EX-10.3A 4 ex-103achsannualvariablepa.htm EXHIBIT 10.3A
EXHIBIT 10.3A
CHS ANNUAL VARIABLE PAY PLAN
APPENDIX FISCAL 2019

Company Return on Invested Capital (ROIC) and Return on Asset (ROA) Goals

Financial Performance Targets | CHS ROIC | CHS ROA | Description | Award as % of Target
Maximum | 6.9% | 6.9% | Maximum Performance Goal | 200%
Target | 5.9% | 6.1% | Targeted Performance Goal | 100%
Threshold | 4.9% | 5.2% | Minimum Performance Goal | 50%

Return on Invested Capital (ROIC) Explanation

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 FY18 July balance sheet for beginning of year funded debt and beginning of year equity. The FY19 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) Explanation

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 FY18 July balance sheet to determine net assets. For individual Business Unit calculations interest income is not netted against interest expense.

EXHIBIT 10.3A

Award Opportunity Example

This is an example for a participant with a $70,000 pay basis and a 5% target award opportunity.

Financial Performance Targets | Award Opportunity Percentage | Calculation | Earned Award 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

Award Calculation Example - Threshold Performance Attained

This is an example for a Business Unit participant with a $70,000 pay basis and a 5% target award opportunity.

Plan Goals | Goal Weighting | Award Opportunity | X | Award as % of Target | = | Earned Award Amount
CHS ROIC | 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

This is an example for a Corporate participant with a $70,000 pay basis and a 5% target award opportunity.

Plan Goals | Goal Weighting | Award Opportunity | X | Award as % of Target | = | Earned Award Amount
CHS ROIC | 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

Award Calculation Example - Threshold Performance Not Attained

This is an example for Business Unit participant with a $70,000 pay basis and a 5% target award opportunity.

Plan Goals | Goal Weighting | Award Opportunity | X | Award as % of Target | = | Earned Award Amount
CHS ROIC | 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