CHS Inc. 20
EX-10.3A 4 ex103a2020chsavpplanap.htm EX-10.3A Document
CHS Annual Variable Pay Plan Exhibit 10.3A
Appendix Fiscal Year 2020
| Performance Goals | ||
The Plan has predetermined financial performance goals, including Return on Invested Capital (ROIC) and Return on Assets (ROA) (“Performance Goals”). The following table illustrates ROIC Performance Goals. Contact your Manager or finance contact for your group for more information on ROA Performance Goals.
Performance Goal Level | Level Definition | Payout Range | Return on Invested Capital (ROIC) | ||||||||
Maximum | Highest level of Performance | 200% | 6.9% | ||||||||
Target | Expected level of Performance | 100% | 5.9% | ||||||||
Threshold | Lowest Level of Performance | 50% | 4.9% | ||||||||
| Return on Invested Capital (ROIC) Definition | ||
ROIC is a measurement of how efficiently the company uses its capital and the level of returns on that capital. It is calculated by dividing net operating profit after tax by funded debt plus equity. Further details on the ROIC calculation, goal determination and goals can be answered by the finance contact for your group. The formula used in the calculation of ROIC is as follows:
| ROIC= | Adjusted Net Operating Profit After Tax* | ||||
| Funded Debt + Equity** | |||||
*(Earnings Before Taxes + Interest, Net) * (1- Effective Tax Rate)
**(Average of Beginning and End of Year Funded Debt) + Beginning of Year Equity
Calculation uses fiscal year 2019 July balance sheet for beginning of year funded debt and beginning of year equity. The fiscal year 2020 July balance sheet will be used for end of year funded debt. Funded debt is calculated by adding long-long term debt plus the current portion of long-term debt plus any guarantees of funded debt.
| Return on Assets (ROA) Definition | ||
ROA is a measurement of how well a company uses its assets to generate earnings and maximizes returns on owner equity and company assets. It is calculated by dividing operating income by total assets minus working capital liabilities. Further details on the ROA calculation, goal determination and goals can be answered by the finance contact for your group. The formula used in the calculation of ROA is as follows:
| ROA= | Adjusted Operating Income* | ||||
| Net Assets** | |||||
*Earnings Before Taxes + Interest, Net + Corporate Indirect Allocations
**Beginning of Year Assets – Beginning of Year Working Capital Liabilities (current liabilities related to the Business Unit business activities excluding financing)
Calculation uses fiscal year 2019 July balance sheet to determine net assets. For individual Business Unit calculations interest income is not netted against interest expense.
2020 CHS Annual Variable Pay Plan Appendix 1
CHS Annual Variable Pay Plan Exhibit 10.3A
Appendix Fiscal Year 2020
| Award Opportunity Example | ||
| Award Calculation Parameters | |||||||||||||||||
| Performance Goal Level | Award Opportunity Percentage | x | Pay Basis | = | Award Opportunity Amount | ||||||||||||
Maximum | 10.0% | x | $70,000 | = | $7,000 | ||||||||||||
Target | 5.0% | $3,500 | |||||||||||||||
Threshold | 2.5% | $1,750 | |||||||||||||||
| Award Calculation Examples | ||
Example A Participant Group: Corporate Function Trigger: Threshold ROIC Met | |||||||||||||||||||||||
Performance Goal | Performance Goal Weighting | Award Opportunity Amount | x | Performance Goal Level Attained | Payout Range | = | Actual Compensation Earned | ||||||||||||||||
ROIC | 70% | $2,450 | x | Target | 100% | = | $1,225 | ||||||||||||||||
Individual | 30% | $1,050 | Maximum | 200% | $2,100 | ||||||||||||||||||
Total | 100% | $3,500 | $3,325 | ||||||||||||||||||||
Example B Participant Group: Business Unit Trigger: Threshold ROIC Met | |||||||||||||||||||||||
Performance Goal | Performance Goal Weighting | Award Opportunity Amount | x | Performance Goal Level Attained | Payout Range | = | Actual Compensation Earned | ||||||||||||||||
ROIC | 35% | $1,225 | x | Target | 100% | = | $1,225 | ||||||||||||||||
ROA | 35% | $1,225 | Maximum | 200% | $2,450 | ||||||||||||||||||
Individual | 30% | $1,050 | Maximum | 200% | $2,100 | ||||||||||||||||||
Total | 100% | $3,500 | $5,775 | ||||||||||||||||||||
Example C Participant Group: Business Unit Trigger: Threshold ROIC Not Met / Target ROA Met | |||||||||||||||||||||||
Performance Goal | Performance Goal Weighting | Award Opportunity Amount | x | Performance Goal Level Attained | Payout Range | = | Actual Compensation Earned | ||||||||||||||||
ROIC | 35% | $1,225 | x | Not Met | 0% | = | $0 | ||||||||||||||||
ROA | 35% | $1,225 | Maximum | 200% | $2,450 | ||||||||||||||||||
Individual | 30% | $1,050 | Not Met | 0% | $0 | ||||||||||||||||||
Total | 100% | $3,500 | $2,450 | ||||||||||||||||||||
| Additional Information | ||
Refer to the CHS Annual Variable Pay Master Plan Document for additional Plan details.
2020 CHS Annual Variable Pay Plan Appendix 2
