CHS Inc. 2017 Annual Variable Pay Plan Appendix A, Plan Details
EX-10.4A 3 ex-104aavpappendixa.htm EXHIBIT 10.4A Exhibit
Exhibit 10.4A
CHS ANNUAL VARIABLE PAY PLAN
APPENDIX A, PLAN DETAILS - FISCAL 2017
COMPANY RETURN ON ADJUSTED EQUITY (ROAE) and RETURN ON ASSET (ROA) GOALS
Performance Targets | CHS ROAE | CHS ROA | Description | Award as % of Target |
Maximum | 11.5% | 11.5% | Maximum Performance Goal | 200% |
Target | 9.5% | 9.5% | Targeted Performance Goal | 100% |
Threshold | 7.5% | 7.5% | Minimum Performance Goal | 50% |
RETURN ON ADJUSTED EQUITY (ROAE) EXPLANATION
ROAE is a measurement of company profitability and is calculated by dividing adjusted net income (earnings) by adjusted equity. To determine the equity and earnings adjustments, CHS subtracts preferred stock dividends from earnings, and reduces equity by the amount of preferred stock on the balance sheet.
ROAE |
Adjusted Fiscal Year Earnings |
Adjusted Beginning Year Equity |
RETURN ON ASSETS (ROA) EXPLANATION
ROA is a measurement of how well a company uses its assets to generate earnings and is calculated by dividing operating income by total assets minus working capital liabilities. Details on the ROA calculation, goal determination and 2017 goals can be answered by the finance contact for your group.
ROA |
Operating Income |
Total Assets - Working Capital Liabilities |
AWARD OPPORTUNITY EXAMPLES
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%.
Performance Targets | Award Opportunity as % of Base Pay | Award Opportunity Calculation | Award Opportunity Amount |
Maximum | 10.0% | $70,000 x 10.0% | $7,000 |
Target | 5.0% | $70,000 x 5.0% | $3,500 |
Threshold | 2.5% | $70,000 x 2.5% | $1,750 |
Compensation earned will be mathematically interpolated when performance results occur between the three Performance Levels.
AWARD CALCULATION EXAMPLES
The following is an example of an annual variable pay compensation calculation for an employee who is a Business Unit Contributor with a $70,000 pay basis and a target award potential of 5.0% ($3,500).
Performance Measures | Goal Weighting | Target Award | X | Performance to Target | = | Goal/ Award Result |
CHS ROAE | 10% | $350 | X | 90% | = | $315 |
Business Unit ROA | 60% | $2,100 | X | 100% | = | $2,100 |
Individual Performance | 30% | $1,050 | X | 170% | = | $1,785 |
Totals | 100% | $3,500 | $4,200 | |||
The following is an example of an annual variable pay compensation calculation for an employee who is in a Corporate Contributor role with a $70,000 pay basis and a target award potential of 5.0% ($3,500).
Performance Measures | Goal Weighting | Target Award | X | Performance to Target | = | Goal/ Award Result |
CHS ROAE | 60% | $2,100 | X | 90% | = | $1,890 |
Enterprise ROA | 10% | $350 | X | 100% | = | $350 |
Individual Performance | 30% | $1,050 | X | 170% | = | $1,785 |
Totals | 100% | $3,500 | $4,025 | |||
In the following example, the CHS ROAE threshold goal required to trigger all components of the Plan is not met. However, the business unit exceeds its target goal. The annual variable pay compensation calculation is for an employee who is in a Business Unit Contributor role with a $70,000 pay basis and a target award potential of 5.0% ($3,500).
The business unit achieves 110% of its ROA target and only the earned business unit award is paid. Zero compensation is earned for the CHS ROAE and Individual Performance components of the award.
Performance Measures | Goal Weighting | Target Award | X | Performance to Target | = | Goal/ Award Result |
CHS ROAE | 10% | $350 | X | 0% | = | $0 |
Business Unit ROA | 60% | $2,100 | X | 110% | = | $2,310 |
Individual Performance | 30% | $1,050 | X | 0% | = | $0 |
Totals | 100% | $3,500 | $2,310 | |||
