Federally chartered corporation | 000-51402 | 04-6002575 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Goal | Weight | Threshold | Target | Excess |
Pre-assessment Core Return on Capital Stock(1), subject to risk limits(2) | 25% | 5.58%, as adjusted for interest rates(3) | 6.20%, as adjusted for interest rates(3) | 7.44%, as adjusted for interest rates(3) |
New Business and Mission Goal | 20% | $2 billion in new long term advances disbursed | $3.50 billion in new long term advances disbursed | $5 billion in new long term advances disbursed |
Insurance Advances Disbursements | 15% | $1.25 billion | $2.25 billion | $3.25 billion |
Insurance Membership | 10% | 3 new members | 5 new members | 7 new members |
Implement the Helping to House New England (HHNE) Initiative | 10% | Establish a cross-functional team to perform an analysis of alternatives to advances as a method to deliver HHNE subsidy to the New England HFAs. Deadline is March 31, 2017 for launch of 2017 HHNE | Disburse 80% of subsidy by December 31, 2017 | Disburse 100% of subsidy by December 31, 2017 |
Implement the Jobs for New England (JNE) Initiative | 10% | Launch the 2017 JNE in January and disburse 50% of the subsidy by June 30, 2017 | Disburse 70% of the subsidy by June 30, 2017 with three new member users | Disburse 100% of the subsidy by October 31, 2017 with 10 new member users of JNE |
Individual, Bank-wide or Department-Specific Initiatives | 10% | As documented by manager | As documented by manager | As documented by manager |
(1) | “Pre-assessment Core Return on Capital Stock” means A divided by B. “A” is net income for fiscal year 2017 reported in accordance with United States Generally Accepted Accounting Principles excluding the effects of prepayment fees in excess of certain historical prepayment fees (net of gains or losses from the unwinding of hedges), certain net fair-value adjustments based on unrealized gains and losses from hedging activities and trading securities, debt retirement costs (net of gains or losses from the unwinding of hedges) in excess of certain historical debt retirement costs, the credit portion of losses attributable to the other-than-temporary-impairment of investment securities, income due to increased accretable yields of investment securities for which we had previously recognized other-than-temporary impairment credit losses, required assessments in connection with the Bank's Affordable Housing Program, subsidy amounts expensed through the Helping to House New England and Jobs for New England initiatives, and income arising from Bank litigation based on certain of its investment securities. “B” is the Bank’s average daily outstanding balance of capital stock (including mandatorily redeemable capital stock). |
(2) | Achievement of the goal is subject to compliance with the Bank's value at risk and duration of equity limits for at least 10 of the 12 months of the year. If this requirement is not met, the Board may use its discretion to reduce or eliminate payouts for this goal. |
(3) | Each of the performance levels will be adjusted up or down by one basis point for every basis point by which the average daily federal funds rate is greater or less than the 0.83% rate assumed in an internal Bank forecast. |
Goal | Weight | Threshold | Target | Excess |
Bank-wide Enterprise Risk Management initiatives | 35% | As set forth in Appendix A to the EIP | As set forth in Appendix A to the EIP | As set forth in Appendix A to the EIP |
Remediation of 2016 Report of Examination Matters (“MRAs”) Requiring Attention and recommendations | 15% | Clear all MRAs and 83.3% of the recommendations | Clear all MRAs and recommendations | Achieve target criteria plus achieve a specified regulatory improvement |
Pre assessment Core Return on Capital Stock, subject to risk limits(1) | 20% | 5.58%, as adjusted for interest rates(2) | 6.20%, as adjusted for interest rates(2) | 7.44%, as adjusted for interest rates(2) |
Implement the Helping to House New England (HHNE) Initiative | 10% | Establish a cross-functional team to perform an analysis of alternatives to advances as a method to deliver HHNE subsidy to the New England HFAs. Deadline is March 31, 2017 for launch of 2017 HHNE | Disburse 80% of the subsidy by December 31, 2017 | Disburse 100% of the subsidy by December 31, 2017 |
Implement the Jobs for New England (JNE) Initiative | 10% | Launch the 2017 JNE in January and disburse 50% of the subsidy by June 30, 2017 | Disburse 70% of the subsidy by June 30, 2017 with three new member users | Disburse 100% of the subsidy by October 31, 2017 with 10 new member users of JNE |
Individual, Bank-wide or Department Specific Initiatives | 10% | As documented by manager | As documented by manager | As documented by manager |
(1) | Achievement of the goal is subject to compliance with the Bank's value at risk and duration of equity limits for at least 10 of the 12 months of the year. If this requirement is not met, the Board may use its discretion to reduce or eliminate payouts for this goal. |
(2) | Each of the performance levels will be adjusted up or down by one basis point for every basis point by which the average daily federal funds rate is greater or less than the 0.83% rate assumed in an internal Bank forecast. |
Threshold | Target | Excess | |
Average Annual Pre-assessment Core Return on Capital Stock from January 1, 2017 until December 31, 2019 | 5.01%(1) | 6.26%(1) | 7.51%(1) |
(1) | Each of the performance levels will be adjusted up or down by 1.0 basis points for every basis point by which the average daily federal funds rate is greater or less than the 1.22% rate assumed in an internal Bank forecast. |
Combined Short and Long-Term Incentive Opportunity as a Percent of Base Salary(1) | |||
Threshold | Target | Excess | |
President | 50.00% | 75.00% | 100.00% |
All Other Named Executive Officers | 30.00% | 50.00% | 70.00% |
(1) | The combined short and long term incentive paid under the EIP will not exceed 100% of the weighted average of the base salary of the participant for 2017, 2018 and 2019. |
2017 Short-Term Incentive Opportunity | |||
Threshold | Target | Excess | |
President | 25.00% | 37.50% | 50.00% |
All Other Named Executive Officers | 15.00% | 25.00% | 35.00% |
• | the requirement that the participant be in employment with the Bank on the short-term award payment date in March 2018, although participants that terminate employment by reason of death or disability or who are eligible to retire prior to that date may receive a pro-rata payment of the award in certain instances as detailed in the EIP; and |
• | Board approval and non-objection of the Federal Housing Finance Agency, the Bank’s principal regulator (the “FHFA”), if required. |
Long-Term Incentive Opportunities | |||
Threshold | Target | Excess | |
All Named Executive Officers | 50% of the remaining 50% of the combined short- and long-term incentive opportunity | 100 % of the remaining 50% of the combined short- and long-term incentive opportunity | 150% of the remaining 50% of the combined short- and long-term incentive opportunity |
• | the requirement that the participant be in employment with the Bank on the long-term award payment date in March 2020, although participants that terminate employment by reason of death or disability or who are eligible to retire prior to that date may receive payment of the award in certain instances as detailed in the EIP; and |
• | Board approval and review and non-objection by the FHFA (to the extent required by the FHFA). |
• | operational errors or omissions resulting in material revisions to the 2017 financial results, information submitted to the FHFA supporting the goal results or payout calculation, or other data used to determine the combined award at year-end 2017; |
• | submission of significant information to the Securities and Exchange Commission, Office of Finance (the Bank’s agent for the issuing and servicing of debt), and/or FHFA materially beyond any deadline or applicable grace period, other than late submissions that are caused by Acts of God or other events beyond the reasonable control of the participants; or |
• | failure by the Bank to make sufficient progress, as determined by the FHFA, in the timely remediation of examination and other supervisory findings relevant to the goal results or payout calculation. |
Date: | February 23, 2017 | Federal Home Loan Bank of Boston | |
By:/s/ Frank Nitkiewicz | |||
Frank Nitkiewicz | |||
Executive Vice President and Chief Financial Officer |