EX-10.2






December 19, 2014




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.




In calculating Final Deferred Incentive Award amounts, performance shall be measured by
evaluating the following:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Minimum	 	Threshold	 	Target	 	Optimum
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	<=2/12 vs
	Total Return(1)
	 	>9/12 vs FHLBanks	 	9/12 vs FHLBanks	 	6/12 vs FHLBanks	 	FHLBanks
	Deferred Incentive
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Measure Percentage
	 	 	0	%	 	 	75	%	 	 	100	%	 	 	125	%
	Weighting
	 	 	0.50	 	 	 	0.50	 	 	 	0.50	 	 	 	0.50	 
	Dollar Value (Deferred
Incentive x Performance
Measure Percentage x Weight)
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	Market Value of Equity (MVE)
/ Total Regulatory Capital
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	<=2/12	 
	Stock (TRCS)(2)
	 	>9/12 vs FHLBanks	 	9/12 vs FHLBanks	 	6/12 vs FHLBanks	 	vs FHLBanks
	Deferred Incentive
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Measure Percentage
	 	 	0	%	 	 	75	%	 	 	100	%	 	 	125	%
	Weighting
	 	 	0.50	 	 	 	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/TRCS)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







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 12/31/2015 to 12/31/2018; 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 01/01/2016 and ending 12/31/2018. 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 12/31/2015 to 12/31/2018; and
Average Capital is defined as the average daily ending balance of all capital stock outstanding
for dates starting with 01/01/2016 and ending 12/31/2018. 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) 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 Deferral
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.




	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	 
	CAO
	 	 	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	 	CRO	 	General Counsel / CAO
	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	%