2008 FEDERAL HOME LOAN BANK OF INDIANAPOLIS INCENTIVE COMPENSATION PLAN
Exhibit 10.1
2008 FEDERAL HOME LOAN BANK OF INDIANAPOLIS
INCENTIVE COMPENSATION PLAN
Approved by Board of Directors January 24, 2008
| MISSION GOALS | WEIGHTED VALUE | MINIMUM THRESHOLD | 2008 TARGET | MAXIMUM | |||||||||||
| 1. PROFITABILITY | |||||||||||||||
| Potential Dividend over our Cost of Funds (1) | 50 | % | 50 B.P. | 100 B.P. | 200 B.P. | ||||||||||
| 2. ADVANCES | |||||||||||||||
| Increase in Average Total Advances (2) | 35 | % | 4.5 | % | 9.0 | % | 18.0 | % | |||||||
| 3. MORTGAGE PURCHASE PROGRAM | |||||||||||||||
| MPP production (3) | 10 | % | $ | 238 M | $ | 325 M | $ | 500 M | |||||||
| 4. COMMUNITY INVESTMENT | |||||||||||||||
| CIP Advances Originated (4) | 5 | % | $ | 25 M | $ | 50 M | $ | 100 M | |||||||
Definitions:
| (1) | Potential Dividend is defined as adjusted net income as a percentage of average total capital stock. Adjusted net income is adjusted (i) for the effects of current and prior period prepayments and debt extinguishments, (ii) to exclude mark to market adjustments and other effects from SFAS 133, (iii) and to exclude the effects from SFAS 150. Assumes no material change in investment authority under FHFB’s FMP, regulation, policy, or law. |
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| (2) | Average annual advances for all members on December 31, 2008 except LaSalle Bank Midwest NA and Flagstar Bank. Excludes non-members. Includes CIP advances. Advances number does not take into account SFAS 133 adjustments. |
| (3) | Mortgage Purchase Program production will be the amount of all MDCs traded in 2008. Assumes no capital requirement for MPP. It also assumes no material change in MPP authority under FHFB’s FMP, regulation, policy, or law. When calculating achievement between the minimum threshold and the performance maximum, no single member can account for more than 25% of production. |
| (4) | Newly-originated Community Investment Cash Advances, including CIP, HomeRetain and other qualifying advances, provided in support of targeted projects as defined in 12 CFR Part 952 and the FHLBank Act. |
Plan Terms:
By resolution the Board of Directors may reduce or eliminate a payout that is otherwise earned under this Plan, if the Board finds that a serious, material safety-soundness problem or a serious, material risk management deficiency exists at the Bank.
For performance results less than the stated threshold, there is no payout for that particular goal. For performance results equal to or greater than the stated threshold, the respective payout will be 25% plus the remaining 75% interpolated between the threshold and the respective maximum for that particular goal.
The FHLBank’s Board of Directors may amend this plan at any time during or after the plan year for any reason, including without limitation, emergency or any unanticipated market conditions outside of management’s control. To be eligible to receive a payment under the plan, the employee must be actively employed on the last work day of the plan year or be on an approved leave of absence, including FMLA leave. In the event a participant terminates employment during the plan year, he or she will not be eligible to receive incentive payments under the plan, unless the employee terminates because of death, disability, or scheduled retirement. In these cases or where the board otherwise determines the incentive payment is appropriate, the payment shall be made on a pro-rata monthly basis earned through the date of termination assuming a satisfactory or better job performance record up to the date of termination.
The plan in its entirety is discretionary and may be discontinued by the board of directors at any time. It is not intended to create any vested rights to employees or their beneficiaries. This plan shall not be considered a contract and nothing in the plan shall be construed as providing participants any assurance of continued employment for any definite period of time, nor any assurance of current or future earnings. This plan shall not, in any manner, limit the Bank’s right to reduce or terminate compensation and/or employment at its will, with or without cause.
The maximum bonus opportunity for the President-CEO is 50% of annual base salary. For the participating Senior Vice Presidents, the maximum payout is 35% of annual base salary. For First Vice Presidents, excluding the Director of Internal Audit, the maximum payout is 25% of base salary.
Compensation paid to employees under the Plan will be paid to employees no later than March 15th of the year immediately following the year in which the compensation is earned, and is not intended to be deferred compensation for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, and/or any Regulations adopted there under.
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