Exhibit 10.10.3

FEDERAL HOME LOAN BANK OF PITTSBURGH
AMENDED AND RESTATED TEMPORARY INCENTIVE COMPENSATION PLAN
EXECUTIVE OFFICERS
 
I.    EFFECTIVE DATE
 
This Amended and Restated Temporary Incentive Plan (“Temporary Plan” or “Plan”)
of the Federal Home Loan Bank of Pittsburgh is established effective as of
January 1, 2011. Temporary Plan Awards (“Awards”) may be paid for each Plan Year
(January 1 to December 31, except as otherwise described below) in accordance
with the provisions of this Plan.
 
II.    PURPOSE AND OBJECTIVES
 
The Temporary Plan is designed to retain and motivate executive officers during
a period in which the Bank's financial condition is below its typical
performance level in terms of earnings generation, dividend paying capacity, and
ability to repurchase excess capital stock. The Temporary Plan has two
components: (a) a Base Incentive Award component intended to reward the
achievement of key annual goals and (b) an Additional Incentive Award component
intended to reward achievement of longer-term financial or other performance
metrics/goals. (Collectively, the Base Incentive Award and Additional Incentive
Award are referred to as “Award” or “Awards.”) The Plan Year for the Base
Incentive Award shall be January 1 to December 31. The Additional Incentive
Award Plan Year shall be set forth in this Plan.
 
III.    PLAN ADMINISTRATION
 
The Plan is administered by the President; the Governance, Public Policy, and
Human Resources Committee of the Board of Directors (the “Committee”); and the
Board of Directors (the “Board”).
 
A.    Responsibilities of the President
 
The President will provide recommendations to the Committee and the Board
regarding Plan participation, Bank performance goals, Bank achievements, and
Awards for the Bank's executive officers.
 
B.    Responsibilities of the Committee
 
The Committee will review all Plan recommendations and revisions (including all
performance goals and Awards) from the President and present final
recommendations to the Board for its approval. In addition, the Committee will
review the performance of the President and the Bank's other executive officers
and make recommendations regarding any Award payouts under the Plan.
 
C.    Responsibilities of the Board
 
The Board will review and approve (as it determines appropriate) recommendations
from the Committee and the President.
 
IV.    ELIGIBILITY
 
The Bank's executive officers are eligible to participate on the terms described
in this Temporary Plan. Eligibility is reviewed each year that the Temporary
Plan is in effect to assure continued appropriateness, and participants are
notified by Human Resources of their participation in the Plan. Upon designation
as a participant, each participant will be provided a copy of the Plan.
 
V.    TEMPORARY PLAN AWARD OPPORTUNITY LEVELS

 

--------------------------------------------------------------------------------

Exhibit 10.10.3

 
A summary of the Award levels is attached as Attachment A. Each participant
shall be provided with a separate document showing his/her level of
participation in the Plan.
 
VI.    PERFORMANCE MEASURES
 
The Plan Year for the Base Incentive Award opportunity shall mean the annual
period ending December 31. With respect to the financial performance goal and
the Additional Incentive Award opportunity, Plan Year shall mean the period
ending December 31, 2012. The Plan goals can be both quantitative and
qualitative. Overall performance of Bank goals, and individual and group goals
(as applicable), as well as individual performance objectives as measured
through the Bank's performance evaluation process, in aggregate, quantify the
performance measures under the Plan that will be considered when determining
overall actual performance and any Award payout amount.
 
Certain positions have a greater and more direct impact than others on the
achievement of Bank performance. Those differences are recognized by varying the
incentive opportunity expressed as a percentage of a participant's base salary.
For executive management, generally, the greater the control and influence a
participant can exert over Bank goals, the larger a portion of their incentive
Award will be based on Bank performance. Executive officer goals may consist
solely of Bank goals or they may include a combination of Bank goals and
individual or group goals as determined by the Board with respect to each
specific Plan Year.
 
In general, goals requiring attainment of specified performance or completion of
specified tasks and activities shall not be considered as having been met when
the actual performance as measured by completion of the activities has not been
attained. Interpolation of Award amounts is permissible for achieved performance
(measured by completion of the stated goals) at levels between threshold and
target and maximum. Awards for performance results between the threshold and
target levels are calculated as a percentage of the target level. Awards for
performance between the target and maximum levels are calculated as a percentage
of maximum. Additionally, the specific terms of an approved goal(s) may
establish further standards for interpolation.
 
VII.    AWARD DETERMINATION AND PAYMENT
 
Until a determination of an Award payment has been made by the Board and a
participant has met all applicable requirements under the Plan, no participant
has a vested right to any Award under the Plan. At the conclusion of the
applicable Plan Year (or with respect to the Additional Incentive Award
opportunity if the performance metrics are satisfied by December 31, 2011, then
on that date), the President, after considering the Bank's performance against
the Bank goal(s), individual performance, and actual overall Bank performance,
shall recommend to the Committee and the Board the Plan Awards to be paid to the
Bank's executive officers, excluding the President.  
A participant who is on formal corrective action for performance at any time
during the Plan Year, or is rated as “Unsatisfactory” on their most recent
performance evaluation will be ineligible to receive any payment of an Award. A
participant who is rated “Needs Improvement” will be eligible for a payment of
an Award reduced by up to 75 percent of the Base Incentive Award opportunity. In
addition, a participant who has attained an “Exceeds Requirements” or
“Outstanding” rating on their last performance evaluation is eligible to receive
up to an additional 3 or 5 percent, respectively, of their base salary in
addition to their Base Incentive Award opportunity.
In order for any Award payment to be made, the most recent examination by the
Federal Housing Finance Agency of the participant's area(s) of responsibility
must not have identified any unsafe or unsound practice or condition.
Participants who terminate employment with the Bank for any

 

--------------------------------------------------------------------------------

Exhibit 10.10.3

reason, other than death, disability, or retirement prior to an Award payout
date will not be eligible for an Award. Participants who are hired prior to July
1 during the Plan Year or whose employment ends due to involuntary termination
(excluding involuntary termination for cause), death, disability, or retirement
prior to the Award payout date may be eligible to be considered for a pro-rated
Award. 1 
 
Unless otherwise directed by the Board or otherwise set forth in this Plan,
payments of Awards under the Plan shall be made as soon as possible after the
Board has made a determination regarding the payment of Awards, but no later
than 2½ months after the close of the applicable Plan Year. Appropriate
provisions shall be made for any taxes that the Bank determines are required to
be withheld from any Awards under the applicable laws or other regulations of
any governmental authority, whether federal, state, or local. The payment of any
Award shall be subject to such obligations, terms, and conditions as the
Committee or the Board may specify in making the Award and, in exercising its
discretion to make any Award determination hereunder, the Board may choose to
consider factors such as overall Bank financial performance, operating
environment, and other relevant considerations. Acceptance of any Award shall
constitute agreement by the participant to all obligations, terms, conditions,
and restrictions so imposed.
 
VIII.     CLAWBACK
In the event of gross misconduct, gross negligence, materially inaccurate
financial statements, erroneous performance metrics related to incentive goal
calculation, or conviction of a felony, the Board will have the authority to
adjust Award amounts or reclaim Award payments.
 
IX.    TERMINATION OR AMENDMENT
 
The Plan, in whole or in part, may at any time or from time to time be amended,
suspended, or reinstated and may at any time be terminated by action of the
Board. The Board has the power and authority to construe, interpret, and
administer the Plan. Any decision arising out of or in connection with the
construction, interpretation, or administration of the Plan will lie within the
Board's absolute discretion and will be binding on all parties.
 
1 Retirement for purposes of this Plan is defined as 60 years of age or older
with at least 10 years of service or 65 years of age or older regardless of
service. “Involuntary termination” shall be interpreted consistent with
“separation from service” as defined in the IRS 409A Regulations and exclude
termination for cause and shall include a “resignation for good reason” as
defined by the IRS 409A Regulations. “Disability” shall be interpreted
consistent with IRS 409A Regulations.

 
 
Attachments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

--------------------------------------------------------------------------------

Exhibit 10.10.3

 
Attachment A-Award Levels
 
 
 
Base and Additional Temporary Incentive Plan Award Opportunity
 
 
2011
2012
Participant Level
Base Incentive Award Opportunity
Additional Incentive Award Opportunity
Base Incentive Award Opportunity
Additional Incentive Award Opportunity
Level A
Up to 22%
Up to 160%
Up to 22%
Up to 120%
Level B
Up to 20%
Up to 108%
Up to 20%
Up to 81%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

--------------------------------------------------------------------------------

Exhibit 10.10.3

 
 
Attachment B-Base Incentive Award Goals
 
 
Goal
Weight
70
%
90
%
110
%
MVE/PVCS
Market Value of Equity to par value of capital stock price at December 31,
2011.1
15
%
Maintain
above 90
>90 to 95
>95
Earnings
Achieve core earned dividend spread after assessment consistent with the 2011
Operating Plan while remaining inside Board level risk limits.1
 
Increase Retained Earnings consistent with the 2011 Operating Plan ($ in
millions)1
10%
 
 
15%
1.44%
 
 
$47
1.58%
 
 
$52
1.74%
 
 
$57
Regulatory Exam
Address Matters Requiring Attention (MRA) in existence at December 31, 2010, to
the satisfaction of the FHFA and the Board of Directors by December, 2011.
 
Improve 2011 Exam Rating
10%
 
 
10%
 
 
Complete all MRAs
 
Improve Rating
Member Outreach
 
 
 
 
Member Product Usage
 
 
 
Advances Usage of Credit-worthy Members
Increase the amount of Member and potential Member Outreach in 2011.2
 
 
 
 
 
Increase the average number of Bank product touch points with CFI members.3
 
 
 
 
 
Maintain the percentage of average borrowing members among the total membership.
15%
 
 
 
 
 
7.5%
 
 
 
 
 
7.5%
 
 
As presented in Member Outreach Spreadsheet
 
 
Maintain average touch points at 1.97
 
 
5% over
Threshold
 
 
 
 
Increase touch points to
2.02
 
 
10% over Threshold
 
 
 
 
Increase touch points to
2.10
 
 
 
 
Affordable Housing Mission Product Utilization
Increase the number of members that submit an application, enroll in or
participate in a community investment product or initiative in 2011.
10
%
89
 
93
 
97
 

Notes:
1 Before dividends and repurchase of excess stock.
2 Member outreach includes in-person member calls, regional member meetings,
educational sessions, and Webinars conducted by Executive Committee Members.
3Product touch points include advances, LOCs, Safekeeping, Wires on Bank4Banks,
Settlement Services, MPF PFIs, and Xtra PFIs.
 
 
 
 
 
 
 
 
 
 
 
 
 

 

--------------------------------------------------------------------------------

Exhibit 10.10.3

 
 
 
Attachment C
 
Additional Incentive Award Goals-Return to Normal Operations
 
The Board and Management understand the vital importance of the Bank returning
to normal operations for its membership. Returning to normal Bank operations
shall be measured and demonstrated by the four key metrics set forth below:
   
(1) Market Value of Equity to Par Value of Capital Stock (MV/CS) must exceed 85
- this criteria and level was chosen because this is the Board-level metric that
would permit consideration of dividend payment and excess stock repurchase. The
Bank currently has a policy that prohibits consideration of dividends and excess
stock repurchases when the Bank is below 85.
 
(2) Quarterly GAAP Net Income must exceed the average 3 Month LIBOR on total
capital stock while staying within the Board of Directors approved duration of
equity (DOE) limits. This level of GAAP income was chosen as the Board has
defined a market return to be 3 Month LIBOR flat.
 
(3) Increase Retained Earnings consistent with the Board approved retained
earnings policy - this criterion was chosen to enforce that not only must the
Bank have enough GAAP earnings as stated above in (2) but to reinforce that it
must also build retained earnings to an adequate level.
 
(4) Retained Earnings must exceed negative Accumulated Other Comprehensive
Income attributable to private-label mortgage-backed securities (PLMBS). This
measure demonstrates that if fair market value is realized via OTTI credit
charges on the PLMBS portfolio that the Bank has adequate retained earnings to
absorb such losses.
 
If the Bank returns to normal operations by meeting the four (4) goals set forth
above for two (2) consecutive quarters during the Additional Incentive Award
opportunity Plan Year, while remaining in compliance with Board-approved risk
measures, participants shall be entitled to an Additional Incentive Award up to
the percentage indicated above for the year in which the Additional Incentive
Award goals are met. Such Additional Incentive Award opportunity percentage
shall be applied to the participant's base salary in effect on January 1 of the
year in which the Bank returns to normal operations, as determined by the Board.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

--------------------------------------------------------------------------------

Exhibit 10.10.3

 
 
 
 
 
 
 
2011 Risk Management TIP Goal Scorecard
 
 
Goal
Weight
70 %
90
%
110
%
YTD
MVE/PVCS
 
Market Value of Equity to par value of capital stock price at December 31,
2011.1
15
%
Maintain above 90
>90 to 95
>95
 
Earnings
 
Increase Retained Earnings consistent with the 2011 Operating Plan ($ in
millions)1
15
%
$
47
 
$
52
 
$
57
 
 
Regulatory Exam
 
Address Matters Requiring Attention (MRA) in existence at December 31, 2010 to
the satisfaction of the FHFA and the Board of Directors by December, 2011.
 
Improve 2011 Exam Rating
 
20%
 
 
10%
 
 
 
Complete all MRA's
 
Improve Rating
 
Member Outreach
 
Increase the amount of Member and potential Member Outreach in 2011.2
15
%
As presented in Member Outreach Spreadsheet
5% over Threshold
10% over Threshold
 
Risk Appetite
 
Operational Excellence - Bank-wide Culture / Philosophy
 
Develop framework that documents management's expectations and philosophy
concerning operational excellence.
 
Ensure that bank executives communicate framework to their staffs.
 
Execute training sessions for all employees on the general framework (for
example three employee meetings in one day with a follow-up session or materials
for those unable to attend).
 
Ensure that a comprehensive series of specific operational excellence-oriented
training sessions (for example: care of confidential and sensitive information,
e-mail and spreadsheet best practices, importance of the “four eyes” review
process, etc.) are executed throughout 2011 for the appropriate employee group
(all staff or targeted based on content).
 
Leverage the normally scheduled quarterly all-employees meetings to reinforce
the operational excellence philosophy or its selected components.
 
25
%
Fully complete all tasks with 4 training sessions
Fully complete all tasks with 5 training sessions
Fully complete all tasks with 6 training sessions
 

 
Notes:
1 Before dividends and repurchase of excess stock.
2 Member outreach includes in-person member calls, regional member meetings,
educational sessions and Webinars conducted by Executive Committee Members.