1 / 8

Variable Pay Funding Finance Accrual Model Update

Variable Pay Funding Finance Accrual Model Update. 6/12/2008 Update. Project Summary. PROBLEM STATEMENT: Each of the Business Entities uses a slightly different methodology, or adjusts the accrual rates at different times or based on unique perspectives.

irisa
Télécharger la présentation

Variable Pay Funding Finance Accrual Model Update

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 Finance Accrual Model Update 6/12/2008 Update

  2. Project Summary • PROBLEM STATEMENT: Each of the Business Entities uses a slightly different methodology, or adjusts the accrual rates at different times or based on unique perspectives. • OBJECTIVES:The objective this phase is to conduct financial modelling for the Discretionary Bonus Plan (DBP) plan only at a HNAH level and by business entity to determine: • how to create the DBP pool – what percent of PBT will be required in order to payout at • a.) target level business performance • b.) above target level business performance • c.) below target level business performance • what methodology / process should be used in allocating the HNAH PBT pool by business entity and department level based on varying business entity performance • KEY STAKEHOLDERS: • Executive Champion: • Key Stakeholders: • SCI Manager: • Team Members: • KEY PROJECT DATES: • START DATE: IMPLEMENTATION DATE: CLOSE DATE: 2

  3. Agenda • Review existing accrual plan for 2008 • Present new HNAH model • Critical inputs that will feed the model • Variances in new model and results • Assumptions in the model • Market data points (HBUS 47% HBIO 54%)

  4. Current Accrual Methodology for 2008 • HBUS - Centrally based on historic data • HBIO - BU based on 120% of target x salary • HBCA - Centrally based on historic data • HTSU - TSI based on historical data

  5. Agreed HNAH Model • (Market Data Point) x (1 + Bonus Target %) = Total Cash Available • (Total Cash Available) – (Actual Salary) = Available Bonus • (Available Bonus) x (Finance Performance Factor) = Adjusted Bonus • Inputs • Market Data Point, Bonus Target and Actual Salary by individual and Legal Entity • Finance Performance Factor based on HNAH PBT against AOP

  6. Example • Midpoint $100,000 x 1.15 (15% target) = $115,000 • $115,000 - $102,000 (actual salary) = $13,000 (available bonus) • $13,000 x 1.0 (finance performance factor) = $13,000 (adjusted bonus) • * Assumptions: • Midpoint - 20/70/10 weighted average performance management rating scale, ~55th percentile • Finance performance factor - percentage variance from pre-tax AOP (1.0 = on AOP) • Computed at the HNAH level and then pushed down 6

  7. Finance Factor • 5% of Pre-Tax variance from AOP • Upside Capped at 200% payout • Downside Floored at 50% payout • Example 1: Pre-Tax AOP = ($2.0) Billion Bonus Pool = $0.3 Billion Actual Pre-Tax = ($1.5) Billion Increased Bonus Pool = $0.5 Billion x 5% = $25 Million Finance Factor = 1.083 • Example 2: Pre-Tax AOP = ($2.0) Billion Bonus Pool = $0.3 Billion Actual Pre-Tax = ($2.5) Billion Increased Bonus Pool = ($0.5) Billion x 5% = ($25) Million Finance Factor = 0.917 7

  8. Agree Model Methodology • Obtain Market Data and Salaries • Agree Finance Factor Methodology • Compute HNAH 3rd Quarter Bonus Target • Prepare Communication for HNAH Finance and HR Teams Next Steps:

More Related