PART 1261—FEDERAL HOME LOAN BANK DIRECTORS Authority: 12 U.S.C. 1426, 1427, 1432, 4511 and 4526. Source: 73 FR 55715, Sept. 26, 2008, unless otherwise noted. Subpart A—Definitions Source: 75 FR 17039, May 5, 2010, unless otherwise noted. § 1261.1 [Reserved] Subpart B—Federal Home Loan Bank Boards of Directors: Eligibility and Elections § 1261.2 Definitions. As used in this Subpart B: Advisory Council Bona fide resident (1) Maintains a principal residence in the Bank district; or (2) If serving as an independent director, owns or leases in his or her own name a residence in the Bank district and is employed in a voting state in the Bank district. FHFA ID number Independent directorship Member directorship Method of equal proportions Public interest director Public interest directorship Record date Voting State [73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51460, Oct. 7, 2009. Redesignated and amended at 75 FR 17039, 17040, Apr. 5, 2010; 81 FR 76296, Nov. 2, 2016] § 1261.3 General provisions. (a) Board size and composition. (b) Term of directorships. (c) Annual elections. (d) Location of members. (e) Dates. [73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51460, Oct. 7, 2009. Redesignated at 75 FR 17039, Apr. 5, 2010; 81 FR 76296, Nov. 2, 2016] § 1261.4 Designation of member directorships. (a) Capital stock reports. (2) The number of shares of Bank stock that any member was required to hold as of the record date shall be determined in accordance with the minimum investment established by the capital plan for that Bank. (b) Designation of member directorships. (c) Allocation of directorships. (d) Notification. (e) Change of state. [74 FR 51460, Oct. 7, 2009. Redesignated and amended at 75 FR 17039, 17040, Apr. 5, 2010; 81 FR 76296, Nov. 2, 2016] § 1261.5 Director eligibility. (a) Eligibility requirements for member directors. (1) A citizen of the United States; and (2) An officer or director of a member that is located in the district in which the Bank is located and that meets all minimum capital requirements established by its appropriate Federal banking agency or appropriate State regulator. In the case of a director elected by the members, the institution of which the director is an officer or director must have been a member as of the record date. In the case of a director elected by a Bank's board of directors to fill a vacancy, the institution of which the director is an officer or director must be a member at the time the board acts. (b) State designation for member directors. (c) Eligibility requirements for independent directors. (1) A citizen of the United States; and (2) A bona fide resident of the district in which the Bank is located. (d) Restrictions. (i) Is an incumbent director, unless: (A) The incumbent director's term of office would expire before the new term of office would begin; and (B) The new term of office would not be barred by the term limit provision of section 7(d) of the Bank Act (12 U.S.C. 1427(d)); or (ii) Is a former director whose service would be barred by the term limit provision of section 7(d) of the Bank Act. (2) For purposes of applying the term limit provision of section 7(d) of the Bank Act (12 U.S.C. 1427(d)): (i) A term of office that is adjusted after July 30, 2008 to a period of fewer than four years shall not be deemed to be a full term; (ii) Any member director's election and service to a directorship with a three year term of office prior to July 30, 2008 shall be deemed to be a full term; (iii) Any three-year term of office that ends immediately before a term of office that is adjusted after July 30, 2008 to a period of fewer than four years, and any term of office commencing immediately following such adjusted term of office, shall constitute consecutive full terms of office; and (iv) Any period of time served by a director who has been elected by the board of directors to fill a vacancy shall not be deemed to constitute a full term. (e) Loss of eligibility. [73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51461, Oct. 7, 2009; 75 FR 17039, 17040, Apr. 5, 2010; 81 FR 76296, Nov. 2, 2016] § 1261.6 Determination of member votes. (a) In general. (b) Number of votes. (c) Voting preferences. [73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51461, Oct. 7, 2009. Redesignated and amended at 75 FR 17039, Apr. 5, 2010; 81 FR 76296, Nov. 2, 2016] § 1261.7 Nominations for member and independent directorships. Within a reasonable time in advance of an election, a Bank shall notify each member in its district of the commencement of the election process. Such notice shall include: (a) Election announcement. (1) The number of member directorships designated for each voting state in the Bank district and the number of independent directorships for the Bank; (2) The name of each incumbent Bank director, the name and location of the member at which each member director serves, and the name and location of the organization with which each independent director is affiliated, if any, and the expiration date of each Bank director's term of office; (3) A brief statement describing the skills and experience the Bank believes are most likely to add strength to the board of directors, provided that the Bank previously has conducted the annual assessment permitted by § 1261.9 and the Bank has elected to provide the results of the assessment to the members; (4) An attachment indicating the name, location, and FHFA ID number of every member in the member's voting state, and the number of votes each such member may cast for each directorship to be filled by such members, as determined in accordance with § 1261.6; and (5) If a member directorship is to be filled by members in a State, a nominating certificate for those members. (b) Member directorship nominations. (2) The nominating certificate shall include the name of the nominee and the name, location, and FHFA ID number of the member the nominee serves as an officer or director. (3) The Bank shall establish a deadline for delivery of nominating certificates, which shall be no earlier than 30 calendar days after the date on which the Bank delivers the notice required by paragraph (a) of this section, and the Bank shall not accept certificates received after that deadline. The Bank shall retain all accepted nominating certificates for at least two years after the date of the election. (c) Accepting member directorship nominations. (d) Independent directorship nominations. (i) More than four years of experience representing consumer or community interests in banking services, credit needs, housing, or consumer financial protections; or (ii) Knowledge of or experience in one or more of the areas set forth in paragraph (e) of this section. (2) Any other interested party may recommend to the Bank that it consider a particular individual as a nominee for an independent directorship, but the Bank shall not nominate any individual unless the individual has delivered to the Bank, on or before the date the Bank has set for delivery of nominating certificates, an executed independent director application form prescribed by FHFA. The application form prescribed by FHFA will provide a means by which an individual can indicate an intent to be considered for a public interest directorship. The board of directors of the Bank may consider any individual for any independent directorship nomination, provided it has determined that the individual is eligible and qualified, but the board shall nominate for a public interest directorship only an individual who indicates on the application form a desire to be considered for a public interest directorship. The board of directors of the Bank shall consult with the Bank's Advisory Council before nominating any individual for any independent directorship. Each Bank shall include in its bylaws the procedures it intends to use for the nomination and election of the independent directors, and shall retain all information received under this paragraph for at least two years after the date of the election. (3) Each Bank shall determine the number of public interest directorships to be included among its authorized independent directorships, provided that each Bank shall at all times have at least two such directorships, and shall announce that number to its members in the notice required by paragraph (a) of this section. In submitting nominations to its members, each Bank shall nominate at least as many individuals as there are independent directorships to be filled in that year's election. (e) Independent director qualifications. (2) Each public interest independent director and each nominee for a public interest directorship shall have more than four years of experience representing consumer or community interests in banking services, credit needs, housing or consumer financial protection. (f) Eligibility verification. [73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51461, Oct. 7, 2009. Redesignated and amended at 75 FR 17039, Apr. 5, 2010; 81 FR 76296, Nov. 2, 2016] § 1261.8 Election process. (a) Ballots. (1) A ballot shall include at least the following provisions: (i) For states in which one or more member directorships are to be filled in the election, an alphabetical listing of the names of each nominee for such directorship, the name, location, and FHFA ID number of the member each nominee serves, the nominee's title or position with the member, and the number of member directorships to be filled by the members in that voting state in the election; (ii) An alphabetical listing of the names of each nominee for a public interest independent directorship and a brief description of each nominee's experience representing consumer and community interests; (iii) An alphabetical listing of the names of each nominee for the other independent directorships and a brief description of each nominee's qualifications, including his or her knowledge or experience in the areas of financial management, auditing and accounting, risk management practices, derivatives, project development, organizational management, and any other area of knowledge or experience set forth in § 1261.7(e); (iv) A statement that write-in candidates are not permitted; and (v) A confidentiality statement prohibiting the Bank from disclosing how any member voted. (2) At the election of the Bank, a ballot also may include, in the body or as an attachment, a brief description of the skills and experience of each nominee for a member directorship. (b) Statement on skills and experience. (c) Lack of member directorship nominees. (d) Voting. (1) Mark on the ballot the name of not more than one of the nominees for each directorship to be filled. Each nominee so selected shall receive all of the votes that the member is entitled to cast. (2) Execute and deliver the ballot to the Bank on or before the closing date. A Bank shall not allow a member to change a ballot after it has been delivered to the Bank. (e) Counting ballots. (f) Declaring results For member directorships. (2) For independent directorships. (ii) If the number of nominees exceeds the number of directorships to be filled, the Bank shall declare elected the nominee receiving the highest number of votes. If more than one directorship is to be filled, the Bank shall declare elected each successive nominee receiving the next highest number of votes for such directorship until all such open directorships are filled. (iii) If the number of nominees is no more than the number of directorships to be filled, the Bank shall declare elected each nominee receiving at least 20 percent of the number of votes eligible to be cast in the election. If any directorship is not filled due to any nominee's failure to receive at least 20 percent of the votes eligible to be cast, the Bank shall continue the election process for that directorship under the procedures in paragraph (h) of this section. (3) Tie votes. (4) Eligibility. (5) Record retention. (g) Report of election. (1) For each member directorship, the name of the director-elect, the name and location of the member at which he or she serves, his or her title or position at the member, the voting State represented, and the expiration date of the term of office; (2) For each independent directorship, the name of the director-elect, whether the director-elect will fill a public interest directorship and, if so, the consumer or community interest represented by such directorship, any qualifications under § 1261.7(e), and the expiration date of the term of office; (3) For member directorships, the total number of eligible votes, the number of members voting in the election, and the total number of votes cast for each nominee, which shall be reported by State; and (4) For independent directorships, the total number of eligible votes, the number of members voting in the election, and the total number of votes cast for each nominee, which shall be reported for the district at large. (h) Failure to fill all independent directorships. (1) The Bank's board of directors, after again consulting with the Bank's Advisory Council, shall nominate at least as many individuals as there are independent directorships to be filled. It may nominate individuals who failed to be elected in the initial vote. The Bank thereafter shall deliver to FHFA a copy of the independent director application form executed by each nominee. (2) The Bank then shall follow the provisions in this section that are applicable to the election process for independent directors, except for the following: (i) The Bank shall not place the name of any nominee on a ballot without prior approval of FHFA; and (ii) The Bank may adopt a closing date that is earlier than 30 calendar days after delivery of the ballots to the eligible voting members, provided the Bank determines that an earlier closing date provides a reasonable amount of time to vote the ballots. [73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51462, Oct. 7, 2009. Redesignated and amended at 75 FR 17039, 17040, Apr. 5, 2010; 81 FR 76296, Nov. 2, 2016] § 1261.9 Actions affecting director elections. (a) Banks. (b) Support for nomination or election. (2) A Bank director, officer, attorney, employee or agent and the board of directors and Advisory Council (including members of the Council) of a Bank may support the candidacy of any individual nominated by the board of directors for election to an independent directorship. (c) Prohibition. (1) Communicate in any manner that a director, officer, attorney, employee, or agent of a Bank, directly or indirectly, supports or opposes the nomination or election of a particular individual for a directorship; or (2) Take any other action to influence the voting with respect to any particular individual. [73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51463, Oct. 7, 2009; 81 FR 76297, Nov. 2, 2016; 83 FR 39326, Aug. 9, 2018] § 1261.10 Independent director conflict of interests. (a) Employment interests. (b) Holding companies. (c) Attribution. [73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51463, Oct. 7, 2009] § 1261.11 Conflict-of-interests policy for Bank directors. (a) Adoption of conflict-of-interests policy. (1) Require the directors to administer the affairs of the Bank fairly and impartially and without discrimination in favor of or against any member; (2) Require independent directors to comply with § 1261.10(a); (3) Prohibit the use of a director's official position for personal gain; (4) Require directors to disclose actual or apparent conflicts of interests and establish procedures for addressing such conflicts; (5) Require the establishment of internal controls to ensure that conflict-of-interests reports are made and filed and that conflict-of-interests issues are disclosed and resolved; and (6) Establish procedures to monitor compliance with the conflict-of-interests policy. (b) Disclosure and recusal. (c) Confidential Information. (d) Gifts. (e) Compensation. (f) Definitions. (1) Immediate family member (2) Financial interest (3) Business associate (i) Any corporation or organization of which the director is an officer or partner, or in which the director beneficially owns ten percent or more of any class of equity security, including subordinated debt; (ii) Any other partner, officer, or beneficial owner of ten percent or more of any class of equity security, including subordinated debt, of any such corporation or organization; and (iii) Any trust or other estate in which a director has a substantial beneficial interest or as to which the director serves as trustee or in a similar fiduciary capacity. [73 FR 55715, Sept. 26, 2008, as amended at 74 FR 51463, Oct. 7, 2009] § 1261.12 Reporting requirements for Bank directors. (a) Annual reporting. (b) Report of noncompliance. [74 FR 51463, Oct. 7, 2009] § 1261.13 Ineligible Bank directors. Upon a determination by FHFA or a Bank that any director of the Bank no longer satisfies the eligibility requirements set forth in the Bank Act or this subpart, or has failed to comply with the reporting requirements of § 1261.12, the directorship shall immediately become vacant. Any director that is determined to have failed to comply with any of these requirements shall not continue to serve as a Bank director. Whenever a Bank makes such a determination, the Bank promptly shall notify the Bank director and FHFA in writing. [74 FR 51464, Oct. 7, 2009, as amended at 81 FR 76297, Nov. 2, 2016] § 1261.14 Vacant Bank directorships. (a) Filling unexpired terms. (2) The board of directors of the Bank may fill an anticipated vacancy prior to the effective date of the vacancy, provided the board does so no sooner than the date of the regularly scheduled board meeting that occurs immediately prior to the effective date of the vacancy. (3) The board of directors shall elect only an individual who satisfies all the eligibility requirements in the Bank Act and in this subpart that applied to his or her predecessor and, for independent directorships, also satisfies any of the qualifications in the Bank Act or this subpart. If a Bank does not have at least two sitting public interest independent directors, the board of directors of the Bank shall designate the directorship as a public interest directorship and shall elect an individual who satisfies a public interest independent directorship qualification in the Bank Act or in this subpart. (b) Verifying eligibility. (c) Notification. (1) For each member directorship filled by the board of a Bank, the name of the director, the name, location, and FHFA ID number of the member the director serves, the director's title or position with the member, the voting State that the director represents, and the expiration date of the director's term of office; and (2) For each independent directorship filled by the board of a Bank, the name of the director, the name and location of the organization with which the director is affiliated, if any, the director's title or position with such organization, and the expiration date of the director's term of office. [74 FR 51464, Oct. 7, 2009, as amended at 75 FR 17039, Apr. 5, 2010] § 1261.15 Minimum number of member directorships. Except with respect to member directorships of a Bank resulting from the merger of any two or more Banks, the number of member directorships allocated to each state shall not be less than the number of directorships allocated to that state on December 31, 1960. The following table sets forth the states within Bank districts not created from the merger of two or more Banks whose members held more than one directorship on December 31, 1960: State Number of California 3 Colorado 2 Illinois 4 Indiana 5 Kansas 3 Kentucky 2 Louisiana 2 Massachusetts 3 Michigan 3 New Jersey 4 New York 4 Ohio 4 Oklahoma 2 Pennsylvania 6 Tennessee 2 Texas 3 Wisconsin 4 [81 FR 76297, Nov. 2, 2016] § 1261.16 [Reserved] Subpart C—Federal Home Loan Bank Directors' Compensation and Expenses Source: 75 FR 17040, Apr. 5, 2010, unless otherwise noted. § 1261.20 Definitions. As used in this subpart C: Compensation Expenses § 1261.21 General. (a) Standard. (b) Reporting— Following calendar year. (2) Preceding calendar year. (i) The total compensation paid to each director; (ii) The total expenses paid to each director; (iii) The total compensation paid to all directors; (iv) The total expenses paid to all directors; (v) The total of all expenses incurred at group functions that are not reimbursed to individual directors, such as the cost of group meals in connection with board and committee meetings; (vi) The total number of meetings held by the board and its designated committees; and (vii) The number of board and designated committee meetings each director attended in-person or through electronic means such as video or teleconferencing. § 1261.22 Directors' compensation policy. (a) General. (b) Minimum contents. (c) Prohibited payments. (d) Submission requirements. § 1261.23 Director disapproval. The Director may determine, based upon his or her review of a Bank's director compensation policy, methodology and/or other related materials, that the compensation and/or expenses to be paid to the directors are not reasonable. In such case, the Director may order the Bank to refrain from making any further payments under that compensation policy. Any such order shall apply prospectively only and will not affect either compensation or expenses that have been earned but not yet paid or reimbursed or payments that had been made prior to the date of the Director's determination and order. § 1261.24 Board meetings. (a) Number of meetings. (b) Site of meetings. Subpart D [Reserved]