FEDERAL HOME LOAN BANK OF SEATTLE Bank Incentive Compensation Plan

1.0

Plan Objectives

1.1

The purpose of the Federal Home Loan Bank of Seattle’s Incentive Compensation Plan (Plan) is to achieve four objectives:

1.1.1

Promote the achievement of the Seattle Bank’s annual business goals in accordance with the business plan;

1.1.2

Link compensation to specific bankwide and individual performance measures;

1.1.3

Provide a competitive reward structure for officers and other exempt employees; and

1.1.4

Provide a vehicle for closer Board involvement and communication with management regarding Seattle Bank strategic plans.

1.2

The Plan is a cash-based, annual incentive plan that establishes individual award opportunities related to achievement of Seattle Bank and individual performance.

1.3

The award opportunity, Performance Measures, and other relevant information for a Plan Year are set forth in Appendix A.

2.0

Definitions

2.1

When used in this Plan, the following words and phrases shall have the following meaning:

2.1.1

Bank means the Federal Home Loan Bank of Seattle.

2.1.2

Base Salary is defined as the Participant’s normal rate of pay, including overtime, before any other add-ons (i.e. Bonuses, incentive pay, etc.) and after any adjustments (i.e. Leave w/o pay).

2.1.3

Board means the Seattle Bank’s Board of Directors.

2.1.4

Committee means the Executive Committee of the Board.

2.1.5

Disability means the Participant is receiving benefits under the Federal Home Loan Bank of Seattle’s Long Term Disability Plan.

2.1.6

Participant means the President of the Seattle Bank for this specific plan.

2.1.7

Plan means the Bank Incentive Compensation Plan – Annual Plan for President and CEO.

2.1.8

Plan Year means the calendar year, January 1 through December 31, over which both Seattle Bank and Participant performance is measured.

2.1.9

President means the President and Chief Executive Officer of the Seattle Bank.

3.0

Eligibility

3.1

The President is an eligible participant under this Plan, effective January 1, 2009.

4.0

Incentive Award Opportunity

4.1

Each Plan Year, the Seattle Bank will determine an award opportunity for the President. The award opportunity shall be a percentage of the annual base salary as described in Appendix A Table 1 – Incentive Award Opportunity.

5.0

Performance Measures

5.1

Bankwide and individual performance measures will be established with respect to each Plan Year as described in Appendix A. Three achievement levels will be set for each bankwide performance measure:

5.2

Bankwide measures will be reviewed by the Governance, Budget and Compensation Committee and approved by the Board.

5.3

Participant incentive award will be based on bankwide performance objectives first and secondly on the individual performance goals.

5.3.1

Participant will typically have two to four major goals established that reflect the priorities of the Participant for the Plan Year.

5.3.2

Participant’s individual performance goals will be established between mutual agreement between the Participant and the Executive Committee of the board.

5.3.3

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