CHS INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")), as of August 31, 2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of that date, our disclosure controls and procedures were effective. Management's Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projecting any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013) . Based on management’s assessment using this framework, management concluded that, as of August 31, 2021, our internal control over financial reporting was effective. This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to the Financial Reform Bill passed in July 2010 that permits us to provide only management’s report in this Annual Report on Form 10-K. Changes in Internal Control Over Financial Reporting There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended August 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION On November 3, 2021, we and Mr. Debertin entered into an amendment ("Employment Agreement Amendment No. 2") to the employment agreement we entered into with Mr. Debertin on May 22, 2017 ("Employment Agreement"), as previously amended on November 5, 2020, pursuant to which the terms of Mr. Debertin’s long-term incentive compensation were amended to provide Mr. Debertin a target opportunity of 300% of his average annual Base Salary over each three-year performance period applicable to that award opportunity, with a threshold opportunity equal to one-half of the target opportunity and a maximum opportunity equal to twice the target opportunity. The amended long-term incentive compensation opportunity targets will apply to each three-year performance period that begins on or after September 1, 2021. 44 Table of Contents The foregoing description of Employment Agreement Amendment No. 2 does not purport to be complete and is qualified in its entirety by reference to Employment Agreement Amendment No. 2, which is filed as Exhibit 10.1 B to this Annual Report on Form 10-K and is incorporated herein by reference. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 45 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE BOARD OF DIRECTORS The table below provides certain information regarding each of our directors, as of August 31, 2021: Name Age Director Region Director Since David Beckman 61 8 2018 Clinton J. Blew 44 8 2010 Hal Clemensen 61 4 2019 Scott Cordes 60 1 2017 Jon Erickson 61 3 2011 Mark Farrell 62 5 2016 Steve Fritel 66 3 2003 Alan Holm 61 1 2013 David Johnsrud 67 1 2012 Tracy Jones 58 5 2017 David Kayser 62 4 2006 Russell Kehl 46 6 2017 Perry Meyer 67 1 2014 Steve Riegel 69 8 2006 Daniel Schurr 56 7 2006 Kevin Throener 49 3 2019 Cortney Wagner 43 2 2020 As a cooperative, members of our Board of Directors are nominated and elected by our members as required by our bylaws. As described below under "Director Elections and Voting," to ensure geographic representation of our members, the Board of Directors represents eight regions in which our members are located. The members in each region nominate and elect the number of directors for that region as set forth in our bylaws. Neither management nor the incumbent directors have any control over the nominating process for directors. As described below under "Director Elections and Voting," to be eligible for service as a director, a nominee must, among other things, (i) be an active farmer or rancher whose primary occupation is that of a farmer or rancher, (ii) be a Class A individual member of CHS or a cooperative association member and (iii) reside in the geographic region from which he or she is nominated. In general, our directors operate large commercial agricultural enterprises, which require expertise in all areas of management, including financial oversight. Most directors also have experience serving on local cooperative association boards and participate in a variety of agricultural and community organizations. Some directors also have experience serving on boards of directors for financial and other institutions and businesses. Our directors complete the National Association of Corporate Directors comprehensive Director Professionalism course and earn the Certificate of Director Education. David Beckman has been a member of the CHS Board of Directors since 2018. He is a member of the Audit Committee and the CHS Foundation Board of Trustees. He serves as board chair for Central Valley Ag Cooperative in York, Nebraska, and secretary of the Nebraska Cooperative Council. He holds a bachelor's degree in agronomy from the University of Nebraska-Lincoln. Mr. Beckman's principal occupation has been farming for more than five years. In partnership with his family, he raises irrigated corn and soybeans and operates a custom hog-feeding operation near Elgin, Nebraska. Clinton J. Blew, First Vice Chair, has been a member of the CHS Board of Directors since 2010. Since 2017, Mr. Blew has served as first vice chair of the Executive Committee of the Board. He also serves on the Audit Committee and Capital Committee. He is a member of the board of directors of Mid Kansas Coop, Moundridge, Kansas, and is a member of the Hutchinson Community College Ag Advisory Board, Kansas Livestock Association, Texas Cattle Feeders Association and Red Angus Association of America. He holds an applied science degree in farm and ranch management from Hutchinson (Kansas) Community College. Mr. Blew's principal occupation has been farming for more than five years, and he farms and ranches in a family partnership in south-central Kansas. 46 Table of Contents Hal Clemensen has been a member of the CHS Board of Directors since 2019. He is vice chair of the Government Relations Committee and a member of the Corporate Risk Committee. He serves on the Agtegra Cooperative board. He also serves on the board of trustees for Presentation College and the Avera Rural Cancer Advisory Board. Previously, he served as a director of the South Dakota Value Added Agriculture Development Center, South Dakota Soybean Association and Redfield Farmers Union Oil Company. He holds a bachelor's degree in agricultural economics and agricultural business from South Dakota State University. Mr. Clemensen’s principal occupation has been farming for more than five years. He and his wife raise corn, soybeans and wheat in Brown and Spink counties in South Dakota. Scott Cordes has been a member of the CHS Board of Directors since 2017. He is vice chair of the Audit Committee and vice chair of the Corporate Risk Committee. He serves as a director and past chair of Security State Bank of Wanamingo, Minnesota. Previously, he served as director of Cooperative Network, the MGEX and National Futures Association. He holds a bachelor's degree in agricultural economics from the University of Minnesota. Mr. Cordes' principal occupation has been farming for more than four years. Prior to his current occupation, he was president of CHS Hedging, a commodities brokerage subsidiary of CHS Inc. He operates a corn and soybean farm near Wanamingo. Jon Erickson, Second Vice Chair, has been a member of the CHS Board of Directors since 2011. Since 2017, he has been second vice chair of the Executive Committee of the Board. He also serves as chair of the Capital Committee and as a member of the Audit Committee. He is a member of the North Dakota Farmers Union and North Dakota Stockmen's Association. He holds a bachelor's degree in agricultural economics from North Dakota State University. Mr. Erickson's principal occupation has been farming for more than five years. He raises grains and oilseeds and operates a commercial Hereford-Angus cow-calf business near Minot, North Dakota. Mark Farrell has been a member of the CHS Board of Directors since 2016. He is a member of the Board's Corporate Risk Committee and Government Relations Committee. Previously, he served as a director and president of the Premier Cooperative board and as a director of Mount Horeb Farmers Co-op and United Ethanol. He graduated from the University of Wisconsin-Madison Agricultural & Life Sciences Farm & Industry Short Course. Mr. Farrell's principal occupation has been farming for more than five years. He raises corn, soybeans and wheat in Dane County, Wisconsin . Steve Fritel has been a member of the CHS Board of Directors since 2003. He chairs the Corporate Risk Committee and is a member of the Audit Committee. He earned an associate degree from North Dakota State College of Science. Mr. Fritel's principal occupation has been farming for more than five years. He raises spring wheat, soybeans, edible beans, corn and canola near Rugby, North Dakota, selling some of his edible beans to family-owned restaurants. He also runs a family business providing on-farm grain storage equipment. Alan Holm has been a member of the CHS Board of Directors since 2013. He serves as chair of the Government Relations Committee and is a member of the Corporate Risk Committee. He also serves on the board for Citizens Bank of Minnesota. Mr. Holm holds an associate degree in machine tool technology from Mankato (Minnesota) Technical College. Mr. Holm's principal occupation has been farming for more than five years. He raises corn, soybeans, sweet corn, peas and hay and operates a cow-calf operation near Sleepy Eye, Minnesota. David Johnsrud has been a member of the CHS Board of Directors since 2012. He serves as a member of the Government Relations Committee and Capital Committee. He also serves as a member of the board for the Cooperative Network. Previously, he served as board chair of AgCountry Farm Credit Services and on the boards of the Minnesota Farm Credit Legislative Committee, Farmers Union Oil, CHS Prairie Lakes, Mid-Minnesota Association and Minnesota State Co-op Directors Association, including terms as board secretary for Farmers Union Oil and CHS Prairie Lakes. Mr. Johnsrud’s principal occupation has been farming for more than five years. He raises corn and soybeans near Starbuck, Minnesota. Tracy Jones has been a member of the CHS Board of Directors since 2017. He is chair of the Governance Committee and a member of the Capital Committee. He has served on the DeKalb County Board and on the boards of CHS Elburn, DeKalb Kane Cattlemen's Association and DeKalb County Corn Growers. He earned an associate degree in farm management from Kishwaukee College in Malta, Illinois. Mr. Jones' principal occupation has been farming for more than five years. He operates a fourth-generation family farm near Kirkland, Illinois, that raises corn, soybeans and wheat and feeds cattle. David Kayser has been a member of the CHS Board of Directors since 2006. He serves as chair of the CHS Foundation Board of Trustees and as a member of the Governance Committee. Mr. Kayser is a member of the Mitchell (South Dakota) Technical Institute Foundation Board and a previous director and chair of CHS Farmers Alliance and South Dakota Association of Cooperatives. Mr. Kayser's principal occupation has been farming for more than five years. He raises corn, soybeans and hay near Alexandria, South Dakota, and operates a cow-calf and feeder-calf business. 47 Table of Contents Russell Kehl, Secretary-Treasurer, has been a member of the CHS Board of Directors since 2017. Since 2019, Mr. Kehl has served as secretary-treasurer of the Executive Committee of the Board. He also serves as vice chair of the Capital Committee and vice chair of the Governance Committee. He previously was a director of CHS SunBasin Growers and vice chair of the Columbia Basin Seed Association. Mr. Kehl's primary occupation has been farming for more than five years. He and his wife operate a farm near Quincy, Washington, that produces crops, primarily potatoes and dry beans, and includes a cow-calf herd. His family also owns a dry bean processing facility, runs a custom farming business, and owns and operates a trucking and logistics company. Perry Meyer has been a member of the CHS Board of Directors since 2014. He serves as chair of the Audit Committee and is a member of the Corporate Risk Committee. He is a member of United Farmers Co-op, Central Region Cooperative, Minnesota Farm Bureau, Minnesota and Nicollet County corn growers associations, and Minnesota Pork Producers Association. He serves as a director of Steamboat Pork Cooperative, chair of the board of Nuvera Communications, Inc. and director of Minnesota Valley Lutheran School Foundation. He holds an agricultural mechanics degree from Alexandria (Minnesota) Technical School. Mr. Meyer's principal occupation has been farming for more than five years. He operates a family farm, raising corn, soybeans and hogs near New Ulm, Minnesota. Steve Riegel, Assistant Secretary-Treasurer, has been a member of the CHS Board of Directors since 2006. Mr. Riegel serves as the assistant secretary-treasurer of the Executive Committee of the Board. He is also a member of the Governance and Capital committees. He is an advisory director of Bucklin National Bank. He attended Fort Hays (Kansas) State University, majoring in agriculture, business and animal science. Mr. Riegel's principal occupation has been farming for more than five years. He raises irrigated corn, soybeans, alfalfa, dryland wheat and milo and operates a cow-calf operation near Ford, Kansas. Daniel Schurr, Chair , has been a member of the CHS Board of Directors since 2006. Since 2017, Mr. Schurr has served as chair of the Executive Committee of the Board. He serves on the Blackhawk Bank and Trust board and audit and loan committees and previously served on the Silos and Smokestacks National Heritage Area board. He holds a bachelor's degree in agricultural business with a minor in economics from Iowa State University. Mr. Schurr's principal occupation has been farming for more than five years. He raises corn and soybeans near LeClaire, Iowa, and operates a commercial trucking business. Kevin Throener has been a member of the CHS Board of Directors since 2019. He is a member of the Governance Committee and the CHS Foundation Board of Trustees. He serves as a CHS Dakota Plains director and is active in the North Dakota Farmers Union, the North Dakota Stockmen's Association and Knights of Columbus. He attended North Dakota State University, majoring in agricultural systems management. Mr. Throener's principal occupation has been farming for more than five years. He and his wife raise corn, soybeans, alfalfa and cattle near Cogswell, North Dakota. Cortney Wagner has been a member of the CHS Board of Directors since 2020. She is a member of the Governance Committee and the CHS Foundation Board of Trustees. Ms. Wagner serves on the board of the Montana Council of Cooperatives. She holds a real estate license and has served as a trust associate at 1st National Bank and Trust Company. She earned an associate of arts degree from Williston State College and attended the University of North Dakota, majoring in business finance and psychology. Ms. Wagner's principal occupation has been farming for more than five years. She is a first-generation cattle and hay producer based near Hardin, Montana. Director Elections and Voting Director elections are for three-year terms and are open to any qualified candidate. Qualifications for the office of director are as follows: • At the time of declaration of candidacy, the individual (except in the case of an incumbent) must have the written endorsement of a locally elected producer board that is part of the CHS system and located within the region from which the individual is to be a candidate. • At the time of the election, the individual must be less than 68 years old. The remaining qualifications set forth below must be met at all times commencing six months prior to the time of election and while the individual holds office: • The individual must be a Class A individual member of CHS or a member of a cooperative association member. • The individual must reside in the region from which he or she is to be elected. 48 Table of Contents • The individual must be an active farmer or rancher. "Active farmer or rancher" means an individual whose primary occupation is that of a farmer or rancher, excluding anyone who is an employee of CHS or of a cooperative association member. The following positions on the Board of Directors will be up for election at the 2021 Annual Meeting of Members: Region Incumbent Region 1 (Minnesota) David Johnsrud Region 3 (North Dakota) Steve Fritel Region 4 (South Dakota) David Kayser Region 6 (Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, Washington) Russell Kehl Region 8 (Colorado, Kansas, Nebraska, New Mexico, Oklahoma, Texas) David Beckman Voting rights, including those in regard to director elections, arise by virtue of membership in CHS, not because of ownership of any equity or debt instruments; therefore, our preferred shareholders cannot recommend nominees to our Board of Directors nor vote in regard to director elections unless they are Class A or Class C members of CHS. EXECUTIVE OFFICERS The table below lists our executive officers as appointed by the CHS Board of Directors as of August 31, 2021: Name Age Position Jay Debertin 61 President and Chief Executive Officer Richard Dusek 57 Executive Vice President, CHS Country Operations Darin Hunhoff 51 Executive Vice President, CHS Energy John Griffith 52 Executive Vice President, Ag Business and CHS Hedging Olivia Nelligan 46 Executive Vice President and Chief Financial Officer Brandon Smith 41 Executive Vice President and General Counsel David Black 55 Senior Vice President, Chief Strategy Officer and Chief Information Officer Gary Halvorson 48 Senior Vice President, CHS Agronomy Mary Kaul-Hottinger 57 Senior Vice President, Human Resources Jay Debertin has been president and chief executive officer ("CEO") for CHS since May 2017. He leads the strategic leadership team in strengthening CHS by advancing operational excellence, accelerating its focus on results and delivering products and services that help the cooperative's owners grow their businesses. Mr. Debertin joined CHS in 1984 in the petroleum division and held a variety of positions in its energy marketing operations before being named vice president of crude oil supply in 1998. In 2001, his responsibilities expanded to include crude oil supply, refining, pipelines and terminals, trading and risk management, and transportation. From 2005 to 2010, Mr. Debertin was executive vice president and chief operating officer for processing at CHS. From 2010 to 2017, he served as executive vice president and chief operating officer of Energy and Foods where he led energy, transportation and processing at CHS. Mr. Debertin serves as board chair for Ventura Foods and as vice chair of the National Council of Farmer Cooperatives. He also serves on the board of directors for Securian Financial. He earned a bachelor's degree in economics from the University of North Dakota and a master of business administration degree from the University of Wisconsin - Madison. Richard Dusek has been executive vice president, CHS Country Operations since November 2017. He is leading the CHS retail platform as a critical distribution channel for our core businesses, aligning an enterprise supply chain to drive efficiencies in delivering crop inputs, fuels, animal nutrition and other farm supplies and marketing the grain produced by farmer owners. Mr. Dusek serves on the board of directors for The Fertilizer Institute and is a past board member of the MGEX. He joined CHS in 1988 as a wheat trader. Prior to leading our retail business, Mr. Dusek held roles as vice president in our grain marketing and agronomy divisions. He earned a bachelor of science degree in agricultural economics from North Dakota State University and he is a graduate of the Harvard Business School Advanced Management Program. Darin Hunhoff has been executive vice president, CHS Energy, since May 2017. He leads CHS energy operations including refineries, pipelines and terminals, refined fuels, propane, lubricants and transportation. In addition, he oversees CHS Strategic Sourcing, the company's enterprisewide strategic sourcing initiative. Mr. Hunhoff serves on the board of directors for Ardent Mills, LLC. He joined CHS more than 25 years ago as a petroleum specialist. He has also been chief strategy officer for 49 Table of Contents CHS and has spent several years in energy leadership roles, including time as senior vice president of refined fuels and vice president of propane. He earned a bachelor's degree in marketing and business management from Southwest Minnesota State University. Olivia Nelligan is the executive vice president and chief financial officer for CHS, joining the organization in January 2020. She is responsible for accounting, treasury, credit and finance activities across CHS and chairs the CHS Retirement Plan Committee. Before joining CHS, Ms. Nelligan held executive positions in multiple organizations as well as acting as a management consultant. From June 2019 until her appointment as our executive vice president and chief financial officer, Ms. Nelligan served as chief executive officer of Inish Enterprises, a strategic advisory firm that she founded. Prior to that, Ms. Nelligan served as chief financial officer and subsequently as chief executive officer of Nasco, LLC, a private equity-owned company that provides specialty products for education, healthcare, laboratory testing and agriculture. After serving as Nasco's CEO, she served as nonexecutive chair of its board. Prior to Nasco, Ms. Nelligan spent many years with Kerry Group plc and was most recently the global chief financial and strategic planning officer of its Taste and Nutrition division. She holds a bachelor's degree in civil law and a higher diploma in business and financial information systems from University College Cork, Ireland, and a master of business administration degree from the University of Wisconsin - Madison. She is a Fellow Chartered Accountant and an associate member of the Institute of Taxation in Ireland and serves on the board of directors of the Boys Scouts of America Northern Star Council. Brandon Smith has been executive vice president and general counsel for CHS since March 2021. He provides counsel to CHS leadership and the Board of Directors on company strategy, government affairs, corporate governance, corporate compliance, federal securities reporting and compliance, and disclosure and investor communications. Mr. Smith also oversees the CHS internal audit department. He previously worked at Tenneco Inc., a multinational industrial company based in Lake Forest, Illinois, for 13 years in various legal and leadership roles, most recently as senior vice president, general counsel and corporate secretary. Prior to joining Tenneco, Mr. Smith worked for the Kirkland & Ellis LLP law firm in Chicago, Illinois. He earned a juris doctor degree from Cornell Law School and a bachelor's degree in business management from Hiram College. David Black has been senior vice president, enterprise transformation, and chief information officer for CHS since April 2018. He leads enterprise transformation and strategy, CHS global information technology, marketing and communications and facilities. He leads enterprise transformation efforts, driving ongoing review of company assets, strategic infrastructure and decision-making on opportunities for profitable growth. He leads strategy, implementation, delivery and operation of information technology for all CHS businesses worldwide and oversees the company's owner and employee communications, advertising and public relations and CHS sustainability programs. He also serves on the board of Ventura Foods and is former board chair of Ag Gateway, a nonprofit consortium of 300-plus businesses, which strives to promote, enable and expand e-business in agriculture. He joined CHS in 2014. Mr. Black previously worked at Monsanto Company, where he served as vice president, information technology, overseeing all aspects of information technology for its global commercial businesses. During his 20 years with Monsanto, he also served as vice president, corporate strategy, and president, Monsanto Agro-Services, LLC. Mr. Black earned a bachelor's degree in computer science from Tarkio College. John Griffith has been executive vice president, Ag Business and CHS Hedging since January 2021. He leads CHS global grain and processing operations and renewable fuels trading, supply chain management and risk management, including freight, currency, execution and trade finance. Mr. Griffith chairs the North American Export Grain Association board and previously was a member of the MGEX board. He also serves as board chair for CHS Hedging, a commodities brokerage subsidiary of CHS. He worked for CHS early in his career as a grain merchandiser and rejoined CHS at a leadership level in January 2013. Since that time, he has held various leadership roles within global grain marketing, including senior vice president, CHS Global Grain Marketing and CHS Hedging, and vice president, grain marketing North America. He earned a bachelor’s degree from St. John's University and a master of business administration degree from Rockhurst University. Gary Halvorson has been senior vice president, enterprise customer development, since September 2021. He is responsible for efforts across all businesses to deliver a focused and coordinated customer experience for owners and customers. He also oversees marketing and sales functions for CHS wholesale and retail agronomy businesses and agronomy product development, as well as CHS Cooperative Resources, which provides strategic business and talent planning for cooperatives. Mr. Halvorson represents CHS on the board of directors for The Fertilizer Institute (TFI) and has served on the National FFA Sponsors Board and the Agricultural Retailers Association board of directors. He joined CHS more than 20 years ago. Most recently, he led the CHS agronomy business. Prior to that, Mr. Halvorson held various leadership roles with CHS at locations in North Dakota before becoming general manager for CHS Ag Services in Warren, Minnesota. Mr. Halvorson also served as vice president of farm supply for CHS Country Operations. He earned a bachelor's degree in business from Concordia University. Mary Kaul-Hottinger has been senior vice president, human resources, for CHS since September 2018. Ms. Kaul-Hottinger sets direction and strategy for human resources with a focus on helping us attract, develop and retain high-performing 50 Table of Contents and diverse employees. She also oversees CHS Community Giving, which provides giving and volunteer programs to strengthen hometown communities in collaboration with local cooperatives. Prior to joining CHS, she was vice president, human resources, for Ecolab's global businesses and supported business units with more than 30,000 employees. She previously served in human resources leadership roles at General Mills and Pillsbury. Ms. Kaul-Hottinger holds a bachelor's degree in business administration from the University of St. Thomas. DELINQUENT SECTION 16(a) REPORTS Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of any class of our preferred stock to file initial reports of ownership and reports of changes in ownership with the SEC. Such executive officers, directors and greater than 10% beneficial owners are required by the regulations of the SEC to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of copies of reports on Forms 3 and 4 and amendments thereto filed electronically with the SEC during, and reports on Form 5 and amendments thereto filed electronically with the SEC with respect to the fiscal year ended August 31, 2021, and based further upon written representations received by us with respect to the need to file reports on Form 5, except for Ms. Wagner, who filed one late Form 3 relating to her election as a director, no persons filed late reports required by Section 16(a) of the Exchange Act during fiscal 2021. CODE OF ETHICS We have adopted a code of ethics within the meaning of Item 406(b) of Regulation S-K promulgated by the SEC. This code of ethics applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. This code of ethics is part of our broader CHS Code of Conduct, which is posted on our website. The internet address for our website is www.chsinc.com and the CHS Code of Conduct may be found on the "Compliance and integrity" web page, which can be accessed from the "About CHS" web page, which can be accessed from our main web page. We intend to disclose any amendment to, or waiver from, a provision of the code of ethics that applies to our principal executive officer, principal financial officer or principal accounting officer on the "Compliance and integrity" web page of our website. The information contained on our website is not part of, and is not incorporated in, this report or any other report we file with or furnish to the SEC. AUDIT COMMITTEE MATTERS The Board of Directors has a separately designated standing Audit Committee for the purpose of overseeing our accounting and financial reporting processes and audits of our financial statements. In fiscal 2021, the Audit Committee was comprised of Mr. Beckman, Mr. Blew, Mr. Cordes, Mr. Erickson, Mr. Fritel and Mr. Meyer (chair), each of whom is an independent director. The Audit Committee has oversight responsibility to our member-owners relating to our financial statements and the financial reporting process, preparation of the financial reports and other financial information provided by us to any governmental or regulatory body, the systems of internal accounting and financial controls, the internal audit function and the annual independent audit of our financial statements. The Audit Committee assures that the corporate information gathering and reporting systems developed by management represent a good faith attempt to provide senior management and the Board of Directors with information regarding material acts, events and conditions within CHS. In addition, the Audit Committee is directly responsible for the appointment, compensation and oversight of the independent registered public accounting firm. We do not believe any member of the Audit Committee is an "audit committee financial expert" as defined in the Sarbanes-Oxley Act of 2002 and the rules and regulations thereunder. As a cooperative, members of our Board of Directors are nominated and elected by our members. To ensure geographic representation of our members, the Board of Directors represents eight regions in which our members are located. The voting members in each region nominate and elect the number of directors for that region as set forth in our bylaws. To be eligible for service as a director, a nominee must among other things, (i) be an active farmer or rancher, (ii) be a Class A individual member of CHS or a cooperative association member and (iii) reside in the geographic region from which he or she is nominated. Neither management nor the incumbent directors have any control over the nominating process for directors. Because of the nomination procedure and the election process, we cannot ensure that an elected director serving on our Audit Committee will be an audit committee financial expert. However, many of our directors, including all of the Audit Committee members, are financially sophisticated and have experience or background in which they have had significant financial management or oversight responsibilities. The current Audit Committee includes directors who have served as presidents or chairs of local cooperative association boards. Members of the Board of Directors, including the Audit Committee, also operate large commercial enterprises requiring expertise in all areas of management, including financial oversight. 51 Table of Contents ITEM 11. EXECUTIVE COMPENSATION Compensation Discussion and Analysis Executive Compensation Overview This Compensation Discussion and Analysis describes the material elements of compensation awarded to each of the following executive officers ("Named Executive Officers") for fiscal 2021, which ran from September 1, 2020, through August 31, 2021: Name Position Jay Debertin President and Chief Executive Officer Olivia Nelligan Executive Vice President and Chief Financial Officer Darin Hunhoff Executive Vice President, Energy Richard Dusek Executive Vice President, CHS Country Operations John Griffith Executive Vice President, Ag Business and CHS Hedging James Zappa Senior Vice President Legal & Government Affairs, Deputy General Counsel CHS is an organization that exists to create connections to empower agriculture, for the benefit of our producer and local cooperative owners and the communities in which we and our owners live and operate. CHS compensation programs are designed to attract, retain and reward the executives who carry out this purpose and align them around attainment of CHS long-term strategies and short-term priorities. This section outlines the compensation and benefit programs, as well as the materials and factors used to assist us in making compensation decisions. In this Compensation Discussion and Analysis, the related compensation tables and the accompanying narratives, all references to a given year refer to our fiscal year ending on August 31 of that year. Compensation Philosophy and Objectives The Governance Committee of our Board of Directors ("Governance Committee") oversees the administration of, and the fundamental changes to, our executive compensation and benefits programs. The primary principles and objectives in compensating our executive officers include: • Attract and retain exceptional talent who meet our leadership expectations and are engaged and committed to the long-term success of CHS by providing market-competitive compensation and benefit programs; • Align executive rewards to quantifiable annual and long-term performance goals that drive enterprise results and provide competitive returns to our member-owners; • Emphasize pay for performance by providing a total direct compensation mix of fixed and variable pay that is primarily weighted on annual and long-term incentives to reward annual and sustained performance over the long term; and • Ensure compliance with government mandates and regulations. There are no material changes anticipated to our compensation philosophy or objectives for fiscal 2022. Components of Executive Compensation and Benefits Our executive compensation programs are designed to attract and retain highly qualified executives and to motivate them to optimize member-owner returns and to achieve our long-term strategies by achieving specified goals. The compensation program links executive compensation directly to our annual and long-term financial performance. A significant portion of each executive's compensation depends on meeting financial goals and a smaller portion is linked to individual performance objectives. The Governance Committee reviews our executive compensation policies each year with respect to the correlation between executive compensation and the creation of member-owner value, as well as the competitiveness of our executive compensation programs. The Governance Committee, with input from a third-party consultant if necessary, determines what, if 52 Table of Contents any, changes are appropriate to our executive compensation programs, including the incentive plan goals applicable to our Named Executive Officers under the incentive compensation plans to which they and other employees are eligible. A third-party consultant is chosen and hired directly by the Executive Committee of our Board of Directors ("Executive Committee") to provide guidance regarding market-competitive levels of base pay, annual variable pay and long-term incentive pay, as well as market-competitive allocations between base pay, annual variable pay and long-term incentive pay for our CEO. The data is shared with our Board of Directors, which makes final decisions regarding our CEO's base pay, annual incentive pay and long-term incentive pay, as well as the allocation of compensation between base pay, annual incentive pay and long-term incentive pay. There are no formal policies for allocation between long-term and short-term compensation, other than the intention to be competitive with the external compensation market for comparable positions and to be consistent with our compensation philosophy and objectives. The Executive Committee recommends to our Board of Directors salary actions relative to our CEO and approves annual and long-term incentive awards for our CEO based on performance of CHS compared to the financial goals and, as applicable, individual performance. In turn, our Board of Directors communicates this pay information to our CEO. Our CEO is not involved with the selection of the third-party consultant and does not participate in or observe Executive Committee meetings that concern CEO compensation matters. Based on a review of compensation market data provided by our human resources department (survey sources and pricing methodology are explained below under "Components of Compensation"), with input from a third-party consultant if necessary, our CEO decides base compensation levels for the other Named Executive Officers, recommends for Board of Directors approval the annual and long-term incentive pay plan performance goals applicable to the other Named Executive Officers (and other employees) and communicates base and incentive compensation pay to the other Named Executive Officers. The day-to-day design and administration of compensation and benefit plans are managed by our human resources, finance and legal departments. Components of Compensation Our executive compensation and benefits program consists of seven components. Each component is designed to be competitive within the executive compensation market. In determining competitive compensation levels, we analyze independent compensation survey information, including comparable industries, markets, revenues and companies that compete with us for executive talent. In fiscal 2021, the Towers Watson CDB Executive Compensation Survey Report was used for this analysis, and the survey data extracted included median market rates for base salary, annual incentive, total cash compensation and total direct compensation. Companies included in the survey vary by industry, revenue and number of employees, and represent both public and private ownership, as well as nonprofit, government and mutual organizations. Compensation paid by a comparator group of industry specific companies, which includes 16 private, public and cooperative organizations in the agronomy, energy, food and grain industries, is also considered when making compensation decisions. The following companies comprised the 2021 comparator group: Comparator Group ADM Conagra Brands Kinder Morgan Mosaic Bunge Conoco Phillips Koch Industries Nutrien CF Industries General Mills Land O'Lakes Valero Energy Cargill Holly Frontier Marathon Petroleum Williams Companies Effective September 1, 2021, we removed Conoco Phillips from our comparator group and added Phillips 66. The latter is a refining and fuel distribution company, which is a more relevant comparator for our energy business. The emphasis of our executive compensation package is weighted more on variable pay through annual variable pay and long-term incentive awards. This is consistent with our compensation philosophy of emphasizing a strong link between pay, employee performance and business goals to foster a clear line of sight and strong commitment to our short-term and long-term success and also aligns our programs with general market practices. The goal is to provide our executives with an overall compensation package that is competitive in comparable industries, companies and markets. We target the market median compensation for base pay, target total cash and target total direct compensation, and the 75th percentile for total direct compensation when we achieve above-market performance. For fiscal 2021, base pay was slightly below the market median, total cash compensation was above the market median and total direct compensation was slightly above the market median. The total cash compensation was above the market median because actual earned annual variable pay awards were above target performance. The slightly above market median total direct compensation occurred because long-term incentive awards for the fiscal 2019-2021 performance period were achieved at the maximum level of performance. 53 Table of Contents The following table presents a more detailed breakout of each compensation element: Pay Element Definition of Pay Element Purpose of Pay Element Base Pay Competitive base level of compensation provided relative to skills, experience, knowledge and contributions • Provides the fundamental element of compensation for carrying out duties of the job Annual Variable Pay Broad-based employee short-term performance-based variable pay incentive for achieving predetermined annual financial and individual performance goals • Provides a direct link between pay and annual business objectives • Pay for performance to motivate and encourage the achievement of critical business initiatives • Encourages proper expense control and containment Profit-Sharing Selective employee short-term performance-based variable pay for achieving predetermined annual financial goals • Provides a direct link between employee pay and our profitability Long-Term Incentive Plans Long-term performance-based incentive for senior management to achieve predetermined triennial Return on Invested Capital ("ROIC") goals • Provides a direct link between senior management pay and long-term strategic business objectives • Aligns management and member-owner interests • Encourages retention of key management Retirement Benefits Retirement benefits under the qualified retirement plans are identical to broad-based retirement plans generally available to all full-time employees • These benefits are a part of our broad-based employee total rewards program designed to attract and retain quality employees The supplemental plans include nonqualified retirement benefits that restore qualified benefits contained in our broad-based plans for employees whose retirement benefits are limited by salary caps under the Internal Revenue Code of 1986, as amended ("Internal Revenue Code"); in addition, the plans allow participants to voluntarily defer receipt of a portion of their income • These benefits are provided to attract and retain senior managers with total rewards programs that are competitive with comparable companies Health and Welfare Benefits Medical, dental, vision, life insurance and short-term disability benefits generally available to all full-time employees. Certain officers, including our Named Executive Officers, also are eligible for executive long-term disability benefits • With the exception of executive long-term disability benefits, these benefits are a part of our broad-based employee total rewards program designed to attract and retain quality employees Additional Benefits Additional benefits provided to certain officers, including our Named Executive Officers • These benefits are provided as part of an overall total rewards package that strives to be competitive with comparable companies and retain individuals who are critical to us Explanation of Ratio of Salary and Bonus to Total Compensation The structure of our executive compensation package is focused on a suitable mix of base pay, annual variable pay and long-term incentive awards to encourage executive officers and employees to strive to achieve goals that benefit our member-owners' interests over the long term and to better align our programs with general market practices. 54 Table of Contents Fiscal 2021 Executive Compensation Mix at Target The charts below illustrate the mix of base salary, annual variable pay at target performance (2021 Performance Period) and long-term incentive compensation at target performance (2019-2021 Plan) for fiscal 2021 for our CEO and the other Named Executive Officers as a group. Base Pay Base salaries of our Named Executive Officers represent a fixed form of compensation paid on a semimonthly basis. The base salaries are generally set at the median level of market data collected through our benchmarking process against other equivalent positions of comparable companies. The individual's actual salary relative to the market median is based on a number of factors, which include, but are not limited to, scope of responsibilities and individual experience. Base salaries for our Named Executive Officers are reviewed on an annual basis or at the time of significant changes in scope and level of responsibilities. Changes in base salaries are determined through review of competitive market data, as well as individual performance and contribution. Changes are not governed by pre-established weighting factors or merit metrics. Our CEO is responsible for this process for the other Named Executive Officers. The Executive Committee is responsible for this process for our CEO. In light of the COVID-19 pandemic and its ongoing impacts on our business and industry, and the economy in general and to respond to changing conditions resulting from the COVID-19 pandemic, based upon the recommendation of the Executive Committee and the request of Mr. Debertin, our Board of Directors approved a decision that neither Mr. Debertin nor any of the other Named Executive Officers would receive, and none of our Named Executive Officers did receive, a base salary increase for calendar year 2021 as part of the annual merit increase process. This decision aligns with our decision to not implement merit increases to base salaries in calendar year 2021 for any of our salaried employees. However, when John Griffith was promoted to Executive Vice President, Ag Business and CHS Hedging on January 1, 2021, he received a base salary increase as part of the promotion. In addition, as part of his career transition plan, Mr. Zappa, our former executive vice president and general counsel, ceased to serve in that position and became our Senior Vice President Legal & Government Affairs on March 22, 2021, when Brandon B. Smith became our executive vice president and general counsel. Upon assuming his new position, Mr. Zappa’s base salary was reduced by 26%. Annual Variable Pay Named Executive Officers are covered by the same CHS Annual Variable Pay Plan ("Annual Variable Pay Plan" or "AVP") as other employees and, based on the plan provisions, when they are hired or retire they receive awards prorated to the period of time eligible. Each Named Executive Officer was eligible to participate in the AVP for fiscal 2021. Target AVP award levels were set with reference to competitive market compensation levels and were intended to motivate our executives by providing annual variable pay awards for the achievement of predetermined goals. Our AVP program for fiscal 2021 was based on enterprise-level financial performance and specific management business objectives with the actual payout dependent on achieving predetermined enterprise-level financial performance goals and individual performance goals. The financial 55 Table of Contents performance components included ROIC goals for CHS at the enterprise level. The threshold, target and maximum ROIC goals for fiscal 2021 are set forth in the table below. The management business objectives include individual performance against specific goals relating to subjects such as business profitability, execution of strategic initiatives or talent acquisition, development and retention. In conjunction with the annual performance appraisal process for our CEO, our Board of Directors reviews the individual goals and, in turn, determines and approves this portion of the annual variable pay award based upon completion or partial completion of the previously specified goals and principal accountabilities for our CEO. Likewise, our CEO uses the same process for determining individual goal attainment for the other Named Executive Officers. CHS financial performance goals and award opportunities under our fiscal 2021 Annual Variable Pay Plan were as follows: Performance Level CHS Company Performance Goal Percent of Target Award Maximum 6.5% ROIC 200% Target 5.5% ROIC 100% Threshold 4.1% ROIC 50% Below threshold <4.1% ROIC 0% ROIC is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for other measures prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. ROIC is a measurement of how efficiently we use capital and the level of returns on that capital and is calculated by dividing adjusted net operating profit after tax by funded debt plus equity. We define adjusted net operating profit after tax as earnings before tax plus interest, net, and the sum is multiplied by the effective tax rate. For purposes of the fiscal 2021 AVP, we define funded debt as the average of long-term debt, including the current portion thereof, plus any guarantees thereof, as of the end of July 2020 and 2021, respectively, and equity at the end of July 2020. Our Board of Directors approved the ROIC performance goals for the fiscal 2021 AVP and determined our CEO's individual goals. The weighting of our CEO's goals for fiscal 2021 was 70% CHS total company ROIC and 30% principal accountabilities and individual goals. Our CEO determined individual goals for the other Named Executive Officers. The weighting of goals for the other Named Executive Officers for fiscal 2021 was 70% CHS total company ROIC and 30% individual goals. ROIC results for fiscal year 2021 were 6.2 %. Despite the significant and enduring operating and leadership challenges experienced in fiscal year 2021 and that we continue to experience, Mr. Debertin, the other Named Executive Officers, and our other CHS employees responded with timely decisions and actions to adjust to those challenging business conditions and consistently execute to meet the needs of our customers and member-owners. Annual variable pay awards that will be or have been paid under the Annual Variable Pay Plan for fiscal 2021 for the Named Executive Officers are as follows: Name Variable Pay (Dollars) Jay Debertin $ 3,357,300 Olivia Nelligan 1,150,862 Darin Hunhoff 1,157,313 Richard Dusek 1,074,988 John Griffith 1,009,528 James Zappa 877,813 56 Table of Contents Profit Sharing Each Named Executive Officer was eligible to participate in our Profit-Sharing Plan, which is also applicable to other employees. The purpose of the Profit-Sharing Plan is to provide a direct link between employee pay and our profitability. Annual profit sharing contributions are calculated as a percent of base pay and annual variable pay (total earnings) and are made to the CHS Inc. 401(k) Plan ("401(k) Plan") account and CHS Inc. Deferred Compensation Plan ("Deferred Compensation Plan") account of each Named Executive Officer. The levels of fiscal 2021 profit-sharing awards vary in relation to the level of CHS ROIC achieved and are displayed in the following table: ROIC Profit-Sharing Award 6.50% 5% 6.04% 4% 5.50% 3% 4.60% 2% 4.10% 1% In fiscal 2021 ROIC results were 6.2%. Accordingly, each Named Executive Officer earned a 4.3% award under the Profit Sharing Plan. Long-Term Incentive Plans Each Named Executive Officer was eligible to participate in the CHS Inc. Long-Term Incentive Plan ("LTIP"), which was renamed the CHS Inc. Executive Long-Term Incentive Plan, effective September 1, 2021. The purpose of the LTIP is to align long-term results with long-term performance goals, encourage our Named Executive Officers to maximize long-term value for our member-owners and retain key executives. The LTIP consists of three-year performance periods to ensure consideration is made for our long-term financial performance and strategic execution, with a new performance period beginning every year. Our Board of Directors approves the LTIP goals for each three-year period. Awards from the LTIP are contributed to the Deferred Compensation Plan after the end of each performance period. These awards vest over an additional 28-month period following the performance period end date. The extended earning and vesting provisions of the LTIP are designed to help us retain key executives. Participants who leave CHS prior to retirement for reasons other than death or disability forfeit all unearned and unvested LTIP award balances. Participants who meet retirement criteria, die or become disabled receive prorated awards following the LTIP rules. Like the Annual Variable Pay Plan, award levels for the LTIP are set with regard to competitive considerations. The target level LTIP award level was 115% of base salary for Named Executive Officers, excluding Mr. Debertin, to improve our competitive position to market. For the three-year LTIP period ending in fiscal 2021, the LTIP performance measure was based upon our ROIC during the period. As stated above, ROIC is a measurement of how efficiently we use capital and the level of returns on that capital and is calculated by dividing adjusted net operating profit after tax by funded debt plus equity. For purposes of the fiscal 2019-2021 performance period, we define funded debt as the average of long-term debt, including the current portion thereof, plus any guarantees thereof, as of the end of July 2018, 2019, 2020 and 2021, respectively, and equity at the end of July 2018, 2019 and 2020, respectively. As also stated above, ROIC is not defined under U.S. GAAP. Therefore, it should not be considered a substitute for other measures prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. 57 Table of Contents Award opportunities for the fiscal 2019-2021 LTIP are expressed as a percentage of a participant's average base salary as of August 31 for each of the three years in the performance period. We must meet a three-year period threshold level of ROIC performance for any participant to earn an award payout under the 2019-2021 LTIP. As indicated in the below table, the threshold, target, maximum and superior performance maximum ROIC goals for the fiscal 2019-2021 performance period are as follows: Performance Level CHS Three-Year ROIC Percent of Target Award Superior performance maximum 7.9% 400% Maximum 6.9% 200% Target 5.9% 100% Threshold 4.9% 50% Below threshold <4.9% 0% Business conditions in the agriculture and energy industries were highly variable during the 2019-2021 performance period, which included ROIC performance well above the target performance level during the period before the coronavirus pandemic began and ROIC performance slightly above t he maximum performance level from the beginning of the pandemic period through the end of fiscal 2021. In particular, both our Ag and Energy segments experienced significant changes in business conditions and were subject to external economic forces that caused our ROIC performance to vary significantly during each year (9.6% in 2019; 5.1% in 2020; 6.2% in 2021). Actual ROIC performance for the fiscal 2019-2021 performance period was 6.93%. LTIP payments for the fiscal 2019-2021 LTIP for the Named Executive Officers are as follows: Name LTIP Payments (Dollars) Jay Debertin 3,872,541 Olivia Nelligan 715,442 Darin Hunhoff 1,349,938 Richard Dusek 1,257,928 John Griffith 743,627 James Zappa 1,185,542 Details for the fiscal 2021 awards associated with the fiscal 2021-2023 LTIP performance period are provided in the "2021 Grants of Plan-Based Awards" table. Other Compensation To preserve key leadership continuity and bench strength, as well as a total direct compensation opportunity amount that is competitive to market, our Board of Directors approved a potential retention incentive award ("2018 Retention Award") for certain of our senior officers, including each of the Named Executive Officers who were both active participants in the 2016-2018 LTIP and active employees on the date the 2018 Retention Award was approved. The potential award value is equal to the percentage of base salary used for the 2016-2018 LTIP awards at the target level, based on the participant’s job level as of August 31, 2018, multiplied by the participant’s base salary as of August 31, 2018. Pursuant to its original terms, the 2018 Retention Award would only be earned if the applicable participant continued active employment through January 1, 2021, or met the limited pro ration criteria provided in the 2018 Retention Award. However, in light of the COVID-19 pandemic and its potential impact on our fiscal 2021 business and financial performance, and the economy in general, and based upon the recommendation of the Governance Committee and the request of Messrs. Debertin, Dusek, Griffith, Hunhoff, Zappa and our other eligible senior officers, in November 2020, our Board of Directors modified the terms of the Strategic Leadership Team 2018 Retention Award to provide that it will only be earned if the applicable participant continues active employment through January 1, 2022, except that, if the applicable participant's employment ends voluntarily or involuntarily for a reason unrelated to misconduct between January 1, 2021, and January 1, 2022, the participant will earn and be paid the 2018 Retention Award. Because Ms. Nelligan was not an active participant in the 2016-2018 LTIP or actively employed by us on the date the 2018 Retention Award was approved, she was not granted a 2018 Retention Award. 58 Table of Contents Retirement Benefits We provide the following retirement and deferral programs to Named Executive Officers: • CHS Inc. Pension Plan • CHS Inc. 401(k) Plan • CHS Inc. Supplemental Executive Retirement Plan • CHS Inc. Deferred Compensation Plan CHS Inc. Pension Plan The CHS Inc. Pension Plan ("Pension Plan") is a tax-qualified defined benefit pension plan. All Named Executive Officers participate in the Pension Plan. A Named Executive Officer is fully vested in the Pension Plan after three years of vesting service. The Pension Plan provides for a lump sum payment of the participant’s account balance once the Named Executive Officer reaches normal retirement age (or, alternatively, for a monthly annuity for the Named Executive Officer's lifetime if elected by the Named Executive Officer). The normal form of benefit for a single Named Executive Officer is a life annuity and for a married Named Executive Officer the normal form of benefit is a 50% joint and survivor annuity. Other annuity forms are also available on an actuarial equivalent basis. Compensation and benefits are limited based on limits imposed by the Internal Revenue Code. A Named Executive Officer's benefit under the Pension Plan depends on pay credits to his or her account, which are based on the Named Executive Officer's total salary and annual variable pay for each year of employment, date of hire, age at date of hire and the length of service, and investment credits, which are computed using the interest crediting rate and the Named Executive Officer's account balance at the beginning of the plan year. The amount of pay credits added to a Named Executive Officer's account each year is a percentage of the Named Executive Officer’s base salary and annual variable pay plus compensation reduction pursuant to the 401(k) Plan and any pretax contribution to any of our welfare benefit plans, paid vacations, paid leaves of absence and pay received if away from work due to a sickness or injury. The pay credits percentage received is determined on a yearly basis, based on the years of benefit service completed as of December 31 of each year. A Named Executive Officer receives one year of benefit service for every calendar year of employment in which the Named Executive Officer completed at least 1,000 hours of service. Pay credits are earned according to the following schedules: Regular Pay Credits Regular Pay Credit Years of Benefit Service Pay Below Social Security Taxable Wage Base Pay Above Social Security Taxable Wage Base 1-3 years 3% 6% 4-7 years 4% 8% 8-11 years 5% 10% 12-15 years 6% 12% 16 years or more 7% 14% Mid-Career Pay Credits Employees hired after age 40 qualify for the following minimum pay credit: Minimum Pay Credit Age at Date of Hire Pay Below Social Security Taxable Wage Base Pay Above Social Security Taxable Wage Base Age 40-44 4% 8% Age 45-49 5% 10% Age 50 or more 6% 12% 59 Table of Contents Investment Credits We credit a Named Executive Officer's account at the end of the calendar year with an investment credit based on the balance at the beginning of the year. The investment credit is based on the average return for one-year U.S. Treasury bills for the preceding 12-month period. The minimum interest rate under the Pension Plan is 4.65% and the maximum is 10%. CHS Inc. 401(k) Plan The 401(k) Plan is a tax-qualified, defined contribution retirement plan. Most full-time, nonunion CHS employees are eligible to participate in the 401(k) Plan, including each Named Executive Officer. Participants may contribute between 1% and 50% of their pay on a pretax basis. We match 100% of the first 1% and 50% of the next 5% of pay contributed each year (maximum 3.5%). Our Board of Directors may elect to reduce or eliminate matching contributions for any year or any portion thereof. Participants are 100% vested in their own contributions and are fully vested after two years of service in matching contributions made on the participant’s behalf by us. Nonparticipants are automatically enrolled in the plan at a 3% contribution rate and, effective each January 1, the participant's contribution will be automatically increased by 1%. This escalation will stop once the participant's contribution reaches 10%. The participant may elect to cancel or change these automatic deductions at any time. CHS Inc. Supplemental Executive Retirement Plan and CHS Inc. Deferred Compensation Plan Because the Internal Revenue Code limits the benefits that may be paid from the Pension Plan and the 401(k) Plan, the CHS Inc. Supplemental Executive Retirement Plan ("SERP") and the Deferred Compensation Plan were established to provide certain employees participating in the qualified plans with supplemental benefits such that, in the aggregate, they equal the benefits they would have been entitled to receive under the qualified plan had these limits not been in effect. The SERP also includes compensation deferred under the Deferred Compensation Plan that is excluded under the qualified retirement plan. All Named Executive Officers participate in the SERP. Participants in the plans are select management or highly compensated employees who have been designated as eligible by our CEO to participate. Compensation includes total salary and annual variable pay without regard to limitations on compensation imposed by the Internal Revenue Code. Company contributions under the Pension Plan and 401(k) Plan are not eligible for pay credits. Certain Named Executive Officers may have accumulated nonqualified plan balances or benefits that have been carried over from predecessor companies as a result of past mergers and acquisitions. Benefits from the SERP are primarily funded in a rabbi trust, with a balance at August 31, 2021, of $ 33.2 million. Benefits from the plan do not qualify for special tax treatment under the Internal Revenue Code. The Deferred Compensation Plan allows eligible Named Executive Officers to voluntarily defer receipt of up to 75% of their base salary and up to 100% of their annual variable pay. The election must occur prior to the beginning of the calendar year in which the compensation will be paid. During the year ended August 31, 2021, all of the Named Executive Officers were eligible to participate in the Deferred Compensation Plan. Mr. Debertin, Ms. Nelligan, Mr. Hunhoff, Mr. Dusek and Mr. Griffith participated in the elective portion of the Deferred Compensation Plan. Benefits from the Deferred Compensation Plan are primarily funded in a rabbi trust, with a balance as of August 31, 2021, of $136.1 million. Benefits from the plan do not qualify for special tax treatment under the Internal Revenue Code. Health and Welfare Benefits Like our other employees, each of the Named Executive Officers is entitled to receive benefits under our comprehensive health and welfare program. Like nonexecutive full-time employees, participation in the individual benefit plans is based on each Named Executive Officer's annual benefit elections and varies by individual. Medical Plans Named Executive Officers and their dependents may participate in our medical plan on the same basis as other eligible full-time employees. The plan provides each Named Executive Officer an opportunity to choose a level of coverage and coverage options with varying deductibles and copays to pay for hospitalization, physician and prescription drug expenses. The cost of this coverage is shared by us and the covered Named Executive Officer. 60 Table of Contents Dental, Vision and Hearing Plan Named Executive Officers and their dependents may participate in our dental, vision and hearing plan on the same basis as other eligible full-time employees. The plan provides coverage for basic dental, vision and hearing expenses. The cost of this coverage is shared by us and the covered Named Executive Officer. Life, AD&D and Dependent Life Insurance Named Executive Officers and their dependents may participate in our basic life, optional life, accidental death and dismemberment ("AD&D") and dependent life plans on the same basis as other eligible full-time employees. The plans allow Named Executive Officers an opportunity to purchase group life insurance on the same basis as other eligible full-time employees. Basic life insurance equal to one times eligible compensation will be provided at our expense on the same basis as other eligible full-time employees. Named Executive Officers can choose various coverage levels of optional life insurance at their own expense on the same basis as other eligible full-time employees. Short- and Long-term Disability Named Executive Officers participate in our Short-Term Disability Plan ("STD") on the same basis as other eligible full-time employees. The Named Executive Officers also participate in an executive Long-Term Disability Plan ("LTD"). These plans replace a portion of income in the event that a Named Executive Officer is disabled under the terms of the plan and is unable to work full-time. The cost of STD and LTD coverage is paid by us. Flexible Spending Accounts/Health Savings Accounts/Health Reimbursement Accounts Named Executive Officers may participate in our Flexible Spending Account ("FSA") or Health Savings Account ("HSA") on the same basis as other eligible full-time employees. The FSA and HSA provide Named Executive Officers an opportunity to pay for certain eligible medical expenses on a pretax basis. Contributions to the FSA and HSA are made by the Named Executive Officer. Travel Assistance Program and Identity Theft Protection Like other nonexecutive full-time employees, each of the Named Executive Officers is covered by our travel assistance program and identity theft protection program. The travel assistance program provides AD&D protection should a covered injury or death occur while on a business trip. The identity theft protection program provides credit monitoring and restoration services to protect against identity theft. Additional Benefits Certain benefits such as executive physical examinations and limited financial planning assistance are available to our Named Executive Officers. These are provided as part of an overall total rewards package that strives to be competitive with comparable companies and retain individuals who are critical to us. Incentive Compensation Recovery Policy We have an Incentive Compensation Recovery Policy ("Recovery Policy") that applies to our current and former employees who are or were identified by us as an "officer" pursuant to Rule 16a-1(f) under the Securities Exchange Act of 1934 and The Nasdaq Stock Market LLC ("The Nasdaq") listing standards ("Covered Employee"). The Recovery Policy provides that, in the event of a required revision of our previously issued financial statements to reflect the correction of one or more errors that are material to those financial statements, we will require reimbursement or forfeiture of any excess incentive compensation received by any Covered Employee during the three completed fiscal years immediately preceding the date on which we determine that we are required to prepare an accounting restatement. The amount of excess incentive compensation will be equal to the amount by which the Covered Employee's incentive compensation for the relevant period exceeded the amount that would have been earned or awarded based on the restated financial results, as determined by our Board of Directors. The method used to recover the applicable excess incentive compensation will be determined by our Board of Directors, in its sole discretion, and may include requiring reimbursement of cash incentive compensation that was previously paid, forfeiting any incentive compensation contribution made under the Deferred Compensation Plan, offsetting the recovered amount from any compensation or incentive compensation that may be earned or awarded in the future or taking any other remedial or recovery action permitted by law. 61 Table of Contents The Recovery Policy also provides that, in the event our Board of Directors determines in good faith that a Covered Employee has engaged in detrimental conduct, we may require the Covered Employee to reimburse or forfeit all or a portion of the incentive compensation earned by or awarded to the Covered Employee, or in which the Covered Employee has become vested under the terms of the Deferred Compensation Plan. For purposes of the Recovery Policy, detrimental conduct includes: • deliberate and continued failure by a Covered Employee to substantially perform his or her duties and responsibilities in a manner that has an adverse effect on us; • knowing and willful violation of any law, government regulation or company code of conduct or policy; • fraud or dishonesty resulting or intended to result in personal enrichment at our expense; and/or • gross misconduct in the performance of duties that results in economic harm to us. Under the Recovery Policy, incentive compensation includes annual cash incentive awards granted pursuant to either the Annual Variable Pay Plan or an individual cash incentive plan, annual cash awards earned under the Profit Sharing Plan and cash-based performance awards granted pursuant to the LTIP or any successor plan; in each case, provided that such compensation is granted, earned or vested based wholly or in part on the attainment of a financial performance measure. Agreements with Named Executive Officers Mr. Debertin On May 22, 2017, Mr. Debertin was elected as our President and CEO, and in connection therewith entered into an employment agreement with us on that date (the "Employment Agreement"). On November 5, 2020, we entered into an amendment to the Employment Agreement ("Employment Agreement Amendment No. 1") with Mr. Debertin, pursuant to which the term of the Employment Agreement was extended to August 31, 2023, provided that, pursuant to the terms of the Employment Agreement, beginning on August 31, 2023, and on each August 31 thereafter, the Employment Agreement will automatically renew for an additional one-year period, unless either party notifies the other in writing, at least 120 days in advance of the relevant renewal date, of its intent not to renew the agreement for the additional one-year period. On November 3, 2021, we and Mr. Debertin entered into another amendment ("Employment Agreement Amendment No. 2") to the Employment Agreement, pursuant to which the terms of Mr. Debertin’s long-term incentive compensation opportunity were amended as set forth below. The amended long-term incentive compensation opportunity contemplated by Employment Agreement Amendment No. 2 will apply for each three-year performance period that begins on or after September 1, 2021. Pursuant to the terms of the Employment Agreement, as amended by Employment Agreement Amendment No. 2, Mr. Debertin is entitled to, among other things: • An annual base salary of $1,150,000, subject to increase by our Board of Directors from time to time; • A target annual incentive compensation opportunity of 150% of his annual base salary with a maximum opportunity equal to twice the target opportunity, based on achievement of performance goals set by our Board of Directors; and • A target long-term incentive compensation award opportunity of 300% of his average annual base salary over each three-year performance period applicable to that award opportunity, with a threshold opportunity equal to one-half of the target opportunity and a maximum opportunity equal to twice the target opportunity. Prior to the execution of Employment Agreement Amendment No. 2, the Employment Agreement provided Mr. Debertin with a target long-term incentive compensation award opportunity of 150% of his average annual base salary over each three-year performance period applicable to that award opportunity with a maximum opportunity equal to three and one-third times his target award opportunity. The Employment Agreement provides that in the event of a restatement of our financial results due to material noncompliance with financial reporting requirements, if our Board of Directors determines in good faith that any compensation paid (or payable but not yet paid) to Mr. Debertin was awarded or determined based on that material noncompliance, then we are entitled to recover from him (or to reduce compensation determined but not yet paid) all compensation based on the erroneous financial data in excess of what would have been paid or been payable to him under the restatement. The severance pay and benefits to which Mr. Debertin would be entitled if we terminated his employment without cause or, if he terminated his employment for "good reason" are described below under "Post Employment." 62 Table of Contents Ms. Nelligan Ms. Nelligan's compensation is set forth in a letter agreement we entered into with her January 7, 2020 (the "Nelligan Letter Agreement"). The Nelligan Letter Agreement provides Ms. Nelligan with an initial annual base salary of $570,000 and a hiring bonus of $200,000 (which bonus amount is the amount to be paid to Ms. Nelligan, after applicable tax withholding), $100,000 of which was paid as a lump sum within 30 days of January 29, 2020, and $100,000 of which was paid as a lump sum within 30 days following one year of employment with us (the "Second Hiring Bonus Payment"). In the event Ms. Nelligan voluntarily terminates, resigns or otherwise ends her relationship with us without good reason during the second year of her employment with us, the Nelligan Letter Agreement provides that she will reimburse us at the rate of 1/12th of the total amount of the Second Hiring Bonus Payment for each uncompleted month in such second year of employment. The Nelligan Letter Agreement provides that Ms. Nelligan's target award for purposes of the Annual Variable Pay Plan will be equal to 115% of her annual base salary on August 31 of each year, and required us to give Ms. Nelligan a full year of credit for the fiscal 2020 Annual Variable Pay Plan, rather than prorate her award for the time that she was employed by us during fiscal 2020. The severance pay and benefits to which Ms. Nelligan would be entitled if we terminated her employment without cause or if she terminated her employment for "good reason" are described below under "Post Employment." Tax Considerations Section 162(m) of the Internal Revenue Code ("Section 162(m)") generally limits us to a deduction for federal income tax purposes of no more than $1 million of compensation paid to certain current and former executive officers in a taxable year. We believe that Section 162(m) is only one of several relevant considerations in setting compensation. We also believe that Section 162(m) should not be permitted to compromise our ability to design and maintain executive compensation arrangements that, among other things, are intended to attract and retain highly qualified executives in a competitive environment. As a result, we retain the flexibility to provide compensation that we determine to be in our best interests and the best interests of our member-owners, even if that compensation ultimately is not deductible for tax purposes. Shareholder Advisory Votes on Executive Compensation We are not required to, and do not, conduct shareholder advisory votes on executive compensation under Section 14A of the Securities Exchange Act of 1934. 63 Table of Contents Summary Compensation Table Name and Principal Position Year Salary (1) Bonus (1)(2)(3) Nonequity Incentive Plan Compensation (1)(4) Change in Pension Value and Nonqualified Deferred Compensation Earnings (1)(5) All Other Compensation (1)(6-11) Total (1) (Dollars) Jay Debertin President and Chief Executive Officer 2021 $ 1,274,819 $ — $ 7,229,841 $ 816,884 $ 127,858 $ 9,449,402 2020 1,262,442 — 8,188,034 1,267,791 435,790 11,154,057 2019 1,218,042 — 5,405,339 1,307,488 410,651 8,341,520 Olivia Nelligan Executive Vice President and Chief Financial Officer 2021 570,000 100,000 1,866,304 129,853 259,825 2,925,982 2020 339,076 100,000 912,080 37,620 90,511 1,479,287 Darin Hunhoff Executive Vice President, Energy 2021 573,195 — 2,507,251 265,462 54,494 3,400,402 2020 567,630 — 3,236,871 563,056 167,292 4,534,849 2019 547,667 — 1,631,254 611,133 160,989 2,951,043 Richard Dusek Executive Vice President, CHS Country Operations 2021 532,421 — 2,332,916 272,341 73,888 3,211,566 2020 528,941 — 2,813,307 415,431 149,864 3,907,543 2019 513,696 — 1,360,928 465,830 142,030 2,482,484 John Griffith Executive Vice President, Ag Business and CHS Hedging 2021 491,274 — 1,753,155 127,620 37,146 2,409,195 James Zappa Senior Vice President Legal & Government Affairs, Deputy General Counsel 2021 478,404 35,000 2,063,355 176,770 67,161 2,820,690 2020 535,500 — 3,053,136 305,866 153,021 4,047,523 2019 516,667 — 1,538,720 285,992 141,526 2,482,905 (1) Information on Ms. Nelligan and Mr. Griffith includes compensation beginning in fiscal 2020 and fiscal 2021, respectively, the first year in which they became a Named Executive Officer. (2) Includes hiring bonus payments to Ms. Nelligan of $200,000. (3) Includes $35,000 cash bonus for Mr. Zappa's strong performance in co-leading our global COVID-19 response initiative since the beginning of the pandemic in March 2020. (4) Amounts include retention awards earned in fiscal 2020, annual variable pay awards and long-term incentive awards. To preserve key leadership continuity and bench strength, as well as a total direct compensation opportunity amount that was competitive to market, in November 2017, the Board of Directors approved a retention award for certain of our senior officers, including each of the Named Executive Officers who were both active participants in the 2015-2017 LTIP and active employees on the date the retention award was approved. The potential award value was the percentage of base salary used for the 2015-2017 LTIP awards at the threshold level, based on the participant's job level as of the date the retention award was granted, and was earned only if the participant continued active employment through January 1, 2020, or met the limited pro ration criteria provided in the retention award. The actual retention award value was as follows in fiscal 2020: Mr. Debertin, $862,500; Mr. Hunhoff, $287,500; Mr. Dusek, $58,570; and Mr. Zappa, $270,710. Because Ms. Nelligan was not an active participant in the 2015-2017 LTIP or actively employed by us on the date the retention award was approved, she was not granted a retention award. Mr. Griffith was not a Named Executive Officer in fiscal 2020. The actual annual variable pay award value was as follows in fiscal 2021, 2020 and 2019, respectively: Mr. Debertin, $3,357,300,$1,173,439 and $3,713,064; Ms. Nelligan, $1,150,862 and $402,248 (Ms. Nelligan was not a Named Executive Officer in fiscal 2019); Mr. Hunhoff, $1,157,313, $404,503 and $1,279,950; Mr. Dusek, $1,074,988, $375,729 and $1,110,515; Mr. Griffith, $1,009,528 (Mr. Griffith was not a Named Executive Officer in fiscal 2019 or 2020); and Mr. Zappa, $877,813, $381,606 and $1,207,500. Mr. Zappa's award value for fiscal 2021 reflects a pro-rated reduction in his target annual incentive opportunity from 115% of base salary to 87% of base salary, effective upon assuming his new position on March 22, 2021. The actual long-term incentive award value was as follows in fiscal 2021, 2020 and 2019, respectively: Mr. Debertin, $3,872,541, $6,152,095 and $1,692,275; Ms. Nelligan, $715,442 and $509,832 (Ms. Nelligan was not a Named Executive Officer in fiscal 2019); Mr. Hunhoff, $1,349,938, $2,544,868 and $351,304; Mr. Dusek, $1,257,928, $2,379,008 and $250,413; Mr. Griffith, $743,627 (Mr. Griffith was not a Named Executive Officer in fiscal 2019 or 2020); Mr. Zappa, $1,185,542, $2,400,820 and $331,220. Mr. Zappa's award value for 64 Table of Contents fiscal 2021 reflects a pro-rated reduction in his target long-term incentive opportunity from 115% of base salary to 87% of base salary, effective upon assuming his new position on March 22, 2021. (5) This column represents both changes in pension value and above-market earnings on deferred compensation. Change in pension value is the aggregate change in the actuarial present value of the Named Executive Officer's benefit under his or her retirement program and nonqualified earnings, if applicable. The aggregate change in the actuarial present value was as follows in fiscal 2021, 2020 and 2019, respectively: Mr. Debertin, $504,012, $1,086,570 and 1,245,229; Ms. Nelligan, $118,911 and $37,484 (Ms. Nelligan was not a Named Executive Officer in fiscal 2019); Mr. Hunhoff, $224,788, $552,962 and $607,801; Mr. Dusek, 182,389, $394,289 and $460,972; Mr. Griffith, $123,725 (Mr. Griffith was not a Named Executive Officer in fiscal 2019 or 2020); and Mr. Zappa, $141,547, $305,866 and $285,992. Above-market earnings on deferred compensation represent earnings exceeding 120% of the Federal Reserve long-term rate as determined by the Internal Revenue Service ("IRS") on applicable funds and was as follows in fiscal 2021, 2020 and 2019, respectively: Mr. Debertin, $312,872, $181,221 and $62,259; Ms. Nelligan, $10,942 and $136 (Ms. Nelligan was not a Named Executive Officer in fiscal 2019); Mr. Hunhoff, $40,674, $10,094 and $3,332; Mr. Dusek, $89,952, $21,142 and $4,858; Mr. Griffith, $3,895 (Mr. Griffith was not a Named Executive Officer in fiscal 2019 or 2020); and Mr. Zappa, $35,223, $0 and $0. (6) Includes fiscal 2021 employer contributions to the Deferred Compensation Plan: Mr. Debertin, $36,654; Ms. Nelligan, $36,654; Mr. Hunhoff, $34,496; Mr. Dusek, $31,033; Mr. Griffith, $17,367; and Mr. Zappa, $31,740. (7) Includes fiscal 2021 employer contribution to the 401(k) Plan: Mr. Debertin, $14,193; Ms. Nelligan, $11,306; Mr. Hunhoff $14,368; Mr. Dusek, $13,696; Mr. Griffith, $14,329; and Mr. Zappa, $14,193. (8) For fiscal 2021, includes executive LTD, travel accident insurance, financial planning and health assessment for Mr. Debertin, Mr. Hunhoff and Mr. Griffith. (9) For fiscal 2021, includes moving and relocation expenses of $34,274 and aggregate gross-ups for taxes of $161,462, in each case, in accordance with the Nelligan Letter Agreement, as well as a nonqualified 401(k) and Pension Match Make-up contribution, executive LTD, travel accident insurance and executive physical for Ms. Nelligan. (10) For fiscal 2021, includes executive LTD, travel accident insurance, executive physical and financial planning for Mr. Dusek. (11) For fiscal 2021, includes gross-up for taxes on cash bonus for co-leading our global COVID-19 response initiative , as well as a nonqualified 401(k) and Pension Match Make-up contribution, executive LTD, travel accident insurance and financial planning for Mr. Zappa. Agreements with Named Executive Officers On May 22, 2017, we entered an Employment Agreement with Mr. Debertin, our President and Chief Executive Officer, which was amended by Employment Agreement Amendment No. 1 on November 5, 2020 and Employment Agreement Amendment No. 2 on November 3, 2021. The Employment Agreement, as amended by Employment Agreement Amendment No. 1 and Employment Agreement Amendment No. 2, supersedes all previous agreements we had with Mr. Debertin. The Employment Agreement was entered into in order to clearly define the obligations of the parties thereto with respect to employment matters, as well as the compensation and benefits to be provided to Mr. Debertin upon termination of employment. Other details of the Employment Agreement, as amended by Employment Agreement Amendment No. 1 and Employment Agreement Amendment No. 2, and Mr. Debertin's employment arrangement with us are described in "Compensation Discussion and Analysis" above. The severance payments to which Ms. Nelligan would be entitled under the Nelligan Letter Agreement if we terminated her employment without cause or if she terminated her employment for "good reason" are described below under the heading "Post Employment." Other details of the Nelligan Letter Agreement and Ms. Nelligan's employment arrangement with us are described in "Compensation Discussion and Analysis" above. The severance payments to which Mr. Zappa would be entitled under his employment term sheet with us if we terminated his employment without cause or if he terminated his employment for "good reason" are described below under the heading "Post Employment." Other details of Mr. Zappa's employment arrangement with us are described in the "Compensation Discussion and Analysis" above. 65 Table of Contents 2021 Grants of Plan-Based Awards Estimated Future Payouts Under Nonequity Incentive Plan Awards Name Grant Date Threshold Target Maximum (Dollars) Jay Debertin 9/9/2020 (1) $ 956,114 $ 1,912,229 $ 3,824,457 9/9/2020 (2) 956,114 1,912,229 6,374,095 Olivia Nelligan 9/9/2020 (1) 327,750 655,500 1,311,000 9/9/2020 (2) 327,750 655,500 2,622,000 Darin Hunhoff 9/9/2020 (1) 329,576 659,151 1,318,303 9/9/2020 (2) 329,576 659,151 2,636,605 Richard Dusek 9/9/2020 (1) 306,142 612,284 1,224,568 9/9/2020 (2) 306,142 612,284 2,449,137 John Griffith 9/9/2020 (1)(3) 130,301 260,601 521,202 9/9/2020 (2)(3) 130,301 260,601 1,042,404 1/1/2021 (4) 287,500 575,000 1,150,000 1/1/2021 (5) 287,500 575,000 2,300,000 James Zappa 9/9/2020 (1) 249,989 499,979 999,957 9/9/2020 (2) 165,249 330,498 1,321,992 (1) Represents range of possible awards under our fiscal 2021 Annual Variable Pay Plan. (2) Represents range of possible awards under our LTIP for the fiscal 2021-2023 performance period. Goals are based on achieving a three-year ROIC of 4.1% threshold, 5.5% target and 6.5% maximum plus a potential award for 7.5% superior ROIC performance. Values displayed in the maximum column reflect 7.5% superior ROIC performance award potential. The 6.5% maximum performance award values are not listed in this table. Awards are measured over a three-year period and vest over an additional 28-month period. (3) These grants were terminated when Mr. Griffith was promoted to Executive Vice President, Ag Business and CHS Hedging on January 1, 2021. (4) Represents range of possible awards under our fiscal 2021 Annual Variable Pay Plan with respect to grants made to Mr. Griffith on January 1, 2021, at the time of his promotion to Executive Vice President, Ag Business and CHS Hedging. (5) Represents range of possible awards under our LTIP for the fiscal 2021-2023 performance period with respect to grants made to Mr. Griffith on January 1, 2021, at the time of his promotion to Executive Vice President, Ag Business and CHS Hedging. The material terms of annual variable pay and long-term incentive awards that are disclosed in this table, including the vesting schedule, are described under "Compensation Discussion and Analysis" above. 66 Table of Contents 2021 Pension Benefits Name Plan Name Number of Years of Credited Service Present Value of Accumulated Benefits (Years) (Dollars) Jay Debertin (1) Pension Plan 37.2500 $ 1,251,063 SERP 37.2500 5,421,891 Olivia Nelligan Pension Plan 1.5833 24,695 SERP 1.5833 131,700 Darin Hunhoff Pension Plan 29.2500 927,800 SERP 29.2500 1,446,720 Richard Dusek (1) Pension Plan 33.0833 1,045,018 SERP 33.0833 1,047,145 John Griffith Pension Plan 20.1667 365,692 SERP 20.1667 439,422 James Zappa Pension Plan 5.3333 195,322 SERP 5.3333 830,333 (1) Mr. Debertin and Mr. Dusek are eligible for early retirement in both the Pension Plan and the SERP. The above table shows the present value of accumulated retirement benefits that Named Executive Officers are entitled to under the Pension Plan and the SERP. For a discussion of the material terms and conditions of the Pension Plan and the SERP, see "Compensation Discussion and Analysis" above. The present value of accumulated benefits is determined in accordance with the same assumptions outlined in Note 13, Benefit Plans , of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K: • Discount rate of 2.75 % for the Pension Plan and 1.83 % for the SERP; • Each Named Executive Officer is assumed to retire at the earliest retirement age at which unreduced benefits are available (age 65). The early retirement benefit under the cash balance plan formula is equal to the participant’s account balance; and • Payments under the cash balance formula of the Pension Plan assume a lump sum payment. SERP benefits are payable as a lump sum. The normal form of benefit for a single Named Executive Officer is a life-only annuity, and for a married Named Executive Officer the normal form of benefit is a 50% joint and survivor annuity. Other annuity forms are also available on an actuarial equivalent basis. A lump sum option is also available. All Named Executive Officers' retirement benefits at normal retirement age will be equal to their accumulated benefits under the Pension Plan and the SERP, as described under "Compensation Discussion and Analysis" above. 67 Table of Contents 2021 Nonqualified Deferred Compensation Name Executive Contributions in Last Fiscal Year (1) Registrant Contributions in Last Fiscal Year (2) Aggregate Earnings in Last Fiscal Year (3) Aggregate Withdrawals/ Distributions Aggregate Balance at Last Fiscal Year End (2)(4) (Dollars) Jay Debertin $ 1,217,572 $ 6,257,294 $ 2,082,813 $ 1,743,464 $ 24,272,537 Olivia Nelligan 91,200 545,625 32,696 — 739,982 Darin Hunhoff 202,252 2,576,725 999,789 — 7,039,188 Richard Dusek 112,719 2,407,667 158,973 — 4,659,102 John Griffith 49,881 1,034,895 245,290 — 2,083,809 James Zappa — 2,430,132 672,259 — 6,023,612 (1) Includes contributions into the Deferred Compensation Plan by the Named Executive Officers representing deferred salary and deferred annual incentive pay. A portion of the contributions reported in this column are included within the amount reported as fiscal 2021 salary in the "Salary" column of the Summary Compensation Table. The specific amounts reported as fiscal 2021 salary in the Summary Compensation Table are: Mr. Debertin, $161,477; Ms. Nelligan, $91,200; and Mr. Griffith, $17,897. Another portion of the contributions reported in this column are included within the amount reported as 2020 nonequity incentive plan compensation in the "Nonequity Incentive Plan Compensation" column of the Summary Compensation Table. Those contributions were made in early fiscal 2021 based on fiscal 2020 results. The specific amounts reported as 2020 nonequity incentive plan compensation in the Summary Compensation Table are: Mr. Debertin, $1,056,095; Mr. Hunhoff, $202,252; Mr. Dusek, $112,719; and Mr. Griffith, $31,984. (2) Contributions are made by us into the Deferred Compensation Plan on behalf of Named Executive Officers. Amounts include LTIP contributions made in early fiscal 2021 based on fiscal 2018-2020 results, which contributions are also included in the amounts reported in the 2020 "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table: Mr. Debertin, $6,152,095; Ms. Nelligan, $509,832; Mr. Hunhoff, $2,544,868; Mr. Dusek, $2,379,008; Mr. Griffith, $1,018,856; and Mr. Zappa, $2,400,820. Also included are retirement contributions made in early fiscal 2021 based on fiscal 2020 results for Profit Sharing and 401(k) match on amounts exceeding IRS compensation limits. Those contributions, and applicable tax withholding, are also included in amounts reported in the "All Other Compensation" column of the Summary Compensation Table for fiscal 2021: Mr. Debertin, $107,730; Ms. Nelligan, $36,654; Mr. Hunhoff, $34,496; Mr. Dusek $31,033; Mr. Griffith, $17,367; and Mr. Zappa, $31,740. (3) The amounts in this column include the change in value of the balance, not including contributions made by or on behalf of the Named Executive Officer. Amounts include the following above-market earnings in fiscal 2021 that are also reflected in the "Change in Pension Value and Nonqualified Deferred Compensation Earnings" column of the Summary Compensation Table: Mr. Debertin, $310,515; Ms. Nelligan, $10,942; Mr. Hunhoff, $40,674; Mr. Dusek, $89,952; Mr. Griffith, $3,895; and Mr. Zappa, $35,223. (4) Amounts vary in accordance with individual pension plan provisions and voluntary employee deferrals and withdrawals. Amounts reported in this column include amounts previously reported in CHS’s Summary Compensation Table in previous fiscal years when earned if the Named Executive Officer's compensation was required to be disclosed in a previous fiscal year. Amounts previously reported in such fiscal years include earned, but deferred, salary and annual incentive pay; LTIP contributions, retirement contributions on amounts exceeding IRS compensation limits, Profit Sharing contributions and 401(k) match contributions made by us on behalf of the Named Executive Officer; and above-market earnings on deferred compensation. Amounts reported in this column also include rollovers, voluntary salary and voluntary incentive plan contributions from predecessor plans with predecessor employers that have increased in value over the course of the Named Executive Officer's career. Named Executive Officers may defer up to 75% of their base salary and up to 100% of their annual variable pay to the Deferred Compensation Plan. Earnings on amounts deferred under the Deferred Compensation Plan are determined based on the investment election made by the Named Executive Officer from five market-based notional investments with a varying level of risk selected by us and a fixed rate fund. The notional investment returns for fiscal 2021 were as follows: Vanguard Federal Money Market, .02%; Vanguard Life Strategy Income, 5.83%; Vanguard Life Strategy Conservative Growth, 11.76%; Vanguard Life Strategy Moderate Growth, 17.68%; Vanguard Life Strategy Growth, 23.96%; and Fixed Rate, 4.00%. Named Executive Officers may change their investment election daily. Payments of amounts deferred are made in accordance with elections by the Named Executive Officer and in accordance with Section 409A under the Internal Revenue Code. Payments under the Deferred Compensation Plan may be made at a specified date elected by the Named Executive Officer or deferred until retirement, disability, or death. Such payments would be made in a lump sum. In the event of retirement, the Named Executive Officer can elect to receive payments either in a lump sum or annual installments up to 10 years. For a discussion of the material terms and conditions of the Deferred Compensation Plan, see "Compensation Discussion and Analysis" above. 68 Table of Contents Post Employment Pursuant to the terms of his Employment Agreement, Mr. Debertin, our President and CEO, is entitled to severance in the event that his employment is terminated by us without cause or by him with "good reason." Specifically, severance under the Employment Agreement would consist of: • The annual incentive compensation Mr. Debertin would have been entitled to receive for the year in which his termination occurred as if he had continued until the end of that fiscal year, determined based on our actual performance for that fiscal year relative to the performance goals applicable to Mr. Debertin (with that portion of the annual incentive compensation based on completion or partial completion of previously specified personal goals equal to 30% of the target annual incentive), prorated for the number of days in the fiscal year through Mr. Debertin’s termination date and generally payable in a cash lump sum at the time that incentive awards are payable to other participants; • Two times Mr. Debertin's base salary plus two times his target annual incentive compensation, payable in three equal installments with the first installment payable 60 days following termination and the second and third installments payable on the first and second anniversary dates of termination, respectively; and • Welfare benefit continuation for two years following termination. The Nelligan Letter Agreement provides for severance in the event Ms. Nelligan's employment is terminated by us without cause or by her with "good reason," in the amount of one year of base pay and prorated annual variable pay, payable as a lump sum. In addition, the Nelligan Letter Agreement provides that we will reimburse Ms. Nelligan’s reasonable, documented repatriation expenses to the Lake Geneva, Wisconsin, area in the event her employment is terminated by us without cause or by her with "good reason" within the first 36 months of her employment. Mr. Zappa's employment term sheet with us provides for severance in the event his employment is terminated by us without cause or by him with "good reason" in the amount of one year of base pay and prorated annual variable pay, payable as a lump sum. During fiscal 2021, Messrs. Hunhoff, Dusek and Griffith were covered by a broad-based employee severance program that provided a lump sum payment of two weeks of pay per year of service with a 12-month cap. Effective September 1, 2021, that program was amended to provide executives, including Messrs. Hunhoff, Dusek and Griffith with a lump sum payment of 26 weeks of pay, plus one week of pay per year of service, with a 12-month cap. The severance pay that the Named Executive Officers would have been entitled to had they been terminated by us without cause or terminated their employment for "good reason," in each case, as of the last business day of fiscal 2021 is as follows: Name Amount (Dollars) Jay Debertin (1)(2) $ 8,331,684 Olivia Nelligan (3)(4) 1,325,500 Darin Hunhoff 573,195 Richard Dusek 532,421 John Griffith 153,846 James Zappa (3) 748,000 (1) Includes the value of health and welfare insurance based on current monthly rates. (2) For purposes of calculating the prorated portion of Mr. Debertin's unpaid annual variable pay award for the fiscal year in which the termination occurred, assumes an annual variable pay award at target performance for the entire fiscal year. (3) Assumes an annual variable pay award at target performance for the entire fiscal year. (4) Assumes that Ms. Nelligan would incur an estimated $100,000 of repatriation expenses to the Lake Geneva, Wisconsin, area that we would be required to reimburse under the Nelligan Letter Agreement. 69 Table of Contents There are no other severance benefits offered to our Named Executive Officers, except for up to $10,000 of outplacement assistance, which would be included as imputed income, and government mandated benefits such as COBRA. Except as otherwise set forth above, the method of payment would be a lump sum. Named Executive Officers not covered by employment agreements are not offered any special postretirement health and welfare benefits that are not offered to other similarly situated (i.e., age and service) salaried employees. Pay Ratio The following pay ratio and supporting information compares the annual total compensation of our employees other than our CEO (including full-time, part-time, seasonal and temporary employees) and the annual total compensation of our CEO, as required by Section 953(b) of Dodd-Frank. The pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K promulgated by the SEC. For fiscal 2021, our last completed fiscal year: • The median of the annual total compensation of all our employees (other than the CEO) was $70,056; a nd • The annual total compensation of our CEO, as reported in the Summary Compensation Table set forth above, was $9,449,402. Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees w as 135:1. To determine the pay ratio, we took the following steps: • We determined that as of June 1, 2021, the determination date, our employee population consisted of approximately 9,627 individuals, 9,041 of whom were located in the United States and 586 of whom were located outside of the United States. This population consisted of our full-time, part-time, temporary and seasonal employees. From this population, we excluded 341 individuals who were located in the following countries: Argentina (44), Bulgaria (4), Canada (6), China (32), Hungary (17), Italy (3), Paraguay (3), Romania (10), Russia (108), Serbia (2), Singapore (5), South Korea (18), Spain (20), Switzerland (18), Taiwan (3), Ukraine (39) and Uruguay (9). Excluding these employees, our employee population that was used to calculate the pay ratio consisted of 9,286 individuals. • To identify the median employee, we compared regular, bonus and overtime wages (or their equivalents). We then applied a statistical sampling methodology to produce a sample of employees who were paid within a 5% range of the median regular, bonus and overtime wages (or their equivalents) and selected an employee from within that group as our median employee. • Once we identified our median employee, we calculated that employee's annual total compensation for fiscal 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K promulgated by the SEC, resulting in annual total compensation of $70,056. • With respect to our CEO, we used the amount reported as total compensation in the Summary Compensation Table set forth above. In adopting the pay ratio rule, the SEC expressly sought to provide flexibility to each company to determine the methodology that best suits its own facts and circumstances. Our pay ratio should not be compared to other companies' pay ratios, because it is based on a methodology specific to us, and certain material assumptions, adjustments and estimates have been made in the calculation of the ratio. Director Compensation Overview Our Board of Directors met seven times during the fiscal year ended August 31, 2021. Each director (other than the chair of the Board) is a member of two Board Committees. At a minimum, each Board Committee meets during each of the Board's six regular meetings. For fiscal 2021, each director was provided annual compensation of $85,000, paid in 12 monthly payments, plus actual expenses and travel allowance, with the chair of the Board receiving additional annual compensation of $24,000, the first vice chair and the secretary-treasurer each receiving additional annual compensation of $6,000, all Board committee chairs receiving additional annual compensation of $9,000 and members of the Executive Committee who are not eligible for other premiums receiving additional annual compensation of $3,000. These amounts, as well as the minimum retirement plan account contribution for the fiscal years 2021-2023 performance period under the Deferred Compensation Plan discussed in greater detail below, were determined after taking into account the analysis included in the market study of director 70 Table of Contents compensation conducted for the Governance Committee by Mercer (U.S.), a global compensation consulting firm, in fiscal 2019. During fiscal 2021, in order to continue to align our director compensation with market practices, our Board of Directors approved increasing annual director compensation from $85,000 to $89,000, effective January 1, 2022. Each director also receives a per diem of $500 plus actual expenses and travel allowance for each day spent at meetings other than regular Board meetings and the CHS Annual Meeting and a per diem of $250 for conference calls other than regular Board meetings. The number of days per diem for days spent at meetings other than regular Board meetings and the CHS Annual Meeting may not exceed 55 days annually, except that the chair of the Board is exempt from this limit. There is no cap on per diems permitted for conference calls. Further, directors are eligible to participate in the Deferred Compensation Plan through a retirement plan account. Other than direct contributions, contributions to the retirement plan account in the Deferred Compensation Plan are made based on our ROIC performance during specific three-year periods, with ROIC defined in the same manner as for the LTIP. We believe that using the ROIC performance metrics for this purpose aligns the interests of our directors with the interests of our management and member-owners. The ROIC performance goal levels are established and approved by our Board of Directors prior to each three-year performance period. Deferred Compensation Plan credits are based on ROIC performance results, as detailed on the following pages. Director Retirement and Health Care Benefits Members of our Board of Directors are eligible for certain retirement and health care benefits. The director retirement plan is a defined benefit plan and provides for a monthly benefit for the director's lifetime, beginning at age 60. Benefits are immediately vested and the monthly benefit is determined according to the following formula: $250 times years of service on the Board (up to a maximum of 15 years). Under no event will the benefit payment be payable for less than 120 months. Payment will be made to the retired director's beneficiary in the event of the director's death before 120 payments are made. Effective August 31, 2011, future accruals under the director retirement plan were frozen. Directors elected after that date are not eligible for benefits under that plan. Retirement benefits are funded by a rabbi trust, with a balance at August 31, 2021, of $7.7 million. Directors serving as of September 1, 2005, and their eligible dependents, are eligible to participate in our medical, life, dental, vision and hearing plans. We will pay 100% of the medical premium for the director and the eligible director's dependents while the director is active on the Board. Term life insurance cost is paid by the director. Retired directors and their dependents are eligible to continue medical and dental insurance with the premiums paid by us after they leave the Board, until they are eligible for Medicare. In the event a director's coverage ends due to death or Medicare eligibility, we will pay 100% of the premium for the eligible spouse and eligible dependents until the spouse reaches Medicare age or upon death, if earlier. New directors elected on or after December 1, 2006, and their eligible dependents, are eligible to participate in our medical, dental, vision and hearing plans. We will pay 100% of the premium for the director and eligible dependents while the director is active on the Board. In the event a director leaves the Board prior to Medicare eligibility, premiums will be shared based on the following schedule: Years of Service Director CHS Up to 3 100% 0% 3 to 6 50% 50% 6+ 0% 100% In the event a director's coverage ends due to death or Medicare eligibility, premiums for the eligible spouse and eligible dependents will be shared based on the same schedule until the spouse reaches Medicare age or upon death, if earlier. Deferred Compensation Plan Directors are eligible to participate in the Deferred Compensation Plan. Each participating director may elect to defer up to 100% of his or her monthly director fees into the Deferred Compensation Plan. This must be done prior to the beginning of the calendar year in which the fees will be earned, or in the case of newly elected directors, upon election to the Board. During fiscal year 2021, the following directors deferred Board fees pursuant to the Deferred Compensation Plan: Mr. Clemensen, Mr. Erickson, Mr. Fritel, Mr. Johnsrud, Mr. Kehl, Mr. Meyer, Mr. Riegel, Mr. Throener and Ms. Wagner. 71 Table of Contents Benefits are funded in a rabbi trust. The Deferred Compensation Plan rabbi trust balance reported elsewhere in this Annual Report on Form 10-K includes amounts deferred by the directors. Each year we will credit an amount to each director's retirement plan account under the Deferred Compensation Plan. The fiscal year 2021 credit to each director's retirement plan account was based on the following ROIC performance goals for fiscal years 2019-2021: Amount Credited* ROIC Performance $100,000 (Superior performance) 7.9% ROIC $50,000 (Maximum) 6.9% ROIC $25,000 (Target) 5.9% ROIC $12,500 (Threshold) 4.9% ROIC *The amount credited for the fiscal years 2019-2021 performance period was required to be mathematically interpolated if results occurred between the superior performance, maximum, target and threshold ROIC performance levels. If results had been less than the threshold ROIC performance level, no amount would have been credited . Actual ROIC performance for the fiscal years 2019-2021 performance period was 6.93 % and, accordingly, $51,500 was credited to each director's retirement plan account under the Deferred Compensation Plan except $38,625 was credited for newly elected director, Ms. Wagner . This amount is reflected in the Director Compensation Table. For the fiscal years 2020-2022 three-year cycle, the amount that will be credited to each director's retirement plan account under the Deferred Compensation Plan will be as follows: Amount Credited* ROIC Performance $100,000 (Superior performance) 7.9% ROIC $50,000 (Maximum) 6.9% ROIC $25,000 (Target, minimum contribution amount) 5.9% ROIC *The amount credited for the fiscal years 2020-2022 performance period will be mathematically interpolated when results occur between the superior performance, maximum and target ROIC performance levels. If results are less than the target ROIC performance level, the amount credited will be $25,000. For the fiscal years 2021-2023 three-year cycle, the amount that will be credited to each director's retirement plan account under the Deferred Compensation Plan will be as follows: Amount Credited* ROIC Performance $100,000 (Superior performance) 7.5% ROIC $50,000 (Maximum) 6.5% ROIC $25,000 (Target, minimum contribution amount) 5.5% ROIC *The amount credited for the fiscal years 2021-2023 performance period will be mathematically interpolated when results occur between the superior performance, maximum and target ROIC performance levels. If results are less than the target ROIC performance level, the amount credited will be $25,000. For the fiscal years 2022-2024 three-year cycle, the amount that will be credited to each director's retirement plan account under the Deferred Compensation Plan will be as follows: Amount Credited* ROIC Performance $100,000 (Superior performance) 9.7% ROIC $50,000 (Maximum) 7.7% ROIC $25,000 (Target, minimum contribution amount) 6.7% ROIC *The amount credited for the fiscal years 2022-2024 performance period will be mathematically interpolated when results occur between the superior performance, maximum and target ROIC performance levels. If results are less than the target ROIC performance level, the amount credited will be $25,000. Upon leaving our Board of Directors during the fiscal year, a director's credit for that partial fiscal year will be the target amount ($25,000) prorated through the end of the month in which the director departs. Directors who join our Board of Directors during the fiscal year receive credit for that partial fiscal year based on the actual ROIC for that fiscal year, prorated from the first of the month following the month in which the director joins our Board of Directors to the end of the fiscal year. 72 Table of Contents Director Incentive Compensation Recovery Policy We have an Incentive Compensation Recovery Policy ("Director Recovery Policy") that applies to our current and former directors ("Covered Director"). The Director Recovery Policy provides that, in the event of a required revision of our previously issued financial statements to reflect the correction of one or more errors that are material to those financial statements, we will require reimbursement or forfeiture of any excess covered deferred compensation received by any Covered Director during the three completed fiscal years immediately preceding the date on which we determine that we are required to prepare an accounting restatement. For purposes of the Director Recovery Policy, covered deferred compensation includes contributions made to a Covered Director's retirement plan account under the Deferred Compensation Plan, or any successor plan, provided that such contributions are made based wholly or in part on the attainment of a financial performance measure. The amount of excess retirement plan account contribution will be equal to the amount by which the Covered Director's retirement account contribution for the relevant period exceeded the amount that would have been contributed based on the restated financial results, as determined by our Board of Directors. The method used to recover the applicable excess contribution will be determined by our Board of Directors, in its sole discretion, and may include forfeiting any deferred compensation contribution made under the Deferred Compensation Plan or taking any other remedial or recovery action permitted by law. 73 Table of Contents 2021 Director Compensation Name Fees Earned or Paid in Cash (1) Change in Pension Value and Nonqualified Deferred Compensation Earnings (2) All Other Compensation (3) Total (Dollars) David Beckman $ 90,750 $ 174 $ 70,589 $ 161,513 Clinton J. Blew 106,000 11,602 80,870 198,472 Hal Clemensen 97,750 576 67,922 166,248 Scott Cordes 100,500 17,528 51,810 169,838 Jon Erickson 113,750 9,366 67,922 191,038 Mark Farrell 91,250 2,411 52,986 146,647 Steve Fritel 109,500 60 67,702 177,262 Alan Holm 105,500 3,653 67,922 177,075 David Johnsrud 98,000 3,080 67,922 169,002 Tracy Jones 97,000 528 71,746 169,274 David Kayser 95,750 11,611 75,558 182,919 Russell Kehl 108,500 37 74,554 183,091 Edward Malesich 33,333 14,837 13,660 61,830 Perry Meyer 105,250 1,697 67,922 174,869 Steve Riegel 98,000 4,069 67,922 169,991 Daniel Schurr 124,500 13,830 71,746 210,076 Kevin Throener 98,000 2 80,870 178,872 Cortney Wagner 60,167 33 38,832 99,032 (1) Of this amount, the following directors deferred the succeeding amounts to the Deferred Compensation Plan: Mr. Clemensen, $22,667; Mr. Erickson, $16,000; Mr. Fritel, $72,150; Mr. Johnsrud, $24,000; Mr. Kehl, $26,667; Mr. Meyer, $6,000; Mr. Riegel, $26,667; Mr. Throener, $6,182; and Ms. Wagner, $40,091. (2) This column represents both changes in pension value and above-market earnings on deferred compensation. Change in pension value is the aggregate change in the actuarial present value of the director's benefit under his retirement program, and nonqualified earnings, if applicable. The change in pension value will vary by director based on several factors including age, service, pension benefit elected (lump sum or annuity), discount rate and mortality factor used to calculate the benefit due. Future accruals under the plan were frozen as of August 31, 2011, as stated above. Above-market earnings represent earnings exceeding 120% of the Federal Reserve long-term rate on applicable funds as determined by the IRS. The following directors had above-market earnings during fiscal 2021: Mr. Beckman, $174; Mr. Blew, $11,602; Mr. Clemensen, $576; Mr. Cordes, $17,528; Mr. Erickson, $9,366; Mr. Farrell, $2,411; Mr. Fritel, $60; Mr. Holm, $3,653; Mr. Johnsrud, $3,080; Mr. Jones, $528; Mr. Kayser, $11,611; Mr. Kehl, $37; Mr. Malesich, $14,837; Mr. Meyer, $1,697; Mr. Riegel, $4,069; Mr. Schurr, $13,830; Mr. Throener, $2; and Ms. Wagner, $33. (3) All other compensation includes health insurance premiums, conference and registration fees, meals and related spousal expenses for trips made with a director on CHS business. Total amounts vary primarily due to the variations in health insurance premiums, which are due to the number of dependents covered. The health insurance premiums paid were less than $25,000 for each director, other than Mr. Blew and Mr. Throener, for whom we paid health insurance premiums of $29,060. All other compensation also includes fiscal 2021 director retirement plan Deferred Compensation Plan contributions of $51,500 for each director except for newly elected director, Ms. Wagner, $38,625; and for former director, Mr. Malesich, $ 8,333. Compensation Committee Interlocks and Insider Participation Our Board of Directors does not have a compensation committee. The Executive Committee performs the equivalent functions of a compensation committee with respect to our CEO and the Governance Committee performs the equivalent functions of a compensation committee, other than with respect to our CEO. During fiscal 2021, the members of the Executive Committee were Messrs. Schurr (chair), Blew (vice chair), Erickson, Kehl and Riegel, and the members of the Governance Committee were Messrs. Jones (chair), Kehl (vice chair), Kayser, Riegel, 74 Table of Contents and Throener, and Ms. Wagner. During fiscal 2021, no executive officer of CHS served on the compensation committee (or other board committee performing equivalent functions) or board of directors of any other entity that had any executive officer who also served on the Executive Committee, the Governance Committee or our Board of Directors. None of the directors who served as a member of the Executive Committee or Governance Committee during fiscal 2021 are, or have been, officers or employees of CHS. See Item 13, Certain Relationships and Related Transactions, and Director Independence , of this Annual Report on Form 10-K for directors, including Messrs. Erickson, Fritel, Johnsrud, Jones, Kayser, Kehl and Throener, who were a party to related-person transactions. Compensation Committee Report The Executive Committee (the committee of our Board of Directors that performs the equivalent functions of a compensation committee with respect to our CEO) and the Governance Committee (the committee of our Board of Directors that performs the equivalent functions of a compensation committee, other than with respect to our CEO) have each reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K promulgated by the SEC with management and, based on such review and discussions, each of the Executive Committee and the Governance Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K. Respectfully submitted, Executive Committee Daniel Schurr, Chair Clinton J. Blew Jon Erickson Russell Kehl Steve Riegel Governance Committee Tracy Jones, Chair David Kayser Russell Kehl Steve Riegel Kevin Throener Cortney Wagner 75 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Beneficial ownership of our equity securities by each member of our Board of Directors, each of our Named Executive Officers and all members of our Board of Directors and executive officers as a group as of October 18, 2021, is shown below. Except as indicated in the footnotes to the following table, each person has sole voting and investment power with respect to all shares attributable to such person. Title of Class 8% Cumulative Redeemable Preferred Stock Class B Cumulative Redeemable Preferred Stock Name of Beneficial Owner Amount of Beneficial Ownership % of Class (1) Amount of Beneficial Ownership % of Class (2) Directors: (Shares) (Shares) David Beckman — * — * Clinton J. Blew — * — * Hal Clemensen — * — * Scott Cordes (3) 200 * 11,750 * Jon Erickson 300 * 1,508 * Mark Farrell 6,000 * — * Steven Fritel — * — * Alan Holm — * — * David Johnsrud — * 1,650 * Tracy Jones — * — * David Kayser — * 630 * Russell Kehl — * — * Perry Meyer (3) 120 * — * Steve Riegel 2,145 * 1,460 * Daniel Schurr — * — * Kevin Throener — * — * Cortney Wagner — * — * Named Executive Officers: Jay Debertin (3) 1,200 * — * Richard Dusek — * — * John Griffith — * — * Darin Hunhoff 596 * — * Olivia Nelligan — * — * James Zappa — * — * All other executive officers — * 400 * Directors and executive officers as a group 10,561 * 17,398 * *Less than 1%. (1) As of October 18, 2021, there were 12,272,003 shares of 8% Cumulative Redeemable Preferred Stock outstanding. (2) As of October 18, 2021, there were 78,659,066 shares of Class B Cumulative Redeemable Preferred Stock outstanding with 21,459,066, 16,800,000, 19,700,000 and 20,700,000 attributed to Series 1, Series 2, Series 3 and Series 4, respectively. (3) Includes shares held by spouse, children and Individual Retirement Accounts. We have no compensation plans under which our equity securities are authorized for issuance. To our knowledge, there is no person or group who is a beneficial owner of more than 5% of any class or series of our preferred stock. 76 Table of Contents ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Because our directors must be active patrons of CHS or of an affiliated association, transactions between us and our directors are customary and expected. Transactions include the sales of commodities to us and the purchases of products and services from us, as well as patronage refunds and equity redemptions received from us. During the year ended August 31, 2021, the value of those transactions between a particular director (and any immediate family member of a director, which includes any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and any person (other than a tenant or employee) sharing the household of such director) and us in which the total amount involved exceeded $120,000 is shown below. Transaction Type Name Transactions with CHS Cash Patronage Dividends (Dollars) Jon Erickson $ 612,012 $ 636 Steve Fritel 335,154 1,358 David Johnsrud 2,273,318 2,270 Tracy Jones 3,327,900 1,625 David Kayser 1,226,421 530 Russell Kehl 4,427,573 12,032 Kevin Throener 1,228,947 242 Additionally, Kehl Farms, LLC, which is owned by our director Russell Kehl, entered into two 2021 crop inputs loans with CHS Capital for the purchase of crop inputs, seeds, supplies and fuel in January 2021 ("Kehl Loans"). The Kehl Loans bear interest at the rates of 6.50% and 0% per annum, payable upon maturity in February 2022 and December 2021, respectively. The largest aggregate amount of principal outstanding under the Kehl Loans during the year ended August 31, 2021, and the balance on August 31, 2021, was $889,852. During the year ended August 31, 2021, no principal or interest was paid on the Kehl Loans. The terms of the Kehl Loans were provided pursuant to financing programs widely available to our qualified customers. Review, Approval or Ratification of Related Party Transactions Pursuant to its amended and restated charter, our Audit Committee has responsibility for the review and approval of all transactions between CHS and any related parties or affiliates of CHS, including its officers and directors, other than transactions in the ordinary course of business and on market terms. Related persons can include any of our directors or executive officers and any of their immediate family members, as defined by the SEC. In evaluating related person transactions, the committee members apply the same standards they apply to their general responsibilities as members of the Audit Committee. The committee will approve a related person transaction when, in its good faith judgment, the transaction is in the best interest of CHS. To identify related person transactions, each year we require our directors and officers to complete a questionnaire identifying any transactions with CHS in which the officer or director or their immediate family members have an interest. We also review our business records to identify potentially qualifying transactions between a related party and us. In addition, we have a written policy addressing related persons (included in our Code of Conduct) that describes our expectation that all directors, officers and employees who may have a potential or apparent conflict of interest will notify our legal department of any such transactions. Director Independence We are a Minnesota cooperative corporation managed by a Board of Directors made up of 17 members. Nomination and election of the directors is done by eight separate regions. In addition to meeting other requirements for directorship, candidates must reside in the region from which they are elected. Directors are elected for three-year terms. The terms of directors are staggered and no more than seven director positions are elected at an annual meeting of members. Nominations for director elections are made by the voting members at each region caucus held during our annual meeting of members. Neither the Board of Directors nor management of CHS participates in the nomination process. Accordingly, we have no nominating committee. 77 Table of Contents The following directors satisfy the definition of director independence set forth in the rules of The Nasdaq: Independent Directors David Beckman Mark Farrell Perry Meyer Clinton J. Blew Steve Fritel Steve Riegel Hal Clemensen Alan Holm Daniel Schurr Scott Cordes David Kayser Kevin Throener Jon Erickson Russell Kehl Cortney Wagner Further, although we do not need to rely upon an exemption for the Board of Directors as a whole, we are exempt pursuant to The Nasdaq rules from The Nasdaq director independence requirements as they relate to the makeup of the Board of Directors as a whole and the makeup of the committee performing the functions of a compensation committee. The Nasdaq exemption applies to cooperatives that are structured to comply with relevant state law and federal tax law and that do not have a publicly traded class of common stock. All of the members of our Audit Committee are independent. All of the members of our Governance Committee and Executive Committee (the committees of our Board of Directors that perform the equivalent functions of a compensation committee) are independent other than Mr. Jones. Independence of CEO and Board Chair Positions Our bylaws prohibit any employee of CHS from serving on the Board of Directors. Accordingly, our CEO may not serve as chair of the Board or in any CHS Board capacity. We believe this leadership structure creates independence between the Board and management and is an important feature of appropriate checks and balances in the governance of CHS. Board of Directors' Role in Risk Oversight It is senior management's responsibility to identify, assess and manage our exposures to risk. Our Board of Directors plays an important and significant role in overseeing the overall risk management approach, including the review and, where appropriate, approval of guidelines and policies that govern our risk management process. Our management and Board of Directors have jointly identified multiple broad categories of risk exposure, each of which could impact operations and affect results at an enterprise level. Each such significant enterprise level risk is reviewed periodically by management with the Board of Directors and/or a committee of the Board as appropriate. The review includes an analysis by management of the continued applicability of the risk, our performance in managing or mitigating the risk, and possible additional or emerging risks to consider. As additional areas of risk are identified, our Board of Directors and/or a committee of the Board provide a review and oversight of management's actions to identify, assess and manage that risk. We continue to develop a formal enterprise risk management program intended to support integration of the risk assessment and management discipline and controls into major decision-making and business processes. The Corporate Risk Committee is involved in reviewing and approving the enterprise risk management framework and is responsible for overseeing its effectiveness on an ongoing basis. When appropriate, the Corporate Risk Committee meets jointly with the Audit Committee to discuss common financial or other risks across CHS that may have potential material impact to our financial statements. 78 Table of Contents ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table shows the aggregate fees billed to us by PricewaterhouseCoopers LLP for services rendered during the years ended August 31, 2021 and 2020: 2021 2020 (Dollars in thousands) Audit fees (1) $ 4,953 $ 6,374 Audit-related fees (2) 416 — Tax fees (3) 121 349 All other fees (4) 5 241 Total $ 5,495 $ 6,964 (1) Includes fees for audit of annual financial statements and reviews of the related quarterly financial statements and certain statutory audits. (2) Includes fees for employee benefit plan audits, due diligence on acquisitions and internal control and system audit procedures. (3) Includes fees related to tax compliance, tax advice and tax planning. (4) Includes fees related to other professional services performed. In accordance with the CHS Inc. Audit Committee Charter, as amended, our Audit Committee adopted the following policies and procedures for the approval of the engagement of an independent registered public accounting firm for audit, review or attest services and for preapproval of certain permissible nonaudit services, all to ensure auditor independence. Our independent registered public accounting firm will provide audit, review and attest services only at the direction of, and pursuant to engagement fees and terms approved by our Audit Committee. Our Audit Committee approves, in advance, all nonaudit services to be performed by the independent auditors and the fees and compensation to be paid to the independent auditors. Our Audit Committee approved 100% of the services listed above in advance. 79 Table of Contents PART IV ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES (a)(1) FINANCIAL STATEMENTS The following financial statements are filed as part of this Annual Report on Form 10-K. Page No. Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets as of August 31, 2021 and 2020 F-2 Consolidated Statements of Operations for the years ended August 31, 2021, 2020 and 2019 F-3 Consolidated Statements of Comprehensive Income for the years ended August 31, 2021, 2020 and 2019 F-4 Consolidated Statements of Changes in Equities for the years ended August 31, 2021, 2020 and 2019 F-5 Consolidated Statements of Cash Flows for the years ended August 31, 2021, 2020 and 2019 F-6 Notes to Consolidated Financial Statements F-7 Regulation S-X promulgated by the SEC also requires separate financial statements of significant equity method investments to be filed with this Annual Report on Form 10-K when the equity income attributable to a significant equity method investment exceeds 20% of income before income taxes for any of our fiscal years for which financial statements are required to be presented in this Annual Report on Form 10-K. As equity income from our investment in CF Nitrogen exceeded 20% of our income before income taxes for the fiscal year ended August 31, 2021, separate financial statements for CF Nitrogen will be filed as an amendment to this Annual Report on Form 10-K within 90 days after CF Nitrogen’s fiscal year ending December 31, 2021. (a)(2) FINANCIAL STATEMENT SCHEDULES SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES Balance at Beginning of Year Additions: Charged to Costs and Expenses* Deductions: Write-offs, Net of Recoveries Balance at End of Year (Dollars in thousands) Allowances for doubtful accounts 2021 $ 165,540 $ 10,175 $ ( 31,993 ) $ 143,722 2020 176,805 3,089 ( 14,354 ) 165,540 2019 221,813 57,380 ( 102,388 ) 176,805 Valuation allowance for deferred tax assets 2021 $ 219,891 $ 11,700 $ ( 22,781 ) $ 208,810 2020 246,344 5,206 ( 31,659 ) 219,891 2019 230,374 41,260 ( 25,290 ) 246,344 Reserve for supplier advance payments 2021 $ 65,885 $ — $ — $ 65,885 2020 65,885 — — 65,885 2019 110,613 — ( 44,728 ) 65,885 *Net of reserve adjustments. 80 Table of Contents (a)(3) EXHIBITS EXHIBIT INDEX 2.1 Second Amended and Restated Limited Liability Company Agreement dated as of December 18, 2015 between CHS Inc. and CF Industries Sales, LLC. (Incorporated by reference to our Current Report on Form 8-K, filed December 21, 2015). (**) 3.1 Amended and Restated Articles of Incorporation of CHS Inc. (Incorporated by reference to our Current Report on Form 8-K, filed December 5, 2016). 3.2 Amended and Restated Bylaws of CHS Inc. (Incorporated by reference to our Current Report on Form 8-K, filed December 5, 2016). 4.1 Amended and Restated Resolution Creating a Series of Preferred Equity to be Designated 8% Cumulative Redeemable Preferred Stock. (Incorporated by reference to Amendment No. 1 to our Registration Statement on Form S-2 (File No. 333-101916), filed January 14, 2003). 4.2 Form of Certificate Representing 8% Cumulative Redeemable Preferred Stock. (Incorporated by reference to Amendment No. 2 to our Registration Statement on Form S-2 (File No. 333-101916), filed January 23, 2003). 4.3 Unanimous Written Consent Resolution of the Board of Directors Amending the Amended and Restated Resolution Creating a Series of Preferred Equity to be Designated 8% Cumulative Redeemable Preferred Stock. (Incorporated by reference to Amendment No. 2 to our Registration Statement on Form S-2 (File No. 333-101916), filed January 23, 2003). 4.4 Unanimous Written Consent Resolution of the Board of Directors Amending the Amended and Restated Resolution Creating a Series of Preferred Equity to be Designated 8% Cumulative Redeemable Preferred Stock to change the record date for dividends. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2003, filed July 2, 2003). 4.5 Resolution Amending the Terms of the 8% Cumulative Redeemable Preferred Stock to Provide for Call Protection. (Incorporated by reference to our Current Report on Form 8-K, filed July 19, 2013). 4.6 Amended and Restated Resolution Creating Class B Cumulative Redeemable Preferred Stock. (Incorporated by reference to Amendment No. 2 to our Registration Statement on Form S-1 (File No. 333-190019), filed September 13, 2013). 4.7 Unanimous Written Consent Resolution of the Board of Directors of CHS Inc. Relating to the Terms of the Class B Cumulative Redeemable Preferred Stock, Series 1. (Incorporated by reference to our Registration Statement on Form 8-A (File No. 001-36079), filed September 20, 2013). 4.8 Form of Certificate Representing Class B Cumulative Redeemable Preferred Stock, Series 1. (Incorporated by reference to Amendment No. 2 to our Registration Statement on Form S-1 (File No. 333-190019), filed September 13, 2013). 4.9 Unanimous Written Consent Resolution of the Board of Directors Relating to the Terms of the Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2. (Incorporated by reference to our Registration Statement on Form 8-A (File No. 001-36079), filed March 5, 2014). 4.10 Form of Certificate Representing Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2. (Incorporated by reference to Amendment No. 1 to our Registration Statement on Form S-1 (File No. 333-193891), filed February 26, 2014). 4.11 Unanimous Written Consent Resolution of the Board of Directors Relating to the Terms of the Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3. (Incorporated by reference to our Registration Statement on Form 8-A (File No. 001-36079), filed September 10, 2014). 4.12 Form of Certificate Representing Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3. (Incorporated by reference to our Registration Statement on Form 8-A (File No. 001-36079), filed September 10, 2014). 4.13 Unanimous Written Consent Resolution of the Board of Directors Relating to the Terms of the Class B Cumulative Redeemable Preferred Stock, Series 4. (Incorporated by reference to our Registration Statement on Form 8-A (File No. 001-36079), filed January 14, 2015). 4.14 Form of Certificate Representing Class B Cumulative Redeemable Preferred Stock, Series 4. (Incorporated by reference to our Registration Statement on Form 8-A (File No. 001-36079), filed January 14, 2015). 4.15 Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (Incorporated by reference to our Form 10-K for the year ended August 31, 2019, filed November 6, 2019). 10.1 Employment Agreement between CHS Inc. and Jay D. Debertin dated and effective May 22, 2017. (Incorporated by reference to our Current Report on Form 8-K, filed May 22, 2017). (+) 10.1A Amendment No. 1 to Employment Agreement, dated as of November 5, 2020, between CHS Inc. and Jay D. Debertin . ( Incorporated by reference to our Form 10-K for the yea r ended August 31, 2020, filed November 5, 2020 ) . (+) 10.1B Amendment No 2. To Employment Agreement, dated as of November 3 , 2021, between CHS Inc. and Jay D. Debertin (*)(+) 81 Table of Contents 10.2 CHS Inc. Supplemental Executive Retirement Plan (2013 Restatement). (Incorporated by reference to Amendment No. 1 to our Registration Statement on Form S-1 (File No. 333-190019), filed September 3, 2013). (+) 10.2A Amendment No. 1 to the CHS Inc. Supplemental Executive Retirement Plan (2013 Restatement). (Incorporated by reference to our Form 10-K for the year ended August 31, 2016, filed November 3, 2016). (+) 10.2B Amendment No. 2 to the CHS Inc. Supplemental Executive Retirement Plan (2013 Restatement). (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2016, filed July 7, 2016). (+) 10.3 CHS Inc. 2021 Annual Variable Pay Plan Master Plan Document. (*) (+) 10.3A CHS Inc. 2021 Annual Variable Pay Plan Appendix, Plan Details. (*) (+) 10.4 CHS Inc. Long-Term Incentive Plan Appendix (2019-2021). (Incorporated by reference to our Form 10-K for the year ended August 31, 2019, filed November 6, 2019) (+) 10.4A CHS Inc. Long-Term Incentive Plan Appendix (2020-2022). (Incorporated by reference to our Form 10-K for the year ended August 31, 2020, filed November 5, 202 0 ). (+) 10.4B CHS Inc. Long-Term Incentive Plan Appendix (2021-2023). (*) (+) 10.5 CHS Inc. Nonemployee Director Retirement Plan. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2010, filed July 8, 2010). (+) 10.5A Amendment No. 1 to the CHS Inc. Nonemployee Director Retirement Plan. (Incorporated by reference to our Form 10-K for the year ended August 31, 2011, filed November 14, 2011). (+) 10.5B Amendment No. 2 to the CHS Inc. Nonemployee Director Retirement Plan. (Incorporated by reference to our Form 10-K for the year ended August 31, 2012, filed November 7, 2012). (+) 10.6 Trust Under the CHS Inc. Nonemployee Director Retirement Plan. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2010, filed July 8, 2010). (+) 10.7 Note Purchase and Private Shelf Agreement between CHS Inc. and Prudential Capital Group dated as of April 13, 2004. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2004, filed July 12, 2004). 10.7A Amendment No. 1 to Note Purchase and Private Shelf Agreement dated April 9, 2007, among CHS Inc., Prudential Investment Management, Inc. and the Prudential Affiliate parties. (Incorporated by reference to our Form 10-Q for the quarterly period ended February 28, 2007, filed April 9, 2007). 10.7B Amendment No. 2 to Note Purchase and Private Shelf Agreement and Senior Series J Notes totaling $50 million issued February 8, 2008. (Incorporated by reference to our Current Report on Form 8-K, filed February 11, 2008). 10.7C Amendment No. 3 to Note Purchase and Private Shelf Agreement, effective as of November 1, 2010. (Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2010, filed January 11, 2011). 10.7D Amendment No. 4 to Note Purchase and Private Shelf Agreement dated as of June 9, 2011, between CHS Inc. and the purchasers of notes party thereto. (Incorporated by reference to our Form 10-K for the year ended August 31, 2015, filed November 23, 2015). 10.7E Amendment No. 5 to Note Purchase and Private Shelf Agreement dated as of December 21, 2012, between CHS Inc. and the purchasers of notes party thereto. (Incorporated by reference to our Form 10-K for the year ended August 31, 2015, filed November 23, 2015). 10.7F Amendment No. 6 to Note Purchase and Private Shelf Agreement dated as of September 4, 2015, between CHS Inc. and the purchasers of notes party thereto. (Incorporated by reference to our Current Report on Form 8-K, filed September 11, 2015). 10.8 CHS Inc. Deferred Compensation Plan Master Plan Document (2015 Restatement). (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2015, filed July 10, 2015). (+) 10.8A Amendment No. 1 to the CHS Inc. Deferred Compensation Plan (2015 Restatement). (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2016, filed July 7, 2016). (+) 10.8B Amendment No. 2 to the CHS Inc. Deferred Compensation Plan (2015 Restatement). (Incorporated by reference to our Form 10-K for the year ended August 31, 2017, filed November 9, 2017). (+) 10.8C Amendment No. 3 to the CHS Inc. Deferred Compensation Plan (2015 Restatement). (Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2019, filed January 8, 2020). (+) 10.8D Amendment No. 4 to the CHS Inc. Deferred Compensation Plan (2015 Restatement). (Incorporated by reference to our Form 10-Q for the quarterly period ended February 28, 2021, filed April 7, 2021). (+) 10.8E Amendment No. 6 to the CHS Inc. Deferred Compensation Plan (2015 Restatement). (Incorporated by reference to our Form 10-Q for the quarterly period ended February 28, 2021, filed April 7, 2021). (+) 10.9 Beneficiary Designation Form for the CHS Inc. Deferred Compensation Plan. (Incorporated by reference to our Form 10-K for the year ended August 31, 2009, filed November 10, 2009). (+) 10.10 New Plan Participants 2011 Plan Agreement and Election Form for the CHS Inc. Deferred Compensation Plan. (Incorporated by reference to our Registration Statement on Form S-8 (File No. 333-177326), filed October 14, 2011). (+) 82 Table of Contents 10.11 Agreement Regarding Distribution of Assets, by and among CHS Inc., United Country Brands, LLC, Land O'Lakes, Inc. and Winfield Solutions, LLC, made as of September 4, 2007. (Incorporated by reference to our Form 10-K for the year ended August 31, 2007, filed November 20, 2007). 10.12 Amended and Restated Loan Origination and Participation Agreement dated as of September 1, 2011, by and among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital, LLC. (Incorporated by reference to our Form 10-K for the year ended August 31, 2011, filed November 14, 2011). 10.12A Amendment No. 1 to Amended and Restated Loan Origination and Participation Agreement dated as of September 1, 2011, by and among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital, LLC. (Incorporated by reference to our Form 10-K for the year ended August 31, 2012, filed November 7, 2012). 10.12B Amendment No. 2 to Amended and Restated Loan Origination and Participation Agreement dated as of September 1, 2011, by and among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital, LLC. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2017, filed July 14, 2017). 10.12C Amendment No. 3 to Amended and Restated Loan Origination and Participation Agreement dated as of September 1, 2011, by and among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital, LLC. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2017, filed July 14, 2017). 10.12D Amendment No. 4 to Amended and Restated Loan Origination and Participation Agreement dated as of September 1, 2011, by and among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital, LLC. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2017, filed July 14, 2017). 10.12E Amendment No. 5 to Amended and Restated Loan Origination and Participation Agreement dated as of September 1, 2011, by and among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital, LLC. (*) 10.12F Amendment No. 6 to Amended and Restated Loan Origination and Participation Agreement dated as of September 1, 2011, by and among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital, LLC. (*) 10.13 Amended and Restated Limited Liability Company Agreement, dated February 1, 2012, between CHS Inc. and Cargill, Incorporated. (Incorporated by reference to our Current Report on Form 8-K, filed February 1, 2012). 10.14 Note Purchase Agreement between CHS Inc. and certain accredited investors ($500,000,000) dated as of June 9, 2011. (Incorporated by reference to our Current Report on Form 8-K, filed June 13, 2011). 10.14A Amendment No. 1 to Note Purchase Agreement dated as of September 4, 2015, between CHS Inc. and the purchasers of notes party thereto. (Incorporated by reference to our Current Report on Form 8-K, filed September 11, 2015). 10.15 Joint venture agreement among CHS Inc., Cargill, Incorporated, and ConAgra Foods, Inc., dated March 4, 2013. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2013, filed July 10, 2013). 10.15A Amendment No. 1 to the joint venture agreement among CHS Inc., Cargill Incorporated, and ConAgra Foods, Inc., dated April 30, 2013. (Incorporated by reference to our Form 10-K for the year ended August 31, 2015, filed November 23, 2015). 10.15B Amendment No. 2 to the joint venture agreement among CHS Inc., Cargill Incorporated, and ConAgra Foods, Inc., dated May 31, 2013. (Incorporated by reference to our Form 10-K for the year ended August 31, 2015, filed November 23, 2015). 10.15C Amendment No. 3 to the joint venture agreement among CHS Inc., Cargill Incorporated, and ConAgra Foods, Inc., dated July 24, 2013. (Incorporated by reference to our Form 10-K for the year ended August 31, 2015, filed November 23, 2015). 10.15D Amendment No. 4 to the joint venture agreement among CHS Inc., Cargill Incorporated, and ConAgra Foods, Inc., dated March 27, 2014. (Incorporated by reference to our Form 10-Q for the quarterly period ended February 28, 2014, filed April 3, 2014). 10.15E Amendment No. 5 to the joint venture agreement among CHS Inc., Cargill Incorporated, and ConAgra Foods, Inc., dated May 25, 2014. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2014, filed July 9, 2014). 10.16 Resolutions Amending the Long-Term Incentive Plan. (Incorporated by reference to our Current Report on Form 8-K, filed September 3, 2013). (+) 10.17 Amended and Restated Supply Agreement dated as of December 18, 2015 between CHS Inc. and CF Industries Nitrogen LLC. (Incorporated by reference to our Current Report on Form 8-K, filed December 21, 2015). (**) 10.18 2019 Amended and Restated Credit Agreement (5-Year Revolving Loan), dated as of July 16, 2019, by and between CHS Inc., CoBank, ACB, for its own benefit as a syndication party and as the administrative agent for the benefit of the present and future syndication parties, Coöperatieve Rabobank U.A., New York Branch and Sumitomo Mitsui Banking Corporation, for their own benefit as syndication parties and as syndication agents, and the other syndication parties party thereto. (Incorporated by reference to our Current Report on Form 8-K, filed July 19, 2019). 10.19 2015 Credit Agreement (10-Year Term Loan) dated as of September 4, 2015, by and between CHS Inc., CoBank, ACB, as a syndication party and as the administrative agent for the benefit of all present and future syndication parties, and the other syndication parties party thereto. (Incorporated by reference to our Current Report on Form 8-K, filed September 11, 2015). 83 Table of Contents 10.19A Amendment No. 1 to 2015 Credit Agreement. (10-Year Term Loan), dated as of June 30, 2016, by and between CHS Inc., CoBank, ACB, as a syndication party and as the administrative agent for the benefit of all present and future syndication parties, and the other syndication parties thereto. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2016, filed July 7, 2016). 10.19B Amendment No. 2 to 2015 Credit Agreement (10-Year Term Loan), dated as of July 16, 2019, by and between CHS Inc., CoBank, ACB, for its own benefit as a syndication party and as the administrative agent for the benefit of the present and future syndication parties, and the other syndication parties party thereto. (Incorporated by reference to our Current Report on Form 8-K , filed July 19, 2019). 10.19C Amendment No. 3 to 2015 Credit Agreement (10–Year Term Loan), dated as of February 19, 2021, by and between CHS Inc., CoBank, ACB, for its own benefit as a syndication party and as the administrative agent for the benefit of the present and future syndication parties, and the other syndication parties party thereto. (Incorporated by reference to our Current Report on Form 8-K filed , February 24, 2021). 10.20 Note Purchase Agreement, dated as of January 14, 2016, among CHS Inc. and each of the Purchasers signatory thereto. (Incorporated by reference to our Current Report on Form 8-K, filed January 21, 2016). 10.21 Note Purchase Agreement, dated as of August 14, 2020, among CHS Inc. and each of the Purchasers signatory thereto. (Incorporated by reference to our Current Report on Form 8-K, filed August 14, 2020). 10.22 Sale and Contribution Agreement, dated as of July 22, 2016, by and among CHS Inc., CHS Capital, LLC and Cofina Funding, LLC. (Incorporated by reference to our Form 10-K for the year ended August 31, 2016, filed November 3, 2016). 10.22A Omnibus Amendment No. 1, dated as of February 14, 2017, by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as an originator, CHS Capital, LLC, as an originator, the conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto, the Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrative agent, and U.S. Bank National Association, as custodian. (Incorporated by reference to our Current Report on 8-K, filed February 15, 2017). 10.22B Omnibus Amendment No. 2, dated as of July 18, 2017, by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as an originator, CHS Capital, LLC, as an originator, the conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto, the Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrative agent, and U.S. Bank National Association, as custodian. (Incorporated by reference to our Form 10-K for the year ended August 31, 2017, filed November 9, 2017). 10.22C Omnibus Amendment No. 3, dated as of September 4, 2018, by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as an originator, CHS Capital, LLC, as an originator, the conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto, the Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrative agent, and U.S. Bank National Association, as custodian. (Incorporated by reference to our Form 10-K for the year ended August 31, 2018, filed December 3, 2018). 10.22D Omnibus Amendment No. 5, dated as of June 27, 2019, by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as an originator, CHS Capital, LLC, as an originator, PNC Bank, National Association, as an alternate purchaser and as a purchaser agent, each of the other conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto and MUFG Bank Ltd. f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrative agent. (Incorporated by reference to our Form 10-K for the year ended August 31, 2019, filed November 6, 2019). 10.22E Omnibus Amendment No. 6, dated as of May 1, 2020, by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as an originator, CHS Capital, LLC, as an originator, each of the conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto and MUFG Bank Ltd. f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrative agent. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2020, filed July 7, 2020). 10.22F Omnibus Amendment No. 7, dated as of June 26, 2020, by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as an originator, CHS Capital, LLC, as an originator, each of the conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto and MUFG Bank Ltd. f/k/a The Bank of Tokyo – Mitsubishi UFJ, Ltd., New York Branch, as administrative agent. ( Incorporated by r eference to our Form 10-K for the year ended Au gust 31, 2020, filed November 5, 2020). 10.22G Omnibus Amendment No. 8, dated as of September 24, 2020, by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as an originator, CHS Capital, LLC, as an originator, each of the conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto and MUFG Bank Ltd. f/k/a The Bank of Tokyo – Mitsubishi UFJ, Ltd., New York Branch, as administrative agent. ( I nco rporated by reference to our Form 10-K for the year ended August 31, 2020 , filed November 5, 2020 ). 10.22H Omnibus Amendment No. 9 , dated as of July 30 , 202 1 , by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as an originator, CHS Capital, LLC, as an originator, each of the conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto and MUFG Bank Ltd. f/k/a The Bank of Tokyo – Mitsubishi UFJ, Ltd., New York Branch, as administrative agent. ( * ) 84 Table of Contents 10.22I Omnibus Amendment No. 10 , dated as of August 3 1 , 2021, by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as an originator, CHS Capital, LLC, as an originator, each of the conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto and MUFG Bank Ltd. f/k/a The Bank of Tokyo – Mitsubishi UFJ, Ltd., New York Branch, as administrative agent. (*) 10.23 Receivables Financing Agreement dated July 22, 2016, by and among CHS Inc., individually and as a Servicer, Cofina Funding, LLC, as Seller, Victory Receivables Corporation and Nieuw Amsterdam Receivables Corporation B.V., as Conduit Purchasers, Coöperatieve Rabobank U.A., as a Committed Purchaser, Coöperatieve Rabobank U.A., New York Branch, as Purchaser Agent, and the Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as a Committed Purchaser, Purchaser Agent and as Administrative Agent. (Incorporated by reference to our Form 10-K for the year ended August 31, 2016, filed November 3, 2016). 10.23A Amended and Restated Receivables Purchase Agreement dated July 18, 2017, by and among CHS Inc., individually and as a Servicer, Cofina Funding, LLC, as Seller, Victory Receivables Corporation and Nieuw Amsterdam Receivables Corporation B.V., as Conduit Purchasers, Coöperatieve Rabobank U.A., as a Committed Purchaser, Coöperatieve Rabobank U.A., New York Branch, as Purchaser Agent, and the Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as a Committed Purchaser, Purchaser Agent and as Administrative Agent. (Incorporated by reference to our Form 10-K for the year ended August 31, 2017, filed November 9, 2017). 10.23B First Amendment to Amended and Restated Receivables Purchase Agreement, dated as of June 28, 2018, by and among Cofina Funding, LLC, as Seller, CHS Inc., as Servicer, the Conduit Purchasers, Committed Purchasers and Purchaser Agents set forth on the signature pages thereto and MUFG Bank Ltd. (f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd.), as Administrative Agent. (Incorporated by reference to our Current Report on Form 8-K, filed July 5, 2018). 10.24 Performance Guaranty, dated as of July 22, 2016, executed by CHS Inc. in favor of The Bank of Tokyo-Mitsubishi UFJ, Ltd. , New York Branch, as administrative agent. (Incorporated by reference to our Form 10-K for the year ended August 31, 2020. filed November 5, 2020). 10.24A Reaffirmation of Performance Guaranty dated July 18, 2017, by and among CHS Inc., individually and as a Servicer, Cofina Funding, LLC, as Seller, Victory Receivables Corporation and Nieuw Amsterdam Receivables Corporation B.V., as Conduit Purchasers, Coöperatieve Rabobank U.A., as a Committed Purchaser, Coöperatieve Rabobank U.A., New York Branch, as Purchaser Agent, and the Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as a Committed Purchaser, Purchaser Agent and as Administrative Agent. (Incorporated by reference to our Form 10-K for the year ended August 31, 2017, filed November 9, 2017). 10.25 Master Framework Agreement, dated as of September 4, 2018 (the "Framework Agreement"), by and among MUFG Bank, Ltd. (f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd.) and each other financial institution from time to time party thereto, as MFA Buyers, MUFG Bank, Ltd., as agent for the MFA Buyers, CHS Inc. and CHS Capital, LLC, as sellers, and CHS Inc., as agent for the sellers . (Incorporated by reference to our Form 10-K for the year ended August 31, 2018, filed December 3, 2018). 10.25A Amendment No. 1 to the Framework Agreement, dated as of July 23 , 201 9 . (Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2019, filed January 8, 2020). 10.25B Amendment No. 2 to the Framework Agreement, dated as of August 29 , 201 9 . (Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2019, filed January 8, 2020). 10.25C Amendment No. 3 to the Framework Agreement, dated as of June 26, 2020. ( In co rporated by reference to our Form 10-K for the year ended August 31, 20 20, filed November 5, 2020 ) . 10.25D Amendment No. 4 to the Framework Agreement, dated as of September 24, 2020. ( Incorporated by reference to our Form 10-K for the year ended Aug ust 31, 2020, filed November 5, 2020 ) . 10.25E Amendment No. 5 to the Framework Agreement, dated as of August 31, 2021. (*) 10.26 1996 SIFMA Master Repurchase Agreement, dated as of September 4, 2018, between CHS Inc. and the buyer under the Framework Agreement, including Annex I thereto (and as amended thereby) . (Incorporated by reference to our Form 10-K for the year ended August 31, 2018, filed December 3, 2018). 10.26A Amendment No. 1 to 1996 SIFMA Master Repurchase Agreement, dated as of June 26, 2020, between CHS Inc., as seller, and MUFG Bank Ltd., as buyer. (Incorporated by reference to our Form 10-K for the year ended August 31, 2020, filed November 5, 2020). 10.27 1996 SIFMA Master Repurchase Agreement, dated as of September 4, 2018, between CHS Capital, LLC and the buyer under the Framework Agreement, including Annex I thereto (and as amended thereby) . (Incorporated by reference to our Form 10-K for the year ended August 31, 2018, filed December 3, 2018). 10.27A Amendment No. 1 to 1996 SIFMA Master Repurchase Agreement, dated as of June 26, 2020, between CHS Capital, LLC, as seller, CHS Inc., as guarantor, and MUFG Bank Ltd., as buyer. ( Incorporated by reference to our Form 10-K for the year ended A ugust 31, 2020, filed November 5, 2020 ) . 10.28 Guaranty, dated as of September 4, 2018, by CHS Inc. in favor of the buyer under the Framework Agreement . (Incorporated by reference to our Form 10-K for the year ended August 31, 2018, filed December 3, 2018). 10.29 CHS Inc. Strategic Leadership Team 2018 Retention Award Document. (Incorporated by reference to our Form 10-Q for the quarterly period ended February 28, 2019, filed April 3, 2019). (+) 85 Table of Contents 10.29A Description of Amendment to the CHS Strategic Leadership Team 2018 Retention Award Document . (Incorporated by reference to our Form 10-K for the year ended August 31, 2020, filed November 5, 2020). (+) 10.30 Letter Agreement, dated January 7, 2020, between CHS Inc. and Olivia Nelligan . (Incorporated by reference to our Current Report on Form 8-K, filed January 21, 2020). (+) 21.1 Subsidiaries of the Registrant. (*) 23.1 Consent of Independent Registered Public Accounting Firm. (*) 24.1 Power of Attorney. (*) 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (*) 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (*) 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (*) 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (*) 101.INS XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). 101.SCH XBRL Taxonomy Extension Schema Document. (*) 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. (*) 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. (*) 101.LAB XBRL Taxonomy Extension Labels Linkbase Document. (*) 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. (*) 104 Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101). (*) Filed herewith. (**) Portions of Exhibits 2.1 and 10.17 have been omitted pursuant to a confidential treatment order under the Exchange Act. (+) Indicates management contract or compensatory plan or arrangement. (b) EXHIBITS The exhibits shown in Item 15(a)(3) of this Annual Report on Form 10-K are being filed herewith. (c) SCHEDULES None. ITEM 16. FORM 10-K SUMMARY None. 86 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 4, 2021. CHS INC. By: /s/ Jay D. Debertin Jay D. Debertin President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on November 4, 2021: Signature Title /s/ Jay D. Debertin President and Chief Executive Officer (principal executive officer) Jay D. Debertin /s/ Olivia Nelligan Executive Vice President and Chief Financial Officer (principal financial officer) Olivia Nelligan /s/ Daniel Lehmann Vice President Finance, Corporate Controller and Chief Accounting Officer (principal accounting officer) Daniel Lehmann * Chair of the Board of Directors Daniel Schurr * Director David Beckman * Director Clinton J. Blew * Director Hal Clemensen * Director Scott A. Cordes * Director Jon Erickson * Director Mark Farrell * Director Steve Fritel * Director Alan Holm 87 Table of Contents * Director David Johnsrud * Director Tracy G. Jones * Director David R. Kayser * Director Russell A. Kehl * Director Perry Meyer * Director Steve Riegel * Director Kevin Throener * Director Cortney Wagner *By /s/ Jay D. Debertin Jay D. Debertin Attorney-in-fact 88 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of CHS Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of CHS Inc. and its subsidiaries (the "Company") as of August 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, changes in equities and cash flows for each of the three years in the period ended August 31, 2021, including the related notes and schedule of valuation and qualifying accounts and reserves for each of the three years in the period ended August 31, 2021, appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note 19 to the consolidated financial statements, the Company changed the manner in which it accounts for leases as of September 1, 2019. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Grain Inventories and Grain Forward Commodity Purchase and Sales Contracts As described in Notes 4, 15, and 16 to the consolidated financial statements, the Company's grain and oilseed inventories were $1,435.5 million as of August 31, 2021, and commodity derivatives in an asset and liability position were $532.8 million and $444.9 million, respectively, as of August 31, 2021, of which grain inventories and grain forward commodity purchase and sales contracts make up the majority. Management enters into various derivative instruments to manage the Company's exposure to movements primarily associated with agricultural and energy commodity prices. The net realizable value of grain inventories and fair value of grain forward commodity purchase and sales contracts are determined using inputs that are F-1 Table of Contents generally based on exchange traded prices and/or recent market bids and offers, including location-specific adjustments. Location-specific inputs are driven by local market supply and demand and are generally based on broker or dealer quotations or market transactions in either listed or over-the-counter markets. The principal considerations for our determination that performing procedures relating to the valuation of grain inventories and grain forward commodity purchase and sales contracts is a critical audit matter are (i) the significant judgment by management to determine the net realizable value of grain inventories and the fair value of grain forward commodity purchase and sales contracts and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management's inputs related to exchange traded prices and/or recent market bids and offers, including location-specific adjustments. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, (i) testing management's process for determining the net realizable value of grain inventories and the fair value of grain forward commodity purchase and sales contracts; (ii) evaluating the appropriateness of the valuation models; (iii) testing the accuracy of the underlying data used in the valuations; and (iv) evaluating the reasonableness of inputs used by management related to the exchange traded prices and/or recent market bids and offers, including location-specific adjustments. Evaluating management's inputs related to the exchange traded prices and/or recent market bids and offers, including location-specific adjustments involved (i) comparing the exchange traded prices and/or recent market bids and location-specific inputs to third-party information; and (ii) comparing the location-specific adjustments to broker or dealer quotations or market transactions in either listed or over-the-counter markets. /s/ PricewaterhouseCoopers LLP Minneapolis, Minnesota November 4, 2021 We have served as the Company's auditor since 1998. F-2 Table of Contents CHS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS August 31, 2021 2020 (Dollars in thousands) ASSETS Current assets: Cash and cash equivalents $ 413,159 $ 140,874 Receivables 2,860,884 2,366,047 Inventories 3,334,675 2,742,138 Other current assets 1,390,233 1,017,488 Total current assets 7,998,951 6,266,547 Investments 3,669,111 3,630,033 Property, plant and equipment 4,810,005 4,957,938 Other assets 1,098,208 1,139,429 Total assets $ 17,576,275 $ 15,993,947 LIABILITIES AND EQUITIES Current liabilities: Notes payable $ 1,740,859 $ 1,575,491 Current portion of long-term debt 38,450 189,287 Accounts payable 2,616,052 1,724,516 Accrued expenses 622,723 501,904 Other current liabilities 1,307,929 928,843 Total current liabilities 6,326,013 4,920,041 Long-term debt 1,579,911 1,601,836 Other liabilities 653,025 652,897 Commitments and contingencies (Note 17) Equities: Preferred stock 2,264,038 2,264,038 Equity certificates 5,247,238 5,161,610 Accumulated other comprehensive loss ( 216,391 ) ( 233,924 ) Capital reserves 1,713,976 1,618,147 Total CHS Inc. equities 9,008,861 8,809,871 Noncontrolling interests 8,465 9,302 Total equities 9,017,326 8,819,173 Total liabilities and equities $ 17,576,275 $ 15,993,947 The accompanying notes are an integral part of the consolidated financial statements. F-3 Table of Contents CHS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended August 31, 2021 2020 2019 (Dollars in thousands) Revenues $ 38,448,033 $ 28,406,365 $ 31,900,453 Cost of goods sold 37,496,634 27,424,558 30,516,120 Gross profit 951,399 981,807 1,384,333 Marketing, general and administrative expenses 745,602 704,542 724,731 Operating earnings 205,797 277,265 659,602 Interest expense 104,565 116,977 167,065 Other income ( 59,559 ) ( 39,875 ) ( 86,309 ) Equity income from investments ( 354,529 ) ( 186,715 ) ( 236,755 ) Income before income taxes 515,320 386,878 815,601 Income tax benefit ( 38,249 ) ( 36,731 ) ( 12,456 ) Net income 553,569 423,609 828,057 Net (loss) income attributable to noncontrolling interests ( 383 ) 1,170 ( 1,823 ) Net income attributable to CHS Inc. $ 553,952 $ 422,439 $ 829,880 The accompanying notes are an integral part of the consolidated financial statements. F-4 Table of Contents CHS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended August 31, 2021 2020 2019 (Dollars in thousands) Net income $ 553,569 $ 423,609 $ 828,057 Other comprehensive income (loss), net of tax: Pension and other postretirement benefits 18,295 12,798 ( 32,559 ) Cash flow hedges ( 6,062 ) ( 4,411 ) 20,196 Foreign currency translation adjustment 5,300 ( 15,378 ) ( 9,949 ) Other comprehensive income (loss), net of tax 17,533 ( 6,991 ) ( 22,312 ) Comprehensive income 571,102 416,618 805,745 Comprehensive (loss) income attributable to noncontrolling interests ( 383 ) 1,170 ( 1,823 ) Comprehensive income attributable to CHS Inc. $ 571,485 $ 415,448 $ 807,568 The accompanying notes are an integral part of the consolidated financial statements. F-5 Table of Contents CHS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITIES Years Ended August 31, 2021, 2020 and 2019 Equity Certificates Accumulated Other Comprehensive Loss Capital Equity Certificates Nonpatronage Equity Certificates Nonqualified Equity Certificates Preferred Stock Capital Reserves Noncontrolling Interests Total Equities (Dollars in thousands) Balances, August 31, 2018 $ 3,837,580 $ 29,498 $ 742,378 $ 2,264,038 $ ( 199,915 ) $ 1,482,003 $ 9,446 $ 8,165,028 Reversal of prior year patronage and redemption estimates 78,941 — ( 345,330 ) — — 420,330 — 153,941 Distribution of 2018 patronage refunds — — 352,980 — — ( 428,756 ) — ( 75,776 ) Redemptions of equities ( 70,859 ) ( 409 ) ( 14,272 ) — — — — ( 85,540 ) Preferred stock dividends — — — — — ( 168,668 ) — ( 168,668 ) Other, net ( 2,169 ) ( 15 ) ( 1,844 ) — — 7,061 ( 233 ) 2,800 Net income (loss) — — — — — 829,880 ( 1,823 ) 828,057 Other comprehensive loss, net of tax — — — — ( 22,312 ) — — ( 22,312 ) Reclassification of tax effects to capital reserves — — — — ( 4,706 ) 4,706 — — Estimated 2019 patronage refunds — — 472,398 — — ( 562,398 ) — ( 90,000 ) Estimated 2019 equity redemptions ( 90,000 ) — — — — — — ( 90,000 ) Balances, August 31, 2019 3,753,493 29,074 1,206,310 2,264,038 ( 226,933 ) 1,584,158 7,390 8,617,530 Reversal of prior year patronage and redemption estimates 80,000 — ( 462,398 ) — — 562,398 — 180,000 Distribution of 2019 patronage refunds — — 474,407 — — ( 564,522 ) — ( 90,115 ) Redemptions of equities ( 80,133 ) ( 340 ) ( 15,965 ) — — — — ( 96,438 ) Preferred stock dividends — — — — — ( 168,668 ) — ( 168,668 ) ASC Topic 842 cumulative-effect adjustment — — — — — 25,320 — 25,320 Other, net ( 1,173 ) ( 7 ) ( 628 ) — — ( 1,008 ) 742 ( 2,074 ) Net income — — — — — 422,439 1,170 423,609 Other comprehensive loss, net of tax — — — — ( 6,991 ) — — ( 6,991 ) Estimated 2020 patronage refunds — — 211,970 — — ( 241,970 ) — ( 30,000 ) Estimated 2020 equity redemptions ( 28,000 ) — ( 5,000 ) — — — — ( 33,000 ) Balances, August 31, 2020 3,724,187 28,727 1,408,696 2,264,038 ( 233,924 ) 1,618,147 9,302 8,819,173 Reversal of prior year patronage and redemption estimates 28,000 — ( 206,970 ) — — 241,970 — 63,000 Distribution of 2020 patronage refunds — — 214,733 — — ( 244,775 ) — ( 30,042 ) Redemptions of equities ( 67,403 ) ( 290 ) ( 11,688 ) — — — — ( 79,381 ) Preferred stock dividends — — — — — ( 168,668 ) — ( 168,668 ) Other, net ( 873 ) ( 6 ) ( 165 ) — — ( 6,360 ) ( 454 ) ( 7,858 ) Net income (loss) — — — — — 553,952 ( 383 ) 553,569 Other comprehensive income, net of tax — — — — 17,533 — — 17,533 Estimated 2021 patronage refunds — — 230,290 — — ( 280,290 ) — ( 50,000 ) Estimated 2021 equity redemptions ( 100,000 ) — — — — — — ( 100,000 ) Balances, August 31, 2021 $ 3,583,911 $ 28,431 $ 1,634,896 $ 2,264,038 $ ( 216,391 ) $ 1,713,976 $ 8,465 $ 9,017,326 The accompanying notes are an integral part of the consolidated financial statements. F-6 Table of Contents CHS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended August 31, 2021 2020 2019 (Dollars in thousands) Cash flows from operating activities: Net income $ 553,569 $ 423,609 $ 828,057 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization, including amortization of deferred major maintenance 535,498 550,251 541,507 Equity (income) loss from investments, net of distributions received ( 40,035 ) 49,130 12,560 Provision for doubtful accounts 6,692 3,418 57,745 Gain/recovery on sale of business ( 19,034 ) ( 1,450 ) ( 3,886 ) LIFO liquidations ( 35,258 ) — — Deferred taxes ( 11,957 ) ( 32,761 ) ( 13,852 ) Other, net ( 41,218 ) ( 1,642 ) 6,094 Changes in operating assets and liabilities, net of acquisitions: Receivables ( 568,752 ) 308,399 ( 218,192 ) Inventories ( 549,221 ) 104,884 284,694 Accounts payable and accrued expenses 1,007,229 ( 330,949 ) ( 38,229 ) Other, net ( 79,702 ) 14,340 ( 316,567 ) Net cash provided by operating activities 757,811 1,087,229 1,139,931 Cash flows from investing activities: Acquisition of property, plant and equipment ( 317,794 ) ( 418,359 ) ( 443,216 ) Proceeds from disposition of property, plant and equipment 20,742 32,670 53,974 Proceeds from sale of business 81,366 1,139 5,044 Expenditures for major maintenance ( 40,922 ) ( 14,496 ) ( 232,094 ) Changes in CHS Capital notes receivable, net 132,268 119,591 ( 10,903 ) Financing extended to customers ( 1,926 ) ( 6,386 ) ( 12,210 ) Payments from customer financing 6,892 35,791 90,193 Business acquisitions, net of cash acquired — 231 ( 119,421 ) Other investing activities, net 17,702 6,114 7,350 Net cash used in investing activities ( 101,672 ) ( 243,705 ) ( 661,283 ) Cash flows from financing activities: Proceeds from notes payable and long-term borrowings 31,765,082 24,343,870 29,071,363 Payments on notes payable, long-term debt and finance lease obligations ( 31,806,918 ) ( 24,948,926 ) ( 29,450,339 ) Preferred stock dividends paid ( 168,668 ) ( 168,668 ) ( 168,668 ) Redemptions of equities ( 79,381 ) ( 96,438 ) ( 85,540 ) Cash patronage dividends paid ( 30,042 ) ( 90,115 ) ( 75,776 ) Other financing activities, net ( 6,658 ) 29,129 ( 16,686 ) Net cash used in financing activities ( 326,585 ) ( 931,148 ) ( 725,646 ) Effect of exchange rate changes on cash and cash equivalents ( 4,063 ) 4,942 2,733 Net increase (decrease) in cash and cash equivalents and restricted cash 325,491 ( 82,682 ) ( 244,265 ) Cash and cash equivalents and restricted cash at beginning of period 216,993 299,675 543,940 Cash and cash equivalents and restricted cash at end of period $ 542,484 $ 216,993 $ 299,675 Supplemental cash flow information: Cash paid for interest $ 102,093 $ 119,354 $ 172,259 Cash (received) paid for income taxes, net of refunds ( 8,842 ) 6,840 19,918 Other significant noncash investing and financing transactions: Capital expenditures and major maintenance incurred but not yet paid 28,010 14,906 28,478 Finance lease obligations incurred 12,831 11,190 7,351 Accrual of dividends and equities payable 150,000 63,000 180,000 Assets contributed to joint venture — — 7,353 The accompanying notes are an integral part of the consolidated financial statements. F-7 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 Organization, Basis of Presentation and Significant Accounting Policies Organization CHS Inc. (referred to herein as "CHS," "we," "us" or "our") is the nation’s leading integrated agricultural cooperative. As a cooperative, CHS is owned by farmers and ranchers and member cooperatives ("members") across the United States. We also have preferred shareholders that own shares of our five series of preferred stock, all of which are listed and traded on the Global Select Market of The Nasdaq Stock Market LLC ("The Nasdaq"). See Note 12, Equities , for more detailed information. We buy commodities from and provide products and services to individual agricultural producers, local cooperatives and other companies (including member and other nonmember customers), both domestically and internationally. Those products and services include initial agricultural inputs such as fuels, farm supplies, crop nutrients and crop protection products, as well as agricultural outputs that include grains and oilseeds, processed grains and oilseeds, renewable fuels and food products. A portion of our operations are conducted through equity investments and joint ventures whose operating results are not fully consolidated with our results; rather, a proportionate share of the income or loss from those entities is included as a component in our net income under the equity method of accounting. Basis of Presentation The consolidated financial statements include the accounts of CHS and all our subsidiaries and limited liability companies in which we have a controlling interest. The effects of all significant intercompany transactions have been eliminated. The notes to our consolidated financial statements refer to our Energy, Ag, Nitrogen Production and Foods reportable segments, as well as our Corporate and Other category, which represents an aggregation of individually immaterial operating segments. The Nitrogen Production reportable segment consists of our investment in CF Industries Nitrogen, LLC ("CF Nitrogen"), and allocated expenses. The Foods reportable segment met quantitative criteria to become a reportable segment during fiscal 2021 and consists of our investment in Ventura Foods, LLC. ("Ventura Foods"), and allocated expenses. See Note 14, Segment Reporting , for more information. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates on assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Due to the inherent uncertainty involved in making estimates, actual results could differ from those estimates. We evaluate our estimates and assumptions on an ongoing basis. Significant Accounting Policies Significant accounting policies are summarized below or within the related notes to our consolidated financial statements. Cash and Cash Equivalents and Restricted Cash Cash equivalents include short-term, highly liquid investments with original maturities of three months or less at the date of acquisition. The carrying value of cash and cash equivalents approximates the fair value due to the short-term nature of the instruments. Restricted cash is included in our Consolidated Balance Sheets within other current assets and primarily relates to customer deposits for futures and option contracts associated with regulated commodities held in separate accounts as required under federal and other regulations. Pursuant to the requirements of the Commodity Exchange Act, such funds must be carried in separate accounts that are designated as segregated customer accounts, as applicable. Restricted cash also includes funds held in escrow pursuant to applicable regulations limiting their usage. F-8 Table of Contents The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported within our Consolidated Balance Sheets that aggregates to the amount presented in our Consolidated Statements of Cash Flows. August 31, 2021 2020 2019 (Dollars in thousands) Cash and cash equivalents $ 413,159 $ 140,874 $ 211,179 Restricted cash included in other current assets 129,325 76,119 88,496 Total cash and cash equivalents and restricted cash $ 542,484 $ 216,993 $ 299,675 Recent Accounting Pronouncements Except for the recent accounting pronouncements described below, other recent accounting pronouncements are not expected to have a material impact on our consolidated financial statements. Adopted In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses ("ASC Topic 326"): Measurement of Credit Losses on Financial Instruments . The amendments in this ASU introduce a new approach, based on expected losses, to estimate credit losses on certain types of financial instruments. This ASU is intended to provide financial statement users with more decision-useful information about the expected credit losses associated with most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance sheet credit exposures. Entities are required to apply the provisions of this ASU as a cumulative-effect adjustment to the opening balance of capital reserves as of the beginning of the first reporting period in which the guidance is adopted. As part of our adoption efforts, we performed various data-gathering activities, developed credit loss models, performed data analyses and made accounting policy election determinations. The impact of adoption on September 1, 2020, did not have a material impact on our consolidated financial statements. Not Yet Adopted There are not any recent accounting pronouncements yet to be adopted that we expect to have a material impact on our consolidated financial statements. Note 2 Revenues We provide a wide variety of products and services, from agricultural inputs such as fuels, farm supplies and agronomy products, to agricultural outputs that include grain and oilseed, processed grains and oilseeds and food products, and renewable fuels production and marketing. We primarily conduct our operations and derive revenues within our Energy and Ag segments. Our Energy segment derives its revenues through refining, wholesaling and retailing of petroleum products. Our Ag segment derives its revenues through origination and marketing of grain, including service activities conducted at export terminals; through wholesale agronomy sales of crop nutrient and crop protection products; from sales of soybean meal, soybean refined oil and soyflour products; through production and marketing of renewable fuels; and through retail sales of petroleum and agronomy products, processed sunflowers, and feed and farm supplies. Corporate and Other primarily consists of our financing and hedging businesses. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the goods has transferred to customers in accordance with the underlying contract. For the majority of our contracts with customers, control transfers to customers at a point in time when goods and/or services have been delivered, as that is generally when legal title, physical possession and risks and rewards of ownership of the goods and/or services transfer to the customer. In limited arrangements, control transfers over time as the customer simultaneously receives and consumes the benefits of the service as we complete our performance obligation(s). Revenue is recognized as the transaction price we expect to be entitled to in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. For physically settled derivative sales contracts that are outside the scope of the revenue guidance, we recognize revenue when control of the inventory is transferred within the meaning of Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). Revenues arising from our financing business are recognized in accordance with ASC Topic 470, Debt ("ASC Topic 470") and fall outside the scope of ASC Topic 606. F-9 Table of Contents Shipping and Handling Costs Shipping and handling amounts billed to a customer as part of a sales transaction are included in revenues, and the related costs are included in cost of goods sold. Shipping and handling is treated as a fulfillment activity, rather than a promised service, and therefore is not considered a separate performance obligation. Taxes Collected from Customers and Remitted to Governmental Authorities Revenues are recorded net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Contract Costs Commissions related to contracts with a duration of less than one year are expensed as incurred. We recognize incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets we otherwise would have recognized is one year or less. Disaggregation of Revenues The following tables present revenues recognized under ASC Topic 606 disaggregated by reportable segment, as well as the amount of revenues recognized under ASC Topic 815, Derivatives and Hedging ("ASC Topic 815"), and other applicable accounting guidance for the years ended August 31, 2021, 2020 and 2019. Other applicable accounting guidance primarily includes revenues recognized under ASC Topic 470 and ASC Topic 842, Leases ("ASC Topic 842") that fall outside the scope of ASC Topic 606: Year Ended August 31, 2021 Reportable Segment* ASC Topic 606 ASC Topic 815 Other Guidance Total Revenues (Dollars in thousands) Energy $ 5,680,391 $ 694,870 $ — $ 6,375,261 Ag 7,491,484 24,517,033 26,825 32,035,342 Corporate and Other 18,325 — 19,105 37,430 Total revenues $ 13,190,200 $ 25,211,903 $ 45,930 $ 38,448,033 Year Ended August 31, 2020 Reportable Segment* ASC Topic 606 ASC Topic 815 Other Guidance Total Revenues (Dollars in thousands) Energy $ 4,833,003 $ 598,131 $ — $ 5,431,134 Ag 5,963,198 16,901,258 61,643 22,926,099 Corporate and Other 22,903 — 26,229 49,132 Total revenues $ 10,819,104 $ 17,499,389 $ 87,872 $ 28,406,365 Year Ended August 31, 2019 Reportable Segment* ASC Topic 606 ASC Topic 815 Other Guidance Total Revenues (Dollars in thousands) Energy $ 6,393,075 $ 726,001 $ — $ 7,119,076 Ag 6,319,304 18,268,977 131,791 24,720,072 Corporate and Other 20,262 — 41,043 61,305 Total revenues $ 12,732,641 $ 18,994,978 $ 172,834 $ 31,900,453 *Our Nitrogen Production and Foods reportable segments represent equity method investments that record earnings and allocated expenses, but not revenues. Less than 1% of revenues accounted for under ASC Topic 606 included within the tables above are recorded over time and relate primarily to service contracts. F-10 Table of Contents Contract Assets and Contract Liabilities Contract assets relate to unbilled amounts arising from goods that have already been transferred to the customer where the right to payment is not conditional on the passage of time. This results in the recognition of an asset, as the amount of revenue recognized at a certain point in time exceeds the amount billed to the customer. Contract assets are recorded in accounts receivable within our Consolidated Balance Sheets and were immaterial as of August 31, 2021 and 2020. Contract liabilities relate to advance payments from customers for goods and services that we have yet to provide. Contract liabilities of $ 213.9 million and $ 139.1 million as of August 31, 2021 and 2020, respectively, are recorded within other current liabilities on our Consolidated Balance Sheets. For the years ended August 31, 2021, 2020 and 2019, we recognized revenues of $ 139.1 million, $ 194.8 million and $ 170.7 million related to contract liabilities, respectively. These amounts were included in the other current liabilities balance at the beginning of the respective period. Note 3 Receivables Receivables as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Trade accounts receivable $ 2,047,198 $ 1,476,585 CHS Capital short-term notes receivable 505,778 563,934 Other 451,630 491,068 Gross receivables 3,004,606 2,531,587 Less allowances and reserves 143,722 165,540 Total receivables $ 2,860,884 $ 2,366,047 Trade Accounts Receivable Trade accounts receivable are recorded at net realizable value, which includes an allowance for expected credit losses in accordance with ASC Topic 326. The allowance for expected credit losses is based on our best estimate of expected credit losses in existing receivable balances and is determined using historical write-off experience, adjusted for various industry and regional data and current expectations of future credit losses. Receivables from related parties are disclosed in Note 18, Related Party Transactions . No third-party customer accounted for more than 10% of the total receivables balance as of August 31, 2021 or 2020. CHS Capital Notes Receivable Notes Receivable CHS Capital, LLC ("CHS Capital"), our wholly-owned subsidiary, has short-term notes receivable from commercial and producer borrowers. The short-term notes receivable have maturity terms of 12 months or less and are reported at their outstanding unpaid principal balances, less an allowance for expected credit losses, as CHS Capital has the intent and ability to hold the applicable loans for the foreseeable future or until maturity or payoff. The carrying value of CHS Capital short-term notes receivable approximates fair value given the notes' short-term duration and use of market pricing adjusted for risk. Notes receivable from commercial borrowers are collateralized by various combinations of mortgages, personal property, accounts and notes receivable, inventories and assignments of certain regional cooperatives' capital stock. These loans are primarily originated in the states of North Dakota and Minnesota. CHS Capital also has loans receivable from producer borrowers that are collateralized by various combinations of growing crops, livestock, inventories, accounts receivable, personal property and supplemental mortgages and are originated in the same states as the commercial notes. In addition to the short-term balances included in the table above, CHS Capital had long-term notes receivable, with durations of generally not more than 10 years, totaling $ 55.4 million and $ 101.5 million at August 31, 2021 and 2020, respectively. The long-term notes receivable are included in other assets on our Consolidated Balance Sheets. As of August 31, 2021 and 2020, commercial notes represented 28 % and 33 %, respectively, and producer notes represented 72 % and 67 %, respectively, of total CHS Capital notes receivable. F-11 Table of Contents CHS Capital has commitments to extend credit to customers if there are no violations of any contractually established conditions. As of August 31, 2021, CHS Capital customers had additional available credit of $ 706.9 million. Allowance for Loan Losses CHS Capital maintains an allowance for loan losses that is an estimate of current expected losses inherent in the loans receivable portfolio. In accordance with ASC Topic 326, the allowance for loan losses is based on our current expectation for future losses, which takes into consideration historical loss experience, third-party industry forecasts, as well as other quantitative and qualitative factors addressing operational risks and industry trends. Additions to the allowance for loan losses are reflected within marketing, general and administrative expenses in the Consolidated Statements of Operations. The portion of loans receivable deemed uncollectible is charged off against the allowance for loan losses. Recoveries of previously charged off amounts increase the allowance for loan losses. No significant amounts of CHS Capital notes were past due as of August 31, 2021 or 2020, and the allowance for loan losses related to CHS Capital notes were no t material as of either date. Interest Income Interest income is recognized on the accrual basis using a method that computes simple interest on a daily basis. Accrual of interest on commercial loans receivable is discontinued at the time the receivable is 90 days past due unless the credit is well-collateralized and in process of collection. Past due status is based on contractual terms of the loan. Producer loans receivable are placed in nonaccrual status based on estimates and analysis due to the annual debt service terms inherent to CHS Capital's producer loans. In all cases, loans are placed in nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. Troubled Debt Restructurings Restructuring of a loan constitutes a troubled debt restructuring, or restructured loan, if the creditor, for economic reasons related to the debtor's financial difficulties, grants a concession to the debtor that it would otherwise not consider. Concessions vary by program and borrower. Concessions may include interest rate reductions, term extensions, payment deferrals or the acceptance of additional collateral in lieu of payments. In limited circumstances, principal may be forgiven. When a restructured loan constitutes a troubled debt restructuring, CHS includes these loans within its impaired loans. CHS Capital had no significant troubled debt restructurings during the years ended August 31, 2021, 2020 and 2019, and no third-party borrowers that accounted for more than 10% of the total CHS Capital notes receivable or total receivables as of August 31, 2021 or 2020. Loan Participations For the years ended August 31, 2021 and 2020, CHS Capital sold $ 40.8 million and $ 70.6 million of notes receivable, respectively, to various counterparties under a master participation agreement. The sales resulted in the removal of notes receivable from the Consolidated Balance Sheets. CHS Capital has no retained interests in the transferred notes receivable, other than collection and administrative services. Proceeds from sales of notes receivable have been included in investing activities in the Consolidated Statements of Cash Flows. Fees received related to the servicing of notes receivable are recorded in other income in the Consolidated Statements of Operations. We consider the fees received adequate compensation for services rendered and, accordingly, have recorded no servicing asset or liability. Other Receivables Other receivables are comprised of certain other amounts recorded in the normal course of business, including receivables related to vendor rebates, value-added taxes, certain financing receivables and pre-crop financing, primarily to Brazilian farmers, to finance a portion of supplier production costs. We receive volume-based rebates from certain vendors during the year. These vendor rebates are accounted for in accordance with ASC 705, Cost of Sales and Services, based on the terms of the volume rebate program. For rebates that meet the definition of a binding arrangement and are both probable and estimable, we estimate the amount of the rebate we will receive and accrue it as a reduction of the cost of inventory and cost of goods sold over the period in which the rebate is earned. For pre-crop financing arrangements, we do not bear costs or operational risks associated with the related growing crops, although our ability to be paid depends on the crops actually being produced. The financing is collateralized by future crops, land and physical assets of the farmers, carries a local market interest rate and settles when the farmer's crop is harvested and sold. No significant troubled debt restructurings occurred during the years ended August 31, 2021, 2020 and 2019, and no third-party customer or borrower accounted for more than 10% of the total receivables balance as of August 31, 2021 or 2020. F-12 Table of Contents Note 4 Inventories Inventories as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Grain and oilseed $ 1,435,544 $ 1,064,079 Energy 762,317 696,858 Agronomy 958,548 822,535 Processed grain and oilseed 140,975 126,022 Other 37,291 32,644 Total inventories $ 3,334,675 $ 2,742,138 Grain, processed grain, oilseed, processed oilseed and other minimally processed soy-based inventories are accounted for in accordance with ASC Topic 330, Inventory , and are stated at net realizable value. These inventories are agricultural commodity inventories that are readily convertible to cash because of their commodity characteristics, widely available markets and international pricing mechanisms. The net realizable value of agricultural commodity inventories is determined using inputs that are generally based on exchange traded prices and/or recent market bids and offers, including location-specific adjustments. Location-specific inputs are driven by local market supply and demand and are generally based on broker or dealer quotations or market transactions in either listed or over-the-counter ("OTC") markets. Changes in the net realizable value of agricultural commodity inventories are recognized in earnings as a component of cost of goods sold. All other inventories are stated at the lower of cost or net realizable value. Costs for inventories produced or modified by us through a manufacturing process include fixed and variable production and raw material costs, and inbound freight costs for raw materials. Costs for inventories purchased for resale include the cost of products and freight incurred to place the products at our points of sale. The costs of certain energy inventories (wholesale refined products, crude oil and asphalt) are determined on the last-in, first-out ("LIFO") method; all other inventories of nongrain products purchased for resale are valued on the first-in, first-out ("FIFO") and average cost methods. As of August 31, 2021 and 2020, we valued approximately 13 % and 16 %, respectively, of inventories, primarily crude oil and refined fuels within our Energy segment, using the lower of cost, determined on the LIFO method, or net realizable value. If the FIFO method of accounting had been used, inventories would have been higher than the reported amount by $ 359.2 million and $ 93.5 million as of August 31, 2021 and 2020, respectively. During fiscal 2021, we recorded LIFO liquidations for certain energy product inventories. The costs of these liquidated inventories in the historical LIFO layers were lower than current costs, which resulted in decreased cost of goods sold of $ 35.3 million had the inventory liquidations not taken place. There were no liquidations of LIFO inventories during fiscal 2020 or fiscal 2019. Note 5 Other Current Assets Other current assets as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Derivative assets (Note 15) $ 559,056 $ 371,195 Margin and related deposits 336,397 194,097 Supplier advance payments 194,706 198,699 Restricted cash 129,325 76,119 Other 170,749 177,378 Total other current assets $ 1,390,233 $ 1,017,488 Margin and Related Deposits Many of our derivative contracts with futures and options brokers require us to make margin deposits of cash or other assets. Subsequent margin deposits may also be necessary when changes in commodity prices result in a loss on the contract value to comply with applicable regulations. Our margin and related deposit assets are generally held in separate accounts to F-13 Table of Contents support the associated derivative contracts and may be used to fund or partially fund the settlement of those contracts as they expire. Similar to our derivative financial instruments, margin and related deposits are reported on a gross basis. Supplier Advance Payments Supplier advance payments are typically for periods less than 12 months and primarily include amounts paid for grain purchases from suppliers and amounts paid to crop nutrient and crop protection product suppliers to lock in future supply, pricing and discounts. Note 6 Investments Investments as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Equity method investments CF Industries Nitrogen, LLC $ 2,667,164 $ 2,662,618 Ventura Foods, LLC 388,612 381,351 Ardent Mills, LLC 220,132 208,927 TEMCO, LLC 31,464 19,444 Other equity method investments 232,923 233,738 Other investments 128,816 123,955 Total investments $ 3,669,111 $ 3,630,033 Joint ventures and other investments in which we have significant ownership and influence but not control, are accounted for in our consolidated financial statements using the equity method of accounting. Our significant equity method investments consist of CF Nitrogen, Ventura Foods, Ardent Mills, LLC ("Ardent Mills") and TEMCO, LLC ("TEMCO"), which are summarized below. In addition to the recognition of our share of income from our equity method investments, our equity method investments are evaluated for indicators of other-than-temporary impairment on an ongoing basis in accordance with U.S. GAAP. We have approximately $ 458.2 million of cumulative undistributed earnings from our equity method investees included in the investments balance as of August 31, 2021. All equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income. We have elected to utilize the measurement alternative for equity investments that do not have readily determinable fair values and measure these investments at cost less impairment plus or minus observable price changes in orderly transactions. Our share in the income or loss of these equity method investments is recorded within equity income from investments in the Consolidated Statements of Operations. Other investments consist primarily of investments in cooperatives without readily determinable fair values and are generally recorded at cost, unless an impairment or other observable market price change occurs requiring an adjustment. Investments in other cooperatives are recorded in a manner similar to equity investments without readily determinable fair values, plus patronage dividends received in the form of capital stock and other equities. Patronage dividends are recorded as a reduction to cost of goods sold at the time qualified written notices of allocation are received. Investments in debt and equity instruments are carried at amounts that approximate fair values. CF Nitrogen We have a $ 2.7 billion investment in CF Nitrogen, a strategic venture with CF Industries Holdings, Inc. ("CF Industries"). The investment consists of an approximate 10 % membership interest (based on product tons) in CF Nitrogen. At the time we entered into the strategic venture, we also entered into a supply agreement that entitles us to purchase up to 1.1 million tons of granular urea and 580,000 tons of urea ammonium nitrate ("UAN") annually from CF Nitrogen for ratable delivery through fiscal 2096. Our purchases under the supply agreement are based on prevailing market prices and we receive semiannual cash distributions (in January and July of each year) from CF Nitrogen via our membership interest. These distributions are based on actual volumes purchased from CF Nitrogen under the strategic venture and will have the effect of reducing our investment to zero over 80 years on a straight-line basis. We account for this investment using the hypothetical liquidation at book value method, recognizing our share of the earnings and losses of CF Nitrogen as equity income from investments in our Nitrogen Production segment based on our contractual claims on the entity's net assets pursuant to the liquidation provisions of CF Nitrogen's Limited Liability Company Agreement, adjusted for the semiannual cash distributions. F-14 Table of Contents Cash distributions received from CF Nitrogen for the years ended August 31, 2021, 2020 and 2019, were $ 193.9 million, $ 174.3 million and $ 186.5 million, respectively. The following tables provide aggregate summarized financial information for CF Nitrogen for balance sheets as of August 31, 2021 and 2020, and statements of operations for the 12 months ended August 31, 2021, 2020 and 2019: 2021 2020 (Dollars in thousands) Current assets $ 850,048 $ 552,127 Noncurrent assets 6,248,315 6,564,086 Current liabilities 301,174 222,391 Noncurrent liabilities 2,454 3,036 2021 2020 2019 (Dollars in thousands) Net sales $ 2,975,983 $ 2,522,827 $ 2,894,795 Gross profit 866,880 570,901 737,168 Net earnings 809,536 529,462 706,291 Earnings attributable to CHS Inc. 198,439 127,954 160,373 Ventura Foods We have a 50 % interest in Ventura Foods, a joint venture with Mitsui & Co., that produces and distributes primarily edible oil-based products. We account for Ventura Foods as an equity method investment, and our share of the results of this equity method investment are included in our Foods segment. The following tables provide aggregate summarized financial information for our equity method investment in Ventura Foods for balance sheets as of August 31, 2021 and 2020, and statements of operations for the 12 months ended August 31, 2021, 2020 and 2019: 2021 2020 (Dollars in thousands) Current assets $ 810,593 $ 695,911 Noncurrent assets 628,516 647,105 Current liabilities 374,361 274,807 Noncurrent liabilities 313,253 331,235 2021 2020 2019 (Dollars in thousands) Net sales $ 2,584,532 $ 2,246,412 $ 2,463,945 Gross profit 350,708 289,590 299,959 Net earnings 151,196 68,055 102,069 Earnings attributable to CHS Inc. 78,519 34,026 51,608 Ardent Mills and TEMCO We have a 12 % interest in Ardent Mills, which is a joint venture with Cargill Incorporated ("Cargill") and Conagra Brands, Inc., and is the largest flour miller in the United States. Additionally, we have a 50 % interest in TEMCO, which is a joint venture with Cargill focused on export elevation, primarily to Asia. We account for Ardent Mills and TEMCO as equity method investments, and our shares of the results of these equity method investments are included in Corporate and Other and our Ag segment, respectively. F-15 Table of Contents The following tables provide aggregate summarized financial information for our equity method investments in Ardent Mills and TEMCO for balance sheets as of August 31, 2021 and 2020, and statements of operations for the 12 months ended August 31, 2021, 2020 and 2019: 2021 2020 (Dollars in thousands) Current assets $ 1,194,484 $ 960,358 Noncurrent assets 1,971,103 1,923,696 Current liabilities 628,344 452,382 Noncurrent liabilities 626,479 637,850 2021 2020 2019 (Dollars in thousands) Net sales $ 6,897,330 $ 5,976,835 $ 6,603,450 Gross profit 541,718 347,209 319,296 Net earnings 247,544 80,328 118,251 Earnings attributable to CHS Inc. 43,339 ( 1,432 ) 3,572 Our investments in other equity method investees are not significant in relation to our consolidated financial statements, either individually or in the aggregate. Note 7 Property, Plant and Equipment Major classes of property, plant and equipment, including finance lease assets, are summarized in the table below as of August 31, 2021 and 2020. 2021 2020 (Dollars in thousands) Land and land improvements $ 324,757 $ 317,714 Buildings 1,171,423 1,110,490 Machinery and equipment 7,673,748 7,559,437 Office equipment and other 378,352 362,084 Construction in progress 337,977 310,901 Gross property, plant and equipment 9,886,257 9,660,626 Less accumulated depreciation and amortization 5,076,252 4,702,688 Total property, plant and equipment $ 4,810,005 $ 4,957,938 Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided on the straight-line method by charges to operations at rates based on the expected useful lives of individual or groups of assets (generally 15 to 20 years for land improvements, 20 to 40 years for buildings, five to 20 years for machinery and equipment, and three to 10 years for office equipment and other). Expenditures for maintenance and minor repairs and renewals are expensed. We also capitalize and amortize eligible costs to acquire or develop internal-use software that are incurred during the application development stage. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the related accounts and resulting gains or losses are reflected in operations. Depreciation expense, including amortization of finance lease assets, for the years ended August 31, 2021, 2020 and 2019, was $ 455.9 million, $ 470.4 million and $ 495.3 million, respectively. Property, plant and equipment and other long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amounts may not be recoverable in accordance with U.S. GAAP. This evaluation of recoverability is based on various indicators, including the nature, future economic benefits and geographic locations of the assets, historical or future profitability measures and other external market conditions. If these indicators suggest the carrying amounts of an asset or asset group may not be recoverable, potential impairment is evaluated using undiscounted estimated future cash flows. Should the sum of the expected future net cash flows be less than the carrying value, an impairment loss F-16 Table of Contents would be recognized. An impairment loss would be measured as the amount by which the carrying value of the asset or asset group exceeds its fair value. No significant impairments were identified during fiscal 2021, fiscal 2020 or fiscal 2019. We have asset retirement obligations with respect to certain of our refineries and other assets due to various legal obligations to clean and/or dispose of the component parts at the time they are retired. In most cases, these assets can be used for extended and indeterminate periods of time if they are properly maintained and/or upgraded. It is our practice and current intent to maintain refineries and related assets and to continue making improvements to those assets based on technological advances. As a result, we believe our refineries and related assets have indeterminate lives for purposes of estimating asset retirement obligations because dates or ranges of dates upon which we would retire a refinery and related assets cannot reasonably be estimated at this time. When a date or range of dates can reasonably be estimated for the retirement of any component part of a refinery or other asset, we estimate the cost of performing the retirement activities and record a liability for the fair value of that future cost. We have other assets that we may be obligated to dismantle at the end of corresponding lease terms subject to the lessor's discretion for which we have recorded asset retirement obligations. Based on our estimates of timing, cost and probability of removal, these obligations are not material. Note 8 Other Assets Other assets as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Goodwill $ 171,601 $ 172,404 Customer lists, trademarks and other intangible assets 58,395 65,025 Notes receivable (Note 3) 73,713 109,145 Long-term derivative assets (Note 15) 21,567 21,157 Prepaid pension and other benefits (Note 13) 119,825 106,209 Capitalized major maintenance 196,641 228,511 Cash value life insurance 147,682 130,673 Operating lease right of use assets (Note 19) 253,451 257,834 Other 55,333 48,471 Total other assets $ 1,098,208 $ 1,139,429 Goodwill and Other Intangible Assets Goodwill represents the excess of cost over the fair value of identifiable assets acquired. Goodwill is assessed for impairment on an annual basis as of July 31, either by first assessing qualitative factors to determine whether a quantitative goodwill impairment test is necessary or by proceeding directly to the quantitative test. The quantitative test may be required more frequently if triggering events or other circumstances occur that could indicate impairment. Goodwill is assessed for impairment at the reporting unit level, which has been determined to be our operating segments or one level below our operating segments in certain instances. Changes in the net carrying amount of goodwill for the year ended August 31, 2021, are included in the table below. There were no changes in the net carrying amount of goodwill for the year ended August 31, 2020. Energy Ag Corporate and Other Total (Dollars in thousands) Balances, August 31, 2020 $ 552 $ 161,278 $ 10,574 $ 172,404 Goodwill disposed of during the period — ( 803 ) — ( 803 ) Balances, August 31, 2021 $ 552 $ 160,475 $ 10,574 $ 171,601 No goodwill has been allocated to our Nitrogen Production or Foods segments, which each consist of a single investment accounted for under the equity method. F-17 Table of Contents No goodwill impairments were identified as a result of our annual goodwill analyses performed as of July 31, 2021 or 2020. However, as a result of our annual goodwill impairment analyses performed as of July 31, 2019, we recorded a goodwill impairment charge of $ 27.4 million associated with a reporting unit in our Ag segment. The impairment charge primarily resulted from changing market dynamics that reduced future profitability within the reporting unit, as well as strategy changes and the challenging economic environment in the agriculture industry. The impairment charge was recorded in marketing, general and administrative expenses in the Consolidated Statement of Operations for the year ended August 31, 2019. Management will continue to monitor the results and projected cash flows for each of our businesses to assess whether any reserves or impairments may be necessary in the future, particularly for our businesses that have experienced or could experience substantial reductions in demand or price declines associated with the COVID-19 pandemic or other factors. Intangible assets subject to amortization primarily include customer lists, trademarks and noncompete agreements, and are amortized over their respective useful lives (ranging from two to 30 years). We have no material intangible assets with indefinite useful lives. All long-lived assets, including other identifiable intangible assets, are also assessed for impairment in accordance with U.S. GAAP and evaluated for impairment whenever triggering events or other circumstances indicate the carrying amount of an asset group or reporting unit may not be recoverable. Information regarding intangible assets is as follows: August 31, 2021 August 31, 2020 Carrying Amount Accumulated Amortization Net Carrying Amount Accumulated Amortization Net (Dollars in thousands) Customer lists $ 84,565 $ ( 29,254 ) $ 55,311 $ 84,895 $ ( 23,770 ) $ 61,125 Trademarks and other intangible assets 10,425 ( 7,341 ) 3,084 10,735 ( 6,835 ) 3,900 Total intangible assets $ 94,990 $ ( 36,595 ) $ 58,395 $ 95,630 $ ( 30,605 ) $ 65,025 Intangible asset amortization expense for the years ended August 31, 2021, 2020 and 2019, was $ 6.9 million, $ 7.3 million and $ 5.3 million, respectively. The estimated annual amortization expense related to intangible assets subject to amortization for future years is as follows: (Dollars in thousands) 2022 $ 6,701 2023 6,607 2024 6,557 2025 6,340 2026 6,159 Thereafter 25,945 Total $ 58,309 Capitalized Major Maintenance Activity related to capitalized major maintenance costs at our refineries for the years ended August 31, 2021, 2020 and 2019, is summarized below: Balance at Beginning of Year Cost Deferred Amortization Balance at End of Year (Dollars in thousands) 2021 $ 228,511 $ 41,899 $ ( 73,769 ) $ 196,641 2020 286,890 14,496 ( 72,875 ) 228,511 2019 130,780 224,406 ( 68,296 ) 286,890 Within our Energy segment, major maintenance activities are regularly performed at our Laurel, Montana, and McPherson, Kansas, refineries. Major maintenance activities are the planned and required shutdowns of refinery processing units, which include replacement or overhaul of equipment that has experienced decreased efficiency in resource conversion. Because major maintenance activities are performed to extend the life, increase the capacity and/or improve the safety or efficiency of refinery processing assets, we follow the deferral method of accounting for major maintenance activities. Expenditures for major maintenance activities are capitalized (deferred) when incurred and amortized on a straight-line basis F-18 Table of Contents over a period of two to five years, which is the estimated time lapse between major maintenance activities. Should the estimated time between major maintenance activities change, we may be required to amortize the remaining cost of the major maintenance activities over a shorter period, which would result in higher depreciation and amortization costs. Amortization expense related to the capitalized major maintenance costs is included in cost of goods sold in our Consolidated Statements of Operations. Selection of the deferral method, as opposed to expensing major maintenance activity costs when incurred, results in deferring recognition of major maintenance activity expenditures. The deferral method also results in classification of related cash outflows as investing activities in our Consolidated Statements of Cash Flows, whereas expensing these costs as incurred would result in classifying the cash outflows as operating activities. Repair, maintenance and related labor costs are expensed as incurred and are included in operating cash flows. Note 9 Notes Payable and Long-Term Debt Our notes payable and long-term debt are subject to various restrictive requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with our debt covenants as of August 31, 2021. Notes Payable Notes payable as of August 31, 2021 and 2020, consisted of the following: Weighted-average Interest Rate 2021 2020 2021 2020 (Dollars in thousands) Notes payable 1.18 % 1.96 % $ 864,147 $ 763,215 CHS Capital notes payable 1.00 % 1.29 % 876,712 812,276 Total notes payable $ 1,740,859 $ 1,575,491 Our primary line of credit is a five -year unsecured revolving credit facility with a syndicate of domestic and international banks. The credit facility provides a committed amount of $ 2.75 billion that expires on July 16, 2024. As of August 31, 2021, there were no borrowings outstanding on this facility, and $ 345.0 million outstanding as of August 31, 2020. We also maintain certain uncommitted bilateral facilities to support our working capital needs with borrowings outstanding of $ 335.0 million as of August 31, 2021, and no borrowings outstanding as of August 31, 2020. In addition to our facilities referenced above, our wholly-owned subsidiaries, CHS Europe S.a.r.l. and CHS Agronegocio Industria e Comercio Ltda have lines of credit with $ 268.0 million outstanding as of August 31, 2021, and our other international subsidiaries have lines of credit with $ 204.3 million outstanding as of August 31, 2021. CHS Capital Notes Payable We have a receivables and loans securitization facility ("Securitization Facility") with certain unaffiliated financial institutions ("Purchasers"). Under the Securitization Facility, we and certain of our subsidiaries ("Originators") sell trade accounts and notes receivable ("Receivables") to Cofina Funding, LLC ("Cofina"), a wholly-owned bankruptcy-remote indirect subsidiary of CHS. Cofina in turn transfers the Receivables to the Purchasers, and this arrangement is accounted for as a secured borrowing. We use the proceeds from the sale of Receivables under the Securitization Facility for general corporate purposes and settlements are made on a monthly basis. The amount available under the Securitization Facility fluctuates over time based on the total amount of eligible Receivables generated during the normal course of business. As of August 31, 2021, total availability under the Securitization Facility was $ 671.9 million, $ 600.0 million of which had been utilized. We also have a repurchase facility ("Repurchase Facility") related to the Securitization Facility. Under the Repurchase Facility, we can borrow up to $ 150.0 million, collateralized by a subordinated note issued by Cofina in favor of the Originators and representing a portion of the outstanding balance of the Receivables sold by the Originators to Cofina under the Securitization Facility. As of August 31, 2021 and 2020, the outstanding balance under the Repurchase Facility was $ 150.0 million. On September 24, 2020, the Securitization Facility and Repurchase Facility were amended, increasing the maximum availability under the Securitization Facility to $ 600.0 million from $ 500.0 million and extending termination dates to July 30, 2021 and September 24, 2021, respectively. On July 30, 2021 the Securitization Facility was further amended to extend its F-19 Table of Contents termination date to August 31, 2021. Subsequently on August 31, 2021, the Securitization Facility and Repurchase Facility were again amended, increasing the maximum committed availability under the Securitization Facility to $ 700.0 million from $ 600.0 million, adding a $ 250.0 million uncommitted portion to the Securitization Facility, and extending their respective maturity dates to August 30, 2022. CHS Capital sells loan commitments it has originated to Compeer Financial, PCA, d/b/a ProPartners Financial on a recourse basis. The total outstanding commitments under the program were $ 150.0 million as of August 31, 2021, of which $ 49.9 million was borrowed under these commitments. On September 29, 2021, the total commitments under the program were reduced to $ 100.0 million. CHS Capital borrows funds under short-term notes issued as part of a surplus funds program. Borrowings under this program are unsecured and are due upon demand. Borrowings under these notes totaled $ 132.3 million as of August 31, 2021. Long-Term Debt During the year ended August 31, 2021, we repaid approximately $ 547.3 million of long-term debt consisting of scheduled debt maturities and optional prepayments. On August 14, 2020, we entered into a Note Purchase Agreement to borrow $ 375.0 million of long-term debt in the form of notes that were funded on November 2, 2020. Amounts included in long-term debt on our Consolidated Balance Sheets as of August 31, 2021 and 2020, are presented in the table below: 2021 2020 (Dollars in thousands) 4.00 % unsecured notes $ 100 million face amount, due in equal installments beginning in fiscal 2017 through fiscal 2021 $ — $ 20,000 4.52 % unsecured notes $ 160 million face amount, due in fiscal 2021 — 162,090 4.67 % unsecured notes $ 130 million face amount, due in fiscal 2023 134,873 137,623 4.39 % unsecured notes $ 152 million face amount, due in fiscal 2023 152,000 152,000 3.85 % unsecured notes $ 80 million face amount, due in fiscal 2025 80,000 80,000 3.80 % unsecured notes $ 100 million face amount, due in fiscal 2025 100,000 100,000 4.58 % unsecured notes $ 150 million face amount, due in fiscal 2025 153,101 154,012 4.82 % unsecured notes $ 80 million face amount, due in fiscal 2026 80,000 80,000 4.69 % unsecured notes $ 58 million face amount, due in fiscal 2027 58,000 58,000 3.24 % unsecured notes $ 95 million face amount, due in fiscal 2027 95,000 — 4.74 % unsecured notes $ 95 million face amount, due in fiscal 2028 95,000 95,000 3.48 % unsecured notes $ 100 million face amount, due in fiscal 2030 100,000 — 4.89 % unsecured notes $ 100 million face amount, due in fiscal 2031 100,000 100,000 3.58 % unsecured notes $ 65 million face amount, due in fiscal 2032 65,000 — 4.71 % unsecured notes $ 100 million face amount, due in fiscal 2033 100,000 100,000 3.73 % unsecured notes $ 115 million face amount, due in fiscal 2035 115,000 — 5.40 % unsecured notes $ 125 million face amount, due in fiscal 2036 125,000 125,000 Private placement debt 1,552,974 1,363,725 2.25 % unsecured term loans from cooperative and other banks, due in fiscal 2025 (a) — 366,000 Bank financing — 366,000 Finance lease liabilities 36,034 31,460 Other notes and contracts with interest rates from 2.6 % to 9.0 % 33,443 34,709 Deferred financing costs ( 4,090 ) ( 4,771 ) Total long-term debt 1,618,361 1,791,123 Less current portion 38,450 189,287 Long-term portion $ 1,579,911 $ 1,601,836 (a) Borrowings are variable under the agreement and bear interest at a base rate (or LIBOR) plus an applicable margin. F-20 Table of Contents As of August 31, 2021, the fair value of our long-term debt is estimated to be $ 1.7 billion based on quoted market prices of similar debt (a Level 2 fair value measurement based on the classification hierarchy of ASC Topic 820, Fair Value Measurement ). On February 19, 2021, we amended our 10-year term loan facility to convert the entire $ 366.0 million aggregate principle amount outstanding thereunder into a revolving loan, which can be paid down and readvanced in an amount up to the referenced $ 366.0 million until February 19, 2022. On February 19, 2022, the total funded loan balance outstanding reverts to a nonrevolving term loan that is payable on September 4, 2025. There was no balance outstanding under this facility as of August 31, 2021. Long-term debt outstanding as of August 31, 2021, has aggregate maturities, excluding fair value adjustments and finance leases (see Note 19, Leases , for a schedule of minimum future lease payments under finance leases), as follows: (Dollars in thousands) 2022 $ 31,108 2023 282,860 2024 837 2025 330,549 2026 80,034 Thereafter 853,034 Total $ 1,578,422 Interest expense for the years ended August 31, 2021, 2020 and 2019, was $ 104.6 million, $ 117.0 million and $ 167.1 million, respectively, net of capitalized interest of $ 8.0 million, $ 10.9 million and $ 9.4 million, respectively. Note 10 Other Current Liabilities Other current liabilities as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Customer margin deposits and credit balances $ 269,114 $ 149,539 Customer advance payments 439,293 300,100 Derivative liabilities (Note 15) 449,522 416,204 Dividends and equity payable (Note 12) 150,000 63,000 Total other current liabilities $ 1,307,929 $ 928,843 Note 11 Income Taxes CHS is a nonexempt agricultural cooperative and files a consolidated federal income tax return within our tax return period. We are subject to tax on income from nonpatronage sources, nonqualified patronage distributions and undistributed patronage-sourced income. Income tax (benefit) expense is primarily the current tax payable for the period and the change during the period in certain deferred tax assets and liabilities. Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities recognized under U.S. GAAP and such amounts recognized for federal and state income tax purposes, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. F-21 Table of Contents The (benefit from) provision for income taxes for the years ended August 31, 2021, 2020 and 2019 is as follows: 2021 2020 2019 (Dollars in thousands) Current: Federal $ ( 533 ) $ 4,519 $ 211 State 2,943 ( 2,231 ) 3,815 Foreign 56 2,748 ( 2,630 ) Total Current 2,466 5,036 1,396 Deferred: Federal ( 24,676 ) ( 36,231 ) ( 4,923 ) State ( 15,666 ) ( 5,263 ) ( 8,491 ) Foreign ( 373 ) ( 273 ) ( 438 ) Total Deferred ( 40,715 ) ( 41,767 ) ( 13,852 ) Total $ ( 38,249 ) $ ( 36,731 ) $ ( 12,456 ) Domestic income before income taxes was $ 497.5 million, $ 324.4 million and $ 825.7 million for the years ended August 31, 2021, 2020 and 2019, respectively. Foreign income (loss) before income taxes was $ 17.8 million, $ 62.5 million and ($ 3.1 ) million for the years ended August 31, 2021, 2020 and 2019, respectively. Deferred taxes are comprised of basis differences related to investments, accrued liabilities and certain federal and state tax credits. Deferred tax assets and liabilities as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Deferred tax assets: Accrued expenses $ 57,245 $ 51,560 Postretirement health care and deferred compensation 42,217 42,898 Tax credit carryforwards 128,824 123,193 Loss carryforwards 115,327 116,741 Nonqualified equity 391,309 344,924 Lease obligations 62,770 64,140 Other 92,325 85,856 Deferred tax assets valuation allowance ( 208,810 ) ( 219,891 ) Total deferred tax assets 681,207 609,421 Deferred tax liabilities: Pension 24,277 17,131 Investments 110,910 95,916 Property, plant and equipment 557,129 556,160 Right of use assets 61,870 64,140 Other 28,549 15,417 Total deferred tax liabilities 782,735 748,764 Net deferred tax liabilities $ 101,528 $ 139,343 We have total gross loss carryforwards of $ 527.5 million, as of August 31, 2021, of which $ 304.4 million will expire over periods ranging from fiscal 2022 to fiscal 2042. The remainder will carry forward indefinitely. Based on estimates of future taxable profits and losses in certain foreign tax jurisdictions, as well as consideration of other factors, we assessed whether a valuation allowance was necessary to reduce specific foreign loss carryforwards to amounts we believe are more likely than not to be realized as of August 31, 2021. If our estimates prove inaccurate, adjustments to the valuation allowances may be required in the future with gains or losses being charged to income in the period such determination is made. McPherson refinery's gross state tax credit carryforwards for income tax were approximately $ 129.7 million and $ 125.5 million F-22 Table of Contents as of August 31, 2021 and 2020, respectively. McPherson refinery's valuation allowance on Kansas state credits is necessary due to the limited amount of taxable income generated in Kansas by the combined group on an annual basis. Our general business credits of $ 44.1 million, comprised primarily of low-sulfur diesel credits, will begin to expire on August 31, 2027, and our state tax credits of $ 129.7 million will begin to expire on August 31, 2022. The reconciliation of the statutory federal income tax rates to the effective tax rates for the years ended August 31, 2021, 2020 and 2019 is as follows: 2021 2020 2019 Statutory federal income tax rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of federal income tax benefit ( 2.6 ) ( 1.8 ) ( 0.7 ) Patronage earnings ( 11.4 ) ( 13.1 ) ( 14.3 ) Domestic production activities deduction ( 8.2 ) ( 19.0 ) ( 9.9 ) Export activities at rates other than the U.S. statutory rate 0.5 1.8 ( 2.1 ) Intercompany transfer of business assets ( 4.7 ) ( 1.6 ) — Increase in unrecognized tax benefits 0.8 4.2 0.2 Valuation allowance ( 0.2 ) ( 1.0 ) 2.6 Tax credits — 0.2 0.4 Other ( 2.6 ) ( 0.2 ) 1.3 Effective tax rate ( 7.4 ) % ( 9.5 ) % ( 1.5 ) % Primary drivers of the fiscal 2021 income tax benefit were retaining the current Domestic Production Activities Deduction ("DPAD") benefit and from tax planning associated with certain assets. Primary drivers of the fiscal 2020 income tax benefit were retaining the current DPAD benefit and the settlement of a U.S. federal audit, resulting in additional tax credit carryovers, which were partially offset by an increase in our uncertain tax position. Primary drivers of the fiscal 2019 income tax benefit were retaining the current DPAD benefit and deducting previously disallowed DPAD available from the carryback of excise tax credits, which were partially offset by an increase in our unrecognized deferred tax benefit. We file income tax returns in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. Our uncertain tax positions are affected by the tax years that are under audit or remain subject to examination by the relevant taxing authorities. In addition to the current year, fiscal 2007 through 2020 remain subject to examination for certain issues. Reserves are recorded against unrecognized tax benefits when we believe certain fully supportable tax return positions are likely to be challenged and we may or may not prevail. If we determine that a tax position is more likely than not to be sustained upon audit, based on the technical merits of the position, we recognize the benefit by measuring the amount that is greater than 50% likely of being realized. We reevaluate the technical merits of our tax positions and recognize an uncertain tax benefit, or derecognize a previously recorded tax benefit, when there is (i) completion of a tax audit, (ii) effective settlement of an issue, (iii) a change in applicable tax law including a tax case or legislative guidance, or (iv) expiration of the applicable statute of limitations. Significant judgment is required in accounting for tax reserves. A reconciliation of the gross beginning and ending amounts of unrecognized tax benefits for the periods presented follows: 2021 2020 2019 (Dollars in thousands) Balance at beginning of period $ 119,150 $ 101,128 $ 91,135 Additions attributable to current year tax positions 2,000 14,410 14,162 Additions attributable to prior year tax positions 15,974 6,128 — Reductions attributable to prior year tax positions ( 14,975 ) ( 2,516 ) ( 4,169 ) Balance at end of period $ 122,149 $ 119,150 $ 101,128 If we were to prevail on all positions taken in relation to uncertain tax positions, $ 114.3 million of the unrecognized tax benefits would ultimately benefit our effective tax rate. It is reasonably possible that the total amount of unrecognized tax benefits could significantly change in the next 12 months. F-23 Table of Contents We recognize interest and penalties related to unrecognized tax benefits in our provision for income taxes. We recognized benefits of $ 1.4 million and $ 1.0 million and expense of $ 1.7 million for interest and penalties related to unrecognized tax benefits in our Consolidated Statements of Operations for the years ended August 31, 2021, 2020 and 2019, respectively, and a related $ 2.5 million, $ 1.0 million and $ 2.9 million interest payable on our Consolidated Balance Sheets as of August 31, 2021, 2020 and 2019, respectively. Note 12 Equities Patronage and Equity Redemptions In accordance with our bylaws and by action of the Board of Directors, annual net earnings from patronage sources are distributed to consenting patrons following the close of each fiscal year and are based on amounts using financial statement earnings. The cash portion of the qualified patronage distribution, if any, is determined annually by the Board of Directors, with the balance issued in the form of qualified and/or nonqualified capital equity certificates. Total patronage distributions for fiscal 2021 are estimated to be $ 280.3 million, with the qualified cash portion estimated to be $ 50.0 million and nonqualified equity distributions of $ 230.3 million. No portion of annual net earnings for fiscal 2021 will be issued in the form of qualified capital equity certificates. The following table presents estimated patronage distributions for the year ending August 31, 2022, and actual patronage distributions for the years ended August 31, 2021, 2020 and 2019: 2022 2021 2020 2019 (Dollars in millions) Patronage distributed in cash $ 50.0 $ 30.0 $ 90.1 $ 75.8 Patronage distributed in equity 230.3 214.8 474.4 353.0 Total patronage distributed $ 280.3 $ 244.8 $ 564.5 $ 428.8 Annual net earnings from patronage or other sources may be added to the unallocated capital reserve or, upon action by the Board of Directors, may be allocated to members in the form of nonpatronage equity certificates. The Board of Directors authorized, in accordance with our bylaws, that 10 % of the earnings from patronage business for fiscal 2021, 2020 and 2019 be added to our capital reserves. Redemptions of outstanding equity are at the discretion of the Board of Directors. Redemptions of capital equity certificates approved by the Board of Directors are divided into two pools, one for nonindividuals (primarily member cooperatives) who may participate in an annual redemption program for qualified equities held by them and another for individual members who are eligible for equity redemptions at age 70 or upon death. The CHS redemption policy includes a redemption program for individuals similar to the one that is available to nonindividual members, subject to Board of Directors overall discretion whether to redeem outstanding equity. In accordance with authorization from the Board of Directors, we expect total redemptions related to the year ended August 31, 2021, which will be distributed in fiscal 2022, to be approximately $ 100.0 million. This amount is classified as a current liability on our August 31, 2021, Consolidated Balance Sheet. During the years ended August 31, 2021, 2020 and 2019, we redeemed in cash, outstanding owners' equities in accordance with authorization from the Board of Directors, in the amounts of $ 79.4 million, $ 96.4 million and $ 85.5 million, respectively. F-24 Table of Contents Preferred Stock The following is a summary of our outstanding preferred stock as of August 31, 2021, all shares of which are listed and traded on The Nasdaq: Nasdaq Symbol Issuance Date Shares Outstanding Redemption Value Net Proceeds (a) Dividend Rate (b) (c) Dividend Payment Frequency Redeemable Beginning (d) (Dollars in millions) 8% Cumulative Redeemable CHSCP (e) 12,272,003 $ 306.8 $ 311.2 8.00 % Quarterly 7/18/2023 Class B Cumulative Redeemable, Series 1 CHSCO (f) 21,459,066 536.5 569.3 7.875 % Quarterly 9/26/2023 Class B Reset Rate Cumulative Redeemable, Series 2 CHSCN 3/11/2014 16,800,000 420.0 406.2 7.10 % Quarterly 3/31/2024 Class B Reset Rate Cumulative Redeemable, Series 3 CHSCM 9/15/2014 19,700,000 492.5 476.7 6.75 % Quarterly 9/30/2024 Class B Cumulative Redeemable, Series 4 CHSCL 1/21/2015 20,700,000 517.5 501.0 7.50 % Quarterly 1/21/2025 (a) Includes patrons' equities redeemed with preferred stock. (b) The Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2 accumulates dividends at a rate of 7.10 % per year until March 31, 2024, and then at a rate equal to the three-month LIBOR plus 4.298 %, not to exceed 8.00 % per annum, subsequent to March 31, 2024. (c) The Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3 accumulates dividends at a rate of 6.75 % per year until September 30, 2024, and then at a rate equal to the three-month LIBOR plus 4.155 %, not to exceed 8.00 % per annum, subsequent to September 30, 2024. (d) Preferred stock is redeemable for cash at our option, in whole or in part, at a per share price equal to the per share liquidation preference of $ 25.00 per share, plus all dividends accumulated and unpaid on that share to and including the date of redemption, beginning on the dates set forth in this column. (e) The 8% Cumulative Redeemable Preferred Stock was issued at various times from 2003 through 2010. (f) Shares of Class B Cumulative Redeemable Preferred Stock, Series 1 were issued on September 26, 2013; August 25, 2014; March 31, 2016; and March 30, 2017. Preferred Stock Dividends We made dividend payments on our preferred stock of $ 168.7 million during each of the years ended August 31, 2021, 2020 and 2019. As of August 31, 2021, the Board of Directors had not authorized the issuance of any preferred shares that were not outstanding. The following is a summary of dividends per share by series of preferred stock for the years ended August 31, 2021 and 2020: Years Ended August 31, Nasdaq Symbol 2021 2020 (Dollars per share) 8% Cumulative Redeemable CHSCP $ 2.00 $ 2.00 Class B Cumulative Redeemable, Series 1 CHSCO 1.97 1.97 Class B Reset Rate Cumulative Redeemable, Series 2 CHSCN 1.78 1.78 Class B Reset Rate Cumulative Redeemable, Series 3 CHSCM 1.69 1.69 Class B Cumulative Redeemable, Series 4 CHSCL 1.88 1.88 F-25 Table of Contents Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive income (loss) by component, for the years ended August 31, 2021, 2020 and 2019 are as follows: Pension and Other Postretirement Benefits Unrealized Net Gain (Loss) on Available for Sale Investments Cash Flow Hedges Foreign Currency Translation Adjustment Total (Dollars in thousands) Balance as of August 31, 2018, net of tax $ ( 140,335 ) $ 8,861 $ ( 5,882 ) $ ( 62,559 ) $ ( 199,915 ) Other comprehensive income (loss), before tax: Amounts before reclassifications ( 51,118 ) — 37,709 ( 9,990 ) ( 23,399 ) Amounts reclassified out 10,279 — ( 9,843 ) — 436 Total other comprehensive income (loss), before tax ( 40,839 ) — 27,866 ( 9,990 ) ( 22,963 ) Tax effect 8,280 — ( 7,670 ) 41 651 Other comprehensive income (loss), net of tax ( 32,559 ) — 20,196 ( 9,949 ) ( 22,312 ) Reclassifications 416 ( 8,861 ) 983 2,756 ( 4,706 ) Balance as of August 31, 2019, net of tax ( 172,478 ) — 15,297 ( 69,752 ) ( 226,933 ) Other comprehensive income (loss), before tax: Amounts before reclassifications ( 4,751 ) — 16,430 ( 17,021 ) ( 5,342 ) Amounts reclassified out 19,908 — ( 22,291 ) — ( 2,383 ) Total other comprehensive income (loss), before tax 15,157 — ( 5,861 ) ( 17,021 ) ( 7,725 ) Tax effect ( 2,359 ) — 1,450 1,643 734 Other comprehensive income (loss), net of tax 12,798 — ( 4,411 ) ( 15,378 ) ( 6,991 ) Balance as of August 31, 2020, net of tax ( 159,680 ) — 10,886 ( 85,130 ) ( 233,924 ) Other comprehensive income (loss), before tax: Amounts before reclassifications 4,048 — 11,700 5,573 21,321 Amounts reclassified out 20,256 — ( 19,753 ) — 503 Total other comprehensive income (loss), before tax 24,304 — ( 8,053 ) 5,573 21,824 Tax effect ( 6,009 ) — 1,991 ( 273 ) ( 4,291 ) Other comprehensive income (loss), net of tax 18,295 — ( 6,062 ) 5,300 17,533 Balance as of August 31, 2021, net of tax $ ( 141,385 ) $ — $ 4,824 $ ( 79,830 ) $ ( 216,391 ) Amounts reclassified from accumulated other comprehensive income (loss) were related to pension and other postretirement benefits, cash flow hedges, available-for-sale investments and foreign currency translation adjustments. Pension and other postretirement reclassifications include amortization of net actuarial loss, prior service credit and transition amounts and are recorded as cost of goods sold and marketing, general and administrative expenses (see Note 13, Benefit Plans , for further information). Gains or losses on the sale of available-for-sale investments and foreign currency translation reclassifications related to sales of businesses are recorded in other income. As described in Note 15, Derivative Financial Instruments and Hedging Activities , amounts reclassified from accumulated other comprehensive loss for cash flow hedges are recorded in cost of goods sold. Note 13 Benefit Plans We have various pension and other defined benefits as well as defined contribution plans in which substantially all employees may participate. We also have nonqualified supplemental executive and Board retirement plans. We provide defined life insurance and health care benefits for certain retired employees and Board of Directors participants. The plan is contributory based on years of service and family status, with retiree contributions adjusted annually. F-26 Table of Contents Financial information on changes in projected benefit obligation, plan assets funded and balance sheet status as of August 31, 2021 and 2020, is as follows: Qualified Pension Benefits Nonqualified Pension Benefits Other Benefits 2021 2020 2021 2020 2021 2020 (Dollars in thousands) Change in benefit obligation: Projected benefit obligation at beginning of period $ 918,002 $ 876,696 $ 19,183 $ 19,047 $ 30,316 $ 31,098 Service cost 45,229 42,151 433 405 1,186 1,050 Interest cost 16,563 21,722 273 429 493 747 Actuarial loss (gain) 34,958 6,265 2,034 1,382 ( 765 ) ( 2,286 ) Assumption change ( 12,847 ) 40,694 ( 55 ) 775 ( 398 ) 1,275 Plan amendments 113 — — — — — Settlements — — — ( 2,130 ) — — Benefits paid ( 76,779 ) ( 69,526 ) ( 1,264 ) ( 725 ) ( 1,763 ) ( 1,568 ) Projected benefit obligation at end of period $ 925,239 $ 918,002 $ 20,604 $ 19,183 $ 29,069 $ 30,316 Change in plan assets: Fair value of plan assets at beginning of period $ 976,542 $ 909,427 $ — $ — $ — $ — Actual gain on plan assets 70,161 90,241 — — — — Company contributions 23,200 46,400 1,264 2,855 1,763 1,568 Settlements — — — ( 2,130 ) — — Benefits paid ( 76,779 ) ( 69,526 ) ( 1,264 ) ( 725 ) ( 1,763 ) ( 1,568 ) Fair value of plan assets at end of period $ 993,124 $ 976,542 $ — $ — $ — $ — Funded status at end of period $ 67,885 $ 58,540 $ ( 20,604 ) $ ( 19,183 ) $ ( 29,069 ) $ ( 30,316 ) Amounts recognized on balance sheet: Noncurrent assets $ 67,885 $ 58,540 $ — $ — $ — $ — Accrued benefit cost: Current liabilities — — ( 2,220 ) ( 1,660 ) ( 1,970 ) ( 2,090 ) Noncurrent liabilities — — ( 18,384 ) ( 17,523 ) ( 27,099 ) ( 28,226 ) Ending balance $ 67,885 $ 58,540 $ ( 20,604 ) $ ( 19,183 ) $ ( 29,069 ) $ ( 30,316 ) Amounts recognized in accumulated other comprehensive loss (pretax): Prior service cost (credit) $ 873 $ 938 $ ( 388 ) $ ( 502 ) $ ( 2,270 ) $ ( 2,715 ) Net loss (gain) 199,785 225,983 5,579 3,813 ( 14,862 ) ( 15,064 ) Ending balance $ 200,658 $ 226,921 $ 5,191 $ 3,311 $ ( 17,132 ) $ ( 17,779 ) The accumulated benefit obligation of the qualified pension plans was $ 877.9 million and $ 871.6 million at August 31, 2021 and 2020, respectively. The accumulated benefit obligation of the nonqualified pension plans was $ 20.5 million and $ 18.2 million at August 31, 2021 and 2020, respectively. Information for the pension plans with an accumulated benefit obligation in excess of plan assets is set forth below: Years Ended August 31, 2021 2020 (Dollars in thousands) Projected benefit obligation $ 20,604 $ 19,183 Accumulated benefit obligation 20,513 18,172 F-27 Table of Contents Components of net periodic benefit costs for the years ended August 31, 2021, 2020 and 2019, are as follows: Qualified Pension Benefits Nonqualified Pension Benefits Other Benefits 2021 2020 2019 2021 2020 2019 2021 2020 2019 (Dollars in thousands) Components of net periodic benefit costs: Service cost $ 45,229 $ 42,151 $ 38,592 $ 433 $ 405 $ 311 $ 1,186 $ 1,050 $ 1,053 Interest cost 16,563 21,722 28,396 273 429 747 493 747 1,094 Expected return on assets ( 43,641 ) ( 46,684 ) ( 44,968 ) — — — — — — Settlement of retiree obligations — — 51 — — 191 — — — Prior service cost (credit) amortization 178 178 190 ( 114 ) ( 114 ) ( 75 ) ( 445 ) ( 445 ) ( 556 ) Actuarial loss (gain) amortization 21,790 21,583 12,348 212 98 2 ( 1,365 ) ( 1,392 ) ( 1,627 ) Net periodic benefit cost (benefit) $ 40,119 $ 38,950 $ 34,609 $ 804 $ 818 $ 1,176 $ ( 131 ) $ ( 40 ) $ ( 36 ) Plan assumptions for the years ended August 31, 2021, 2020 and 2019, are as follows: Qualified Pension Benefits Nonqualified Pension Benefits Other Benefits 2021 2020 2019 2021 2020 2019 2021 2020 2019 Weighted-average assumptions to determine the net periodic benefit cost: Interest credit rate for cash balance plans 4.65 % 4.65 % 4.65 % 4.65 % 4.65 % 4.65 % N/A N/A N/A Discount rate 2.65 % 3.06 % 4.23 % 2.07 % 2.70 % 4.09 % 2.43 % 2.89 % 4.08 % Expected return on plan assets 4.90 % 5.50 % 5.50 % N/A N/A N/A N/A N/A N/A Rate of compensation increase 4.99 % 5.28 % 5.14 % 4.99 % 5.28 % 5.14 % N/A N/A N/A Weighted-average assumptions to determine the benefit obligations: Discount rate 2.78 % 2.67 % 3.06 % 2.08 % 2.15 % 2.70 % 2.57 % 2.43 % 2.89 % Rate of compensation increase 4.79 % 4.99 % 5.28 % 4.79 % 4.99 % 5.28 % N/A N/A N/A Components of net periodic benefit costs and amounts recognized in other comprehensive loss (income) for the years ended August 31, 2021, 2020 and 2019, are as follows: Qualified Pension Benefits Nonqualified Pension Benefits Other Benefits 2021 2020 2019 2021 2020 2019 2021 2020 2019 (Dollars in thousands) Other comprehensive loss (income): Prior service cost $ 113 $ — $ 18 $ — $ — $ — $ — $ — $ — Net actuarial loss (gain) ( 4,408 ) 3,401 47,556 1,978 2,157 1,917 ( 1,163 ) ( 1,011 ) 801 Amortization of actuarial (gain) loss ( 21,790 ) ( 21,583 ) ( 12,307 ) ( 212 ) ( 98 ) ( 2 ) 1,365 1,392 1,627 Amortization of prior service (credit) costs ( 178 ) ( 178 ) ( 190 ) 114 114 75 445 445 556 Settlement of retiree obligations (a) — — — — ( 397 ) ( 191 ) — — — Total recognized in other comprehensive loss (income) $ ( 26,263 ) $ ( 18,360 ) $ 35,077 $ 1,880 $ 1,776 $ 1,799 $ 647 $ 826 $ 2,984 (a) Reflects amounts reclassified from accumulated other comprehensive loss (income) to net earnings . E stimated amortization in fiscal 2022 from accumulated other comprehensive loss into net periodic benefit cost is as follows: Qualified Pension Benefits Nonqualified Pension Benefits Other Benefits (Dollars in thousands) Amortization of prior service cost (credit) $ 178 $ ( 114 ) $ ( 445 ) Amortization of actuarial loss (gain) 23,343 478 ( 1,259 ) A significant assumption for pension costs and obligations is the discount rate. We utilize a full-yield curve approach by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant F-28 Table of Contents projected cash flows. The discount rate reflects the rate at which the associated benefits could be effectively settled as of the measurement date. In estimating this rate, we look at rates of return on fixed-income investments of similar duration to the liabilities in the plans that receive high investment-grade ratings by recognized ratings agencies. For measurement purposes, a 6.8 % annual rate of increase in the per capita cost of covered health care benefits was assumed for the year ended August 31, 2021. The rate was assumed to decrease gradually to 4.5 % by 2028 and remain at that level thereafter. An annual analysis of the risk versus the return of the investment portfolio is conducted to justify the expected long-term rate of return assumption. We generally use long-term historical return information for the targeted asset mix identified in asset and liability studies. Adjustments are made to the expected long-term rate of return assumption when deemed necessary, based upon revised expectations of future investment performance of the overall investment markets. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in the assumed health care cost trend rates would have the following effects: 1% Increase 1% Decrease (Dollars in thousands) Effect on total of service and interest cost components $ 180 $ ( 150 ) Effect on postretirement benefit obligation 2,000 ( 1,700 ) Contributions depend primarily on market returns on the pension plan assets and minimum funding level requirements. During fiscal 2021, we made a discretionary contribution of $ 23.2 million to the pension plans. Based on the funded status of the qualified pension plans as of August 31, 2021, we do not currently believe we will be required to contribute to these plans in fiscal 2022, although we may voluntarily elect to do so. We expect to pay $ 4.2 million to participants of the nonqualified pension and postretirement benefit plans during fiscal 2022. Our retiree benefit payments, which reflect expected future service, are anticipated to be paid as follows: Qualified Pension Benefits Nonqualified Pension Benefits Other Benefits (Dollars in thousands) 2022 $ 70,100 $ 2,220 $ 1,970 2023 70,900 2,490 2,260 2024 70,300 2,210 2,340 2025 71,400 2,110 2,340 2026 73,900 2,100 2,290 2027-2031 342,700 7,930 8,920 We have trusts that hold the assets for the defined benefit plans. CHS has a qualified plan committee that sets investment guidelines with the assistance of external consultants. Investment objectives for the plans' assets are as follows: • Optimization of the long-term returns on plan assets at an acceptable level of risk; • Maintenance of broad diversification across asset classes and among investment managers; and • Focus on long-term return objectives. Asset allocation targets promote optimal expected return and volatility characteristics given the long-term time horizon for fulfilling the obligations of the pension plans. The investment portfolio contains a diversified portfolio of investment categories, including equities, fixed-income securities and real estate. Securities are also diversified in terms of domestic and international securities, short- and long-term securities, growth and value equities, large and small cap stocks, as well as active and passive management styles. Our pension plans' investment policy strategy is such that liabilities match assets. This is being accomplished through the asset portfolio mix by reducing volatility and de-risking the plans. The plans' target allocation percentages range between 45 % and 80 % for fixed income securities and range between 20 % and 55 % for equity securities. The qualified plan committee believes that with prudent risk tolerance and asset diversification, the plans should be able to meet pension obligations in the future. F-29 Table of Contents Our pension plans' recurring fair value measurements by asset category at August 31, 2021 and 2020, are presented in the tables below: 2021 Level 1 Level 2 Level 3 Total (Dollars in thousands) Cash and cash equivalents $ 11,383 $ — $ — $ 11,383 Equities: Common/collective trust at net asset value (1) — — — 180,766 Fixed income securities: Common/collective trust at net asset value (1) — — — 707,831 Partnership and joint venture interests measured at net asset value (1) — — — 93,144 Total $ 11,383 $ — $ — $ 993,124 2020 Level 1 Level 2 Level 3 Total (Dollars in thousands) Cash and cash equivalents $ 57,801 $ — $ — $ 57,801 Equities: Common/collective trust at net asset value (1) — — — 219,050 Fixed income securities: Common/collective trust at net asset value (1) — — — 603,250 Partnership and joint venture interests measured at net asset value (1) — — — 94,400 Other assets measured at net asset value (1) — — — 2,041 Total $ 57,801 $ — $ — $ 976,542 (1) In accordance with ASC Topic 820-10, Fair Value Measurement, certain assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in the tables above are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the "Financial information on changes in projected benefit obligation, plan assets funded and balance sheet status" table above. Definitions for valuation levels are found in Note 16, Fair Value Measurements . We use the following valuation methodologies for assets measured at fair value. Common/collective trusts. Common/collective trusts primarily consist of equity and fixed income funds and are valued using other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risks, referenced indices, quoted prices in inactive markets, adjusted quoted prices in active markets, adjusted quoted prices on foreign equity securities that were adjusted in accordance with pricing procedures approved by the trust, etc.). Common/collective trust investments can be redeemed daily and without restriction. Redemption of the entire investment balance generally requires a 45- to 60-day notice period. The equity funds provide exposure to large, mid and small cap U.S. equities, international large and small cap equities and emerging market equities. The fixed income funds provide exposure to U.S., international and emerging market debt securities. Partnership and joint venture interests. Valued at the net asset value of shares held by the plan at year-end as a practical expedient for fair value. The net asset value is based on the fair value of the underlying assets owned by the trust, minus its liabilities, then divided by the number of units outstanding. Redemptions of these interests generally require a 45- to 60-day notice. Other assets. Other assets primarily include real estate funds and hedge funds held in the asset portfolio of our U.S. defined benefit pension plans. F-30 Table of Contents We are one of approximately 400 employers that contribute to the Co-op Retirement Plan ("Co-op Plan"), which is a defined benefit plan constituting a "multiple employer plan" under the Internal Revenue Code of 1986, as amended, and a "multiemployer plan" under the accounting standards. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects: • Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; • If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and • If we choose to stop participating in the multiemployer plan, we may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. The withdrawal liability associated with the multiemployer plan was approximately $ 32.0 million as of August 31, 2021. Our participation in the Co-op Plan for the years ended August 31, 2021, 2020 and 2019, is outlined in the table below: Contributions of CHS (Dollars in thousands) Plan Name EIN/Plan Number 2021 2020 2019 Surcharge Imposed Expiration Date of Collective Bargaining Agreement Co-op Retirement Plan 01-0689331 / 001 $ 1,172 $ 1,455 $ 1,712 N/A N/A Our contributions for the years stated above did not represent more than 5 % of total contributions to the Co-op Plan as indicated in the Co-op Plan's most recently available annual report (Form 5500). Provisions of the Pension Protection Act of 2006 ("PPA") do not apply to the Co-op Plan because there is a special exemption for cooperative plans if the plan is maintained by more than one employer and at least 85 % of the employers are rural cooperatives or cooperative organizations owned by agricultural producers. In the Co-op Plan, a "zone status" determination is not required, and therefore not determined. In addition, the accumulated benefit obligations and plan assets are not determined or allocated separately by individual employers. The most recent financial statements available in 2021 and 2020 are for the Co-op Plan's year-end at March 31, 2021 and 2020, respectively. In total, the Co-op Plan was at least 80 % funded on those dates based on the total plan assets and accumulated benefit obligations. Because the provisions of the PPA do not apply to the Co-op Plan, funding improvement plans and surcharges are not applicable. Future contribution requirements are determined each year as part of the actuarial valuation of the plan and may change as a result of plan experience. In addition to the contributions to the Co-op Plan listed above, total contributions to individually insignificant multi-employer pension plans were immaterial in fiscal 2021, 2020 and 2019. We have other contributory defined contribution plans covering substantially all employees. Total contributions by us to these plans were $ 30.1 million, $ 34.5 million and $ 31.0 million, for the years ended August 31, 2021, 2020 and 2019, respectively. Note 14 Segment Reporting We are an integrated agricultural cooperative, providing grain, foods and energy resources to businesses and consumers on a global basis. We provide a wide variety of products and services, from initial agricultural inputs such as fuels, farm supplies, crop nutrients and crop protection products, to agricultural outputs that include grains and oilseeds, processed grains and oilseeds, renewable fuels and food products. We define our operating segments in accordance with ASC Topic 280, Segment Reporting , to reflect the manner in which our chief operating decision maker, our Chief Executive Officer, evaluates performance and allocates resources in managing the business. We have aggregated those operating segments into four reportable segments: Energy, Ag, Nitrogen Production and Foods. Our Energy segment produces and provides primarily for the wholesale distribution of petroleum products and transportation of those products. Our Ag segment purchases and further processes or resells grains and oilseeds originated by our country operations business, by our member cooperatives and by third parties; serves as a wholesaler and retailer of crop inputs; and produces and markets ethanol. Our Nitrogen Production segment consists of our equity method investment in CF F-31 Table of Contents Nitrogen and allocated expenses, which entitles us, pursuant to a supply agreement that we entered with CF Nitrogen, to purchase up to a specified quantity of granular urea and UAN annually from CF Nitrogen. Our Foods segment consists of our equity method investment in Ventura Foods and allocated expenses. Prior to August 31, 2021, Ventura Foods was reported as a component of Corporate and Other. Reported segment results and balances prior to August 31, 2021, have been recast to reflect the addition of the Foods segment. There were no changes to the composition of our Energy, Ag or Nitrogen Production segments as a result of the addition of the Foods segment. Corporate and Other represents our financing and hedging businesses, which primarily consists of a U.S. Commodity Futures Trading Commission-regulated futures commission merchant ("FCM") for commodities hedging and financial services related to crop production. Our nonconsolidated investment in Ardent Mills is also included in our Corporate and Other category. Corporate administrative expenses and interest are allocated to each reportable segment, along with Corporate and Other, based on direct use for services, such as information technology and legal, and other factors or considerations relevant to the costs incurred. Many of our business activities are highly seasonal and our operating results vary throughout the year. For example, in our Ag segment, our country operations business generally experiences higher volumes and revenues during the fall harvest and spring planting seasons, which generally correspond to our first and third fiscal quarters, respectively. Additionally, our agronomy business generally experiences higher volumes and revenues during the spring planting season. Our global grain and processing operations are subject to fluctuations in volume and revenues based on producer harvests, world grain prices, demand and international trade relationships. Our Energy segment generally experiences higher volumes and revenues in certain operating areas, such as refined products, in the spring, summer and early fall when gasoline and diesel fuel use by agricultural producers is highest and is subject to global supply and demand forces. Other energy products, such as propane, generally experience higher volumes and revenues during the winter heating and fall crop-drying seasons. Our revenues, assets and cash flows can be significantly affected by global market prices for commodities such as petroleum products, natural gas, grains, oilseeds, crop nutrients and flour. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including the weather, crop damage due to plant disease or insects, drought, availability and adequacy of supply, availability of a reliable rail and river transportation networks, outbreaks of disease, government regulations and policies, global trade disputes, and general political and economic conditions. While our revenues and operating results are derived primarily from businesses and operations that are wholly-owned or subsidiaries and limited liability companies in which we have a controlling interest, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less or do not control the operations. We account for these investments primarily using the equity method of accounting, wherein we record our proportionate share of income or loss reported by the entity as equity income from investments, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. In our Nitrogen Production segment, this consists of our approximate 10 % membership interest (based on product tons) in CF Nitrogen. In our Foods segment, this consists of our 50 % ownership in Ventura Foods. In Corporate and Other, this principally includes our 12 % ownership in Ardent Mills. See Note 6, Investments , for more information related to CF Nitrogen, Ventura Foods and Ardent Mills. Reconciling amounts represent the elimination of revenues between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of the individual business segments. F-32 Table of Contents Segment information for the years ended August 31, 2021, 2020 and 2019, is presented in the tables below. Energy Ag Nitrogen Production Foods Corporate and Other Reconciling Amounts Total Year ended August 31, 2021 (Dollars in thousands) Revenues, including intersegment revenues $ 6,812,478 $ 32,058,064 $ — $ — $ 46,476 $ ( 468,985 ) $ 38,448,033 Intersegment revenues ( 437,217 ) ( 22,722 ) — — ( 9,046 ) 468,985 — Revenues, net of intersegment revenues $ 6,375,261 $ 32,035,342 $ — $ — $ 37,430 $ — $ 38,448,033 Operating earnings (loss) ( 15,775 ) 265,362 ( 35,432 ) ( 10,617 ) 2,259 205,797 Interest expense 1,113 65,099 44,461 — 1,804 ( 7,912 ) 104,565 Other income ( 2,819 ) ( 47,452 ) ( 2,489 ) — ( 14,711 ) 7,912 ( 59,559 ) Equity income from investments ( 3,473 ) ( 50,381 ) ( 198,439 ) ( 78,519 ) ( 23,717 ) ( 354,529 ) Income before income taxes $ ( 10,596 ) $ 298,096 $ 121,035 $ 67,902 $ 38,883 $ — $ 515,320 Capital expenditures 112,160 148,770 — — 56,864 — 317,794 Depreciation and amortization 245,273 182,210 — — 34,247 — 461,730 Total assets as of August 31, 2021 4,286,677 7,451,559 2,683,652 388,612 2,765,775 — 17,576,275 Energy Ag Nitrogen Production Foods Corporate and Other Reconciling Amounts Total Year ended August 31, 2020 (Dollars in thousands) Revenues, including intersegment revenues $ 5,820,154 $ 22,940,712 $ — $ — $ 55,567 $ ( 410,068 ) $ 28,406,365 Intersegment revenues ( 389,020 ) ( 14,613 ) — — ( 6,435 ) 410,068 — Revenues, net of intersegment revenues $ 5,431,134 $ 22,926,099 $ — $ — $ 49,132 $ — $ 28,406,365 Operating earnings (loss) 219,861 82,543 ( 33,497 ) ( 9,847 ) 18,205 — 277,265 Interest expense 308 71,682 45,255 — 11,806 ( 12,074 ) 116,977 Other income ( 3,005 ) ( 35,560 ) ( 2,635 ) — ( 10,749 ) 12,074 ( 39,875 ) Equity income from investments ( 2,759 ) ( 7,303 ) ( 127,954 ) ( 34,026 ) ( 14,673 ) — ( 186,715 ) Income before income taxes $ 225,317 $ 53,724 $ 51,837 $ 24,179 $ 31,821 $ — $ 386,878 Capital expenditures 175,169 158,903 — — 84,287 — 418,359 Depreciation and amortization 245,983 196,510 — — 34,882 — 477,375 Total assets as of August 31, 2020 4,447,526 6,325,857 2,681,616 381,351 2,157,597 — 15,993,947 F-33 Table of Contents Energy Ag Nitrogen Production Foods Corporate and Other Reconciling Amounts Total Year ended August 31, 2019 (Dollars in thousands) Revenues, including intersegment revenues $ 7,581,450 $ 24,736,425 $ — $ — $ 68,710 $ ( 486,132 ) $ 31,900,453 Intersegment revenues ( 462,374 ) ( 16,353 ) — — ( 7,405 ) 486,132 — Revenues, net of intersegment revenues $ 7,119,076 $ 24,720,072 $ — $ — $ 61,305 $ — $ 31,900,453 Operating earnings (loss) 615,662 65,181 ( 35,046 ) ( 8,912 ) 22,717 — 659,602 Interest expense 5,719 101,386 55,226 — 11,684 ( 6,950 ) 167,065 Other income ( 5,548 ) ( 74,774 ) ( 2,769 ) — ( 10,168 ) 6,950 ( 86,309 ) Equity income from investments ( 2,697 ) ( 4,447 ) ( 160,373 ) ( 51,608 ) ( 17,630 ) — ( 236,755 ) Income before income taxes $ 618,188 $ 43,016 $ 72,870 $ 42,696 $ 38,831 $ — $ 815,601 Capital expenditures 268,877 110,197 — — 64,142 — 443,216 Depreciation and amortization 233,624 208,294 — — 31,293 — 473,211 We have international sales, which are predominantly in our Ag segment. The following table presents our sales, based on the geographic location of the subsidiary making the sale, for the years ended August 31, 2021, 2020 and 2019: 2021 2020 2019 (Dollars in thousands) North America (a) $ 36,540,178 $ 25,360,077 $ 27,896,269 South America 242,848 1,559,380 2,027,020 Europe, Middle East and Africa (EMEA) 955,605 774,068 895,472 Asia Pacific (APAC) 709,402 712,840 1,081,692 Total $ 38,448,033 $ 28,406,365 $ 31,900,453 (a) Revenues in North America are substantially all attributed to revenues from the United States. Long-lived assets include our property, plant and equipment, finance lease assets and capitalized major maintenance costs. The following table presents long-lived assets by geographical region based on physical location: 2021 2020 (Dollars in thousands) United States $ 4,944,574 $ 5,121,315 International 62,072 65,134 Total $ 5,006,646 $ 5,186,449 Note 15 Derivative Financial Instruments and Hedging Activities We enter into various derivative instruments to manage our exposure to movements primarily associated with agricultural and energy commodity prices and, to a lesser degree, foreign currency exchange rates and interest rates. Except for certain interest rate swaps and certain cash-settled swaps related to future crude oil purchases and refined product sales, which are accounted for as fair value hedges and cash flow hedges, respectively, our derivative instruments represent economic hedges of price risk for which hedge accounting under ASC Topic 815 is not applied. Rather, the derivative instruments are recorded on our Consolidated Balance Sheets at fair value with changes in fair value being recorded directly to earnings, primarily within cost of goods sold in our Consolidated Statements of Operations. See Note 16, Fair Value Measurements, for additional information. The majority of our exchange traded agricultural commodity futures are settled daily through CHS Hedging, LLC, our wholly-owned futures commission merchant. Derivatives Not Designated as Hedging Instruments The following tables present the gross fair values of derivative assets, derivative liabilities and margin deposits (cash collateral) recorded on our Consolidated Balance Sheets, along with related amounts permitted to be offset in accordance with U.S. GAAP. Although we have certain netting arrangements for our exchange-traded futures and options contracts and certain F-34 Table of Contents OTC contracts, we have elected to report our derivative instruments on a gross basis on our Consolidated Balance Sheets under ASC Topic 210-20, Balance Sheet - Offsetting . August 31, 2021 Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting Gross Amounts Recognized Cash Collateral Derivative Instruments Net Amounts (Dollars in thousands) Derivative Assets Commodity derivatives $ 532,832 $ — $ 4,174 $ 528,658 Foreign exchange derivatives 19,429 — 5,582 13,847 Embedded derivative asset 16,488 — — 16,488 Total $ 568,749 $ — $ 9,756 $ 558,993 Derivative Liabilities Commodity derivatives $ 444,861 $ 2,485 $ 4,174 $ 438,202 Foreign exchange derivatives 8,506 — 5,582 2,924 Total $ 453,367 $ 2,485 $ 9,756 $ 441,126 August 31, 2020 Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting Gross Amounts Recognized Cash Collateral Derivative Instruments Net Amounts (Dollars in thousands) Derivative Assets Commodity derivatives $ 327,493 $ — $ 2,980 $ 324,513 Foreign exchange derivatives 11,809 — 9,385 2,424 Embedded derivative asset 18,998 — — 18,998 Total $ 358,300 $ — $ 12,365 $ 345,935 Derivative Liabilities Commodity derivatives $ 343,343 $ 956 $ 5,578 $ 336,809 Foreign exchange derivatives 69,466 — 9,385 60,081 Total $ 412,809 $ 956 $ 14,963 $ 396,890 Derivative assets and liabilities with maturities of less than 12 months are recorded in other current assets and other current liabilities, respectively, on our Consolidated Balance Sheets. Derivative assets and liabilities with maturities greater than 12 months are recorded in other assets and other liabilities, respectively, on our Consolidated Balance Sheets. The amount of long-term derivative assets recorded on our Consolidated Balance Sheet at August 31, 2021 and 2020, was $ 21.6 million and $ 21.2 million, respectively. The amount of long-term derivative liabilities recorded on our Consolidated Balance Sheet at August 31, 2021 and 2020, was $ 4.8 million and $ 5.4 million, respectively. F-35 Table of Contents The majority of our derivative instruments have not been designated as hedging instruments. The following table sets forth the pretax gains (losses) on derivatives not accounted for as hedging instruments that have been included in our Consolidated Statements of Operations for the years ended August 31, 2021, 2020 and 2019: Derivative Type Location of Gain (Loss) 2021 2020 2019 (Dollars in thousands) Commodity derivatives Cost of goods sold $ ( 971,581 ) $ 89,248 $ 125,323 Foreign exchange derivatives Cost of goods sold 25,277 ( 184,692 ) 4,228 Foreign exchange derivatives Marketing, general and administrative expenses 1,105 ( 2,986 ) ( 1,229 ) Interest rate derivatives Interest expense — ( 1,226 ) — Embedded derivative Other income 2,489 2,634 2,769 Total $ ( 942,710 ) $ ( 97,022 ) $ 131,091 Commodity Contracts When we enter into a commodity purchase or sales commitment, we incur risks related to price changes and performance, including delivery, quality, quantity and shipment period. In the event that market prices decrease, we are exposed to risk of loss for the market value of inventory and purchase contracts with fixed- or partially fixed-prices. Conversely, we are exposed to risk of loss on our fixed- or partially fixed-price sales contracts in the event that market prices increase. Our use of hedging reduces exposure to price volatility by protecting against adverse short-term price movements but also limits the benefits of favorable short-term price movements. To reduce the price risk associated with fixed-price commitments, we generally enter into commodity derivative contracts, to the extent practical, to achieve a net commodity position within the formal position limits we have established and deemed prudent for each commodity. These contracts are primarily transacted through our FCM on regulated commodity futures exchanges, but may include over-the-counter derivative instruments when deemed appropriate. These contracts are recorded at fair values based on quotes listed on regulated commodity exchanges or the market prices of the underlying products listed on the exchanges, except that certain contracts are accounted for as normal purchase and normal sales transactions. For commodities where there is no liquid derivative contract, risk is managed through the use of forward sales contracts, other pricing arrangements and, to some extent, futures contracts in highly correlated commodities. These contracts are economic hedges of price risk, but are not designated as hedging instruments for accounting purposes. Unrealized gains and losses on these contracts are recognized in cost of goods sold in our Consolidated Statements of Operations. When a futures position is established, initial margin must be deposited with the applicable exchange or broker. The amount of margin required varies by commodity and is set by the applicable exchange at its sole discretion. If the market price relative to a short futures position increases, an additional margin deposit would be required. Similarly, a margin deposit would be required if the market price relative to a long futures position decreases. Conversely, if the market price increases relative to a long futures position or decreases relative to a short futures position, margin deposits may be returned by the applicable exchange or broker. Our policy is to manage our commodity price risk exposure according to internal policies and in alignment with our tolerance for risk. It is our policy that our profitability should come from operations, primarily derived from margins on products sold and grain merchandised, not from hedging transactions. At any one time, inventory and purchase contracts for delivery to us may be substantial. We have risk management policies and procedures that include established net physical position limits. These limits are defined for each commodity and business unit, and business units may include both trader and management limits as appropriate. The limits policy is overseen at a high level by our corporate compliance team, with day-to-day monitoring procedures being implemented within each individual business unit to ensure any limits overage is explained and exposures reduced, or a temporary limit increase is established if needed. The position limits are reviewed at least annually with our senior leadership and Board of Directors. We monitor current market conditions and may expand or reduce our net position limits or procedures in response to changes in those conditions. The use of hedging instruments does not protect against nonperformance by counterparties to cash contracts. We evaluate counterparty exposure by reviewing contracts and adjusting the values to reflect potential nonperformance. Risk of nonperformance by counterparties includes the inability to perform because of a counterparty's financial condition and the risk that the counterparty will refuse to perform on a contract during periods of price fluctuations where contract prices are significantly different than the current market prices. We manage these risks by entering into fixed-price purchase and sales contracts with preapproved producers and by establishing appropriate limits for individual suppliers. Fixed-price contracts are F-36 Table of Contents entered into with customers of acceptable creditworthiness, as internally evaluated. Regarding our use of derivatives, we transact in exchange traded instruments or enter into over-the-counter derivatives that primarily clear through our FCM, which limits our counterparty exposure relative to hedging activities. Historically, we have not experienced significant events of nonperformance on open contracts. Accordingly, we only adjust the estimated fair values of specifically identified contracts for nonperformance. Although we have established policies and procedures, we make no assurances that historical nonperformance experience will carry forward to future periods. As of August 31, 2021 and 2020, we had outstanding commodity futures and options contracts that were used as economic hedges, as well as fixed-price forward contracts related to physical purchases and sales of commodities. The table below presents the notional volumes for all outstanding commodity contracts: 2021 2020 Derivative Type Long Short Long Short (Units in thousands) Grain and oilseed (bushels) 666,726 851,582 664,673 892,303 Energy products (barrels) 9,881 7,656 10,028 6,570 Processed grain and oilseed (tons) 559 3,418 657 3,304 Crop nutrients (tons) 66 12 74 127 Ocean freight (metric tons) 210 — 1,140 95 Foreign Exchange Contracts We conduct a substantial portion of our business in U.S. dollars, but we are exposed to risks relating to foreign currency fluctuations primarily due to global grain marketing transactions in South America, the Asia Pacific region and Europe, and purchases of products from Canada. We use foreign currency derivative instruments to mitigate the impact of exchange rate fluctuations. Although CHS has some risk exposure relating to foreign currency transactions, a larger impact with exchange rate fluctuations is the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of U.S. agricultural products compared to the same products offered by alternative sources of world supply. The notional amount of our foreign exchange derivative contracts was $ 1.2 billion as of both August 31, 2021 and 2020. Embedded Derivative Asset Under the terms of our strategic investment in CF Nitrogen, if the CF Industries credit rating is reduced below certain levels by two of three specified credit ratings agencies, we are entitled to receive a nonrefundable annual payment of $ 5.0 million from CF Industries. These payments will continue on an annual basis until the date the CF Industries credit rating is upgraded to or above certain levels by two of the three specified credit ratings agencies or February 1, 2026, whichever is earlier. During fiscal 2021, fiscal 2020 and fiscal 2019, the CF Industries credit rating was below the specified levels and we received an annual payment of $ 5.0 million from CF Industries. Gains totaling $ 2.5 million, $ 2.6 million and $ 2.8 million were recognized in other income in our Consolidated Statements of Operations during fiscal 2021, fiscal 2020 and fiscal 2019, respectively. The fair value of the embedded derivative asset recorded on our Consolidated Balance Sheet as of August 31, 2021, was equal to $ 16.5 million. The current and long-term portions of the embedded derivative asset are included in other current assets and other assets on our Consolidated Balance Sheet, respectively. See Note 16, Fair Value Measurements , for additional information regarding the valuation of the embedded derivative asset. Derivatives Designated as Cash Flow or Fair Value Hedging Strategies Fair Value Hedges During the year ended August 31, 2020, we exited all our interest rate swaps resulting in a $ 16.4 million gain, which is being amortized over the life of the fixed-rate debt for which the swaps had previously been designated as fair value hedges, through fiscal 2025. Our objective in entering into these transactions was to offset changes in the fair value of the debt associated with the risk of variability in the three-month U.S. dollar LIBOR interest rate, in essence converting the fixed-rate debt to variable-rate debt. Under these interest rate swaps, we received fixed-rate interest payments and made interest payments based on the three-month LIBOR. Offsetting changes in the fair values of both the swap instruments and the hedged debt were recorded contemporaneously each period and only created an impact to earnings to the extent the hedge was ineffective. F-37 Table of Contents The following table sets forth the pretax gains (losses) on derivatives accounted for as hedging instruments that have been included in our Consolidated Statements of Operations for the years ended August 31, 2021, 2020 and 2019: Gain (Loss) on Fair Value Hedging Relationships Location of Gain (Loss) 2021 2020 2019 (Dollars in thousands) Interest rate swaps Interest expense $ — $ ( 1,897 ) $ 21,158 Hedged item Interest expense — 1,897 ( 21,158 ) Total $ — $ — $ — Cash Flow Hedges Certain pay-fixed, receive-variable, cash-settled swaps are designated as cash flow hedges of future crude oil purchases in our Energy segment. We also designate certain pay-variable, receive-fixed, cash-settled swaps as cash flow hedges of future refined product sales. These hedging instruments and the related hedged items are exposed to significant market price risk and potential volatility. As part of our risk management strategy, we look to hedge a portion of our expected future crude oil needs and the resulting refined product output based on prevailing futures prices, management's expectations about future commodity price changes and our risk appetite. We may also elect to dedesignate certain derivative instruments previously designated as cash flow hedges as part of our risk management strategy. Amounts recorded in other comprehensive income for these dedesignated derivative instruments remain in other comprehensive income and are recognized in earnings in the period in which the underlying transactions affect earnings. As of August 31, 2021 and 2020, the aggregate notional amount of cash flow hedges was 2.7 million and 9.7 million barrels, respectively. The following table presents the fair value of our commodity derivative instruments designated as cash flow hedges and the line items on our Consolidated Balance Sheets in which they are recorded as of August 31, 2021 and 2020: Derivative Assets Derivative Liabilities Balance Sheet Location 2021 2020 Balance Sheet Location 2021 2020 (Dollars in thousands) (Dollars in thousands) Other current assets $ 11,874 $ 34,052 Other current liabilities $ 1,001 $ 8,821 The following table presents the pretax gains (losses) recorded in other comprehensive income relating to cash flow hedges for the years ended August 31, 2021, 2020 and 2019: 2021 2020 2019 (Dollars in thousands) Commodity derivatives $ ( 7,824 ) $ ( 2,596 ) $ 27,650 The following table presents the pretax gains relating to our existing cash flow hedges that were reclassified from accumulated other comprehensive loss into our Consolidated Statements of Operations for the years ended August 31, 2021, 2020 and 2019: Location of Gain (Loss) 2021 2020 2019 (Dollars in thousands) Commodity derivatives Cost of goods sold $ 21,262 $ 23,807 $ 11,497 Note 16 Fair Value Measurements ASC Topic 820, Fair Value Measurement, defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We determine fair values of derivative instruments and certain other assets, based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. ASC Topic 820 F-38 Table of Contents describes three levels within its hierarchy that may be used to measure fair value, and our assessment of relevant instruments within those levels is as follows: Level 1. Values are based on unadjusted quoted prices in active markets for identical assets or liabilities. These assets and liabilities may include exchange-traded derivative instruments, rabbi trust investments, deferred compensation investments and available-for-sale investments. Level 2. Values are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. These assets and liabilities include interest rate, foreign exchange and commodity swaps; forward commodity contracts with a fixed price component; and other OTC derivatives whose values are determined with inputs that are based on exchange traded prices, adjusted for location-specific inputs that are primarily observable in the market or can be derived principally from, or corroborated by, observable market data. Level 3. Values are generated from unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the assets or liabilities. These unobservable inputs would reflect our own estimates of assumptions that market participants would use in pricing related assets or liabilities. Valuation techniques might include the use of pricing models, discounted cash flow models or similar techniques. The following tables present assets and liabilities, included on our Consolidated Balance Sheets, that are recognized at fair value on a recurring basis and indicate the fair value hierarchy utilized to determine these fair values. Assets and liabilities are classified in their entirety based on the lowest level of input that is a significant component of the fair value measurement. The lowest level of input is considered Level 3. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy levels. Recurring fair value measurements at August 31, 2021 and 2020, are as follows: 2021 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (Dollars in thousands) Assets Commodity derivatives $ 2,453 $ 542,253 $ — $ 544,706 Foreign currency derivatives — 19,429 — 19,429 Deferred compensation assets 51,940 — — 51,940 Embedded derivative asset — 16,488 — 16,488 Segregated investments and marketable securities 99,837 — — 99,837 Other assets 6,052 — — 6,052 Total $ 160,282 $ 578,170 $ — $ 738,452 Liabilities Commodity derivatives $ 1,615 $ 444,247 $ — $ 445,862 Foreign currency derivatives — 8,506 — 8,506 Total $ 1,615 $ 452,753 $ — $ 454,368 F-39 Table of Contents 2020 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (Dollars in thousands) Assets Commodity derivatives $ 5,762 $ 355,783 $ — $ 361,545 Foreign currency derivatives — 11,523 — 11,523 Deferred compensation assets 47,669 — — 47,669 Embedded derivative asset — 18,998 — 18,998 Segregated investments and marketable securities 85,950 — — 85,950 Other assets 5,276 — — 5,276 Total $ 144,657 $ 386,304 $ — $ 530,961 Liabilities Commodity derivatives $ 6,037 $ 346,126 $ — $ 352,163 Foreign currency derivatives — 69,467 — 69,467 Total $ 6,037 $ 415,593 $ — $ 421,630 Commodity and foreign currency derivatives. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified within Level 1. Our forward commodity purchase and sales contracts with fixed-price components, select ocean freight contracts and other OTC derivatives are determined using inputs that are generally based on exchange traded prices and/or recent market bids and offers, including location-specific adjustments, and are classified within Level 2. Location-specific inputs are driven by local market supply and demand and are generally based on broker or dealer quotations or market transactions in either listed or OTC markets. Changes in the fair values of these contracts are recognized in our Consolidated Statements of Operations as a component of cost of goods sold. Deferred compensation and other assets. Our deferred compensation investments consist primarily of rabbi trust assets that are valued based on unadjusted quoted prices on active exchanges and classified within Level 1. Changes in the fair values of these other assets are primarily recognized in our Consolidated Statements of Operations as a component of marketing, general and administrative expenses. Embedded derivative asset. The embedded derivative asset relates to contingent payments inherent to our investment in CF Nitrogen. The inputs used in the fair value measurement include the probability of future upgrades and downgrades of the CF Industries credit rating based on historical credit rating movements of other public companies and the discount rates applied to potential annual payments based on applicable historical and current yield coupon rates. Based on these observable inputs, our fair value measurement is classified within Level 2. See Note 15, Derivative Financial Instruments and Hedging Activities , for additional information. Segregated investments and marketable securities. Our segregated investments and marketable securities are comprised of investments in various government agencies and U.S. Treasury securities, which are valued using quoted market prices and classified within Level 1. Note 17 Commitments and Contingencies Environmental We are required to comply with various environmental laws and regulations incidental to our normal business operations. To meet our compliance requirements, we establish reserves for future costs of remediation associated with identified issues that are both probable and can be reasonably estimated. Estimates of environmental costs are based on current available facts, existing technology, undiscounted site-specific costs and currently enacted laws and regulations and are included in cost of goods sold and marketing, general and administrative expenses in our Consolidated Statements of Operations. Recoveries, if any, are recorded in the period in which recovery is received. Liabilities are monitored and adjusted as new facts or changes in law or technology occur. The resolution of any such matters may affect consolidated net income for F-40 Table of Contents any fiscal period; however, we currently believe any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial position, results of operations or cash flows during any fiscal year. Other Litigation and Claims We are involved as a defendant in various lawsuits, claims and disputes, which are in the normal course of our business. The resolution of any such matters may affect consolidated net income for any fiscal period; however, we currently believe any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial position, results of operations or cash flows during any fiscal year. Guarantees We are a guarantor for lines of credit and performance obligations of related, nonconsolidated companies. Our bank covenants allow maximum guarantees of $ 1.0 billion, of which $ 153.7 million were outstanding on August 31, 2021. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. The underlying loans to the counterparties for which we provide these guarantees are current as of August 31, 2021. Credit Commitments CHS Capital has commitments to extend credit to customers if there is no violation of any condition established in the contracts. As of August 31, 2021, CHS Capital customers have additional available credit of $ 706.9 million. Unconditional Purchase Obligations Unconditional purchase obligations are commitments to transfer funds in the future for fixed or minimum amounts or quantities of goods or services at fixed or minimum prices. Our long-term unconditional purchase obligations primarily relate to pipeline and grain handling take-or-pay and throughput agreements and are not recorded on our Consolidated Balance Sheets. As of August 31, 2021, minimum future payments required under long-term commitments that are noncancelable and that third parties have used to secure financing for facilities that will provide contracted goods, are as follows: Payments Due by Period Total 2022 2023 2024 2025 2026 Thereafter (Dollars in thousands) Long-term unconditional purchase obligations $ 537,047 $ 83,044 $ 65,918 $ 65,650 $ 60,115 $ 57,951 $ 204,369 Total payments under these arrangements were $ 81.0 million, $ 77.6 million and $ 70.8 million for the years ended August 31, 2021, 2020 and 2019, respectively. Note 18 Related Party Transactions We purchase and sell grain and other agricultural commodity products from certain equity investees , primarily CF Nitrogen, Ventura Foods, Ardent Mills and TEMCO. Sales to and purchases from related parties for the years ended August 31, 2021, 2020 and 2019, respectively, are as follows: 2021 2020 2019 (Dollars in thousands) Sales $ 2,744,482 $ 2,528,921 $ 2,628,670 Purchases 2,682,165 872,819 901,812 Receivables due from and payables due to related parties as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Due from related parties $ 40,485 $ 129,397 Due to related parties 90,986 53,602 F-41 Table of Contents As a cooperative, we are owned by farmers and ranchers and member cooperatives, which are referred to as members. We buy commodities from and provide products and services to our members. Individually, our members do not have a significant ownership in CHS. Note 19 Leases We assess arrangements at inception to determine whether they contain a lease. An arrangement is considered to contain a lease if it conveys the right to control the use of an asset for a period of time in exchange for consideration. The right to control the use of an asset must include both (a) the right to obtain substantially all economic benefits associated with an identified asset and (b) the right to direct how and for what purpose the identified asset is used. Certain service agreements may provide us with the right to use an identified asset; however, most of these arrangements are not considered to represent a lease as we do not control how and for what purpose the identified asset is used. We lease property, plant and equipment used in our operations primarily under operating lease agreements and, to a lesser extent, under finance lease agreements. Our leases are primarily for railcars, equipment, vehicles and office space, many of which contain renewal options and escalation clauses. Renewal options are included as part of the right of use asset and liability when it is reasonably certain that we will exercise the renewal option; however, renewal options are generally not included as we are not reasonably certain to exercise such options. After the adoption of ASC Topic 842, Leases , on September 1, 2019, right of use assets and liabilities for operating and finance leases are recognized at the lease commencement date for leases in excess of 12 months based on the present value of lease payments over the lease term. For measurement and classification of lease agreements, lease and nonlease components are grouped into a single lease component for all asset classes. Variable lease payments are excluded from measurement of right of use assets and liabilities and generally include payments for nonlease components such as maintenance costs, payments for leased assets beyond their noncancelable lease term and payments for other nonlease components such as sales tax. The discount rate used to calculate present value is our collateralized incremental borrowing rate or, if available, the rate implicit in the lease. The incremental borrowing rate is determined for each lease based primarily on its lease term. Certain lease arrangements include rental payments adjusted annually based on changes in an inflation index. Our lease arrangements generally do not contain residual value guarantees or material restrictive covenants. Lease expense is recognized on a straight-line basis over the lease term. The components of lease expense recognized in our Consolidated Statements of Operations as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Operating lease expense $ 73,489 $ 71,541 Finance lease expense: Amortization of assets 8,065 8,205 Interest on lease liabilities 938 1,060 Short-term lease expense 16,955 15,991 Variable lease expense 2,300 3,674 Total net lease expense* $ 101,747 $ 100,471 *Income related to sub-lease activity is not material and has been excluded from the table above. F-42 Table of Contents Supplemental balance sheet information related to operating and finance leases as of August 31, 2021 and 2020, are as follows: Balance Sheet Location 2021 2020 (Dollars in thousands) Operating leases Assets Operating lease right of use assets Other assets $ 253,451 $ 257,834 Liabilities Current operating lease liabilities Accrued expenses 56,424 57,200 Long-term operating lease liabilities Other liabilities 200,720 203,691 Total operating lease liabilities $ 257,144 $ 260,891 Finance leases Assets Finance lease assets Property, plant and equipment $ 48,625 $ 44,860 Liabilities Current finance lease liabilities Current portion of long-term debt 7,444 7,993 Long-term finance lease liabilities Long-term debt 28,590 23,467 Total finance lease liabilities $ 36,034 $ 31,460 Information related to the lease term and discount rate for operating and finance leases as of August 31, 2021 and 2020, are as follows: 2021 2020 Weighted average remaining lease term (in years) Operating leases 7.9 8.3 Finance leases 10.3 6.0 Weighted average discount rate Operating leases 3.01 % 3.11 % Finance leases 3.50 % 3.33 % Supplemental cash flow and other information related to operating and finance leases as of August 31, 2021 and 2020, are as follows: 2021 2020 (Dollars in thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 71,702 $ 71,003 Operating cash flows from finance leases 938 1,060 Financing cash flows from finance leases 8,235 7,949 Supplemental noncash information: Right of use assets obtained in exchange for lease liabilities 43,991 56,461 Right of use asset modifications 27,664 7,333 F-43 Table of Contents Maturities of lease liabilities by fiscal year as of August 31, 2021, were as follows: August 31, 2021 Finance Leases Operating Leases (Dollars in thousands) 2022 $ 8,517 $ 66,132 2023 6,979 52,874 2024 4,217 42,666 2025 2,797 31,782 2026 2,387 23,858 Thereafter 19,557 86,654 Total maturities of lease liabilities 44,454 303,966 Less amounts representing interest 8,420 46,822 Present value of future minimum lease payments 36,034 257,144 Less current obligations 7,444 56,424 Long-term obligations $ 28,590 $ 200,720 F-44