Document:

Exhibit

EXHIBIT 10.9

FHLBank San Francisco
2016 EXECUTIVE INCENTIVE PLAN

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

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

ELIGIBILITY
Participants are Bank executive officers whose performance has a major impact on the Bank’s success.  The 2016 participants are the incumbents in the Bank’s senior officer positions, including:

Executive Vice President
Senior Vice President, Chief Risk Officer
Senior Vice Presidents (excluding the Senior Vice President, Director of Internal Audit - participates in the Audit Executive Incentive Plan)

Participants must be employed by the Bank through January 1, 2017 to be eligible for an incentive award under the 2016 plan.  Participants hired, promoted, or who have a leave of absence during the plan year are eligible to participate on a pro-rata basis.  Participants 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 each participant there are individual goals and Bank goals, which are weighted for each participant.  The individual goals support the Bank-wide goals (See 2016 Short-Term Incentive Plan Goals and Measures) and objectives.  

The three Bank goals for 2016 are:

1.    2016 Risk Management Goal: Continue to enhance and advance the function and approaches to the Bank’s risk management.
2.    2016 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.    2016 Community Investment Goal:  Support and promote the Bank’s Affordable Housing Program and Community Investment Programs.
Incentive Goal Achievement Measures
The plan 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 achievement levels 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 excluded from the measurement of Adjusted Return on Capital Spread performance.

January 2016

  

AWARD DETERMINATION AND OPPORTUNITY
All plan participant awards will be based on success in achieving individual and Bank goals, and on overall performance.  In the case of the Bank goals, the same achievement levels apply to all participants.  At yearend, accomplishments will be assessed and a percentage of achievement will be determined for each goal and any award determination shall be approved by the Board.

	
			
	Percentage of Goal Achievement Scale
	Aggregate Goal Achievement
	Award Range (Percentage of 2016 Base Salary) EVP/SVP

	0% - 150%
	150% = Far Exceeds
	50.0%

	 
	125% = Exceeds
	48.0%

	 
	100% = Meets
	40.0%

	 
	75% = Threshold
	20.0%

For each goal, the percentage of achievement will be multiplied by the applicable goal weights.  Each weighted achievement will then be added to determine the total weighted achievement.  The basis for each participant’s award opportunity 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
All incentive awards must be approved by the President and the Board of Directors prior to payment, including an award for achievement below Threshold.  Awards will be considered by the Board of Directors at the January 2017 Board meeting, or as soon thereafter as reasonably practicable.

TIMING OF PAYMENT OF INCENTIVE AWARDS
Payment of an incentive award, if any, will be paid in the taxable year immediately following the end of the performance period and no later than 60 days after the date that the Board of Directors’ approval of such award becomes effective.

PLAN ADMINISTRATION AND IMPLEMENTATION
The President is responsible for overseeing the administration and interpretation of the plan.

The plan is intended to be exempt from Section 409A of the Internal Revenue Code and the provisions of the plan shall be construed and interpreted consistent with such intent.
	
					
	2016 Executive Officer Goal Weights

	 
	Executive Vice President 
and Senior Vice Presidents
	Senior Vice President, Chief Risk Officer

	 
	Corporate Goal Weights
	Goal Weight (includes individual goals)
	Corporate Goal Weights
	Goal Weight (includes individual goals)

	Individual
	N/A
	10.0%
	N/A
	10.0%

	Risk Management
	30.0%
	27.0%
	60.0%
	54.0%

	Franchise Enhancement
	50.0%
	45.0%
	26.0%
	23.4%

	Community Investment
	20.0%
	18.0%
	14.0%
	12.6%

	Total
	100.0%
	100.0%
	100.0%
	100.0%

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 not become effective until after the Agency's non-objection under applicable laws and regulations in effect from time to time.

January 2016

2016 Short-Term Incentive Plan Goals and Measures
	
									
	2016 Goals
	2016 Goal Components
	Goal Weight
	Goal Component Weight
	2016 Short-Term Incentive Plan Goal Measures

	1)  RISK MANAGEMENT
	 
	30%
	 
	In the event of a Significant Deficiency or Material Weakness in internal control over financial reporting, a significant operations loss, or a significant noncompliance with Bank policy as described in the Bank’s Risk Management Policy, the Board of Directors will assess the impact and appropriate adjustment to the Risk Management goal achievement level, if any.

	 
	A) Strategic Sourcing and
Vendor Management 
	 
	50%
	75%:
	threshold

	•
	Strategic Sourcing: Adopt new Bank Purchasing Policy

	•

	Vendor Management: Adopt Risk Management Tool for assessment and diligence of the Bank's Strategic vendors

	100%:
	75% achievement, plus: 

	•
	Strategic Sourcing: Attain 40% spend under management (SUM)

	•
	Vendor Management: Rationalize vendor base into Strategic, Preferred, and Tactical vendor categories

	125%:
	100% achievement, plus:

	•
	Strategic Sourcing: Attain 50% SUM

	•
	Vendor Management: Adopt Risk Management Tool for assessment and diligence of Preferred vendors

	150%:
	125% achievement, plus:

	•
	Strategic Sourcing: Attain 60% SUM

	•
	Vendor Management: Adopt Risk Management Tool for assessment and diligence of Tactical vendors

	 
	B) Business Continuity
	 
	50%
	75%:
	Develop and establish Business Continuity Management (BCM) Program Standards

	100%:
	Achieve 50% of targets in the BCM Program Planning and Exercise Standards

	125%:
	Achieve 50% of targets in the BCM Program Threat Analysis and Crisis Management Standards

	150%:
	Achieve 75% of targets in the BCM Program Education, Awareness and Training, and BCM Program Governance and Reporting Standards

	2)  FRANCHISE ENHANCEMENT
	 
	50%
	 
	 

	 
	A) Financial Performance
	 
	35%
	Adjusted Return on Capital Spread

	 
	75%
	100%
	125%
	150%

	 
	3.27%
	3.52%
	3.77%
	4.02%

	Achievement level targets and measured performance exclude OTTI credit charges.

	 
	B) Technology
	 
	25%
	75%:
	Complete 2 strategic technology initiatives: [Technology Resiliency-Phase I and Vendor/Procurement Management]

	100%:
	75% achievement, plus: complete 2 additional (total of 4) strategic technology initiatives

	125%:
	100% achievement, plus: complete 2 additional (total of 6) strategic technology initiatives

	150%:
	125% achievement, plus: complete 2 additional (total of 8) strategic technology initiatives

	 
	 
	 
	 
	Calypso Upgrade not included in the total, given dependency on the vendor to release the product before the upgrade can begin.

	 
	C) Member Business
	 
	20%
	 
	Advances and Letters of Credit (LC) Volume
Average Outstanding Daily Balance ($Bils)

	 
	75%
	100%
	125%
	150%

	 
	$[*]
	$[*]
	$[*]
	$[*]

	5%
	 
	Mortgage Partnership Finance (MPF) Volume
($Mils)

	 
	75%
	100%
	125%
	150%

	 
	$[*]
	$[*]
	$[*]
	$[*]

	5%
	 
	Mortgage Partnership Finance (MPF)
(Conversions of New/Non-Selling PFIs)

	 
	75%
	100%
	125%
	150%

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

	 
	Measured by existing non-sellers or new PFIs that sell loans.

	10%
	 
	Recruitment (# of New Members)

	 
	75%
	100%
	125%
	150%

	 
	7
	9
	11
	13

	3)  COMMUNITY
INVESTMENT
	 
	20%
	 
	 

	 
	CIP/ACE Advances, Letters of Credit and AHEAD
(# of Members)
	 
	100%
	(# of Members)

	 
	75%
	100%
	125%
	150%

	 
	38
	41
	44
	47

[*]  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

January 2016Exhibit

EXHIBIT 10.11

FHLBank San Francisco
2016 Executive Performance Unit Plan [the Long-Term Incentive Plan]
Summary Description

PLAN PURPOSE
To optimize the Bank’s performance in accomplishing Board-approved goals.
PLAN OBJECTIVES
To motivate key executives to position the Bank to exceed specified long-term Bank goals that directly support the Bank’s mission and strategic plan. To attract and retain outstanding executives by providing a competitive total compensation program, including a cash-based long-term incentive reward opportunity tied to the performance of the Bank against specified performance measures.
PARTICIPANTS
Participants are key executives whose performance has a major impact on the Bank’s success. Participants are the incumbents in the Bank’s senior officer positions, including:
President
Executive Vice President
Senior Vice Presidents (excluding the Senior Vice President, Director of Internal Audit – participates in the Audit Performance Unit Plan)
PERFORMANCE PERIOD
The Executive Performance Unit Plan (EPUP) pays incentive awards related to the achievement of Bank performance over a three-year performance period. The 2016 EPUP is effective January 1, 2016, and is based on performance from January 1, 2016 through December 31, 2018.
PERFORMANCE METRICS
Performance metrics balance financial and risk management objectives, focusing on achievement of Adjusted Return on Capital Spread and Risk Management goals. Adjusted Return on Capital Spread will be weighted 30% and Risk Management will be weighted 70%. The Meets performance level reflects long-term performance expectations. Unlike the President’s Incentive Plan (PIP) and Executive Incentive Plan (EIP), participants do not have an individual goal under the EPUP.
1.3-Year Average Adjusted Return on Capital Spread: Adjusted Return on Capital Spread (AROCS) is the primary measure the Bank uses to determine total rate of return to shareholders. The Meets AROCS achievement level has been set at 2.69% and represents the projected average for the performance period (January 1, 2016 through December 31, 2018). The Meets AROCS achievement level is consistent with the Bank’s Strategic Plan forecast and reflects the Bank’s continued mission-consistent focus on member’s mortgage finance business. Threshold AROCS has been set at 2.44%, Exceeds achievement level has been set at 2.94% and Far Exceeds achievement level has been set at 3.19%.
2.3-Year Average Risk Management: Risk Management is based on the 3-year average of the actual Risk Management goal achievement levels under the 2016, 2017, and 2018 annual incentive plans, and will be set at the end of the performance period.

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 Adjusted Return on Capital Spread achievement levels, but are included in the measurement of actual Adjusted Return on Capital Spread performance. Impacts of dividend benchmark variances to plan are excluded from the measurement of Adjusted Return on Capital Spread performance.

January 2016

EPUP ACHIEVEMENT MEASURES
The Executive Performance Unit Plan rewards four levels of performance achievement, 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.

AWARD DETERMINATION
An award is calculated and paid in whole or part at the end of the 2016 plan term (during the first quarter of 2019). Awards earned are based on the level at which the 3-year performance goals have been achieved. Final awards may 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. Note that the percentages of award opportunity provided below are not the award percentages of base salary. See below for award opportunities and ranges.
	
								
	Adjusted Return on Capital Spread Goal 
(3-Year Average) 1
	Risk Management Goal 
(3-Year Average) 2

	30% goal weight
	 
	% of Award Opportunity
	70% goal weight
	 
	 
	% of Award Opportunity

	Threshold
	(75%)
	2.44%
	22.5%
	Threshold
	(75%)
	Average of 3- 
Year 
Achievement
	52.5%

	Meets
	(100%)
	2.69%
	30.0%
	Meets
	(100%)
	70.0%

	Exceeds
	(125%)
	2.94%
	37.5%
	Exceeds
	(125%)
	87.5%

	Far Exceeds
	(150%)
	3.19%
	45.0%
	Far Exceeds
	(150%)
	105.0%

	 

	1 Meets excludes OTTI impact, while measured performance includes OTTI impact.

	2 Measured by 3-year achievement levels of Risk Management goal under the respective STIPs.

Performance below the Threshold achievement level for either measure 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.

AWARD DETERMINATION AND OPPORTUNITY
Achievement award levels are stated below as a percentage of the February 1st base salary at the beginning of the performance period.

2016-2018 EPUP Plan Period
	
				
	Percentage of Goal Achievement Scale
	Aggregate Goal Achievement
	Award Range (Percentage of 2016 Base Salary)

	0% - 150%
	150% = Far Exceeds
	50.0%

	 
	125% = Exceeds
	48.0%

	 
	100% = Meets
	40.0%

	 
	75%  = Threshold
	20.0%

Awards will be considered by the Board of Directors at the end of the 3-year performance period (during the first quarter of 2019).  The amount of an award, if any, shall be approved by the Board of Directors. All incentive awards are governed by the terms and conditions of the 2016 Executive Performance Unit Plan.  In the event there is any conflict between the terms of this summary description and the terms of the plan document, the plan document shall govern.
To be eligible for the Executive Performance Unit Plan payment, participants must be employed with the Bank through the end of the 3-year performance period, except in the case of a voluntary normal retirement, a qualified long-term disability, or death. EPUP awards will be prorated for participants in position less than a full plan term, including participants who have a leave of absence greater than one month during the plan term. 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 not become effective until after the Agency's non-objection under applicable laws and regulations in effect from time to time.

January 2016

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