EX-10.1






Long-Term Incentive Plan

February 24, 2011




Policy Information




	 	 	 
	Document Title:

	 	Long-Term Incentive Plan
	Content Owner:

	 	Director of HRA
	Certification of Compliance Contact:

	 	N/A
	Policy Category:

	 	FHLBank Policy
	FHLBank-Level Approver:

	 	Policy Oversight Group
	Board-Level Approver:

	 	Full Board
	Review Frequency:

	 	Yearly
	Initial Effective Date:

	 	12/18/2008
	Last Review Date:

	 	5/26/2010
	Next Review Date:

	 	12/2011











1






Table of Contents




	 	 	 	 	 	 	 	 	 
	 	1.0	 	 	Plan Objectives
	 	 	2	 
	 	2.0	 	 	Definitions
	 	 	3	 
	 	3.0	 	 	Eligibility
	 	 	4	 
	 	4.0	 	 	Base Award Opportunity
	 	 	5	 
	 	5.0	 	 	Performance Measures
	 	 	6	 
	 	6.0	 	 	Final Award Determination
	 	 	6	 
	 	7.0	 	 	Distribution of Final Awards
	 	 	7	 
	 	8.0	 	 	Plan Communication
	 	 	7	 
	 	9.0	 	 	Administrative Control
	 	 	8	 
	 	10.0	 	 	Miscellaneous Conditions
	 	 	8	 
	 	 	 	 	Appendices
	 	 	13	 
	 	 	 	 	 
	 	 	 	 







	1.0	 	Plan Objectives






	 	1.1	 	The purpose of the Federal Home Loan Bank of Topeka Long-Term Incentive Plan
is to:






	 	1.1.1	 	Promote consistently high value creation for FHLBank Topeka
members by promoting the long-term growth and profitability of FHLBank Topeka
in accordance with the achievement of its long-term strategic objectives and
mission;






	 	1.1.2	 	Promote key employee loyalty and dedication to FHLBank
Topeka and its strategic objectives by rewarding performance that facilitates
the growth and financial stability and success of FHLBank Topeka;






	 	1.1.3	 	Increase FHLBank Topeka’s capacity to attract, retain and
motivate key employees by enhancing its ability to offer competitive total
compensation to key employees who are also vital to FHLBank Topeka’s future
success.






Payments awarded under this plan, when combined with base salary, Short Term
Incentive Plan (STIP) awards, and other benefits are designed to provide
competitive total compensation to key employees for achieving FHLBank Topeka’s
desired strategic objectives. Total compensation is targeted to be at the
50th percentile relative to similar key employee positions at other
FHLBanks. If total targeted compensation is above the 50th percentile,
then the Compensation Committee may recommend a corresponding decrease in the STIP
targeted award during that corresponding period.




	 	1.2	 	The Plan is a cash-based long-term incentive plan that establishes individual
Base Award Opportunities related to achievement of FHLBank Topeka performance hurdles
relative to the other FHLBanks and individual performance over a three-year
Performance Period.






	 	1.3	 	The Base Award Opportunity, Performance Measures, Final Value of Incentive,
Participants, and other terms are set forth in Appendix A.






	2.0	 	Definitions






	 	2.1	 	When used in this Long-Term Incentive Plan, the following words and phrases
shall have the following meaning:






	 	2.1.1	 	Base Award Opportunity means the award that may be earned
during a Performance Period for achieving target performance levels under each
Performance Measure;






	 	2.1.2	 	Board means FHLBank Topeka’s Board of Directors;






	 	2.1.3	 	Compensation Committee means the Compensation Committee of
the Board;






	 	2.1.4	 	Extraordinary Occurrences means those events that, in the
opinion and discretion of the Compensation Committee, are outside the
significant influence of the Participants or FHLBank Topeka and are likely to
have a significant unanticipated effect, whether positive or negative, on
FHLBank Topeka’s operating and/or financial results;






	 	2.1.5	 	FHFA means Federal Housing Finance Agency or any successor;






	 	2.1.6	 	FHLBank Topeka means Federal Home Loan Bank of Topeka;






	 	2.1.7	 	Final Award means the amount ultimately paid to a
Participant under the Plan for a Performance Period;






	 	2.1.8	 	Participant means a person who is eligible to take part in
the Plan for a designated Performance Period as set forth in Appendix A;






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






	 	2.1.10	 	Performance Period means a three-year period over which FHLBank Topeka’s
performance is measured, with the current period to be as set forth at
Appendix A;






	 	2.1.11	 	Plan means the Federal Home Loan Bank of Topeka Long-Term Incentive Plan;






	 	2.1.12	 	Plan Award means an amount that is provisionally determined at the end of
the Performance Period subject to adjustment as provided in Section 6.4;






	3.0	 	Eligibility






	 	3.1	 	Individual employees eligible for participation for a Performance Period will
be recommended by the President/CEO to the Compensation Committee for approval. In
the case of the President/CEO, the Compensation Committee has sole authority to
approve the President/CEO’s eligibility during that applicable Performance Period.






	 	3.2	 	Eligibility shall be limited to a select group of management or other
highly-compensated employees (i.e., key employees), but normally will be further
limited to the President/CEO and senior officers who are recommended as a Participant
by the President/CEO. Other key employees may be recommended by the President as
Participants on a limited basis to address extraordinary performance and/or other
criteria and considerations as determined by the Compensation Committee.






	 	3.3	 	There will be three levels of participation:






Level I: President & CEO




Level II: Chief Operating Officer; Chief Risk Officer




Level III: Other FHLBank Topeka employees as recommended by the President/CEO and
determined by the Compensation Committee




	 	3.4	 	The list of eligible Participants for each Performance Period is set forth in
Appendix A.






	 	3.5	 	An employee who is otherwise eligible under this Plan as set forth above
remains otherwise subject to and shall cease to remain a Participant within the Plan
for violation of either or both of the following requirements:






	 	a)	 	Non-disclosure. In and as a result of the Participant’s
employment with FHLBank Topeka, Participant is or will be making use of,
acquiring knowledge of and/or adding to confidential or proprietary
information relating to FHLBank Topeka and its affiliates, including, without
limitation, FHLBank Topeka’s systems, procedures, policies, manuals, trade
secrets, business plans, financial data, strategies, methods of conducting
business, processes, procedures, standards, know-how, manuals, techniques,
technology, confidential reports and all other information, knowledge, or data
of any kind or nature relating to the products, services, or business of
FHLBank Topeka or any subsidiary, parent or other affiliate of FHLBank Topeka
(collectively, “Confidential Information”). As a material inducement to
FHLBank Topeka to allow Participant to be eligible under the Plan, Participant
shall not, at any time during or following the term of his employment with
FHLBank Topeka, directly or indirectly, except in furtherance of FHLBank
Topeka business and in accordance with FHLBank Topeka policies, use,
disseminate, divulge or disclose, for any purpose whatsoever, any Confidential
Information.






	 	b)	 	Non-solicitation. In acknowledgement and recognition of the
highly competitive and unique nature of FHLBank Topeka’s business, Participant
shall not, during his continued employment and for the one-year period
following termination of such relationship, directly or indirectly, either by
himself or through others, as an individual, partner, employee, agent,
officer, stockholder or otherwise:






	 	a.	 	solicit, divert, take away or attempt to
take away the business of the FHLBank Topeka’s present or past
customers that otherwise exist at the time of termination, or such
customers of any affiliated or related companies;






	 	b.	 	Solicit, hire, employ or endeavor to employ
any of FHLBank Topeka’s employees, or independent contractors.






	 	c)	 	Remedies. By virtue of his signing of the Participation
Agreement set forth at Appendix B, Participant acknowledges the terms and
conditions of that Agreement, as well as that FHLBank Topeka will suffer
irreparable damage and injury and will not have an adequate remedy at law in
the event of any actual, threatened or attempted breach by the Participant of
any provision of the Plan or the specific provisions of subparagraph a or b
above. Accordingly, in the event of a threatened, attempted or actual breach
by Participant of any provision of the Plan, or subparagraph a or b, in
addition to all other remedies to which FHLBank Topeka is entitled at law, in
equity or otherwise, FHLBank Topeka may be entitled to a temporary restraining
order and a permanent injunction or a decree of specific performance of any
provision of subparagraph a or b. The foregoing remedies will not be deemed
to be the exclusive rights or remedies of FHLBank Topeka for any breach of or
noncompliance with the terms of this Plan, or the Participation Agreement
signed by the Participant but will be in addition to all other rights and
remedies available to FHLBank Topeka at law, in equity or otherwise.






	4.0	 	Base Award Opportunity






	 	4.1	 	For each Performance Period, FHLBank Topeka will present a Base Award
Opportunity to Participants. The Base Award Opportunity is equal to a percentage of
each Participant’s annual base salary at the beginning of the Performance Period as
described in Appendix A. Certain key employees have a greater and more direct impact
than others on the annual success of FHLBank Topeka; therefore, these differences are
recognized by varying Base Award Opportunities for each Participant by level of
participation.






	 	4.2	 	For each Performance Period, the President/CEO may recommend to the
Compensation Committee that a discretionary award opportunity (the President’s Award)
be made to a Level II or Level III Participant indicated in Appendix A for
extraordinary performance and/or other criteria and considerations as determined by
the Compensation Committee.






	5.0	 	Performance Measures






	 	5.1	 	Three achievement levels will be defined for each Performance
Measure.	 





Threshold – The minimum achievement level acceptable for the Performance
Measure.


Target – The expected achievement level for the Performance Measure.


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




	 	5.2	 	Performance between Threshold – Target, and Target – Maximum shall be
calculated by linear interpolation of the achievement point in the applicable
performance range, as determined by the Compensation Committee.






	 	5.3	 	Performance Measures for a Performance Period will be established by the
Compensation Committee.






	6.0	 	Final Award Determination






	 	6.1	 	Except as provided in Section 6.3, Plan Awards are based on the achievement
of Bankwide performance goals and Participants achieving satisfactory levels of
individual performance; provided, however, if FHLBank Topeka fails to achieve
performance at or above the Performance Measure(s) set forth in Section 5, Plan Awards
may be reduced or eliminated for that Performance Period.






	 	6.2	 	A Participant’s Plan Award for a Performance Period equals the Base Award
Opportunity plus any discretionary awards that may be granted under the President’s
Award as set forth in Section 4.2.






	 	6.3	 	Final Awards for a Performance Period are determined by the Compensation
Committee promptly after the Performance Period based upon the Compensation
Committee’s analysis of all applicable standards set forth herein and/or consideration
of performance that is not captured in the Performance Measures. The Compensation
Committee may also consider Extraordinary Occurrences when assessing performance
results and determining Final Awards and may adjust the Performance Measures to ensure
that the purpose of the Plan is served.






	 	6.4	 	The above notwithstanding, a Final Award shall not be payable for any
Performance Period under the following circumstances:






	 	a)	 	FHLBank Topeka receives a cumulative “4” rating in its FHFA
examination, or other equivalent “operating in an unsafe or unsound condition,
or with unsafe or unsound practices” rating from applicable regulatory
authorities during any year within the Performance Period.






	 	b)	 	FHLBank Topeka has negative net income, as defined and in
accordance with GAAP accounting standards, for the cumulative Performance
Period.






	 	c)	 	Specific to each Participant only, such Participant does not
achieve satisfactory individual achievement levels during the applicable
Performance Period. For purposes of this Plan, the determination of whether
performance is deemed “satisfactory” is in the sole discretion of the
Compensation Committee.






	7.0	 	Distribution of Final Awards






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






	 	7.2	 	No Final Award received by a Participant shall be considered as compensation
for purposes of determining benefits under any employee benefit plan of FHLBank
Topeka, except as otherwise determined by FHLBank Topeka.






	 	7.3	 	Final Awards will be made as soon as practical following the end of the
Performance Period, but no later than 2 1/2 months following the end of the applicable
Performance Period.






	8.0	 	Plan Communication






	 	8.1	 	The Compensation Committee, or its designee(s) shall communicate with
Participant(s) regarding the Plan in accordance with the following schedule:






First quarter of the Performance Period - Communicate Performance Measures and
identify Plan Participants for the next Performance Period.




First quarter of the Performance Period - Communicate Performance Measures and
specific hurdles for the Performance Period.




Annually - Interim assessments of progress toward achieving Performance Measures.




End of Performance Period - Final assessment of FHLBank Topeka and individual
performance.




	9.0	 	Administrative Control






	 	9.1	 	Oversight of the Plan’s operation will be provided by the Compensation
Committee. Administration of the Plan shall be provided by the Compensation
Committee, with delegated authority to FHLBank Topeka’s President/CEO, Human Resources
and Administration Department, or other employees as applicable.






	 	9.2	 	The Compensation Committee, in consultation with the President/CEO has full
discretion and authority and is otherwise responsible for interpreting and applying
the terms of the Plan. These interpretations and applications shall be final and
binding.






	10.0	 	Miscellaneous Conditions






	 	10.1	 	Except as provided in Section 10.3, Participants must be employed by FHLBank
Topeka on the date of payment for the Performance Period, and otherwise not in
violation of Section 3.5, to receive a Final Award.






	 	10.2	 	Employees of FHLBank Topeka who are hired, transferred, or promoted during
the first six months of the Performance Period may be recommended for: (i)
participation in the Plan or (ii) participation in the Plan at a level other than the
one originally designated, in accordance with Section 3.1, and receive a prorated Base
Award Opportunity calculated as a percentage of the employee’s new base salary at the
time of the promotion.






	 	10.3	 	Notwithstanding the provisions of Section 10.1, if a Participant incurs a
Termination of Service (i) due to death, (ii) due to Disability, (iii) due to
Retirement, (iv) by the Participant for Good Reason or (v) by the Bank without Cause
during the Performance Period any portion of his or her Plan Award eligible to become
earned in the Performance Periods in which the termination occurs will, to the extent
the Performance Measures for such Performance Periods are satisfied, be treated as
earned and payable to the Participant or his or her beneficiary (as designated under a
completed Beneficiary Designation) in a pro rata manner equivalent to the period of
time during the Performance Periods that the Participant participated in the Plan.






	 	a)	 	For purposes of the Plan and this section, Disability means,
as a result of the Participant’s incapacity due to physical or mental illness,
the Participant has been absent from his or her duties with FHLBank Topeka for
an aggregate of 12 out of 15 consecutive months and, within 30 days after a
written notice of termination is thereafter given by FHLBank Topeka to the
Participant, the Participant does not return to the full-time performance of
the Participant’s duties.






	 	b)	 	Retirement means the planned and voluntary termination of the
Participant’s employment on or after the Participant has attained age 62 with
five years of employment.






	 	c)	 	For purposes of the Plan, “Good Reason” will mean a
Termination of Service by the Participant under any of the following
circumstances:






	 	a.	 	During the period: (A) beginning with the
earliest to occur of the following three dates, as applicable:
(I) 12 months prior to the execution of a definitive agreement
regarding a Reorganization of FHLBank Topeka or (II) if a
Reorganization has been mandated by federal statute, rule, regulation
or directive, 12 months prior to the effective date of such
Reorganization or (III) 12 months prior to the adoption of a plan or
proposal for the liquidation or dissolution of FHLBank Topeka, and
(B) ending on the effective date of such Reorganization.






	 	i.	 	a material change in
the Participant’s status, position, job title or principal
duties and responsibilities as a key employee of FHLBank
Topeka which does not represent a promotion from the
Participant’s status and position as in effect as of the
date hereof (hereinafter, Position), or






	 	ii.	 	the assignment to the
Participant of any duties or responsibilities (or removal
of any duties or responsibilities), which assignment or
removal is materially inconsistent with such Position, or






	 	iii.	 	any removal of the
Participant from such Position (including, without
limitation, all demotions and harassing assignments),
except in connection with the termination of the
Participant’s employment for Cause or Disability, or as a
result of the Participant’s death;






	 	b.	 	any material breach by FHLBank Topeka of
any provisions of this Plan or any other agreement with the
Participant; or






	 	c.	 	any failure by FHLBank Topeka or its
successors and assigns to obtain the assumption of this Plan by any
successor or assign of FHLBank Topeka.






	 	d)	 	For purposes of the Plan, “Cause” means (1) continued failure
of the Participant to perform his or her duties with FHLBank Topeka (other
than any such failure resulting from Disability), after a demand for
performance by the Board; (2) personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or willful violation of any law, rule or
regulation (other than routine traffic violations or similar offenses); or
(3) removal of the Participant for cause by the FHFA pursuant to 12 U.S.C.
1422b(a)(2), or by any successor agency to the FHFA pursuant to a similar
statute.






	 	10.4	 	The designation of an employee as a Participant in the Plan does not
guarantee employment. Nothing in this Plan will confer on any employee the right to
be retained in the service of FHLBank Topeka nor limit the right of FHLBank Topeka to
terminate or otherwise deal with any employee.






	 	10.5	 	The Board has the right to revise, modify, or terminate the Plan in whole or
in part at any time or for any reason without the consent of any Participant.






	 	10.6	 	No benefit or interest available under the Plan will be subject in any manner
to anticipation or alienation and no Participant has any direct or indirect right to
sell, transfer, assign, pledge, attach, garnish or otherwise encumber any anticipated
Plan Award and any effort(s) to do so shall be void and unenforceable, and FHLBank
Topeka shall not be liable in any manner for or subject to the debts, contracts,
liabilities, engagements or torts of any person who might anticipate a Plan Award
under this Plan.






	 	10.7	 	This Plan shall at all times be entirely unfunded and no provision shall at
any time be made with respect to segregating assets of FHLBank Topeka for payment of
any Plan Award under this program.






	 	10.8	 	Except to the extent superseded by laws of the United States, the laws of the
State of Kansas will be controlling in all matters relating to the Plan without regard
to the choice of law principles therein. The Plan and all Award Agreements are
intended to comply, and will be construed by FHLBank Topeka in a manner which they are
exempt from or comply with the applicable provisions of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”). To the extent there is any conflict
between a provision of the Plan and a provision of Code Section 409A, the applicable
provision of Code Section 409A will control.






	 	10.9	 	The headings and subheadings in the Plan have been inserted for convenience
of reference only and will not affect the construction of the Plan provisions. In any
necessary construction, the masculine will include the feminine and the singular the
plural, and vice versa.






	 	10.10	 	This Plan may be executed in any number of counterparts, each one
constituting but one and the same instrument, and may be sufficiently evidenced by any
one counterpart.






	 	10.11	 	The individual members of the Board and Compensation Committee will, in
accordance with FHLBank Topeka’s By-laws and other Board governance, be indemnified
and held harmless by FHLBank Topeka with respect to any alleged breach of
responsibilities performed or to be performed hereunder. In addition, notwithstanding
any other provision of the Plan, neither FHLBank Topeka nor any individual acting as
an employee or agent of FHLBank Topeka will be liable to a Participant for any claim,
loss, liability or expense incurred in connection with the Plan, except when the same
has been affirmatively determined by a court order or by the affirmative and binding
determination of an arbitrator, to be due to the gross negligence or willful
misconduct of that person.






	 	10.12	 	If any person entitled to receive a distribution under the Plan is
physically or mentally incapable of personally receiving and giving a valid receipt
for any payment due (unless a prior claim for the distribution has been made by a duly
qualified guardian or other legal representative), then, unless and until a claim for
the distribution has been made by a duly appointed guardian or other legal
representative of the person, the Compensation Committee may provide for the
distribution to be made to any other individual or institution then contributing
toward or providing for the care and maintenance of the person. Any payment made for
the benefit of the person under this Section will be a payment for the account of such
person and a complete discharge of any liability of FHLBank Topeka and the Plan.






	 	10.13	 	Evidence required of anyone under the Plan may be by certificate, affidavit,
document or other information which the person relying on the evidence considers
pertinent and reliable, and signed, made or presented by the proper party or parties.






	 	10.14	 	Any action required of or permitted by FHLBank Topeka under the Plan will be
made by the Compensation Committee through delegated authority of the Board, or its
designated authorities or individual designee(s).






	 	10.15	 	In the event any provisions of the Plan are held to be illegal or invalid
for any reason, the illegality or invalidity will not affect the remaining parts of
the Plan, and the Plan will be construed and endorsed as if the illegal or invalid
provisions had never been contained in the Plan.






	 	10.16	 	A Participant, or any other person entitled to benefits under the Plan, must
furnish the Compensation Committee with any and all documents, evidence, data or other
information the Committee considers necessary or desirable for the purpose of
administering the Plan. Benefit payments under the Plan are conditioned on a
Participant (or other person who is entitled to benefits) furnishing full, true and
complete data, evidence or other information to the Compensation Committee, and on the
prompt execution of any document reasonably related to the administration of the Plan
requested by the Compensation Committee.






	 	10.17	 	The Plan will be binding upon and inure to the benefit of FHLBank Topeka and
its successors and assigns, and the successors, assigns, designees and estates of a
Participant. The Plan will also be binding upon and inure to the benefit of any
successor organization succeeding to substantially all of the assets and business of
FHLBank Topeka, but nothing in the Plan will preclude FHLBank Topeka from merging or
consolidating into or with, or transferring all or substantially all of its assets to,
another organization which assumes the Plan and all obligations of FHLBank Topeka
hereunder. FHLBank Topeka agrees that it will make appropriate provision for the
preservation of a Participant’s rights under the Plan in any agreement or plan which
it may enter into to effect any merger, consolidation, reorganization or transfer of
assets. Upon such a merger, consolidation, reorganization, or transfer of assets and
assumption of Plan obligations of FHLBank Topeka, the term “FHLBank Topeka” will refer
to such other organization and the Plan will continue in full force and effect.






 



2



Appendix A-I

2009-2011 Performance Period




Performance Period


The Performance Period described in this Appendix shall be January 1, 2009 through December 31,
2011.



Eligibility


The following individuals are eligible to participate in the 2009 – 2011 Performance Period



	 	 	 
	 	 	Base Award Opportunity
	 	 	Percentage
	Level I:

Andrew J. Jetter, President & CEO

	 	40%



	Level II:

David S. Fisher, SEVP & Chief Operating Officer

Mark E. Yardley, EVP & Chief Risk Officer

	 	30%





	Level III:

Patrick C. Doran, SVP & General Counsel

Sonia Betsworth, SVP& Director of Credit

Brad Hodges, SVP & Director of Corporate Services

Dan Hess, FVP & Director of Member Products

Wil Osborn, FVP & Chief Financial Officer

	 	20%

















3




Appendix A-I (cont.)




Performance Measures


In calculating Base Award amounts, performance shall be measured by evaluating the following:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Minimum	 	Threshold	 	Target	 	Maximum
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	2/12 or 1/12
	Total Return(1)
	 	>9/12 vs FHLBanks	 	9/12 vs FHLBanks	 	6/12 vs FHLBanks	 	vs FHLBanks
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Salary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Measure Percentage
	 	 	0	%	 	 	50	%	 	 	100	%	 	 	150	%
	Weighting
	 	 	0.75	 	 	 	0.75	 	 	 	0.75	 	 	 	0.75	 
	Dollar Value (Salary x
Performance Measure Percentage x
Weight)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	2/12 or 1/12
	Expense Growth(2)
	 	>9/12 vs FHLBanks	 	9/12 vs FHLBanks	 	6/12 vs FHLBanks	 	vs FHLBanks
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Salary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Measure Percentage
	 	 	0	%	 	 	50	%	 	 	100	%	 	 	150	%
	Weighting
	 	 	0.25	 	 	 	0.25	 	 	 	0.25	 	 	 	0.25	 
	Dollar Value (Salary x
Performance Measure Percentage x
Weight)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	Total Value (Dollar Value for
Total Return + Dollar Value for
Expense Growth)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Base Award Opportunity Percentage
Level I (40%)
Level II (30%)
Level III (20%)
	 	 	%	 	 	 	%	 	 	 	%	 	 	 	%	 
	Total Base Award (Total Value x
Base Award Opportunity
Percentage)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






Footnotes:


1) Total Return. Total Return equals the Total Dividends, plus the Change in Retained
Earnings, divided by the Average Capital. For FHLBank Topeka: Total Dividends is defined as the sum
of the actual dividends paid on required Class A Common Stock and all Class B Common Stock during
the three-year Performance Period; Change in Retained Earnings is defined as the change in retained
earnings from 12/31/08 to 12/31/11; and Average Capital is defined as the average daily ending
balance of required Class A Common Stock and all Class B Common Stock for dates starting with
01/01/09 and ending 12/31/11. For the other FHLBanks, unless determined otherwise by the
Compensation Committee: 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 12/31/08 to 12/31/11; and Average Capital is defined as the average daily ending
balance of all capital stock outstanding for dates starting with 01/01/09 and ending 12/31/11. 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 12 FHLBanks.



2) Expense Growth. Expense growth is the dollar amount of the change in operating expenses
(including salaries and benefits, costs of quarters and other operating expenses) at FHLBank Topeka
from calendar year 2008 to calendar year 2011. For performance comparison purposes, FHLBank Topeka
will be ranked against the other FHLBanks, with the lowest increase (or greatest decrease) being
the best performance, and a 1st out of the 12 FHLBanks being the highest ranking.

 


4



Appendix A-I (cont.)




Final Award Calculation:



The value of the Final Award at the end of the Performance Period shall be determined as follows:




	 	1.	 	After the Performance Period ends, determine actual FHLBank Topeka performance under
the Performance Measure criteria (i.e., Minimum, Threshold, Target or Maximum) set forth
above.






	 	2.	 	Multiply the performance measure percentage achieved in step 1 for each performance
measure by its respective weighting.






	 	3.	 	Multiply the product from step 2 by the Participant’s Base Salary to equal initial
Dollar Value of award for each performance measure.






	 	4.	 	Add the respective Dollar Value for each performance measure to determine Total Value
amount.






	 	5.	 	Determine the applicable Base Award Opportunity Percentage, based on applicable
eligibility Level (i.e., Level I, II or III, but not Level IV).






	 	6.	 	Multiply Total Value by Base Award Opportunity Percentage to determine Base Award
amount.






	 	7.	 	Add President’s Award, if applicable, to determine Final Award amount.






	 	8.	 	Ensure that all conditions for receipt of a Final Award described in the Plan have
been met in accordance with Section 6.4.



 



  



5



Appendix A-II

2010-2012 Performance Period




Performance Period


The Performance Period described in this Appendix shall be January 1, 2010 through December 31,
2012.



Eligibility


The following individuals are eligible to participate in the 2010 – 2012 Performance Period.



	 	 	 
	 	 	Base Award Opportunity
	 	 	Percentage
	Level I:

Andrew J. Jetter, President & CEO

	 	40%



	Level II:

David S. Fisher, SEVP & Chief Operating Officer

Mark E. Yardley, EVP & Chief Risk Officer

	 	30%





	Level III:

Patrick C. Doran, SVP & General Counsel

Sonia Betsworth, SVP& Director of Credit

Brad Hodges, SVP & Director of Corporate Services

Dan Hess, FVP & Director of Member Products

Wil Osborn, FVP & Chief Financial Officer

	 	20%

















6




Appendix A-II (cont.)




Performance Measures


In calculating Base Award amounts, performance shall be measured by evaluating the following:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Minimum	 	Threshold	 	Target	 	Maximum
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	2/12 or 1/12
	Total Return(1)
	 	>9/12 vs FHLBanks	 	9/12 vs FHLBanks	 	6/12 vs FHLBanks	 	vs FHLBanks
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Salary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Measure Percentage
	 	 	0	%	 	 	50	%	 	 	100	%	 	 	150	%
	Weighting
	 	 	0.75	 	 	 	0.75	 	 	 	0.75	 	 	 	0.75	 
	Dollar Value (Salary x
Performance Measure Percentage x
Weight)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	2/12 or 1/12
	Expense Growth(2)
	 	>9/12 vs FHLBanks	 	9/12 vs FHLBanks	 	6/12 vs FHLBanks	 	vs FHLBanks
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Salary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Measure Percentage
	 	 	0	%	 	 	50	%	 	 	100	%	 	 	150	%
	Weighting
	 	 	0.25	 	 	 	0.25	 	 	 	0.25	 	 	 	0.25	 
	Dollar Value (Salary x
Performance Measure Percentage x
Weight)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	Total Value (Dollar Value for
Total Return + Dollar Value for
Expense Growth)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Base Award Opportunity Percentage
Level I (40%)
Level II (30%)
Level III (20%)
	 	 	%	 	 	 	%	 	 	 	%	 	 	 	%	 
	Total Base Award (Total Value x
Base Award Opportunity
Percentage)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






Footnotes:


1) Total Return. Total Return equals the Total Dividends, plus the Change in Retained
Earnings, divided by the Average Capital. For FHLBank Topeka: Total Dividends is defined as the sum
of the actual dividends paid on required Class A Common Stock and all Class B Common Stock during
the three-year Performance Period; Change in Retained Earnings is defined as the change in retained
earnings from 12/31/09 to 12/31/12; and Average Capital is defined as the average daily ending
balance of required Class A Common Stock and all Class B Common Stock for dates starting with
01/01/10 and ending 12/31/12. For the other FHLBanks, unless determined otherwise by the
Compensation Committee: 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 12/31/09 to 12/31/12; and Average Capital is defined as the average daily ending
balance of all capital stock outstanding for dates starting with 01/01/10 and ending 12/31/12. 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 12 FHLBanks.



2) Expense Growth. Expense growth is the dollar amount of the change in operating expenses
(including salaries and benefits, costs of quarters and other operating expenses) at FHLBank Topeka
from calendar year 2009 to calendar year 2012. For performance comparison purposes, FHLBank Topeka
will be ranked against the other FHLBanks, with the lowest increase (or greatest decrease) being
the best performance, and a 1st out of the 12 FHLBanks being the highest ranking.

 


7



Appendix A-II (cont.)




Final Award Calculation:



The value of the Final Award at the end of the Performance Period shall be determined as follows:




	 	1.	 	After the Performance Period ends, determine actual FHLBank Topeka performance under
the Performance Measure criteria (i.e., Minimum, Threshold, Target or Maximum) set forth
above.






	 	2.	 	Multiply the performance measure percentage achieved in step 1 for each performance
measure by its respective weighting.






	 	3.	 	Multiply the product from step 2 by the Participant’s Base Salary to equal initial
Dollar Value of award for each performance measure.






	 	4.	 	Add the respective Dollar Value for each performance measure to determine Total Value
amount.






	 	5.	 	Determine the applicable Base Award Opportunity Percentage, based on applicable
eligibility Level (i.e., Level I, II or III, but not Level IV).






	 	6.	 	Multiply Total Value by Base Award Opportunity Percentage to determine Base Award
amount.






	 	7.	 	Add President’s Award, if applicable, to determine Final Award amount.






	 	8.	 	Ensure that all conditions for receipt of a Final Award described in the Plan have
been met in accordance with Section 6.4.



 
 


Appendix A-III

2011-2013 Performance Period




Performance Period


The Performance Period described in this Appendix shall be January 1, 2011 through December 31,
2013.



Eligibility


The following individuals are eligible to participate in the 2011-2013 Performance Period.



	 	 	 
	 	 	Base Award Opportunity
	 	 	Percentage
	Level I:

Andrew J. Jetter, President & CEO

	 	40%



	Level II:

David S. Fisher, SEVP & Chief Operating Officer

Mark E. Yardley, EVP & Chief Risk Officer

	 	30%





	Level III:

Patrick C. Doran, SVP & General Counsel

Sonia Betsworth, SVP& Director of Credit

Brad Hodges, SVP & Director of Corporate Services

Dan Hess, SVP & Director of Member Products

Wil Osborn, SVP & Chief Financial Officer

Denise Cauthon, SVP & Chief Accounting Officer

	 	20%



















8




Appendix A-III (cont.)




Performance Measures


In calculating Base Award amounts, performance shall be measured by evaluating the following:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Minimum	 	Threshold	 	Target	 	Maximum
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	2/12 or 1/12
	Total Return(1)
	 	>9/12 vs FHLBanks	 	9/12 vs FHLBanks	 	6/12 vs FHLBanks	 	vs FHLBanks
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Salary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Measure Percentage
	 	 	0	%	 	 	50	%	 	 	100	%	 	 	150	%
	Weighting
	 	 	0.375	 	 	 	0.375	 	 	 	0.375	 	 	 	0.375	 
	Dollar Value (Salary x
Performance Measure Percentage x
Weight)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	2/12 or 1/12
	Expense Growth(2)
	 	>9/12 vs FHLBanks	 	9/12 vs FHLBanks	 	6/12 vs FHLBanks	 	vs FHLBanks
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Salary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Measure Percentage
	 	 	0	%	 	 	50	%	 	 	100	%	 	 	150	%
	Weighting
	 	 	0.25	 	 	 	0.25	 	 	 	0.25	 	 	 	0.25	 
	Dollar Value (Salary x
Performance Measure Percentage x
Weight)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	Market Value of Equity (MVE) /
Total Regulatory Capital Stock
	 	 	 	 	 	 	 	 	 	 	 	 	 	2/12 or 1/12
	(TRCS)(3)
	 	>9/12 vs FHLBanks	 	9/12 vs FHLBanks	 	6/12 vs FHLBanks	 	vs FHLBanks
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Salary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Measure Percentage
	 	 	0	%	 	 	50	%	 	 	100	%	 	 	150	%
	Weighting
	 	 	0.375	 	 	 	0.375	 	 	 	0.375	 	 	 	0.375	 
	Dollar Value (Salary x
Performance Measure Percentage x
Weight)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	Total Value (Dollar Value for
Total Return + Dollar Value for
Expense Growth + Dollar Value
for MVE/TRCS)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Base Award Opportunity Percentage
Level I (40%)
Level II (30%)
Level III (20%)
	 	 	%	 	 	 	%	 	 	 	%	 	 	 	%	 
	Total Base Award (Total Value x
Base Award Opportunity
Percentage)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






Footnotes:


1) Total Return. Total Return equals the Total Dividends, plus the Change in Retained
Earnings, divided by the Average Capital. For FHLBank Topeka: Total Dividends is defined as the sum
of the actual dividends paid on required Class A Common Stock and all Class B Common Stock during
the three-year Performance Period; Change in Retained Earnings is defined as the change in retained
earnings from 12/31/10 to 12/31/13; and Average Capital is defined as the average daily ending
balance of required Class A Common Stock and all Class B Common Stock for dates starting with
01/01/11 and ending 12/31/13. For the other FHLBanks, unless determined otherwise by the
Compensation Committee: 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 12/31/10 to 12/31/13; and Average Capital is defined as the average daily ending
balance of all capital stock outstanding for dates starting with 01/01/11 and ending 12/31/13. 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 12 FHLBanks.



2) Expense Growth. Expense growth is the dollar amount of the change in operating expenses
(including salaries and benefits, costs of quarters and other operating expenses) at FHLBank Topeka
from calendar year 2010 to calendar year 2013. For performance comparison purposes, FHLBank Topeka
will be ranked against the other FHLBanks, with the lowest increase (or greatest decrease) being
the best performance, and a 1st out of the 12 FHLBanks being the highest ranking.



3) MVE/TRCS. Using amounts reported on the Trendbook Analysis from the FHFA Call Report
System (CRS), MVE/TRCS is calculated by dividing base case MVE by TRCS (TRCS calculated as Total
Regulatory Capital minus Retained Earnings) calculated at the end of the Performance Period. For
performance comparison purposes, FHLBank Topeka will be ranked against the other FHLBanks, with the
highest MVE/TRCS being the best performance, and ranking 1st out of the 12 FHLBanks.



  



9



Appendix A-III (cont.)




Final Award Calculation:



The value of the Final Award at the end of the Performance Period shall be determined as follows:




	 	1.	 	After the Performance Period ends, determine actual FHLBank Topeka performance under
the Performance Measure criteria (i.e., Minimum, Threshold, Target or Maximum) set forth
above.






	 	2.	 	Multiply the performance measure percentage achieved in step 1 for each performance
measure by its respective weighting.






	 	3.	 	Multiply the product from step 2 by the Participant’s Base Salary to equal initial
Dollar Value of award for each performance measure.






	 	4.	 	Add the respective Dollar Value for each performance measure to determine Total Value
amount.






	 	5.	 	Determine the applicable Base Award Opportunity Percentage, based on applicable
eligibility Level (i.e., Level I, II or III, but not Level IV).






	 	6.	 	Multiply Total Value by Base Award Opportunity Percentage to determine Base Award
amount.






	 	7.	 	Add President’s Award, if applicable, to determine Final Award amount.






	 	8.	 	Ensure that all conditions for receipt of a Final Award described in the Plan have
been met in accordance with Section 6.4.



 
 


10



Appendix B




Participation Agreement



	 	 	 
	Participant:

	 	Social Security No.:
	Address:

	 	Date of Birth:






1. Agreement to Participate. The Participant (identified above and sometimes hereinafter
referred to as “I”) hereby agrees to become a Participant in the Federal Home Loan Bank of Topeka
Long-Term Incentive Plan (the “Plan”).



2. Acknowledgements: I hereby acknowledge the following: (1) I have received and reviewed
a copy of the Plan; (2) all benefits under this Plan remain subject to the claims of the general
creditors of Federal Home Loan Bank of Topeka (“FHLBank Topeka”), and in the event of the
bankruptcy, insolvency, or any similar situation involving FHLBank Topeka, I acknowledge that I
would have the rights of a general unsecured creditor with respect to the benefits under this Plan;
(3) that any right to benefits hereunder are subject to the specific terms and conditions of the
Plan, including any specific Performance Measures set forth therein; (4) no benefits will be paid
under this Plan if I am terminated for “Cause” as set forth in the Plan; (5) no benefits will be
paid under this Plan or other remedies may be available to FHLBank Topeka if I violate or fail to
fulfill the non-disclosure or non-solicitation provisions set forth under Section 3.5 in this Plan,
if applicable; (6) the benefits of this Plan may be subject to FICA taxes before such amounts are
actually paid to me; and (7) all amounts received under this Plan shall be taxable to me as
ordinary income.



IN WITNESS WHEREOF, I have executed this Participation Agreement as of the date set forth
below.



Date:



(Signature of Participant)



Received and acknowledged this            day of      , 20 .



FEDERAL HOME LOAN BANK OF TOPEKA




By:

Print Name:

Print Title:



“FHLBank Topeka”



11



BENEFICIARY DESIGNATION




CAREFULLY READ THE INSTRUCTIONS FOUND AT THE END

OF THIS FORM BEFORE PROCEEDING.




	 	 	 
	Participant:

	 	Social Security No.:
	Address:

	 	Date of Birth:






The Participant hereby designates the following individual(s) or entity(ies) as his or her
beneficiary(ies) pursuant to the terms of the Long-Term Incentive Plan of Federal Home Loan Bank of
Topeka (“FHLBank Topeka”) [Insert Name, Social Security Number, Relationship, Date of Birth and
Address of Individuals and/or fully identify any trust beneficiary by the Name of the Trust, Date
of Execution of the Trust, the Trustee’s Name, the address of the trust, and the employer
identification number of the trust]:



Primary Beneficiary(ies):



SSN/Tax I.D.:



Contingent Beneficiary(ies):



The Participant hereby reserves the right to change this Beneficiary Designation, and any such
change shall be effective when the Participant has executed a new or amended Beneficiary
Designation form, and the receipt of such form has been acknowledged by FHLBank Topeka, all in such
manner as specified by FHLBank Topeka from time to time, or on a future date specified by any such
new or amended Beneficiary Designation form.

 


IN WITNESS WHEREAS, the Participant has executed this Beneficiary Designation on the date
designated below.



Date:



(Signature of Participant)



Received:



FEDERAL HOME LOAN BANK OF TOPEKA



Date:


By:


Print Name:


Print Title:



12



INSTRUCTIONS FOR COMPLETION OF

BENEFICIARY DESIGNATION FORM




As a participant in the Federal Home Loan Bank of Topeka Long-Term Incentive Plan (the
“Plan”), you may be entitled to have certain benefits paid to a designated beneficiary under the
Plan in the event of your death. We recommend that you consult your attorney concerning the
completion of this form to assure that the desired federal tax consequences are achieved.



The originally-signed copy of this form must be mailed or delivered to FHLBank Topeka at the
following address: Federal Home Loan Bank of Topeka, One Security Benefit Pl., Suite 100, P.O.
Box 176, Topeka KS 66601-0176, and to the attention of Mr. Kurt Burger. You should also make and
keep one copy of the form, and it should be kept with your other important documents.



If no Primary Beneficiary is alive when the payment becomes due, the benefits will be paid in
equal shares to those of the Contingent Beneficiaries who are alive when the payment becomes due.



If you fail to designate a beneficiary, or if no designated beneficiaries are alive when the
payment becomes due, or if insufficient information is available to reasonably determine your
intent, the death benefits under the Plan will be paid to your estate.



THIS BENEFICIARY DESIGNATION DOES NOT ALTER OR MODIFY THE PROVISIONS OF THE PLAN. IN THE EVENT
THAT THIS BENEFICIARY DESIGNATION FORM INADVERTENTLY CONFLICTS WITH THE PROVISIONS OF THE PLAN, THE
PROVISIONS OF THE PLAN SHALL CONTROL.



  




13