Document:

2010 Executive Performance Unit Plan

 EXHIBIT 10.7 
 FHLBANK San Francisco 
 2010 Executive Performance
Unit 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 business plan and long-term 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 2010 EPUP is effective January 1, 2010, and is based on performance from
January 1, 2010 through December 31, 2012. 
 PERFORMANCE METRICS 
 Performance metrics balance financial, member, 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 50% and Risk Management will be weighted 50%. Target performance levels reflect 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 is the primary measure the Bank uses to determine total rate of return to
shareholders. The target Adjusted Return on Capital Spread has been set at 1.65% and represents the projected average for the performance period (January 1, 2010 through December 31, 2012). The target Adjusted Return on Capital Spread 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 (75% of plan) Adjusted Return on Capital Spread has been set at 1.40%, 150%
of target has been set at 2.15% and 200% of target has been set at 2.65%. 

  

	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 2010, 2011, and
2012 annual incentive plans, and will be set at the end of the performance period. 

 Actual achievements of performance
metrics are subject to adjustment for changes resulting from movements in interest rates, changes in financial strategies or policies, as well as other factors determined by the Board for which management should not receive credit or be held
accountable. 

 EPUP ACHIEVEMENT MEASURES 
 The Executive Performance Unit Plan rewards four levels of performance achievement, as follows: 
  

			
	 Achievement Level
	  	 Measure Definition

	Threshold (75%)	  	Minimum level of performance that must be achieved for awards to be paid.
		
	Target (100%)	  	Performance that is expected under the Bank’s Plan.
		
	150% of Target	  	An optimistic achievement level that exceeds levels forecasted from expected business.
		
	200% of Target	  	The most optimistic achievement level that far exceeds levels forecasted from expected business.

 AWARD DETERMINATION 
 An award is calculated and paid in whole or part at the
end of the 2010 plan term (during the first quarter of 2013). Awards earned are based on the level at which the 3-year performance goals have been achieved. 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. Target payouts for the January 1, 2010 through December 31, 2012, performance period are presented on the following page.
Note that the percentages of award opportunity provided below are not the award percentages of base salary. See the formula on the next page for payout percentages. 
  

															
	 Potential Dividend Spread Goal (3 Yr. Avg.)
	  	 Risk Management Goal (3 Yr. Avg.)
1
	  	  
	 							 
	  	  	 	  	% of Award
Opportunity	  	 	  	 	  	 	  	% of Award
Opportunity	  	  
	 	 	 			 	 	 
	 Threshold
	  	1.40%	  	25%	  		  	Threshold	  	 	  	25%	  	 
	 	 	 			 	 	 
	 Target
	  	1.65%	  	50%	  		  	Target	  	 	  	50%	  	 
	 	 	 			 	 	 
	 150% of Target
	  	2.15%	  	75%	  		  	150% of Target	  	 	  	75%	  	 
	 	 	 			 	 	 
	 200% of Target
	  	2.65%	  	100%	  		  	200% of Target	  	 	  	100%	  	 
	 	 
	Notes:	  	 
	 1        Performance levels for risk management will be based on the average of the actual 3-year performance during the 3-year EPUP period.
  
	  	 

 Award payouts may be modified up or down at the Board’s discretion (+/- 25% of the dollar award derived from the table) to account for performance that is not captured in the performance metrics. Performance below the threshold
achievement level for either measure normally will not result in an incentive award. 

 AWARD OPPORTUNITY 
 Individual EPUP targets for each plan year are established annually for each participant at the beginning of each calendar year. Target
award levels are stated below as a percentage of the February 1st base salary at the beginning of the performance period. 
 Award Range Scale
(some % rounded) 
 2010 Plan Year – EPUP Payout as % of 2010 Base Salary (as of
February 1st) 
  

													
	 Position Level
	  	Threshold1	 	 	Target2	 	 	150% of Target3	 	 	200% of Target4	 
	 President
	  	25	% 	 	50	% 	 	75.0	% 	 	100	% 
	 Executive Vice President
	  	20	% 	 	40	% 	 	60.0	% 	 	80	% 
	 Senior Vice Presidents
	  	18	% 	 	35	% 	 	52.5	% 	 	70	% 

 Notes:

  

			
	1 –	 	50% of target payout; based on achieving 1.40% Adjusted Return on Capital Spread and the 3-year average of the actual risk management achievement levels during the
period.
		
	2 –	 	100% of target payout; based on achieving 1.65% Adjusted Return on Capital Spread and the 3-year average of the actual risk management achievement levels during the
period.
		
	3 –	 	150% of target payout; based on achieving 2.15% Adjusted Return on Capital Spread and the 3-year average of the actual risk management achievement levels during the
period.
		
	4 –	 	200% of target payout; based on achieving 2.65% Adjusted Return on Capital Spread and the 3-year average of the actual risk management achievement levels during the
period.

 Awards will be considered by the Board of Directors at the end of the 3-year performance period (during the first
quarter of 2013) and are to be paid to participants in cash. 
 Example of how award would be calculated for a Senior
Vice President for 2010 EPUP 
  

													
	 (50% weight)
 3
yr. Average Risk
 Management Level Achieved:
 (200% of Target)
	 	  
  
 }
	  	Percent of Target Payout:
150%	  	2010 Base
Salary	  	Target EPUP Payout
(% of Base Salary)	  	Payout % Based
on Performance	  	EPUP Payment
paid Q1 2013
	  
 (50% weight)
 3 yr. Average Adjusted Return
 on Capital Spread Achieved:
 (Maximum or 100%)
	 	  	  	$330,000 X	  	35% X	  	150% =	  	$173,250
	 	  	  		  		  		  	
	 	  	  		  		  		  	
	 	  	  		  		  		  	

 Payments under this plan are subject to approval by the Board of Directors. 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 be subject to the Agency’s approval under applicable laws and regulations in effect from time to time.2010 President's Incentive Plan

 EXHIBIT 10.11 
 2010 President’s Incentive Plan 
 2010 Risk Management Goal
[Segment Weight = 40%] 
 Qualitative assessment at yearend by Board of Directors. 
 Goal Measures 
  

	 	•	 	 Enhance the framework for balancing the risks to the Bank as a cooperative, from individual member credit deterioration, with the mission of the Bank
to support members’ housing finance objectives. 

  

	 	•	 	 Enhance the Bank’s ability to prudently support weak and troubled members. 

  

	 	•	 	 Enhance accounting and risk management processes and practices for the Bank’s portfolio of non-agency MBS to improve fair value measurement,
credit risk and accounting write-down risk analysis, and funding and hedging risk analysis. 

  

	 	•	 	 Improve the measurement and management of strategic liquidity risk to enhance the Bank’s ability to provide liquidity to members.

  

	 	•	 	 Maintain System leadership in accounting policy and System consistency projects. 

  

	 	•	 	 Begin implementation of the new Front Office and Back Office trading, operations and accounting infrastructure to place the Bank in a better position
to meet regulatory, risk management and competitive challenges. 

 2010 Franchise Enhancement Goal [Segment Weight = 40%]

 Qualitative assessment at yearend by Board of Directors. 
 Goal Measures 
  

	 	•	 	 Achieve targeted potential dividend spread. Enhance financial strategies that enable the Bank to effectively manage capital and maintain the
appropriate balance between financial risk and financial return. 

  

	 	•	 	 Innovate and pursue business and product development opportunities to enhance and promote the value of the franchise to members, prospects and
constituents. 

  

	 	•	 	 Develop strategies and implementation plans to address either significant shrinkage or significant growth in advances. 

  

	 	•	 	 Develop and actively pursue strategies to counter the unintended consequences of Congressional and regulatory efforts that affect the FHLBanks’
funding and advances franchises. 

  

	 	•	 	 Develop a strategy to resume repurchase of excess capital stock and payment of dividends. 

 2010 Community Investment Goal [Segment Weight = 20%] 
 Qualitative assessment at yearend by Board of Directors. 
 Goal Measures 
  

	 	•	 	 Promote the use of the Bank’s CICA products. 

  

	 	•	 	 Promote active participation in the Banks’ Affordable Housing Program and Set-Aside Programs. 

  

	 	•	 	 Provide effective technical assistance and outreach for Affordable Housing Program and Set-Aside Programs and promote financial literacy, foreclosure
prevention, and re-use of foreclosed homes for affordable housing. 

 2010 President Goal Weights 
  

							
	 	  	President	 
	 	  	Corporate
Goal
Weights	 	 	Goal Weight
(includes individual
goals)	 
	 Individual
	  	N/A	  	 	10	% 
	 Risk Management
	  	40	% 	 	36	% 
	 Franchise Enhancement
	  	40	% 	 	36	% 
	 Community Investment
	  	20	% 	 	18	% 
	 Total
	  	100	% 	 	100	%

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