Revised December 18, 2015

Federal Home Loan Bank of Topeka
Executive Incentive Compensation Plan Targets
Goal Metrics, Metric Performance Ranges, Participant Eligibility and Metric
Weights

This document specifies goal metrics, metric performance ranges/objectives, and
metric weights for the participants (Participants) in the Executive Incentive
Compensation Plan (Plan).

The Plan targets contained in this document specifically cover the 2015 Base
Performance Period (January 1, 2015 through December 31, 2015) and the 2016 —
2018 Deferral Performance Period (January 1, 2016 through December 31, 2018).

A.   2015 Base Performance Period Metrics. The following goal metrics are
assigned to the Participants under the Plan. All calculations including interest
rates will be rounded to two decimal places.

1.   Adjusted Return Spread on Regulatory Total Capital

Definition: The spread between (a) adjusted net income divided by daily average
regulatory total capital and (b) the average daily Overnight Federal funds
effective rate (Fed Effective).

     
Measure:
 
 
Adjusted net income is defined as follows:

  •   Net income calculated under generally accepted accounting principles
(GAAP)

  •   Plus recorded AHP assessments

  •   Excluding the impact or adjustment required because of Accounting
Standards Codification 815 (ASC 815)

  •   Plus dividends on redeemable Class A and Class B Common Stock treated as
interest expense under ASC 450

  •   Minus prepayment fees

  •   Minus/plus realized or unrealized gains/losses on securities (excludes any
charges for other-than-temporary impairment of securities)

  •   Minus/plus gains/losses on mortgage loans held for sale

  •   Minus/plus gains/losses on early retirement of debt and related
derivatives

  •   Minus/plus any amortization/accretion of premium/discount on unswapped
securities in the FHLBank’s trading portfolio and any investment that is tied to
an economic swap where an upfront fee was not received (not amortized/accreted
under GAAP)

  •   Less a calculated 10% AHP assessment

Performance Range:

              Annual Performance Range
Threshold
    4.72 %
Target
    5.85 %
Optimum
    6.42 %

2.   Net Income after Capital Charge

Definition: The dollar amount of adjusted net income as defined in the above
metric which exceeds the cost of the required return on capital.

Measure: Adjusted income as defined in the Net Income after Capital Charge
Definition above, less required return on all capital. The required return on
capital is the sum of the outstanding regulatory Class B Common Stock times the
average of three-month LIBOR plus 1.00 percent for each day during the year plus
the sum of all other capital (regulatory for Class A Common Stock and GAAP for
retained earnings and other comprehensive income) times the average of
three-month LIBOR for each day during the year.

Performance Range:

              Annual Performance Range
Threshold
  $ 71,477,000  
Target
  $ 91,477,000  
Optimum
  $ 101,477,000  

3.   Retained Earnings

Definition: The dollar amount of GAAP Retained Earnings as of 12/31/2015.

Measure: Retained earnings as defined above as reported on the 12/31/2015
balance sheet.

Performance Ranges:

              Annual Performance Range
Threshold
  $ 655,263,000  
Target
  $ 681,920,000  
Optimum
  $ 702,007,000  

4.   Core Mission Assets (CMA) Ratio

Definition: Core Mission Assets Ratio is defined as daily advances plus mortgage
loans held for portfolio divided by daily consolidated obligations.

Measure: Average Daily Advances as reported to the Federal Housing Finance
Agency (CRS reference SC11800) plus Daily Average mortgage loans held for
portfolio (CRS reference SC12100) divided by the average daily consolidated
obligations as reported to the Federal Housing Finance Agency (CRS reference
SC15100) averaged over the Performance Period.

Performance Range:

              Annual Performance Range
Threshold
    60 %
Target
    70 %
Optimum
    80 %

5.   Risk Management – Market, Credit and Liquidity Risks

Definition: Management of FHLBank risks as determined by the weighted average
rating by the board of directors in an annual evaluation of the Risk Appetite
metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk
categories are market, credit and liquidity risks.

Performance Ranges

              Score
Threshold
    3.0  
Target
    4.0  
Optimum
    5.0  

Risk Management Metric Weights: The following metric weight for each goal metric
is assigned to the Participants:

          Risk Management Category   Weighting
Liquidity Risk
    30 %
Market Risk
    40 %
Credit Risk
    30 %
Total
    100 %

6.   Risk Management – Compliance, Business and Operations Risks

Definition: Management of FHLBank risks as determined by the weighted average
rating by the board of directors in an annual evaluation of the Risk Appetite
metrics in this area using a 1 (lowest) to 5 (highest) point scale. General risk
categories are compliance, business and operations risks.

Performance Ranges

              Score
Threshold
    3.0  
Target
    4.0  
Optimum
    5.0  

Risk Management Metric Weights: The following metric weight for each goal metric
is assigned to the Participants:

          Risk Management Category   Weighting
Compliance Risk
    30 %
Business Risk
    35 %
Operations Risk
    35 %
Total
    100 %

B.   2016-2018 Deferral Performance Period Metrics.

These metrics apply to the 2016-2018 Deferral Performance Period.

Minimum Requirement for Receiving a Final Deferred Incentive Award
In order for Participants to be eligible to receive a Final Deferred Incentive
Award for the 2016-2018 Deferral Performance Period, FHLBank must have a Market
Value of Equity (MVE) of not less than 100 percent of FHLBank’s Total Regulatory
Capital Stock (TRCS) outstanding (as defined in FHLBank’s Risk Management
Policy), as of the last day of the Deferral Performance Period. Upon determining
FHLBank has achieved this minimum requirement, the calculation of the Final
Deferred Incentive Award amounts shall be measured by evaluating the following:

                              Threshold   Target   Optimum
 
  10/11 or 11/11 vs           2/11 or 1/11 vs
Total Return(1)
  FHLBanks   5/11 vs FHLBanks   FHLBanks
Deferred Incentive
                       
Performance Measure Percentage
    75 %     100 %     125 %
Weighting
    0.50       0.50       0.50  
Dollar Value (Deferred Incentive x Performance Measure Percentage x Weight)
  $       $       $    
MVE / Total Regulatory
  10/11 or 11/11 vs           2/11 or 1/11
Capital (TRC)(2)
  FHLBanks   5/11 vs FHLBanks   vs FHLBanks
Deferred Incentive
                       
Performance Measure Percentage
    75 %     100 %     125 %
Weighting
    0.50       0.50       0.50  
Dollar Value (Deferred Incentive x Performance Measure Percentage x Weight)
  $       $       $    
Final Deferred Incentive Award (Dollar value for Total Return + Dollar Value for
MVE/TRC)
                       

Footnotes:
1) Total Return. Total Return equals the Total Dividends, plus the Change in
Retained Earnings, divided by the Average Total Regulatory Capital (TRC) over
the three-year period. Total Dividends is defined as all dividends paid on all
capital stock during the three-year period; Change in Retained Earnings is
defined as the change in retained earnings from 12/31/2015 to 12/31/2018; and
Average TRC is defined as the average daily ending balance of Regulatory Capital
for dates starting with 01/01/2016 and ending 12/31/2018.  TRC is defined as
total capital stock plus total retained earnings plus subordinated debt plus
mandatorily redeemable capital stock. TRC will also include any additional
capital from mergers that will be reported in the CRS statement of condition.
 For performance comparison purposes, FHLBank Topeka will be ranked against the
other FHLBanks, with the highest total return being the best performance, and
ranking 1st out of the 11 FHLBanks.

2) MVE/TRC. Using amounts reported on the Trendbook Analysis from the FHFA Call
Report System (CRS), MVE/TRC is calculated by dividing base case MVE by TRC (as
defined above) calculated at the end of the Deferral Performance Period. For
performance comparison purposes, FHLBank Topeka will be ranked against the other
FHLBanks, with the highest MVE/TRC being the best performance, and ranking 1st
out of the 11 FHLBanks.

C.   Total Base Opportunity Metric Weights.

Total Base Opportunity Matrix
(As a percent of base)

                          Participant   Total Base Opportunity 1     Threshold  
Target   Optimum
Level 1
                       
CEO
    40       80       120  
Level 2
                       
COO
    32.5       65       97.5  
Level 3
                       
CRO
    25       50       75  
General Counsel
    25       50       75  
CFO
    25       50       75  

1   In the event FHLBank’s performance during the Base Performance Period
results in the achievement of a Total Base Opportunity that exceeds 100% of a
Participant’s base salary at the start of the Base Performance Period, the Total
Base Opportunity shall be capped at 100% of the Participant’s base salary.  

D.   Base Opportunity Metric Weights. The following metric weight for each goal
metric is assigned to the Participants:

                          Objective   CEO/COO/CFO   CRO   General Counsel
1. Adjusted Return Spread on Regulatory
Total Capital
  20%

  10%

  15%

2. Net Income after Capital Charge
    20 %     10 %     15 %
3. Retained Earnings
    10 %     20 %     10 %
4. Core Mission Assets (CMA) Ratio
    10 %     10 %     10 %
5.Risk Management — Market, Credit,
Liquidity
  20%

  25%

  25%

6.Risk Management — Compliance,
Business, Operations
  20%

  25%

  25%

Total
    100 %     100 %     100 %