Document:

Exhibit 10.1

 

Exhibit 10.1

Human Resources Policy

Revised 11/03

Policy 2.10

POLICY 

SEVERANCE POLICY

	I.  	Policy
	 
	   	The Bank provides for payment of severance benefits to any eligible employee upon
involuntary termination of employment.
	 
	II.  	Scope
	 
	   	This policy applies to full-time and part-time employees (>20 hours per week) with a
minimum of 6 months of service whose employment with the Bank is discontinued due to, but
not limited to, any of the following events: elimination of employee’s position, general
reduction in staff, substantial job modification resulting in employee’s inability to
qualify or perform the revised job, changing business needs, reorganization of Bank staff,
or reassignment of staff requiring relocation of employee’s primary residence. Employees who
are terminated for cause are not eligible for benefits under this policy.
	 
	III.  	Responsibility
	 
	   	Overall responsibility for this policy is assigned to the Manager, Human Resources and
Administration. Bank management is responsible for identifying and providing written
documentation regarding any reduction in staff. Exceptions to this policy must be approved
by the President. Benefits provided to executive and senior management under this policy
must be reviewed and approved by the Human Resources Committee of the Board of Directors.
	 
	IV.  	Administration
	 
	   	Notification
	 
	   	Employees are provided a minimum of two weeks’ notice in the event of the
termination of their employment. The Bank may, at its discretion, provide salary
continuation in lieu of notice.
	 
	   	Policy Benefits
	 
	   	Salary Continuation
	 
	   	The salary continuation benefit reflects the employee’s current salary, position and length
of Bank service. The benefit is calculated as follows:

	 	•  	Executive and Senior Management –

	 	ü  	4 weeks base salary per year of service
	 
	 	ü  	26-week minimum
	 
	 	ü  	52-week maximum

 

 

Severance

Page 2 of 3

	 	•  	Exempt Employees (paygrade 35 and above) –

	 	ü  	3 weeks base salary per year of service
	 
	 	ü  	4-week minimum
	 
	 	ü  	36-week maximum

	 	•  	Exempt Employees (below paygrade 35) –

	 	ü  	2 weeks of base salary per year of service
	 
	 	ü  	3-week minimum
	 
	 	ü  	26-week maximum

	 	•  	Non-Exempt Employees –

	 	ü  	1 week of base salary per year of service
	 
	 	ü  	2-week minimum
	 
	 	ü  	13-week maximum

Under certain circumstances the Bank may extend salary continuation beyond the
described benefit levels.

Years of Service

Years of service are calculated based upon the employee’s service years as of the most
recent service anniversary. Employees with more than one year of service receive no credit
for partial years. Employees with less than one full year of service receive the minimum
severance benefit. Any prior service within Bank system is included as service in the
calculation of severance benefits.

Payment

Salary continuation is paid in semi-monthly installments in accordance with the Bank’s
regular semi-monthly pay periods. Salary continuation begins with the first full pay period
after termination date. Payments are subject to all required withholdings. Salary
continuation may be paid in a lump sum at the employee’s request.

Benefit Continuation

The Bank continues to provide employee medical coverage for the length of the salary
continuation period. The medical carrier and level of coverage (single, two party, family)
remains the same as the employee benefit election in effect at the time of the termination
of employment.

The employee’s medical benefit contribution will be automatically deducted from the salary
continuation payments. Employees who request lump sum payment must submit payment directly
to the Bank for their portion of the medical cost. The Bank will not pay cash in lieu of
medical benefits.

 

 

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All terminating employees and their dependents who are participants in the Bank’s dental and
vision benefits have an option to continue coverage for a specified number of months
following termination of their coverage. The employee is responsible for the full cost of
such continuing coverage plus a 2% administrative fee. A letter outlining the option of
benefit continuation is sent to employees following termination of their coverage (see
Benefit Continuation procedure).

Any vested retirement and/or thrift plan benefits are handled in the same manner as any
employee who separates their employment from the Bank. All terminated employees, regardless
of position, receive payment for earned, unused vacation.

Tuition assistance approved and paid by the Bank prior to the termination date need not be
reimbursed upon termination.

Outplacement Services

As part of this policy, the Bank may provide the following outplacement services:

	 	•  	COO/Senior Management — formal individualized 12-month executive outplacement program
	 
	 	•  	Exempt Employees — 3-month individualized program
	 
	 	•  	Non-Exempt Employees — group career workshop

Outplacement services are required to begin within 30 days of termination. The Bank will not
pay cash in lieu of outplacement services.

Separation Agreement

The Bank will require a signed Separation Agreement between the Bank and the employee
relative to any salary, benefits, or services offered through this policy. The agreement
includes a description of the severance benefits and provides a general release by the
employee for any claims against the Bank relative to the separation action as well as any
other claims relating to employment with the Bank.

Approvals/Exceptions

All severance packages must have the approval of the President. No exceptions to this
policy may be made without the approval of the President.

Right to Amend or Terminate

The Bank reserves the right to amend, modify, or terminate this policy at any time without
notice.Exhibit 10.2

 

Exhibit 10.2

FEDERAL HOME LOAN BANK OF PITTSBURGH

ANNUAL INCENTIVE COMPENSATION PLAN

(Revised 1/1/05)

	I.  	EFFECTIVE DATE
	 
	   	The Annual Incentive Compensation Plan (the Plan) of the Federal Home Loan Bank of
Pittsburgh is effective as of January 1, 1991. Annual Incentive Compensation Awards
(Awards) may be paid for each Plan Year (January 1 to December 31) thereafter, in accordance
with the provisions of the Plan.
	 
	II.  	PURPOSE AND OBJECTIVES
	 
	   	The Annual Incentive Compensation Plan is designed to attract, retain
and motivate key Bank employees. The Plan seeks to support the
annual planning process and achievement of the Bank’s operational and
profitability goals. Within this overall purpose, there are three
primary objectives:

	 	•  	To focus attention on the establishment and achievement of
objective goals which are linked to the Bank’s business plan and
success factors.
	 
	 	•  	To provide opportunities to earn financial rewards based on
improved Bank performance and individual contributions to that
performance.
	 
	 	•  	To ensure that variable compensation opportunities are
reasonable and comparable with incentive payments made to employees
of other similar businesses, including financial institutions, with
similar duties and responsibilities.

	III.  	PLAN ADMINISTRATION
	 
	   	The Plan is administered by the President, the Human Resources
Committee of the Board of Directors (the Committee), and the Board of
Directors (the Board).

	 	A.  	Responsibilities of the President

	   	The President will provide recommendations to the Committee and the Board regarding Plan
participation, Bank and individual performance goals, Bank and individual achievements, and
Awards for executive management. The President is responsible for approval of Plan
participation, Bank and individual performance goals, Bank and individual achievements, and
Awards for staff below the executive management level. The President’s responsibilities
also include monitoring the effectiveness of the Plan, the payment process, and providing
recommendations to the Committee and the Board regarding modifications to the Plan.

 

 

FEDERAL HOME LOAN BANK OF PITTSBURGH

ANNUAL INCENTIVE COMPENSATION PLAN

Page 2

	 	B.  	Responsibilities of the Committee

	   	The Committee will review all Plan recommendations and revisions (including all performance
goals and Awards) from the President and present final recommendations to the Board for its
approval. In addition, the Committee will review the performance of the President and
determine an annual Award, to be recommended to the Board for its approval.

	 	C.  	Responsibilities of the Board

	   	The Board will review and approve as appropriate all recommendations from the Committee and
the President.
	 
	IV.  	ELIGIBILITY
	 
	   	All Bank staff are eligible to participate in the Plan.
Participation for executive management is recommended by the President
to the Committee and approved by the Board.
	 
	   	Eligibility is reviewed annually to assure continued appropriateness,
and participants are notified by Human Resources of their
participation in the Plan. Upon designation as a participant, each
participant will be given a copy of the Plan. No employee will have
the automatic right to be selected as a participant for any year or,
having been selected as a participant for one year, be considered a
participant for any other year.
	 
	V.  	INCENTIVE AWARD OPPORTUNITY
	 
	   	Certain positions have a greater and more direct impact than others on the achievement of
Bank performance. Those differences are recognized by varying the incentive opportunity,
expressed as a percentage of a participant’s base salary or, in the case of non-exempt
employees such employees’ total base salary and overtime earnings over the plan year.
	 
	   	A summary of the annual incentive plan award levels is attached as Attachment 1. Each
participant shall be provided with a separate attachment showing their level of
participation in the Plan. Awards for performance results between the threshold and maximum
levels are calculated as a percentage of the target level.
	 
	VI.  	PERFORMANCE MEASURES
	 
	   	The Plan is designed to reward participants to the extent the
participant meets objective performance goals related to Bank and/or
individual performance criteria established by the Board. The mix of
Bank and individual performance goals is determined for each
participant at the onset of each Plan Year.

 

 

FEDERAL HOME LOAN BANK OF PITTSBURGH

ANNUAL INCENTIVE COMPENSATION PLAN

Page 3

	   	Bank-wide Performance Goal 
	 
	   	One or more Bank-wide goal(s) are established for each Plan Year. These goals can be both
quantitative and qualitative, and are established on the basis of the annual operating
budget and business plan as approved by the Board.
	 
	   	A performance schedule is established to indicate potential total awards payable at various
levels of performance: the threshold level below which no award is paid, the target
objective, and a maximum level which defines the limit of maximum incentive payment under
the plan.
	 
	   	For executive management and various other positions in the Bank, generally the greater the
control and influence a participant can exert over Bank-wide goals, the larger a portion of
their incentive award will be based on Bank performance.
	 
	   	Individual Goals 
	 
	   	The establishment of individual goals is based upon objective individual performance
initiatives which are mutually agreed upon by the participant and Bank management. These
goals represent clearly defined and meaningful accomplishments desired within the framework
of the responsibilities of the participant. Each goal will be designed to be attainable,
within specific timeframes, but not without significant effort.
	 
	   	Goals may be related solely to one individual, or may relate to a group of two or more
individuals whose efforts are required to produce the results. At the President’s
discretion, the goals may be equally weighted or assigned different weights and emphasis.
The minimum weight is 10% and the total weightings equal 100%. Goals will be established at
three performance levels: threshold, target, and maximum, if appropriate.
	 
	   	Individual goals are normally established on the basis of the annual operating budget and
business plan. Goals may apply to the full Plan Year or to a portion of the Plan Year, as
appropriate. For the President, goals will be established by the Board. For the Executive
Vice President, in addition to the Bank’s financial goal(s), the President establishes
additional individual performance goals based upon criteria established by the Board.
	 
	   	Revisions and Amendments
	 
	   	Bank-wide and Individual performance goals are determined for the entire year. Recognizing,
however, that circumstances and priorities may change during the year, the President may
submit to the Committee and the Board revisions to Bank-wide goals during the course of the
Plan Year at such time as he may choose. The Committee and the Board will determine, at its
discretion, whether Bank-wide goals will be amended. The President will inform the
Committee of any revisions to executive management’s individual goals which are required
throughout the Plan Year.

 

 

FEDERAL HOME LOAN BANK OF PITTSBURGH

ANNUAL INCENTIVE COMPENSATION PLAN

Page 4

	VII.  	AWARD DETERMINATION
	 
	   	At the conclusion of each Plan Year, the President, after considering the Bank’s performance against its Bank-wide
goal(s) and each participant’s performance against his/her individual performance goals, shall recommend to the Committee
and the Board the annual incentive award to be paid to executive management for that Plan Year, if any. The President is
responsible for approval of Awards to be paid to staff below the executive management level. A participant who is on
formal corrective action for performance anytime during the plan year will not be eligible for an award. In order for any
annual incentive payment to be made, the most recent examination by the Federal Housing Finance Board of the
participant’s area(s) of responsibility must not have identified any unsafe or unsound practice or condition.
	 
	   	Unless otherwise directed by the Board, payments of Awards under the Plan shall be made as soon as possible after the
Board has made a determination regarding the payment of Awards but no later than 2 1/2 months after the close of the Plan
year. Appropriate provisions shall be made for any taxes that the Bank determines are required to be withheld from any
Awards under the applicable laws or other regulations of any governmental authority, whether federal, state, or local.
The payment of any Award shall be subject to such obligations, terms and conditions as the Committee or the Board may
specify in making the Award and, in exercising its discretion to make any Award determination hereunder, the Board may
choose to consider factors such as overall Bank financial performance, operating environment, and other relevant
considerations. Acceptance of any Award shall constitute agreement by the participant to all obligations, terms,
conditions, and restrictions so imposed.
	 
	   	Participants who terminate employment with the Bank for any reason, other than death, disability or retirement prior to
the end of the Plan Year will not be eligible for an Award. If a participant ceases employment after the Plan Year ends,
but before the Board approves the Awards, the President will consider whether the participant should receive an Award.
	 
	   	Participants who are hired prior to July 1 during the Plan year or whose employment ends due to involuntary termination
(excluding involuntary termination for cause), death, disability or retirement during the Plan Year may be eligible to be
considered for a prorated incentive award.
	 
	   	Each payment of an Award shall be from the general assets of the Bank.
	 
	VIII.  	TERMINATION OR AMENDMENT
	 
	   	The Plan, in whole or in part, may at any time or from time-to-time be amended, suspended, or reinstated and may at any
time be terminated by action of the Board. Until a determination of Award payment has been made by the Board, no
participant has a vested right to an Award under the Plan.

 

 

FEDERAL HOME LOAN BANK OF PITTSBURGH

ANNUAL INCENTIVE COMPENSATION PLAN

Page 5

	   	No amendment, suspension, or termination of the Plan by the Board shall, without the consent
of the participant, affect the rights of the participant to any Award previously determined
by the Board which has not yet been paid to the participant.
	 
	IX.  	MISCELLANEOUS PROVISIONS

	 	A.  	Neither the adoption of the Plan nor its operation shall in any way affect the
right and power of the Bank to dismiss any employee, or otherwise terminate the
employment or take other action including, but not limited to, removing the employee
from the incentive-eligible position, at any time, for any reason, with or without
cause.
	 
	 	B.  	No participant will have the right to alienate, assign, encumber, hypothecate,
or pledge his or her interest in any Award under the Plan, voluntarily or
involuntarily, and any attempt to do so dispose of any such interest will be void.
	 
	 	C.  	This document is a complete statement of the Plan and as of the date below,
supersedes all prior plans, representations and proposals written or oral relating to
its subject matter. The Bank will not be bound by or liable to any employee for any
representation, promise, or inducement made by any person which is not embodied in this
document.
	 
	 	D.  	The Board has the power and authority to construe, interpret, and administer
the Plan. Any decision arising out of or in connection with the construction,
interpretation or administration of the Plan will lie within the Board’s absolute
discretion and will be binding on all parties.

 

 

ATTACHMENT 1

FEDERAL HOME LOAN BANK OF PITTSBURGH

ANNUAL INCENTIVE COMPENSATION PLAN

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	Payout	Performance	 	 
	 	Eligibility	 	 	Threshold	 	Target	 	Maximum	 	 	        Bank	 	      Shared/Individual	 	 
	 	 	 	 	 	 	 	 	 
	 	Level 1
	 	 	 	20.0	%	 	 	35.0	%	 	 	50.0	%	 	 	40.0%	 	 	 	60.0%	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Level 2
	 	 	 	18.75	%	 	 	25.0	%	 	 	37.5	%	 	 	Up to 40.0%	 	Up to 70.0%	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Level 3
	 	 	 	15.0	%	 	 	20.0	%	 	 	30.0	%	 	 	Up to 30.0%	 	Up to 100.0%	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Level 4
	 	 	 	14.5	%	 	 	19.0	%	 	 	26.5	%	 	 	Up to 30.0%	 	Up to 100.0%	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Level 5
	 	 	 	11.0	%	 	 	14.0	%	 	 	19.0	%	 	 	Up to 30.0%	 	Up to 100.0%	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Level 6
	 	 	 	7.5	%	 	 	9.0	%	 	 	11.5	%	 	 	Up to 30.0%	 	Up to 100.0%	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Level 7
	 	 	 	3.5	%	 	 	5.0	%	 	 	7.5	%	 	 	Up to 100.0%	 	Up to 100.0%

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