EXHIBIT 10.5

FHLBank San Francisco

2009 Audit Performance Unit Plan

Summary Description

PLAN PURPOSE

To optimize the Internal Audit Department’s long-term performance in
accomplishing Audit Committee-approved goals.

PLAN OBJECTIVES

To motivate the Internal Audit Department senior executive to exceed goals on a
long-term basis that directly support the annual audit plans and strategic
departmental objectives. To attract and retain an outstanding executive by
providing a competitive total compensation program, including a cash-based
long-term incentive reward opportunity tied to the performance of the Internal
Audit Department against specified performance measures.

PARTICIPANT

The participant is a key executive whose performance has a major impact on the
Internal Audit Department’s success. The participant is an incumbent in the
Internal Audit Department’s senior executive position:

Senior Vice President, Enterprise Risk Management & Director of Internal Audit

PERFORMANCE PERIOD

The Audit Performance Unit Plan (APUP) pays incentive awards related to the
achievement of the Internal Audit Department performance over a three-year
performance period. The 2009 Plan is effective January 1, 2009, and is based on
performance from January 1, 2009, through December 31, 2011.

PERFORMANCE METRICS

The target performance level reflects long-term Internal Audit Department
performance expectations. Unlike the annual Audit Executive Incentive Plan
(AEIP), the participant does not have an individual goal.

 

1. Three-Year Average Annual AEIP Departmental Goal Achievements: Measured by
the average of the actual departmental goal achievement levels under the 2009,
2010, and 2011 AEIP (short-term incentive plan), determined at the end of the
performance period.

APUP ACHIEVEMENT MEASURES

The Internal Audit long-term incentive plan rewards four levels of performance
achievement, as follows:

 

Achievement Level    Measure Definition 200% of Target    The most optimistic
achievement level that far exceeds levels forecasted from expected business.
150% of Target    An optimistic achievement level that exceeds levels forecasted
from expected business. Target (100%)    Performance that is expected under the
Bank’s Plan. Threshold (75%)    Minimum level of performance that must be
achieved for awards to be paid.

AWARD DETERMINATION

An award is calculated and paid, in whole or part, at the end of the 2009 plan
term (during the first quarter of 2012) based on achievement of a minimum level
of performance under the goals. Awards earned are based on the level at

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which the three-year performance goals have been achieved. Final awards will be
prorated for a participant promoted or hired into position during the
performance period, and for a participant who takes a leave of absence during
the performance period. Target payout for the January 1, 2009, through
December 31, 2011, performance period is presented in the table under the Award
Opportunity section below.

Award payouts may be modified up or down at the Audit Committee’s discretion
(+/- 25% of the dollar award derived from the table (Award Range Scale) below to
account for performance that is not captured in the performance metrics.
Performance below the threshold achievement level for any measure will normally
not result in an incentive award.

AWARD OPPORTUNITY

APUP targets for each three-year performance period are established annually for
the participant at the beginning of each calendar year. Target award levels are
stated below as a percentage of the February 1st base salary at the beginning of
the three-year performance period.

Award Range Scale (some % rounded)

2009 Plan Year – APUP Payout as % of 2009 Base Salary (as of February 1st)

 

Position Level    Threshold1     Target2     150% of Target3     200% of Target4
  Senior Vice President    18 %    35 %    52.5 %    70 % 

Notes:

1 – 50% of target payout; based on the average of the actual three-year annual
AEIP’s departmental goal(s) performance during the plan period.

2 – 100% of target payout; based on the average of the actual three-year annual
AEIP’s departmental goal(s) performance during the plan period.

3 – 150% of target payout; based on the average of the actual three-year annual
AEIP’s departmental goal(s) performance during the plan period.

4 – 200% of target payout; based on the average of the actual three-year annual
AEIP’s departmental goal(s) performance during the plan period.

Awards will be considered by the Audit Committee and Board at the end of the
three-year performance period. Cash awards are paid to the participant at the
end of the three-year performance period (during the first quarter of 2012).

Example of how award would be calculated for the Senior Vice President for 2009
APUP Plan Period

 

(100% weight)

3-year Average Annual

AEIP Departmental Goal

Levels Achieved: (160% of Target)

 

 

 

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Percent of

Target Payout:

160%

 

  2009 Base Salary   Target APUP Payout (% of Base Salary)  

Payout % Based

on Performance

 

APUP Payment

paid Q1 2012

     

$290,000 X

 

 

        35% X

 

 

160% =

 

 

$162,400

 

Payments under this plan are subject to approval by the Audit Committee and the
Board of Directors. To be eligible for the Audit Performance Unit Plan payment,
a participant must be employed with the Bank through the end of the three-year
performance period, except in the case of a voluntary normal retirement, a
qualified long-term disability, or death. APUP awards will be prorated for a
participant in the position less than a full plan term, including a participant
who has a leave of absence greater than one month during the plan term. Any
awards will be distributed as soon as administratively possible following the
effective date of Audit Committee and Board approval. All compensation and
incentive plans are subject to review and revision at the Bank’s discretion.
Such plans are reviewed regularly to ensure they are competitive and equitable.
Internal Audit Department Senior Executive compensation and benefit programs are
subject to Federal Housing Finance Agency review and oversight, and payments
made under such programs may be subject to the Agency’s approval under
applicable laws and regulations in effect from time to time.