Exhibit 10.2

FEDERAL HOME LOAN BANK OF CINCINNATI

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Transitional Executive Long-Term Incentive Plan
Plan Document

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FEDERAL HOME LOAN BANK OF CINCINNATI

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Transitional Executive Long-Term Incentive Plan
TABLE OF CONTENTS
 
 
 
 
 
Page
1.0
Plan Objectives
1
2.0
Definitions
1
3.0
Eligibility
3
4.0
Target Award Opportunity
3
5.0
Performance Measures
3
6.0
Final Award Determination
4
7.0
Administrative Control
5
8.0
Miscellaneous Conditions
5
 
 
 
Appendix – 2012 – 2014 Performance Period
9
 
Performance Period
10
 
Target Award Opportunity
10
 
Initial Value of Performance Unit
10
 
Participants
10
 
Performance Measures & Final Value of Performance Unit
11
 
Detailed Goals & Performance Measures
11

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FEDERAL HOME LOAN BANK OF CINCINNATI

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Transitional Executive Long-Term Incentive Plan
PLAN DOCUMENT
Background
This Transitional Executive Long-Term Incentive Plan (LTIP) is intended to fill
the “gap” in long-term incentive payments created by the adoption of the
proposed Incentive Compensation Plan (ICP). Under the Deferred component of the
ICP, potential payouts would not commence until 2016, creating a gap in
long-term payments for Participants in the year 2015. In order to prevent this
unintended reduction in compensation due to changes in plan design, one more
“transitional” LTIP (2012-2014) will be in effect to close the gap under the
proposed ICP.

1.0
Plan Objectives

1.1
The purpose of the Federal Home Loan Bank of Cincinnati Executive Long-Term
Incentive Plan (the “Plan”) is to achieve five objectives:

1.1.1
Promote the achievement of the Bank's long-term profitability and business
goals;

1.1.2
Link executive compensation to specific long-term performance measures;

1.1.3
Provide a competitive reward structure for senior officers and other key
employees;

1.1.4
Provide a vehicle for closer Board involvement and communication with management
regarding the Bank’s long-term strategic plans; and

1.1.5
Promote loyalty and dedication to the Bank and its objectives.

1.2
The Plan is a cash-based, long-term incentive plan which establishes individual
Target Award Opportunities related to achievement of Bank performance over
certain three-year Performance Periods.

1.3
The Participants, the Target Award Opportunity, Performance Measures, value of a
Performance Unit at the beginning and end of a Performance Period, and other
relevant information are set forth in the attached Appendices.

2.0
Definitions

2.1
When used in this Plan, the words and phrases below shall have the following
meanings:

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2.1.1    Bank means the Federal Home Loan Bank of Cincinnati;
2.1.2
Target Award Opportunity means the award that may be earned during a Performance
Period for achieving target performance levels under each Performance Measure;

2.1.3    Board means the Bank's Board of Directors;
2.1.4
Disabled means a Participant who (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Bank.

2.1.5
Extraordinary Occurrences means those events that, in the opinion and discretion
of the Board, are outside the significant influence of the Participants or the
Bank and are likely to have a significant unanticipated effect, whether positive
or negative, on the Bank’s operating and/or financial results, including,
without limit, movement in interest rates, changes in financial strategies, or
policies or significant change in Bank membership.

2.1.6
Final Award means the amount ultimately paid to a Participant under the Plan for
a Performance Period.

2.1.7
Performance Measure means each performance factor that is taken into
consideration under the Plan in determining the value of the Final Award.

2.1.8
Participant means an employee who participates in the Plan pursuant to Section
3.1.

2.1.9
Performance Period means a certain three-year period over which Bank performance
is measured.

2.1.10
Performance Unit means a unit, the value of which shall be determined in
accordance with the applicable Appendix.

2.1.11
Personnel Committee or Committee means the Personnel Committee of the Board.

2.1.12    Plan means this Executive Long-Term Incentive Plan.
2.1.13
Plan Award means an amount that is provisionally determined at the end of the
Performance Period subject to adjustment as provided in Section 6.

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2.1.14    President means the President of the Bank.
3.0
Eligibility

3.1
A Bank employee who is nominated by the President and approved by the Board may
participate in the Plan.

3.2
Eligibility shall generally be limited to officers (i) whose functional
responsibilities encompass the establishment of strategic direction and tactical
action plans for the Bank, and (ii) who have received at least satisfactory
rankings on annual performance reviews over a Performance Period. Other
employees may also be eligible to participate as defined by competitive
compensation practices within the Bank's labor market.

3.3
Due to its unique role for the Bank and reporting relationship to the Board, the
Director of Internal Audit will not be included as an eligible position under
the Plan, but will be eligible for a similar plan administered by the Audit
Committee of the Board.

4.0
Target Award Opportunity

4.1
At the beginning of each Performance Period, the Bank will provide a Target
Award Opportunity to Participants. The Target Award Opportunity is equal to a
percentage of each Participant's annual base salary at the beginning of the
Performance Period as described in the applicable Appendix. Certain executive
positions have a greater and more direct impact than others on the annual
success of the Bank; therefore, these differences are recognized by varying
award opportunities for each Participant level.

4.2
Each Participant in a Performance Period shall be granted a number of
Performance Units for that Performance Period determined by dividing the Target
Award Opportunity by the value of a Performance Unit at the beginning of a
Performance Period as described in the applicable Appendix.

4.3
There will be four levels of award opportunities:

Level I:
President

Level II:
Executive Vice Presidents

Level III:
Senior Vice Presidents

Level IV:
Vice Presidents

5.0
Performance Measures

5.1
Three achievement levels will be established for each Performance Measure:

Threshold
The minimum achievement level accepted for the Performance Measure.

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Target
The planned achievement level for the Performance Measure.

Maximum
The achievement level for the Performance Measure that substantially exceeds the
planned level of achievement.

5.2
At the beginning of each Performance Period, Performance Measures for a
Performance Period and Performance Units and their initial values will be
established by the Personnel Committee with Board approval.

5.3
When establishing Performance Measures, the Threshold level should reflect a 90
percent success rate; the Target level should reflect a 75 to 80 percent success
rate; and the Maximum level should reflect a 10 to 15 percent success rate.

6.0
Final Award Determination

6.1
Plan Awards will be based on the achievement level for each of the three-year
Performance Measures. However, if the Bank fails to achieve the Threshold level
for a Performance Measure,no award will be payable for that specific Performance
Measure.

6.2
A Participant’s Plan Award for a Performance Period equals the number of his or
her Performance Units for that Performance Period multiplied by the value of a
Performance Unit at the end of the Performance Period as determined in
accordance with the applicable Appendix.

6.3
In the event that a Federal Housing Finance Agency (FHFA) examination assigned
to the Bank the lowest Composite Rating (as defined in the FHLBank Rating
System) indicating the Bank has been found to be operating in an unacceptable
manner, exhibits serious deficiencies in corporate governance, risk management
or financial condition and performance, or in substantial noncompliance with
laws, FHFA regulation or supervisory guidance in a Participant’s area of
responsibility, the Participant will not be eligible for an award under the Plan
for the Performance Period in which the lowest Composite Rating existed.

6.4
Promptly after a Performance Period, Plan Awards for the Performance Period
shall be determined by the Board in its sole discretion based upon the Plan
Award determined pursuant to Section 6.2.

6.5
President’s Award. In addition to the Plan Award, in determining a Participant’s
Final Award, the Executive Vice President, Senior Vice Presidents, Vice
Presidents and other employees (e.g., new hires and highly valued existing
employees) may be nominated by the President for a discretionary allocation of
Performance Units, to be approved by the Board, to recognize extraordinary
performance and/or to address competitive compensation practices within the
Bank’s labor market (the “President’s Award”).

6.6
The value of a Performance Unit under the President’s Award will be equal to the
value of a Performance Unit under the Target Award Opportunity.

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6.7
For a Performance Period, the total value of Performance Units granted under the
President’s Award shall not exceed ten (10) percent of the total Performance
Units granted under the Target Award Opportunity.

6.8
The Board may also authorize the President to receive a discretionary allocation
of Performance Units to recognize extraordinary performance and/or to address
competitive compensation practices within the Bank’s labor market. Any
discretionary allocation of Performance Units granted to the President under
this section will not exceed ten (10) percent of the total Performance Units
granted to the President under the Target Award Opportunity.

6.9
A Participant’s Final Award will consist of his or her Plan Award plus any
additional discretionary award granted under Section 6.5 or 6.8.

7.0
Administrative Control

7.1
The Bank's Director of Human Resources will assist, as requested, the President
and the Committee in the administration of the Plan, however, the Board will
have the ultimate authority over the Plan.

7.2
In addition to the authority expressly provided in the Plan, the Board shall
have such authority in its sole discretion to control and manage the operation
and administration of the Plan and shall have all authority necessary to
accomplish these purposes, including, but not limited to, the authority to
interpret the terms of the Plan, and to decide questions regarding the Plan and
the eligibility of any person to participate in the Plan and to receive benefits
under the Plan. The Board’s determinations and interpretations regarding the
Plan shall be final, binding, and conclusive.

8.0
Miscellaneous Conditions

8.1
Except as provided in Section 8.4, Participants must be employed by the Bank on
the last day of the Performance Period in order to become eligible to receive a
Final Award. A Participant will not become vested in an award under this Plan
until the date the Board authorizes the payment of the Participant’s Final
Award.

8.2
In the event a Participant voluntarily or involuntarily terminates employment
during the Performance Period, no award will be made to the Participant, except
as provided in Section 8.4 below.

8.3
Employees of the Bank who are hired, transferred, or promoted into an eligible
position during a Performance Period may be nominated for participation in the
Plan in accordance with Section 3.1, and receive a prorated Target Award
Opportunity.

8.4
A Participant who retires, dies or becomes disabled during the Performance
Period may receive a prorated Plan Award, but only if the President nominates
and the Board approves such action. For purposes of this Section, the term

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“retires” means the Participant has (i) been employed with the Bank for at least
five (5) years and (ii) reached at least age 62 when he or she retires from the
Bank. If a Participant becomes vested to receive a prorated award under this
Section, the prorated Final Award will be paid to the Participant no later than
2½ months following the calendar year in which such vesting occurred. If a
Participant terminates service with the Bank for any reason other than
retirement, death, or disability during the Performance Period, the Participant
will not be eligible to receive an award under the Plan.
8.5
The amount of any prorated award will be determined by dividing the number of
months the Participant was employed by the Bank during the Performance Period by
36 and multiplying such quotient by the Plan Award.

8.6
If a Participant ceases employment after the Performance Period but before the
Board approves the Final Award for that Performance Period, the President may
nominate and the Board may approve the Participant to receive an award. However,
if the President fails to make such a recommendation or the Board fails to
approve such action, the Participant will not be entitled to an award.

8.7
Notwithstanding any Plan provision to the contrary, mere participation in the
Plan will not entitle a Participant to an award.

8.8
The designation of an employee as a Participant in the Plan does not guarantee
employment. Nothing in this Plan shall be deemed (i) to give any employee or
Participant any legal or equitable rights against the Bank, except as expressly
provided herein or provided by law; or (ii) to create a contract of employment
with any employee or Participant, to obligate the Bank to continue the service
of any employee or Participant, or to affect or modify any employee's or
Participant's term of employment in any way.

8.9
The right of the Bank to discipline or discharge a Participant shall not be
affected by reason of any provision of this Plan.

8.10
All Final Awards will be paid out in cash and will be subject to applicable
payroll tax withholdings.

8.11
No Final Award received by a Participant shall be considered as compensation
under any employee benefit plan of the Bank, except as otherwise determined by
the Bank.

8.12
Final awards will be paid no later than 2 ½ months following the calendar year
which the Participant became vested in the Final Award.

8.13
The Board has the right to revise, modify, or terminate the Plan in whole or in
part at any time or for any reason, and the right to modify any recommended
award amount (including the determination of a greater or lesser award, or no
award), for any reason, without the consent of any Participant. Any payments
under the Plan may be impacted by extraordinary events, a failure to meet
certain minimum financial performance or control requirements and may be subject
to a claw back provision.

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Extraordinary events may include changes in business strategy, impact of severe
economic fluctuations, significant growth or consolidation of the membership
base or other factors that impact the Bank or Bank System. Any undue incentives
paid to an officer of the Bank based on achievement of financial or operational
goals within this Plan that subsequently are deemed to be inaccurate, misstated
or misleading shall be recoverable from the officer by the Bank. Inaccurate,
misstated and/or misleading achievement of financial or operational goals
includes, but is not limited to, overstated revenue, income, capital, return
measures and/or understated credit risk, market risk, operational risk or
expenses. The value of any benefits delivered or accrued related to the undue
incentive (the amount of the incentive over and above what should have been paid
barring inaccurate, misstated and/or misleading achievement of financial or
operational goals) shall be reduced and/or recovered by the Bank to the fullest
extent possible.

8.14
Since no employee has a guaranteed right to any award under this Plan, any
attempt by an employee to sell, transfer, assign, pledge, or otherwise encumber
any anticipated award shall be void, and the Bank shall not be liable in any
manner for or subject to the debts, contracts, liabilities, engagements or torts
of any person who might anticipate an award under this program.

8.15
This Plan shall at all times be entirely unfunded and no provision shall at any
time be made with respect to segregating assets of the Bank for payment of any
award under this program.

8.16
The Plan shall be construed, regulated and administered in accordance with the
laws of the state of Ohio, unless otherwise preempted by the laws of the United
States.

8.17
If any provision of the Plan is held invalid or unenforceable, its invalidity or
unenforceability shall not affect any other provision of the Plan, and the Plan
shall be construed and enforced as if such provision had not been included
herein.

8.18
If a Participant dies before receiving his or her award, any amounts determined
to be paid under this Plan shall be paid to the Participant’s surviving spouse,
if any, or if none, to the Participant’s estate. The Bank's determination as to
the identity of the proper payee of any amount under this Plan shall be binding
and conclusive and payment in accordance with such determination shall
constitute a complete discharge of all obligations on account of such amount.

8.19
Claims and Appeals Procedures. A Participant (such Participant being referred to
below as a “Claimant”) may deliver to the Personnel Committee a written claim
for a determination with respect to any claim as to which the Personnel
Committee has jurisdiction under this Plan. If such a claim relates to the
contents of a notice received by the Claimant, the claim must be made within
sixty (60) days after such notice was received by the Claimant. The claim must
state with particularity the determination desired by the Claimant.

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The Personnel Committee shall consider a Claimant's claim within a reasonable
time, but no later than ninety (90) days after receiving the claim. If the
Personnel Committee determines that special circumstances require an extension
of time for processing the claim, written notice of the extension shall be
furnished to the Claimant prior to the termination of the initial ninety (90)
day period. Upon reaching its decision, the Personnel Committee shall notify the
Claimant in writing.
On or before sixty (60) days after receiving a notice from the Personnel
Committee that a claim has been denied, in whole or in part, a Claimant (or the
Claimant's duly authorized representative) may file with the Committee a written
request for a review of the denial of the claim. The Committee shall render its
decision on review promptly, in writing, and deliver it to the Claimant no later
than sixty (60) days after it receives the Claimant’s written request for a
review of the denial of the claim.
8.20
Any agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter of this Plan which are not contained herein will
have no effect or enforceability.

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APPENDICES            

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FEDERAL HOME LOAN BANK OF CINCINNATI

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Executive Long-Term Incentive Plan
APPENDIX
2012 – 2014 Performance Period
Performance Period
The Performance Period described in this Appendix shall be January 1, 2012
through December 31, 2014.
Target Award Opportunity
The Target Award Opportunity (as a percentage of January 1, 2012 base salary)
for Levels I, II, III, and IV are:
Level
 
I
30%
II
25%
III
20%
IV
15%

                    
Initial Value of Performance Unit
The value of a Performance Unit at the beginning of this Performance Period
equals $100.
Plan Participants:

The Participants for the 2012 – 2014 Performance Period are:

Level
Title    

I
President & CEO

II
Executive Vice Presidents

III
Senior Vice Presidents

IV
Vice Presidents

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Performance Measures
1.
After the Performance Period ends, evaluate actual Bank performance against the
Performance Measures stated below.

Determine the value of the Performance Unit based on the minimum, target, and
maximum awards for the Operating Efficiency, Risk Adjusted Profitability, Market
Capitalization Ratio and Market Penetration achievements according to the
following table below. Performance will be measured on an interpolated basis
between threshold through maximum.
 
Threshold
Target
Maximum
Operating Efficiency
3rd Quartile
2nd Quartile
1st Quartile
Dollar Value at Hurdles
$
50

$
100

$
150

Weight
0.30

0.30

0.30

Operating Efficiency Value
$
15

$
30

$
45

 
 
 
 
Risk Adjusted Profitability
3rd Quartile
2nd Quartile
1st Quartile
Dollar Value at Hurdles
$
50

$
100

$
150

Weight
0.30

0.30

0.30

Risk Adjusted Profitability Value
$
15

$
30

$
45

 
 
 
 
Market Capitalization Ratio
95%
100%
110%
Dollar Value at Hurdles
$
50

$
100

$
150

Weight
0.30

0.30

0.30

Market Capitalization Ratio
$
15

$
30

$
45

 
 
 
 
Market Penetration
4.25
%
4.50
%
5.00
%
Dollar Value at Hurdles
$
50

$
100

$
150

Weight
0.10

0.10

0.10

Market Penetration Value
$
5

$
10

$
15

 
 
 
 
Total Value
$
50

$
100

$
150

Performance Measures
Threshold
Target
Maximum
OPERATING EFFICIENCY - Incentive Weight: 25%
Ranking of Operating Efficiency Ratio in comparison to other FHLBanks

8th
4th
1st
RISK ADJUSTED PROFITABILITY - Incentive Weight: 25%
Ranking of Risk Adjusted Profitability in comparison to other FHLBanks

8th
4th
1st
MARKET CAPITALIZATION RATIO - Incentive Weight: 25%
Ratio of Market Value of Equity (MVE) to Par Value of Regulatory Capital stock

95%
100%
110%
MARKET PENETRATION - Incentive Weight: 10%
Ratio of Member Advances to Member Assets in comparison to other FHLBanks
3.50%
3.70%
4.00%

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