UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 31, 2012
FEDERAL HOME LOAN BANK OF SEATTLE
(Exact name of registrant as specified in its charter)
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| Federally chartered corporation | | 000-51406 | | 91-0852005 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
1501 Fourth Avenue, Suite 1800
Seattle, WA 98101-1693
(Address of principal executive offices, including zip code)
206.340.2300
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On April 20, 2012, the Board of Directors (the "Board") of the Federal Home Loan Bank of Seattle (the "Seattle Bank"), acting upon a recommendation from the Board's Governance, Budget and Compensation Committee (the "GBC Committee"), approved the Seattle Bank's 2012 Bank Incentive Compensation Plan - Annual Executive Plan (the "Annual BICP") and the 2012 Bank Incentive Compensation Plan - Long-Term Executive Plan (the "Long-Term BICP"), both effective retroactively to January 1, 2012, subject to Federal Housing Finance Agency ("Finance Agency") non-objection. Participants in the Annual BICP and Long-Term BICP include the Seattle Bank's president and chief executive officer and senior vice presidents (excluding the senior vice president and director of audit, who is eligible for participation in different compensation plans). The president and chief executive officer and five senior vice presidents currently participate in the Annual BICP and the Long-Term BICP. The Finance Agency notified the Seattle Bank of its non-objection to the plans on May 31, 2012. Each plan is summarized below.
Annual BICP
The Annual BICP is a cash-based incentive plan that provides annual award opportunities to eligible executive officers based on achievement of performance goals over one-year periods beginning on January 1 and ending on December 31 of a plan year. Annual performance goals are pre-established at threshold, target, and superior levels of achievement. Individual award opportunities for 2012 under the Annual BICP, as a percentage of base salary, are as follows:
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| Performance Level | No Award | Threshold | Target | Superior |
| I - President/CEO | —% | 10% | 20% | 35% |
| II - Senior Officers (SVP and above) | —% | 10% | 20% | 35% |
The performance measures and related goals for the January 1, 2012 through December 31, 2012 performance period, each weighted as noted in the table below, are the following:
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| Performance Measure | Weight | Threshold | Target | Superior |
| Capital Strength: | | | | |
| Retained Earnings | 25% | $135 million | $155 million | $175 million |
| Market Value of Equity/Par Value of Common Stock | 15% | 75% | 80% | 85% |
| Profitability: | | | | |
| Return on PVCS (earned dividend) less federal funds effective rate | 10% | (0.89%) | (0.06%) | 0.77% |
| Mission/Member Goals: | | | | |
| Core Average Advances outstanding (Unpaid Principal Balance of all advances less Large Members and ILCs) | 10% | $5 billion | $5.6 billion | $6.2 billion |
| One new large member | 10% | Establish Membership | Borrow $500 million at 5 basis points or greater spread to cost of funds | Borrow $2 billion at 5 basis points or greater spread to cost of funds |
| Repurchase Excess Stock | 20% | Obtain FHFA authority to repurchase stock | Conduct one repurchase round in 2012 | Conduct two repurchase rounds in 2012 |
| Improved member survey score assessing quality of interactions with customer-facing staff | 10% | 3.0 Survey Score | 3.2 Survey Score | 3.4 Survey Score |
At the end of a plan year, each performance measure is evaluated against performance results and plan awards are determined, equal to the sum of the amounts payable with respect to achievement of each performance measure, less any reductions due to non-achievement of other key objectives (as discussed below). Achievement levels between threshold and target and target and superior will be interpolated in a manner acceptable to the GBC Committee. No incentive award will be payable for any individual performance measure for which the Seattle Bank fails to achieve the threshold level of performance. In addition, no plan awards will be paid to any participant who does not have satisfactory individual performance during the plan year. If threshold performance levels are not achieved, upon the recommendation of the Seattle Bank's president and chief executive officer, the GBC Committee may approve incentive awards for extraordinary individual performance.
Plan participants generally must be employed by the Seattle Bank until the pay period in which the plan award payments are made. All payments are subject to Finance Agency approval. However, if the Seattle Bank has not achieved a level of performance such that it has the ability to repurchase capital stock, payment of earned plan awards will be deferred until such level of performance has been achieved.
Other key objectives that may reduce, in part or in whole, plan awards for all or selected participants include, among others, operational errors or omissions resulting in material revisions to financial results or information submitted to the Finance Agency; untimely submission of information to the Securities and Exchange Commission, the Office of Finance, or the Finance Agency; insufficient progress made in the timely remediation of examination findings; ineffective management of risk and safety and soundness considerations; and input from the Finance Agency regarding the performance period.
For the 2012 plan year, total incentive awards under the Annual BICP will not exceed $666,000, which is equal to the total amount payable to all plan participants if all performance measures for 2012 are achieved at maximum level (subject to certain adjustments set forth in the Annual BICP for changes in plan participants or mid-year adjustments to base salaries).
Long-Term BICP
The Long-Term BICP is a cash-based incentive plan that provides award opportunities to eligible executive officers based on achievement of performance goals over three-year periods beginning on January 1 of one year and ending on December 31 of the third consecutive calendar year. Individual award opportunities for the 2012 - 2014 performance period are as follows:
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| Performance Level | No Award | Threshold | Target | Superior |
| I - President/CEO | —% | 20% | 40% | 60% |
| II - Senior Officers (SVP and above) | —% | 15% | 30% | 45% |
For the 2012 - 2014 performance period, the long-term performance measures are as follows:
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| Threshold | Target | Superior |
| Ability to repurchase stock | Ability to redeem stock | Ability to pay dividend |
At the end of each three-year performance period, the performance measure(s) is evaluated against performance results and the plan award is determined, less any reductions due to non-achievement of other key objectives (the same as those discussed above for the Annual BICP).
Plan participants generally must be employed by the Seattle Bank until the pay period in which the plan award payments are made. All payments are subject to Finance Agency approval. However, if the Seattle Bank has not achieved a level of performance such that it has the ability to redeem capital stock, payment of plan awards will be deferred until such level of performance has been achieved.
Key objectives that may reduce, in part or in whole, plan awards for all or some participants include, among others, operational errors or omissions resulting in material revisions to the financial results or information submitted to the Finance Agency; untimely submission of information made to the Securities and Exchange Commission, the Office of Finance, or the Finance Agency; insufficient progress made in the timely remediation of examination findings; ineffective management of risk and safety and soundness considerations; and input from the Finance Agency regarding the performance period.
For the 2012 - 2014 performance period under the Long-Term BICP, total incentive awards will not exceed $942,000, which is the total amount payable to all plan participants if the performance measure for the 2012 - 2014 performance period is achieved at superior level (subject to certain adjustments set forth in the Long-Term BICP for changes in plan participants).
The above descriptions of each plan are qualified in their entirety by reference to the complete text of the applicable plan, which plans are included as Exhibits 10.1 and 10.2 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits
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| (d) | Exhibits | |
| | 10.1 | Federal Home Loan Bank of Seattle Bank Incentive Compensation Plan - Annual Executive Plan as of January 1, 2012 |
| | 10.2 | Federal Home Loan Bank of Seattle Bank Incentive Compensation Plan - Long-Term Executive Plan as of January 1, 2012 |
Signature(s)
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | Federal Home Loan Bank of Seattle |
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| Date: June 6, 2012 | | By: /s/ Christina J. Gehrke |
| | | Senior Vice President, Chief Accounting and Administrative Officer |
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| Exhibit Index | |
| (d) | Exhibit No. | Description |
| | 10.1 | Federal Home Loan Bank of Seattle Bank Incentive Compensation Plan - Annual Executive Plan as of January 1, 2012 |
| | 10.2 | Federal Home Loan Bank of Seattle Bank Incentive Compensation Plan - Long-Term Executive Plan as of January 1, 2012 |
