FEDERAL HOME LOAN BANK OF SAN FRANCISCO 2006 PRESIDENTS INCENTIVE PLAN
EXHIBIT 10.11
FEDERAL HOME LOAN BANK OF SAN FRANCISCO
2006 PRESIDENT’S INCENTIVE PLAN
PLAN PURPOSE
To optimize the Bank’s performance in accomplishing Board approved goals and objectives.
PLAN OBJECTIVES
To motivate key executive (President) to exceed Bank goals and objectives which directly support the business plan and long-term strategic plan. To attract and retain an outstanding executive by providing a competitive total compensation program, including incentive award opportunity.
INCENTIVE GOALS, WEIGHTS, AND MEASURES
Incentive Goals
The incentive goals are based primarily on the objectives set forth in the Bank’s 2006 business plan.
The President’s incentive goals and objectives are identified below:
| 1. | 2006 Dividend Potential: Dividend potential before any provision for retained earnings or accounting impacts of FAS 133 is at least 102.0 basis points over the benchmark yield on invested capital. |
| 2. | 2006 Market Penetration: Achieve a target market penetration of wholesale borrowings and convert non-borrowing members into borrowing members. |
| - | Market penetration is divided into sub-categories of members found on the following page. [*] |
| - | Convert [*] non-borrowing member institutions into borrowing members. This is consistent with the Bank’s strategic objective to increase diversification of its core credit business and maximize the value of membership among all members. |
| 3. | 2006 Leadership: Provide effective leadership and direction to the Bank and within the Federal Home Loan Bank System. |
The Board of Directors will also determine whether or not to allocate a discretionary amount/pool of dollars to the incentive compensation payout.
Incentive Goal Weights
The incentive goal weights are set forth in the 2006 goal weights and measures table found on the following page.
Actual achievement of Bank goals one (1) and two (2) are subject to adjustment for changes resulting from movements in interest rates, changes in financial strategies or policies, any significant change in Bank membership, as well as other factors determined by the Board.
| [*] | 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. |
Incentive Goal Achievement Measures
The plan rewards levels of goal achievement as follows:
| Achievement Level | Measure Definition | |
| 200% of target | The most optimistic achievement level based on reasonable business assumptions and conditions. | |
| 150% of target | An optimistic achievement level based on expected business. | |
| Target (100%) | Performance that is considered a target level of successful plan achievement. Incentive payments are made at the target (100%) level found in the award range scale on the following page. | |
| Threshold (75% of target) | A threshold level of performance. |
2006
| Goals | Weights | Measures | ||||||||||
| (75%) Threshold | (100%) Target | (150%) Exceeds Target | (200%) Far Exceeds | |||||||||
| Dividend Potential | 36% | Benchmark + 82.0 bps | Benchmark + 102.0 bps | Benchmark + 142.0 bps | Benchmark + 182.0 bps | |||||||
| Market Penetration | 32% | Customer Segment | % of Wholesale Borrowings | % of Wholesale Borrowings | % of Wholesale Borrowings | % of Wholesale Borrowings | ||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||
| Average Balance | Average Balance | Average Balance | Average Balance | |||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||
| Average Balance | Average Balance | Average Balance | Average Balance | |||||||||
| [*] | [*] | [*] | [*] | [*] | ||||||||
| Leadership Goal | 10% | BOD Evaluation | BOD Evaluation | BOD Evaluation | BOD Evaluation | |||||||
| Discretionary | 22% | BOD Determines | BOD Determines | BOD Determines | BOD Determines | |||||||
| Total | 100% | |||||||||||
Achievement levels can not exceed 250% for each market penetration goal segment. And, the aggregate achievement level for each plan goal/objective (dividend potential, market penetration, overall bank-wide performance, and individual goal) can not exceed 200%.
| [*] | 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. |
AWARD DETERMINATION
The incentive award will be based on success in achieving the key business goals. At yearend, accomplishments will be assessed and a percent of achievement will be determined for each goal.
| Percent of Achievement Scale | Achievement Levels | ||||||
| 0% - 200% | 200 | % | = | Far Exceeds Target | |||
| 150 | % | = | Exceeds Target | ||||
| 100 | % | = | Target | ||||
| 75-99 | % | = | Threshold | ||||
For each goal, the percent of achievement (subject to limits) will be multiplied by the appropriate weights. The weighted achievements will then be added to determine the total weighted achievement. The basis for award opportunity is total weighted achievement that can not exceed 200%. Performance from 75-99% (threshold level) is below the target achievement level and therefore will result in an award less than the target award. No awards will be paid for performance between 0-74%.
AWARD OPPORTUNITY
The Board of Directors has the discretion to approve incentive awards for achievement below 75% total weighted achievement. And, the Board of Directors has full discretion to modify any and all incentive payments.
| Total Weighted Achievement | Award Ranges as a % of Base Salary | ||||||||
| 200% | 60 | % | |||||||
| 150-199% | 45-59 | % | |||||||
| 100-149% | 30-44 | % | |||||||
| 75-99% | 15-29 | % | |||||||
| 0-74% | Award at the discretion of the Board of Directors | ||||||||
Payments under this plan are subject to the approval of the Board of Directors and will be distributed within two business days following the Board’s approval at their January 2007 meeting.
