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 LevelAward Opportunity PercentagexPay 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