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Integration Performance Incentive Plan
 
 
 
 
 
 

Introduction
This document summarizes the Federal Home Loan Bank of Des Moines’ Integration
Performance Incentive Plan (IPIP). The plan provides incentive compensation
opportunity for employees identified as having a significant role in the merger
with the FHLBank of Seattle. This incentive opportunity is in addition to the
opportunity provided in the incentive plan and recognizes the additional time
and effort required for the merger. Each participant is provided information on
his or her incentive opportunity and the specific goals as part of the plan
communication.

Incentive Plan Design
There are two primary phases in the merger that correspond to two parts of the
IPIP.

•
Phase 1 is defined as the date of the definitive agreement to the date of
merger.

•
Phase 2 is defined as the date of merger through the integration date. The
integration date is defined as the date when approximately 80% of the work is
complete in merging the two banks.

Each phase is important to the merger. The two phases are addressed
independently in the plan with different measurement goals. Phase 1 is
anticipated to have a shorter duration than Phase 2 and includes work that will
be completed even if the merger does not occur. Phase 2 work will only occur if
the merger is approved by the members and the regulator.

Phase 1 Specifics

1.
Participants in Phase 1 are identified during the due diligence period and
informed of their participation, related goals, and reward opportunity when a
definitive agreement is executed.

2.
Performance goals are specified that support the development of department plans
required to merge the two banks. Three to five department performance measures
are developed for each department.

3.
The results of the department performance measures will be assessed by the
Executive Team with payouts approved by the CEO.

4.
Potential award payouts will occur after all department plans are completed, and
will be paid whether the merger is ultimately approved or not approved.

Phase 2 Specifics

1.
Participants in Phase 2 are identified prior to the merger approval and informed
of their participation, related goals, and reward opportunity after merger
approval.

2.
Phase 2 performance goals are measured at two levels: department-specific
measures and bank-wide measures.

a.
Department-specific measures support the integration of the two banks at the
department level. Three to five performance measures are developed for each
department.

b.
Bank-wide measures articulate the successful integration of the banks at a
holistic level. Three to five measures are identified for overall success of the
merger.

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3.
The weightings of the two measurement levels depends on the tier of the
participating position. The chart below shows the relative measurement weighting
by position.

 
Department
Bank-wide
Executives
0%
100%
Sr. Officers
30%
70%
Individual Contributor / Manager
70%
30%

 
4.
Bank-wide measures are identified for Phase 2 that articulate the successful
integration of the banks. We anticipate the identification of three to five
measures that may include a member evaluation, a board evaluation, and
quantitative measures.

5.
The results of the department performance measures will be assessed by the
Executive Team and communicated to the HRC for final payout approval. Potential
department payouts may occur at different times when the department goals are
complete.

6.
The HRC will determine success against the bank-wide measures. The Committee
will have the ability to exercise negative discretion on individual payouts or
payouts for the entire participant group. Potential payouts for the bank-wide
measures occur at the integration date (The integration date is defined as the
date when approximately 80% of the work is complete in merging the two banks.)

Plan Administration

Eligibility
To receive an incentive, participants must:
•
Be identified in advance for participation in each phase of the IPIP.

•
Have written goals and the incentive opportunity communicated to them by their
department heads.

•
Be employed by the Bank at the time of the payouts for the respective plan
phases.

•
Be performing satisfactorily, as noted on their latest annual performance
review, and not on a Performance Improvement Plan during the plan year.

Partial Year Pro-Rating
Employees who become participants after the start of either Phase 1 or Phase 2
may participate in the IPIP. The incentive opportunity is pro-rated based on
actual start or transfer date.

Retirement, Disability, or Death
If a participant ceases employment with the Bank because of retirement, death,
or disability, the participant or beneficiary shall receive a pro-rated
incentive based on the time of active employment during the phase of the IPIP.
The incentive will be calculated and paid to the participant or beneficiary at
the end of the performance period.

Golden Parachute Limitation
The Bank acknowledges that the intent is that benefits under this IPIP shall not
constitute an “excess parachute payment” under § 280G of the Code, which would
trigger an excise tax under Code § 4999. To give effect to that intent, and
notwithstanding any other provision of this IPIP to the contrary, if the value
of any compensation (in whatever form) provided pursuant to this IPIP is counted
as a “parachute payment” within the meaning of § 280G(b)(2) of the Code, and the
value of all such parachute payments would exceed 299% of the “base amount”
applicable under §280G of the Code, then the amount of any payment under this
IPIP shall be reduced to the extent necessary so that the sum of such parachute
payments equals exactly 299% of the Executive’s base amount.

In addition, the IPIP is subject to the requirements of part 1231 of subchapter
B of title 12 CFR Chapter XII regarding golden parachute payments. This IPIP,
and any payments made hereunder, shall comply with such regulations as
applicable.

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Leaves of Absence
Leaves of absence lasting longer than four weeks will result in a partial
payment based on the period of the year for which the participant was an active
employee of the Bank. A minimum of six months active employment in a respective
IPIP phase is required for participation. Participants on disability or unpaid
leave at the time payments are made will receive payments, if any, upon
returning from leave to active duty. Participants who fail to return to work
will not be eligible for payment.

Payment
Payments for the earned incentives will be made after assessment of performance
results against goals and required approvals. Taxes are withheld at time of
payment.

Effective Date
The effective date of this plan is September 18, 2014. The plan is in effect
only during the two defined phases related to the merger of the Des Moines and
Seattle Federal Home Loan Banks.

Termination/Amendment
Nothing in this document is intended to create an expressed or implied contract
of employment and / or any other obligation related to compensation. The Bank
reserves the right to modify, amend, supersede, or terminate this plan at any
time. This document supersedes any prior written or oral communication regarding
terms and conditions of the Bank’s compensation plans.

The Bank retains the discretionary authority to determine eligibility and
payments under the incentive plan, and the HRC Committee of the Board of
Directors is the final arbiter of any disputes concerning the interpretation or
operation of this plan.

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