CHS Inc. 2018 Annual Variable Pay Plan Appendix, Plan Details

APPENDIX, PLAN DETAILS - FISCAL 2018    

ROIC is a measurement of how efficiently the company uses its capital and the level of returns on that capital, and is calculated by dividing net operating profit after tax by funded debt plus equity. Details on the ROIC calculation, goal determination and 2018 goals can be answered by the finance contact for your group.

*Funded Debt is the average of the funded debt at each of the beginning of and the end of the fiscal year, and Equity is the equity at the beginning of the fiscal year.

ROA is a measurement of how well a company uses its assets to generate earnings and maximizes returns on owner equity and company assets, and is calculated by dividing operating income by total assets minus working capital liabilities. Details on the ROA calculation, goal determination and 2018 goals can be answered by the finance contact for your group.

* Net Assets are total assets minus working capital liabilities (current liabilities related to the Business Unit business activities excluding financing (payables, accruals, derivatives, liabilities, advances, etc.)) and is measured as of the beginning of the fiscal year.

The example below illustrates threshold, target, and maximum award opportunities for an employee with a pay basis of $70,000 and a target award potential of 5%.

Compensation earned will be mathematically interpolated when performance results occur between the three Performance Levels.

The following is an example of an annual variable pay compensation calculation for an employee who is a Business Unit participant with a $70,000 pay basis and a target award potential of 5.0% ($3,500).

The following is an example of an annual variable pay compensation calculation for an employee who is a Corporate participant with a $70,000 pay basis and a target award potential of 5.0% ($3,500).

In the following example, the CHS ROIC threshold goal required to trigger all components of the Plan is not met. The business unit achieves 110% of its ROA target and only the earned business unit award is paid. No compensation is earned for the CHS ROIC and individual performance components of the award.

The earned award calculation is for an employee who is a Business Unit participant with a $70,000 pay basis and a target award potential of 5.0% ($3,500).