Document:

AGL-33113-10Q Exhibit 10.6

        

EXHIBIT 10.6

Director Compensation Summary
 
We currently pay our non-management directors an annual retainer of $200,000 per year; $100,000 of which is paid in cash and $100,000 of which is paid in restricted stock.  A director may elect to receive his or her entire annual retainer in restricted stock.  In addition, a director who has satisfied our Share Ownership Guidelines (described below) may also elect to receive up to 50% of the portion of the annual retainer that is not paid in cash in the form of stock rather than in the form of restricted stock.
 
Restricted stock and options vest (and, in the case of stock options, are exercisable) on the day immediately prior to the first annual general meeting of shareholders at which directors are elected following the grant of the stock or options.  However, if, prior to such vesting date, either (i) a change in control (as defined in the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan, as amended) of Assured Guaranty Ltd. occurs before the director terminates service on the Board or (ii) the director terminates service on the Board as a result of such director’s death or disability, then the restricted stock and options will vest (and, in the case of stock options, be exercisable) on the date of such change in control or the date of the director’s termination of service, whichever is applicable.  Grants of restricted stock receive cash dividends and have voting rights.  Grants of stock options may not be sold or otherwise transferred.
 
Our Share Ownership Guidelines require that each director own the greater of (i) at least 25,000 Common Shares or (ii) Common Shares with a market value of at least three times the maximum cash portion of the annual director retainer, before being permitted to dispose of any shares acquired as compensation from the Company.  Once a director has reached the Share Ownership Guideline, for so long as he or she serves on the Board, such director may not dispose of any Common Shares if such disposition would cause the director to be below the Share Ownership Guideline.  Vested restricted stock, vested restricted stock units (i.e., units for which Common Shares will be received by a director six months after termination of such director’s service on the Board), and purchased shares will all count toward the Stock Ownership Guideline.
 
In addition to the annual retainer described above:
 
•                  The Chairman of the Board receives an additional $100,000 annual retainer
•                  The Chairman of the Audit Committee receives an additional $30,000 annual retainer
•                  The Chairman of each of the Compensation Committee, the Nominating and Governance Committee, the Finance Committee and the Risk Oversight Committee receives an additional $15,000 annual retainer
•                  Members of the Audit Committee, other than the chairman, receive an additional $15,000 annual retainer
•                  Members, other than the chairmen, of each of the Compensation Committee, the Nominating and Governance Committee, the Finance Committee and the Risk Oversight Committee receive an additional $10,000 annual retainer.
 
The Company generally will not pay a fee for attendance at board or committee meetings, although the Chairman of the Board has the discretion to pay attendance fees of $2,000 for extraordinary or special meetings.EX 10.1 2013 President's Incentive Plan

EXHIBIT 10.1

FHLBank San Francisco
2013 PRESIDENT'S INCENTIVE PLAN

PLAN PURPOSE
To optimize individual and Bank performance in accomplishing Board-approved goals and objectives.

PLAN OBJECTIVES
To motivate the Bank President to exceed individual and Bank goals that support the Bank's mission and strategic plan.  To attract and retain an outstanding executive by providing a competitive total compensation program, including an annual incentive award opportunity.

ELIGIBILITY
The 2013 participant is the Bank President.

The Bank President must be employed by the Bank through December 31, 2013 to be eligible for an incentive award under the 2013 plan.  A Bank President hired, promoted, or who takes a leave of absence during the plan year is eligible to participate on a pro-rata basis.  A Bank President hired or promoted on or after October 1st may be eligible to participate during the current plan year at the discretion of the Board.      

INCENTIVE GOALS AND MEASURES

Incentive Goals
For the Bank President there are individual and Bank goals, which are weighted.  The individual goal(s) support the Bank-wide goals (See 2013 Short-Term Incentive Plan Goals and Measures) and objectives.  

The three Bank goals for 2013 are:

		
	1.
	2013 Risk Management Goal:  Continue to enhance and advance the Bank's Risk Management Division.

		
	2.
	2013 Franchise Enhancement Goal: Position the Bank and the FHLBank System to remain an integral component of the changing housing and financial services markets.  Continue to meet the Bank's mission objectives within these markets as they are currently structured, but also influence and adapt to structural changes in those markets.

		
	3.
	2013 Community Investment Goal:  Support and promote the Bank's Affordable Housing Program and Community Investment Programs.      

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

	
		
	Achievement Level
	Measure Definition

	Far Exceeds

	The most optimistic achievement level that far exceeds expected performance.

	Exceeds

	An optimistic achievement level that exceeds expected performance.

	Meets

	Performance that is expected under the Bank's Plan.  

	Threshold

	Minimum level of performance that must be achieved for awards to be paid.

Actual achievement of Bank goals is subject to adjustment for changes resulting from changes in financial strategies or policies, any significant change in Bank membership, as well as other factors determined by the Board.  Impacts of OTTI credit charges are excluded from the Meets achievement level and measurement of performance for the Adjusted Return on Capital Spread component of the Franchise Enhancement Goal. Impacts of dividend benchmark variances to plan are also excluded from the measurement of Adjusted Return on Capital Spread performance.  

1

AWARD DETERMINATION AND OPPORTUNITY
Any award will be based on success in achieving the individual and Bank goals, and on the overall performance. At yearend, accomplishments will be assessed and a percentage of achievement will be determined for each goal and any award determination will be at the discretion of the Board.
	
			
	Percentage of Goal Achievement Scale
	Aggregate Goal Achievement
	Award Range (Percentage of 2013 Base Salary)

	0% - 150%
	150% = Far Exceeds
	50%

	 
	125% = Exceeds
	48%

	 
	100% = Meets
	40%

	 
	75% = Threshold
	20%

For each goal, the percentage of achievement will be multiplied by the applicable weights.  Each weighted achievement will then be added to determine the total weighted achievement.  The basis for any award opportunity for the participant is total weighted achievement.  Total weighted achievement from Threshold achievement level (75-99%) is below the Meets achievement level and, therefore, results in an award less than one granted for achieving the Meets achievement level.  Total weighted achievement below the Threshold achievement level normally will not result in an incentive award.  The Board of Directors has full discretion to modify any and all goals, achievement levels, and incentive payments to account for matters not specifically addressed in the plan, subject to review by the Federal Housing Finance Agency, as required.  Incentive compensation reductions may be made, but are not limited to the following circumstances: (i) if errors or omissions result in material revisions to the Bank's financial results, information submitted to a regulatory or a reporting agency, or information used to determine incentive compensation payouts; (ii) if information submitted to a regulatory or a reporting agency is untimely; or, (iii) if the Bank does not make appropriate progress in the timely remediation of examination, monitoring, or other supervisory findings and matters requiring attention.

APPROVAL OF INCENTIVE AWARDS
The incentive award is approved by the Board of Directors prior to payment.  The Board of Directors has full discretion to approve any award, including an award for achievement below Threshold.  Awards will be considered by the Board of Directors at the January 2014 Board meeting or as soon thereafter as reasonably practicable.

PLAN ADMINISTRATION AND IMPLEMENTATION
The Board of Directors oversees the administration and interpretation of the Plan.
________________________________________________________________________________________

	
			
	President and CEO Goal Weights

	 
	Corporate Goal Weights
	Goal Weight (includes individual goals)

	Individual
	N/A
	10.0%

	Risk Management
	30.0%
	27.0%

	Franchise Enhancement
	50.0%
	45.0%

	Community Investment
	20.0%
	18.0%

	Total
	100.0%
	100.0%

Payments under this plan are subject to approval by the Board of Directors. Any awards will be distributed as soon as administratively possible following the effective date of Board approval.  All compensation and incentive plans are subject to review and revision at the Bank's discretion.  Such plans are reviewed regularly to ensure they are competitive and equitable. Executive Officer compensation and benefit programs are subject to Federal Housing Finance Agency review and oversight, and payments made under such programs may be subject to the Agency's approval under applicable laws and regulations in effect from time to time.  

2

	2013 Short-Term Incentive Plan Goals and Measures

									
	Goal
	Goal Component
	Goal Weight
	Goal Component Weight
	Goal Measures

	1)  RISK MANAGEMENT
	 
	30%
	 
	In the event of a significant deficiency, an operational loss or a noncompliance event, the Board of Directors will assess the impact and appropriate adjustment to the Risk Management goal achievement level, if any.

	

	A)   Complete Gap Assessment of the Prudential Management and Operations Standards
	 
	34%
	75%:
	Completion of the gap assessment before March 31, 2013.

	100%:
	Prepare a gap assessment for each of the ten standards in the standards.

	125%:
	Prepare an assessment of the separate provisions relating to the responsibilities of the Board and Management. Review any documented assurance work relating to the standards, such as internal audit, quality assurance and external reviews, and document such review.

	150%:
	Confirm through internal audit assurance, business unit walkthroughs or other procedures that compliance activities address the compliance obligations in the PMOS.

	 
	 B)   Develop an Annual Stress Test as Required by Pending FHFA Regulation
	 
	33%
	75%:
	Develop stress testing platform and methodology.

	100%:
	Business units validate the platform, develop assumptions and complete stress testing.

	125%:
	Establish a system of controls, oversight and documentation to ensure the stress testing process is controlled.

	150%:
	Present Test report to the Board and develop a roadmap to address implications relating to capital, risk positions or overall risk management.

	 
	C)   Implement Phase 1 of the Information Security Roadmap Project
	 
	33%
	75%:
	Create a security control catalog, identify control objectives and perform a risk and threat assessment on selected control objectives.

	100%:
	Implement a security control framework including the creation of a security control catalog, identify control objectives, perform a risk and threat assessment, select control procedures, map to control objectives, and define testing and validation procedures.

	125%:
	Develop streamlined risk assessment methodology for IS assets and for exceptions to the control framework.

	150%:
	Define control requirements for patch management and implement for SOX critical assets. Evaluate and select a security event management solution.

	2)  FRANCHISE ENHANCEMENT
	 
	50%
	 
	 

	 
	A)   Financial Performance
	 
	35%
	Adjusted Return on Capital Spread

	 
	75%
	100%
	125%
	150%

	 
	2.48%
	2.73%
	2.98%
	3.23%

	 
	Target and measure performance exclude impact of OTTI charges.

	 
	B)   Front Office/Back Office (FOBO) Systems
	 
	25%
	

	Subject to the Bank's quality assurance processes and requirement:

	75%:
	Complete impact and scope analysis of Calypso's FHLB Service Pack/Upgrade by yearend.

	100%:
	Complete trade Servicing and Verification for the Back Office initiative.

	125%:
	100% achievement, plus complete back office functionality for Advances, CO Bonds, and Discount Notes by year-end.

	150%:
	125% achievement, plus complete back office functionality for Derivatives by year-end. Complete impact and scope analysis of Prepayments for Structured Advances by year-end.

	 
	C)  Member Goal
	 
	20%
	

	Advances and Letters of Credit (LC) Volume
Average Outstanding Daily Balance (in billions)

	 
	75%
	100%
	125%
	150%

	 
	[*]
	[*]
	[*]
	[*]

	([*])

	 
	10%
	 
	Member Recruitment (# of members)

	 
	75%
	100%
	125%
	150%

	 
	[*]
	[*]
	[*]
	[*]

	 
	10%
	

	Letters of Credit Conversions (# of members)

	 
	75%
	100%
	125%
	150%

	 
	5
	7
	9
	11

	3)  COMMUNITY INVESTMENT
	 
	20%
	 
	 

	 
	A)  CIP/ACE/HPA Advances, Letters of Credit & AHEAD (# of members)
	 
	35%
	 
	75%
	100%
	125%
	150%

	 
	27
	30
	33
	36

	 
	B)  New CICA Products ($ Mils)
	 
	35%
	 
	75%
	100%
	125%
	150%

	 
	$550
	$575
	$600
	$625

	 
	C)  Member Participation in Bank Workshops & Technical Assistance (# of members)
	 
	30%
	 
	75%
	100%
	125%
	150%

	 
	59
	62
	65
	72

		
	[*]
	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.

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