Document:

2003 Executive Performance Unit Plan

 EXHIBIT 10.8 
  
 

 
  
 Executive Performance Unit Plan

  
 2003 Plan 
  
 (For Performance Period Beginning January 1, 2003 
 and Ending December 31, 2005) 
  
 Plan Document 

 FHLBSF 2003 PUP – Plan Document 
  

 Section 1: Purpose of the Plan 
  
 The purpose of the Federal Home Loan Bank of San Francisco Performance Unit Plan (“PUP” or “Plan”) is to motivate key
executives to exceed specified long-term Bank goals that directly support the business plan and long-term strategic plan. The attainment of targeted goals established for executives and the Bank can result in significant rewards to the executives
who are eligible to participate in the Plan. The Plan is also designed to assist the Bank in attracting and retaining outstanding executives by providing long-term incentive reward opportunities tied to the performance of the Bank against specified
performance measures. 
  
 Section 2: Definitions – The following terms
used in this Plan have these meanings: 
  

	2.1	Bank – Federal Home Loan Bank of San Francisco. 

  

	2.2	Board – the Board of Directors of the Bank. 

  

	2.3	Dividend Potential – one of the performance factors, as defined by the Plan, which constitute a Performance Metric. 

  

	2.4	Extraordinary Occurrences – those events that, in the opinion and discretion of the Board, are outside the significant influence of the Participants or the Bank and are
likely to have a significant unanticipated effect, whether positive or negative, on the Bank’s operating and/or financial results, including, without limit, movement in interest rates, changes in financial strategies or policies or significant
change in Bank membership. 

  

	2.5	Final Award – the amount ultimately paid to an eligible executive under the Plan. 

  

	2.6	Market Penetration – one of the performance factors, as defined by the Plan, which constitute a Performance Metric. 

  

	2.7	Member – a member of the Bank. 

  

	2.8	Participant – an officer of the Bank who is eligible to participate as designated in the Plan. 

  

	2.9	Performance Metric – each performance factor that is taken into consideration under the Plan in determining the value of the Plan Award. 

  

	2.10	Performance Period – the three-year period beginning January 1, 2003 and ending on December 31, 2005. 

  

	2.11	Plan – the Federal Home Loan Bank of San Francisco Performance Unit Plan (“PUP”). 

  

	2.12	Plan Award – an amount that is provisionally determined at the end of the Performance Period subject to adjustment as provided in Section 4.3. 

 

	2.13	Plan Year – a calendar year (January 1 through December 31) within a performance period. 

 FHLBSF 2003 PUP – Plan Document 
  

	2.14	Target Award – the award that may be earned for achieving target performance levels under each Performance Metric. 

  
 Section 3: General Description of the Plan 
  

	3.1	The Plan is a cash-based long-term incentive plan that establishes individual three-year Target Awards expressed as a percentage of a Participant’s base salary on
February 1, 2003. The Plan establishes incentive awards related to achievement of Bank performance over a three-year Performance Period. The 2003 Plan is effective January 1, 2003 and is based on performance from January 1, 2003 through December 31,
2005. 

  

	3.2	Performance Metrics for the Plan are Dividend Potential (weighted 60%) and Market Penetration (weighted 40%). Target Performance Metric levels reflect the Bank’s
long-term performance expectations. 

  

	3.3	Dividend Potential is the primary measure the Bank uses to determine total rate of return and is expressed as the spread over the Bank’s benchmark yield on invested
capital before any provisions for retained earnings or accounting impacts of FAS 133. The target Dividend Potential is consistent with the Bank’s strategic plan forecast, and reflects the Bank’s mission-consistent focus on Member’s
mortgage finance business. The target, threshold and maximum Dividend Potential for the Performance Period are set forth in the table in Section 4.2. 

  

	3.4	Market Penetration is calculated using a 3-year average of Member credit as a percentage of the Members’ total wholesale borrowings over the Performance Period. The
target Market Penetration goal for the Performance Period is the average of the Market Penetration goals set under the Bank’s Executive Incentive Plan for each of the three years in the Performance Period. The threshold and maximum Market
Penetration goals are 90% and 200% of the target Market Penetration goal, respectively. 

  
 Section 4: Plan Awards 
  

	4.1	The Target Award is a percentage of the Participant’s February 1, 2003 base salary and is established at the beginning of the Performance Period. The Target Award
percentages of base salary are as follows: 

  

			
	 Position Level

	  	Target Award %

	President	  	30%
	Executive Vice President	  	27%
	Senior Vice Presidents	  	25%
	Vice President, Human Resources	  	18%

 FHLBSF 2003 PUP – Plan Document 
  

	4.2	Except as provided in Section 4.3, Plan awards are based on the level at which the three-year Performance Metrics have been achieved; provided, however, if the Bank fails to
achieve performance at or above the threshold level for either of the Performance Metrics, no awards will be payable under the 2003 Plan. Initially, the Plan Awards will be determined pursuant to the following table, subject to modification by the
Board, pursuant to Section 4.3: 

  
 

 
  
 If actual performance under the
Plan falls between performance levels specifically designated in the table, then the amount of the Plan Award will be calculated by linear interpolation. 
  

	4.3	Final Awards are determined by the Board in its sole discretion promptly after the Performance Period based upon the amount determined pursuant to Section 4.2, modified up or
down at the Board’s discretion (+/-25% of the dollar amount of the Target Award derived from the table above) to account for performance that is not captured in the Performance Metrics, provided that the Board in its sole discretion may
consider Extraordinary Occurrences when assessing performance results and determining Final Awards and may adjust the Performance Metrics to ensure that the purpose of the Plan is served. 

  
 Section 5: Payment of Awards 
  

	5.1	Final Awards will be paid to Participants promptly after the end of the Performance Period. 

  

	5.2	To be eligible for payment of a Final Award, a Participant must be employed with the Bank in an eligible position at the end of the Performance Period and when the Final Award is
disbursed. Final Awards will be prorated for Participants promoted or hired into an eligible position during the Performance Period, and for Participants who take a leave of absence during the Performance Period. 

  

	5.3	In the event of a Participant’s voluntary or involuntary termination of employment during a Performance Period, no award will be made under the Plan except as provided
under Section 5.4. 

  

	5.4	 In the event of a termination of employment due to (a) voluntary retirement, after reaching normal retirement age as defined in the Bank’s Deferred
Compensation Plan as then in effect, (b) death, or (c) long-term disability (as defined in the Bank’s Long Term Disability Plan) during a Performance Period, a prorated award will be paid to the Participant (or the Participant’s Personal
Representative in the case of death). The Board will have the authority, in its sole discretion, to waive the proration 

 FHLBSF 2003 PUP – Plan Document 
  

	 	 
feature of the Plan. The amount of any prorated award will be determined by the number of months that the Participant was employed by the Bank and not on a
leave of absence during the Performance Period, divided by 36. 

  
 Section 6: Plan Administration 
  

	6.1	The President has the sole responsibility for interpreting and administering the Plan. The President’s decisions regarding the construction, interpretation, and
administration of the Plan shall be final and binding on all parties. 

  

	6.2	The financial information necessary to measure performance during the Performance Period will be determined by the President and reported to the Board. The Board may direct
the President to have the financial information audited by the Bank’s internal or external auditors prior to submission to the Board for purposes of determining Final Awards. 

  
 Section 7: Miscellaneous 
  

	7.1	No right to an award is created under the Plan, and no right or interest in the Plan or in any award is assignable or transferable, or subject to any lien or encumbrance,
either directly or indirectly, by operation of law or otherwise, including levy, garnishment, attachment, pledge, or bankruptcy. 

  

	7.2	Participation in the Plan does not guarantee or create any right to continued employment by the Bank, and the Bank reserves the right to dismiss any Participant at any time.
Participation in any one Performance Period does not guarantee participation in any other Performance Period. 

  

	7.3	All awards to be paid under the Plan will be subject to all applicable withholding taxes, including federal and state income taxes and employment taxes. The Bank will
withhold such taxes in accordance with applicable tax regulations. 

  

	7.4	This Plan Document represents the final, exclusive and complete statement of the terms of the Plan, and supersedes any and all prior or contemporaneous understandings,
representations, documents and communications of the Bank, the Board or the Participants, whether oral or written, relating to Plan. 

  

	7.5	No payout or award from this Plan shall be included in the definition of “pay” or “compensation” for purposes of any retirement benefit calculation,
agreement, or plan, whether qualified or nonqualified, maintained or sponsored by the Bank. 

  
 *    *    *    *2005 President's Incentive Plan

 EXHIBIT 10.9 
  
 FHLBANK SAN FRANCISCO 
 2005 PRESIDENT’S INCENTIVE PLAN 
  
 PLAN PURPOSE 
  
 To optimize the Bank’s
performance in accomplishing Board approved goals and objectives. 
  
 PLAN OBJECTIVES 
  
 To motivate key executive
(President) to exceed Bank goals and objectives which directly support the business plan and long-term strategic plan. To attract and retain an outstanding executive by providing a competitive total compensation program, including incentive award
opportunity. 
  
 INCENTIVE GOALS, WEIGHTS, AND MEASURES

  
 Incentive Goals 
  
 The incentive goals are based primarily on the objectives set forth in the Bank’s 2005
business plan. 
  
 The President’s incentive goals and objectives are
identified below: 
  

	1.	2005 Dividend Potential: Dividend potential before any provision for retained earnings or accounting impacts of FAS 133 is at least 172.0 basis points over the
benchmark yield on invested capital.  

  

	2.	2005 Market Penetration: Achieve a target market penetration of wholesale borrowings and convert non-borrowing members into borrowing members. 

  

	 	•	 	Market penetration is divided into sub-categories of members found on the following page. 

  
 [*] 
  

	 	•	 	Convert [*] non-borrowing member institutions into borrowing members. This is consistent with the Bank’s strategic objective to increase diversification of its core credit
business and maximize the value of membership among all members. 

  

	3.	2005 Leadership: Provide effective leadership and direction to the Bank and within the Federal Home Loan Bank System. 

  
 The Board of Directors will also determine whether or not to allocate a discretionary
amount/pool of dollars to the incentive compensation payout. 
  
 Incentive Goal Weights 
  
 The incentive goal weights are
set forth in the 2005 goal weights and measures table found on the following page. 
  
 Actual achievement of Bank goals one (1) and two (2) are subject to adjustment for changes resulting from movements in interest rates, changes in financial strategies or policies, any significant change in Bank membership, as well as
other factors determined by the Board. 
  

	[*]	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the
omitted portion. 

  

 1 

 Incentive Goal Achievement Measures 
  
 The plan rewards levels of goal achievement as follows: 
  

			
	 Achievement Level

	  	 Measure Definition

	200% of target	  	The most optimistic achievement level based on reasonable business assumptions and conditions.
		
	150% of target	  	An optimistic achievement level based on expected business.
		
	Target (100%)	  	Performance that is considered a target level of successful plan achievement. Incentive payments are made at the target (100%) level found in the award range scale on the following
page.
		
	Threshold (75% of target)	  	A threshold level of performance.

  
 2005

  

														
	 Goals

	  	Weights

	 	 	Measures

	 	  	 	 	 	 	 	 (75%)
 Threshold

	 	 (100%)
 Target

	 	 (150%)
 Exceeds
 Target

	 	 (200%)
 Far
 Exceeds
 Target

	 Dividend Potential
	  	36	%	 	 	 	Benchmark
+147.0 bps	 	Benchmark
+172.0 bps	 	Benchmark
+222.0 bps	 	Benchmark
+272.0 bps
	 
	 	  	 	 	 	 	 	 	 	 	 	 	 	 
	 Market Penetration
	  	32	%	 	 	 	 	 	 	 	 	 	 
	 	  	 	 	 	 Customer
 Segment
	 	 % of
 Wholesale
 Borrowings
	 	 % of
 Wholesale
 Borrowings
	 	 % of
 Wholesale
 Borrowings
	 	 % of
 Wholesale
 Borrowings

	 	  	 	 	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
							
	 	  	 	 	 	 	 	Average Balance

	 	Average Balance

	 	Average Balance

	 	Average Balance

	 	  	 	 	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
							
	 	  	 	 	 	 	 	Average Balance

	 	Average Balance

	 	Average Balance

	 	Average Balance

	 	  	 	 	 	[*]	 	[*]	 	[*]	 	[*]	 	[*]
	 
	 Leadership Goal
  
	  	10 
	%  
	 	 	 	BOD Evaluation  
	 	BOD Evaluation  
	 	BOD Evaluation  
	 	BOD Evaluation  

	 Discretionary
	  	22	%	 	 	 	BOD Determines	 	BOD Determines	 	BOD Determines	 	BOD Determines
	 	  	
	
	 	 	 	 	 	 	 	 	 	 
	 Total
	  	100	%	 	 	 	 	 	 	 	 	 	 

  
 Achievement levels can not exceed
250% for each market penetration goal segment. And, the aggregate achievement level for each plan goal/objective (dividend potential, market penetration, overall bank-wide performance, and individual goal) can not exceed 200%. 
  

	[*]	Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the
omitted portion. 

  

 2 

 AWARD DETERMINATION 
  
 The incentive award will be based on success in achieving the key business goals. At yearend, accomplishments will be assessed and a percent
of achievement will be determined for each goal. 
  

							
	 Percent of Achievement Scale

	  	Achievement Levels

	   0% - 200%
	  	200%	 	=	  	Far Exceeds Target
	 	  	150%	 	=	  	Exceeds Target
	 	  	100%	 	=	  	Target
	 	  	75-99%	 	=	  	Threshold

  
 For each goal, the percent of
achievement (subject to limits) will be multiplied by the appropriate weights. The weighted achievements will then be added to determine the total weighted achievement. The basis for award opportunity is total weighted achievement that can
not exceed 200%. Performance from 75-99% (threshold level) is below the target achievement level and therefore will result in an award less than the target award. No awards will be paid for performance between 0-74%. 
  
 AWARD OPPORTUNITY 
  
 The Board of Directors has the discretion to approve incentive awards for achievement below
75% total weighted achievement. And the Board of Directors have full discretion to modify any and all incentive payments. 
  

			
	 Total Weighted
Achievement

	  	                             Award Ranges as a % of Base
 Salary                            

	200%	  	60%
	150-199%	  	45-59%
	100-149%	  	30-44%
	75-99%	  	15-29%
	0-74%	  	Award at the discretion of the Board of Directors

  
 Payments under this plan are
subject to the approval of the Board of Directors and will be distributed within two business days following the Board’s approval at their January 2006 meeting. 
  

 3

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