at the meeting. The following Board Meeting Attendance Fees shall be paid to Directors in attendance at Board of Director's meetings (including telephonic Board meetings):

						
	Chairman	$6,041

	Vice Chairman	$5,104

	Committee Chairman	$5,104

	Director	$4,583

2021 DIRECTORS’ COMPENSATION POLICY

In the absence of the Chairman, the Acting Chairman, whether it be the Vice Chairman or Chairman Pro Tem, shall receive the Chairman Board Meeting Attendance Fee. Board Meeting Attendance Fees are paid per meeting day.1

Standing Committee Meeting Fees

In order to compensate Directors for their time while serving as Directors, each Director that attends a Standing Committee meeting (including participating by telephone) shall be paid a Standing Committee Meeting Attendance Fee. The amount of the Standing Committee Meeting Attendance Fee varies among Directors in attendance at the meeting. The following Standing Committee Meeting Attendance Fees shall be paid to Directors in attendance at Committee Director's meetings:

						
	Chairman	$6,041

	Vice Chairman	$5,104

	Committee Chairman	$5,104

	Director	$4,583

Committee Meeting Attendance Fees are paid per meeting day, not per Committee meeting. No Committee Attendance Fee will be paid if a Board Meeting Attendance Fee is paid for the same day.2

Prorated Fees

A Director’s quarterly retainer fees will be prorated for the number of days in the quarter that they actually served on the Board in the event a Director leaves the Board mid-quarter.

Methodology

In 2019, McLagan Partners conducted a director compensation study for the FHLBanks, which was valid for the 2020 and 2021 calendar years and formed the basis for the Bank’s Director Compensation Policy. Directors used the study to determine both the levels of compensation to be paid, as well as to the structure of how it would be paid.

Attendance

Directors must fulfill their responsibilities by regularly attending and participating, either in person or telephonically, in at least 75 percent of meetings of the Board of Directors and assigned Committees within a given calendar year. The Board of Directors reserves the right to direct the Corporate Secretary to adjust downward or eliminate the fourth quarter retainer payment to any Director who fails to meet this attendance requirement.

Travel

The Directors shall be reimbursed for travel, subsistence and other related expenses incurred in connection with the Directors duties under the terms and conditions of the Bank's Travel and Expense Policy; provided, however, a Director may not be paid or reimbursed for gift or entertainment expenses.

1 Board meeting fees are rounded down to the nearest dollar.
2 Committee meeting fees are rounded down to the nearest dollar.

2021 DIRECTORS’ COMPENSATION POLICY

Disclosure

The Bank shall disclose in its annual report to the Federal Housing Finance Agency the following items:

a.the sum of the total compensation paid to its Directors in that year;
b.the sum of the total expenses paid to its Directors in that year;
c.the total compensation paid to each Director in that year;
d.the total expenses paid to each Director in that year;
e.the total of all expenses incurred at group functions that are not reimbursed to individual Directors in that year;
f.the total number of Board meetings and Committee meetings held in that year;
g.the total number of Board and Committee meetings that each Director attended in that year; and
h.a summary of this Policy.

POLICY ADMINISTRATION

Approval of Exceptions.  All exceptions under this Policy must be approved by the Managing Director, General Counsel and Corporate Secretary or the President and must be reported to the Approving Committee listed above.

Policy Interpretations.  The Managing Director, General Counsel and Corporate Secretary may make interpretations of this Policy.  All interpretations shall be summarized in a memo and maintained along with the Policy.

COMPLIANCE MONITORING

The Managing Director, General Counsel and Corporate Secretary will be responsible for monitoring the compliance with this Policy.

APPLICABLE LAWS AND REGULATIONS

12 USC § 1427
12 CFR § 1261.22

RELATED POLICIES; BANK-WIDE PROCEDURES

Code of Conduct
Policy Governance Standards

DEFINED TERMS

None

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