FEDERAL HOME LOAN BANK OF SEATTLE Executive Long-Term Incentive Plan

1.0

Plan Objectives

1.1

The purpose of the Federal Home Loan Bank of Seattle Executive Long-Term Incentive Plan is to achieve five objectives:

1.1.1

Promote the achievement of the Seattle Bank’s business goals;

1.1.2

Link executive compensation to specific long-term performance measures;

1.1.3

Provide a competitive reward structure for senior officers and other key employees;

1.1.4

Provide a vehicle for closer Board involvement and communication with management regarding the Seattle Bank’s long-term strategic plans; and

1.1.5

Retention of officers and other key employees.

1.2

The Plan is a cash-based, long-term incentive plan that establishes individual Base Award Opportunities related to achievement of Seattle Bank performance over certain three-year Performance Periods.

1.3

The Base Award Opportunity, Performance Measures, value of a Performance Unit at the beginning and end of a Performance Period, and other relevant information are set forth in Appendix A.

2.0

Definitions

2.1

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

2.1.1

Bank means the Federal Home Loan Bank of Seattle.

2.1.2

Base Award Opportunity means the award that may be earned during a Performance Period for achieving target performance levels under each Performance Measure.

2.1.3

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

2.1.4

Board means the Seattle Bank’s Board of Directors.

2.1.5

Committee means the Governance, Budget and Compensation Committee of the Board.

2.1.6

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

2.1.7

Extraordinary Occurrences means those events that, in the opinion and discretion of the Board, are outside the significant influence of the Participants or the Seattle Bank and are likely to have a significant unanticipated effect, whether positive or negative, on the Seattle Bank’s operating and/or financial results, including, without limit changes in financial strategies or policies, or significant change in Seattle Bank membership.

2.1.8

Final Award means the amount ultimately paid to a Participant under the Plan for a Performance Period.

2.1.9

Interim Performance Period means a single 12 month calendar year period of which three make up a Performance Period (see Section 2.1.13).

2.1.10

Performance Measure means each performance factor that is taken into consideration under the Plan in determining the value of the Final Award.

2.1.11

Participant means an employee who participates in the Plan pursuant to Section 3.1.

2.1.12

Periodic Plan Award means an amount that is provisionally determined at the end of the Interim Performance Period.

2.1.13

Performance Period means a certain three-year period over which Seattle Bank performance is measured.

2.1.14

Performance Unit means a unit, the value of which shall be determined in accordance with the Appendix – Initial Value of Performance Unit.

2.1.15

Plan means this Executive Long-Term Incentive Plan.

2.1.16

Plan Award means an amount that is provisionally determined at the end of the Performance Period subject to adjustment as provided in Section 6.

2.1.17

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

2.1.18

Termination for cause means the participants malfeasance, including the commission of any fraud or felony, or the Participant’s material breach of his or her employment obligations, as determined by the Board.

3.0

Eligibility

3.1

A Seattle Bank employee who is a grade 19 or above during the Performance Period shall participate in the Plan.

3.2

Eligibility shall generally be limited to officers (i) whose functional responsibilities encompass the establishment of strategic direction and tactical action plans for the Seattle Bank, and (ii) who have received at least “meets all goals” rankings on annual performance reviews over a Performance Period.

3.3

Due to its unique role for the Seattle Bank and reporting relationship to the Board, the Director of Internal Audit (and any qualified auditor staff) will not be included as an eligible position under the Plan, but will be eligible for a similar plan administered by the Audit Committee of the Board.

4.0

Base Award Opportunity

4.1

At the beginning of each Performance Period, the Seattle Bank will provide a Base Award Opportunity to Participants. The Base Award Opportunity is equal to a percentage of each Participant’s annual base salary at the beginning of the Performance Period as described in Appendix A. Certain executive positions have a greater and more direct impact than others on the annual success of the Seattle Bank; therefore, these differences are recognized by varying award opportunities for each Participant level.

4.2

Each Participant in a Performance Period shall be granted a number of Performance Units for that Performance Period determined by dividing the Base Award Opportunity by the value of a Performance Unit at the beginning of a Performance Period as described in the applicable Appendix.

4.3

There will be four levels of award opportunities:

5.0

Performance Measures

5.1

Three achievement levels will be established for each Performance Measure: