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Use this form to set up variable compensation plans.

Task that uses this form

Navigating the form

The following tables provide descriptions for the controls in this form.

Tabs

Tab

Description

Enter or view details about the plan.

Enter or view details about the plan.

Enter or view information used to increase or reduce an award, based on the performance of the organization unit in which the person works.

Buttons

Button

Description

Enter or view levels that apply only to this particular variable compensation plan. To do this, you must select the check box.

Fields

Field

Description

Enter a unique identifier for the plan.

Enter a description of the plan.

Enter a starting date for the plan.

Enter an ending date for the plan.

If the value of the award is more or less than 1.00 of their fixed pay rate, enter the value here. For example, if this is a stock award, enter the value of the stock. If this is a cash award, select the check box.

NoteIt is also a good idea to select the currency and document a vesting rule for the plan.

Enter the currency in which the unit is valued. This is required for stock awards.

NoteCash awards are based on the currency in which fixed compensation is paid.

Select a plan type classification for this variable compensation plan.

To allow employees to enroll in this type of plan only, select the check box.

Allow employees to enroll in variable compensation plans of this type only. The type is specified in the field.

If the award is to be a set number of units for every participant in the plan, enter the number of units to award. This field is not available if the check box is selected.

Note Note

If this is a cash award, it is a good idea to select the check box.


Select this check box to indicate that one award unit is equal to the value of one unit of the currency that you use to pay the employee. If the unit value is 1, the currency will be the same as the employee's fixed pay rate.

Enter the value of the unit being awarded. This is useful when awarding stocks.

If this is a stock award, or another type of long-term award, select the vesting rule that to use to control the portion, also and the timing when a stock award will vest.

Indicate whether to annualize the basis if the employee has a weekly, hourly, or monthly fixed pay frequency. This is useful to calculate the award amount based on pay for a full year.

Enter a percentage of a base award to grant, only if all plan participants receive the same percentage of their fixed pay.

If plan participants at different compensation levels are awarded different percentages, select the check box and then click the button to enter the percentages.

Select this check box to allow recommendations to be applied to this plan. This allows managers or other personnel to suggest a pay amount that differs from that which is calculated by settings in the plan.

Select the hire rule to control whether to award the full or a prorated amount for employees hired during the compensation cycle.

Select this check box to create a level progression, including either a specific amount to award or a percentage (but not both), specifically for this plan. If you do this, the plan does not use the default levels defined for variable compensation plans.

Indicate whether to use the standard fixed pay rate or the control point when determining the amount of an award.

Select the calculation method to use:

  • Composite- This method prorates all changes in compensation for the employee for the cycle when calculating an award amount.

  • Point-in-time- This method uses compensation information that is active at a specified point in time only.

Enter the lowest percentage of target to award.

This value works with the setting in the field, and the guideline amount, to determine the amount of the bonus.

For information about how the tolerance levels affect this amount, see the Help for the fields.

Specify the percentage of target award to deduct for each percent that the unit or company is below the objective.

Specify the percentage of target award to pay if the unit reaches 100 percent of the objective.

Specify the percentage of target award to pay for each percent that the unit achieves above the objective.

Specify the highest percentage of target award to pay in the plan.

Select the tolerance level to apply to the value in the field.

For example, a tolerance level applied to the lowest allowable payout amount functions as follows:

  • None- No tolerance level specified. Guideline awards are calculated without reference to the lowest and highest allowable payout amounts.

  • Soft- If an amount is below the lowest allowable amount, a message is displayed. Guideline awards are set to 0 if below the lowest allowable payout. Recommendations between 0 and the lowest allowable payout are allowed.

  • Hard- Recommendation amounts below the lowest allowable payout are not allowed. Guideline awards below the lowest allowable payout are set to 0.

Select the tolerance level to apply to the value in the field.

For example, a tolerance level applied to the highest allowable payout amount functions as follows:

  • None- No tolerance level specified. Guideline awards are calculated without reference to the highest allowable payout amount.

  • Soft- If an amount is greater than the highest allowable amount, a message is displayed. Guideline awards are capped below the highest allowable payout (and above 0). Recommendations above the highest allowable payout are allowed.

  • Hard- Guideline awards are capped below the highest allowable payout. Recommendation amounts above the highest allowable payout are not allowed.