Departure of Directors or Certain

On December 3, 2020, the Board of Directors (“Board”) of the Federal Home Loan Bank of Dallas (“Bank”), acting upon a recommendation from its Compensation and Human Resources Committee (“Committee”), approved the Bank’s 2021 Executive Incentive Plan (“2021 EIP”), subject to the review of the Federal Housing Finance Agency (“FHFA”). On January 11, 2021, the FHFA informed the Bank that it did not object to the 2021 EIP. The 2021 EIP is retroactively effective as of January 1, 2021.

The 2021 EIP provides cash-based award opportunities to officers of the Bank who are voting members of the Bank’s Executive Management Committee (“EMC”). Among other executive officers, Sanjay Bhasin, Tom Lewis, Kalyan Madhavan and Jibo Pan (four of the five named executive officers identified in the Bank’s A nnual Report on Form 10-K for the year ended December 31, 2019 (the “2019 10-K")) serve as voting members of the Bank’s EMC. Paul Joiner, the fifth named executive officer identified in the 2019 10-K, retired from the Bank at the end of 2019. The Bank’s 2019 10-K was filed with the Securities and Exchange Commission (“SEC”) on March 25, 2020.

As further described below, the 2021 EIP provides for an annual award ("Annual Award") which is based on the achievement of performance goals for the period from January 1, 2021 through December 31, 2021 (the "2021 Performance Goals") and, for 50 percent of that award, the satisfaction of safety and soundness goals for the period from January 1, 2022 through December 31, 2024.

The 2021 Performance Goals that will be used to calculate the Annual Award were established by the Board and fall into the following broad categories: (a) business activity and financial execution; (b) technology modernization; (c) operational excellence; (d) learning initiatives; and (e) diversity and inclusion initiatives. Each 2021 Performance Goal has been assigned a specific percentage weight with a "threshold," "target" and "stretch" objective.

For Mr. Bhasin (President and Chief Executive Officer), the incentive factor for each 2021 Performance Goal can be 0 percent (if the threshold objective is not met), 50 percent (if results are equal to the threshold objective), 75 percent (if results are equal to the target objective) or 100 percent (if results are equal to or greater than the stretch objective). For Mr. Lewis (Executive Vice President and Chief Financial Officer), the incentive factor for each 2021 Performance Goal can be 0 percent (if the threshold objective is not met), 30 percent (if results are equal to the threshold objective), 50 percent (if results are equal to the target objective) or 70 percent (if results are equal to or greater than the stretch objective). For Mr. Madhavan (Executive Vice President and Chief Business Officer) and Mr. Pan (Executive Vice President and Head of Capital Markets), the incentive factor for each 2021 Performance Goal can be 0 percent (if the threshold objective is not met), 30 percent (if results are equal to the threshold objective), 60 percent (if results are equal to the target objective) or 80 percent (if results are equal to or greater than the stretch objective).

Achievement levels between threshold and target and between target and stretch for each 2021 Performance Goal will be interpolated in a manner as determined by the Committee. The results for each 2021 Performance Goal will be multiplied by the assigned percentage weight to determine its contribution to the overall 2021 EIP goal achievement percentage. For example, if the target objective is achieved for a goal with a percentage weight of 10.0 percent, then the contribution of that goal to Mr. Bhasin’s overall goal achievement percentage would be 7.5 percent (10.0 percent x 75 percent). For Mr. Lewis, the contribution of that same goal to his overall goal achievement percentage would be 5.0 percent (10.0 percent x 50 percent). For Messrs. Madhavan and Pan, the contribution of that same goal to their overall goal achievement percentage would be 6.0 percent (10.0 percent x 60 percent). The percentages derived from this calculation for each 2021 Performance Goal will be added together to derive each executive’s overall goal achievement percentage for the 2021 EIP, which percentage will then be multiplied by the executive’s salary to determine his final Annual Award.

For purposes of the Annual Award, salary means the executive’s annual base salary for 2021. Given the number of variables involved in the calculation of the Annual Awards, the ultimate payouts (other than the maximum payouts) could vary significantly. For instance, the Annual Awards could be less than 50 percent of salary for Mr. Bhasin and 30 percent of salary for Messrs. Lewis, Madhavan and Pan if the Bank fails to achieve the threshold objective for one or more of its 2021 Performance Goals but achieves the threshold objective for each of its other 2021 Performance Goals.

Fifty percent of an executive’s final Annual Award under the 2021 EIP (the "Current Award") will become earned and vested on December 31, 2021 if: (1) the 2021 Performance Goals have been met; (2) the executive receives a performance rating for 2021 of at least "Solid Performance"; and (3) the executive is actively employed on December 31, 2021. An executive’s Current Award under the 2021 EIP is payable no later than March 15, 2022. The remaining 50 percent of an executive’s final Annual Award under the 2021 EIP (the "Deferred Award") will become earned and vested on December 31, 2024 if: (1) the safety and soundness goals set forth in the next paragraph are satisfied during the three-year deferral performance period which runs from January 1, 2022 through December 31, 2024 (the "Deferral Performance Period"); (2) the executive receives a performance

rating for 2024 of at least "Solid Performance"; and (3) the executive is actively employed on December 31, 2024. An executive’s Deferred Award under the 2021 EIP is payable no later than March 15, 2025 with interest at 6 percent compounded annually over the Deferral Performance Period.

The safety and soundness goals that must be satisfied during the Deferral Performance Period are: (i) no material risk management deficiency exists at the Bank; (ii) no operational errors or omissions result in material revisions to the Bank’s financial results, information submitted to the FHFA, or data used to determine incentive payouts; (iii) no submission of material information to the SEC, the Federal Home Loan Banks Office of Finance, and/or the FHFA is significantly past due; (iv) the Bank makes sufficient progress, as determined by the Board, in the timely remediation of significant examination, monitoring and other supervisory findings; and (v) the Bank has sufficient capital to pay dividends and repurchase members’ stock.

If an executive officer's employment is terminated for any reason other than death, disability or a reduction in force (as defined in the 2021 EIP), his or her unvested 2021 EIP awards will be forfeited.

If an executive officer’s employment is terminated in 2021 due to death or disability, then his or her Current Award will be treated as earned and vested based on the portion of 2021 during which the executive was employed based on the assumption that the Bank would have achieved the 2021 Performance Goals at the target achievement level. If an executive officer’s employment is terminated during the Deferral Performance Period due to death or disability, then his or her Deferred Award will be treated as fully earned and vested based on the assumption that the Bank would have achieved the safety and soundness goals. Payment of awards in connection with a death or disability would be made in a single lump sum within 75 days of the executive’s termination date.

If an executive’s employment is terminated in 2021 due to a reduction in force, then the Current Award will be treated as earned and vested based on the portion of 2021 during which the executive was employed and the extent to which the 2021 Performance Goals are ultimately satisfied. If an executive officer’s employment is terminated during the Deferral Performance Period due to a reduction in force, then his or her Deferred Award will be treated as fully earned and vested upon completion of the three-year performance period. Payment of awards in connection with a reduction in force would be made according to the normal scheduled dates and would be contingent upon the executive executing the severance agreement offered by the Bank.

If, in 2021, the Bank is involved in a merger, consolidation, reorganization or sale of all or substantially all of its assets, or is liquidated or dissolved (collectively, a "Reorganization"), subject to certain exceptions for which the Director of the FHFA has determined should not be a basis for accelerated vesting, then the Current Award will be treated as earned and vested on a pro rata basis through the date of the Reorganization. If the Bank is involved in a Reorganization during the Deferral Performance Period, then the Deferred Award will be treated as fully earned and vested effective as of the Reorganization date based on the assumption that the Bank would have achieved the safety and soundness goals. Payment of awards in connection with a Reorganization would be made in a single lump sum on the date on which the Reorganization occurs.

The Board may adjust the 2021 Performance Goals to ensure the purposes of the 2021 EIP are served. In addition, the Board, in its discretion, may consider extraordinary occurrences when assessing performance results and determining award payments. Extraordinary occurrences mean those events that, in the opinion and at the discretion of the Board, are outside the significant influence of the executive or the Bank and are likely to have a significant unanticipated effect, whether positive or negative, on the Bank’s operating and/or financial results.

Any awards not yet paid may be reduced or eliminated if any actual losses or other measures or aspects of performance are realized which would have caused a reduction in the amount of the awards. Further, if during the most recent examination of the Bank by the FHFA, the FHFA identified an unsafe or unsound practice or condition that is material to the financial operation of the Bank within the executive’s area(s) of responsibility and such unsafe or unsound practice or condition is not subsequently resolved in favor of the Bank, then all of an executive’s vested and unvested awards under the 2021 EIP will be forfeited. Any future payments for a vested award will cease and the Bank will have no further obligation to make such payments.

By resolution, the Board may reduce or eliminate an award that is otherwise earned under the 2021 EIP but not yet paid if the Board finds that a serious, material safety and soundness problem or a serious, material risk management deficiency exists at the Bank, or if: (i) operational errors or omissions result in material revisions to the Bank’s financial results, the information submitted to the FHFA, or the data used to determine incentive payouts; (ii) the submission of material information to the SEC, the Federal Home Loan Banks Office of Finance, and/or the FHFA is significantly past due; or (iii) the Bank fails to make sufficient progress, as determined by the Board, in the timely remediation of significant examination, monitoring and other supervisory findings.

The Board may amend the 2021 EIP at any time in its sole discretion. However, the Board may not amend the 2021 EIP to reduce an executive’s award as determined on the day immediately preceding the effective date of the amendment or to otherwise retroactively impair or adversely affect the rights of an executive.

In addition, the Board may terminate the 2021 EIP at any time in its sole discretion. Absent an amendment to the contrary, incentives that were earned and vested prior to the termination will be paid at the times and in the manner provided for by the 2021 EIP at the time of the termination.

Messrs. Bhasin, Lewis, Madhavan and Pan also participate in the 2018 Executive Incentive Plan ("2018 EIP"), which provides cash-based award opportunities for these officers (as well as the Bank’s other executive officers) based on the achievement of safety and soundness goals for the period from January 1, 2019 through December 31, 2021 (the "2018 Deferred Awards"). For a description of the potential 2018 Deferred Awards that can be earned under the 2018 EIP, please refer to the Bank's Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 25, 2019.

Item 9.01 Financial Statements and Exhibits.

Exhibits

10.1

2021 Executive Incentive Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

Federal Home Loan Bank of Dallas

  

 

 

 

 

Date:

January 15, 2021

 

By:

 

/s/ Tom Lewis

 

 

 

 

 

 

 

 

Name: Tom Lewis

 

 

 

 

Title: Executive Vice President and Chief Financial Officer



makes a similar move, sign up!

Other recent filings from the company include the following:

Consolidated Obligation Bonds Committed To Be Issued By The Federal Home Loan Bank Of Dallas TRADE DATE SETTLEMENT MATURITY DATE NEXT PAY DATE CALL TYPE (1) CALL STYLE (2) RATE TYPE/ SUB-TYPE (3)(4) N - April 22, 2021
Current report, items 2.03 and 9.01 - April 20, 2021
Current report, items 2.03 and 9.01 - April 15, 2021
Current report, items 2.03 and 9.01 - April 13, 2021
Current report, items 2.03 and 9.01 - April 8, 2021

Auto Refresh

Feedback