1 / 8

Variable Pay Funding Project

Variable Pay Funding Project. June 10, 2008 Update. Agenda . Review accrual methodology for 2008 Present new HNAH model and a simple example Model inputs, assumptions & Finance Performance Factor Proforma results and what they mean Next Steps. 1. Accrual Methodology for 2008.

jacie
Download Presentation

Variable Pay Funding Project

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Variable Pay Funding Project June 10, 2008 Update

  2. Agenda • Review accrual methodology for 2008 • Present new HNAH model and a simple example • Model inputs, assumptions & Finance Performance Factor • Proforma results and what they mean • Next Steps 1

  3. Accrual Methodology for 2008 • HBUS - Controlled centrally based on historical data, includes GCB 0s & 1s and an estimate for payroll taxes and TRIP ($67mm) • HBIO – Decentralized in business units based on 120% of target X salary (historical) and ($120mm) • HBCA – Controlled centrally based on historical and includes GCB ($55mm) • HTSU – TSI based on historical data ($40mm) • Total HNAH accrual $285mm 2

  4. New HNAH Model • (Market Data Point) x (1 + Target %) = Total Cash Available • Total Cash Available – Actual Salary = Available Bonus • Available Bonus x Finance Performance Factor = Adjusted Bonus • Example: • $100,000 (MDP) x 1.15 (15% target) = $115,000 • $115,000 - $102,000 (actual salary) = $13,000 (avail bonus) • $13,000 x 1.0 (finance performance factor)* = $13,000 (adjusted bonus) 3

  5. Inputs and Assumptions • Current Market Data Point, Target and Actual Salary by individual and Legal Entity - information to be provided by HR • Separate list of all secondees and GCB 0s & 1s by legal entity - controlled centrally by HNAH CEO office • Reflects a 20/70/10 weighted average performance management rating scale (MDP 55%) • Finance Performance Factor based on HNAH PBT against AOP (or ROP?) 4

  6. Finance Performance Factor • Expressed as a percentage (200% - 50%) and based on HNAH PBT • Achieving HNAH PBT equal to AOP ($5,000) equates to a Finance Performance Factor (FF) of 100% • Sliding scale where “slope of the line” determines PBT required to payout 200% (cap) and floor (50%) 5

  7. Proforma results and what they mean • Sample HR data (from 12/07 CMS), run through the model and using a FF of 100% for illustrative purposes • Units (legal entities) where actual salaries are below MDP will require larger amounts of variable compensation where as units with a salary structure above MDP will require lower accrual amounts • HUSI Proforma ($xxx) versus current accrual ($xxx) • HBIO Proforma ($xxx) versus current accrual ($xxx) • HBCA Proforma ($xxx) versus current accrual ($xxx) • HTSU Proforma ($xxx) versus current accrual ($xxx) 6

  8. Next Steps • Obtain refreshed data including all MDP update and current participant population and targets • Finalize secondees and GCB 0s & 1s list with variable comp projections for 2008 • Finalize FF methodology (slope of the pay line) and correlate versus YTD performance (ROP?) • Discuss omission and or managed view results. IE. GB&M PBT used to determine FF yet they have no participants in this variable comp plan • Adjust legal entity accruals accordingly (includes taxes and TRIP?) 7

More Related