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Short Term Incentive Calculator

Posted by: Mansour Baker

Short Term Incentive Calculator

Company Net Profit ($):

Bonus Pool % of Net Profit:

Employee Level: Management (Directors) Middle Management (Managers) Professionals (Engineers) Junior Professional or Support Staff

Number of Staff in this Level:

Company Performance Rating (%):

Employee Performance Rating (1.00 - 4.00):

Calculate Incentive

Enter values and click 'Calculate Incentive'

Actual Bonus Payout Calculation:

• (Company weight x allowable bonus per staff) x company pay out% + (employee weight x allowable bonus per staff) x employee pay out% = final payable bonus

Short Term Incentive Calculator

​The short-term incentive calculator aligns with a pay-for-performance approach in which the company and employees are only rewarded for achieving a certain level of predetermined performance objectives.

Features:

• Overall Structure: Objective & KPI based
• Funding: Top-down approach of profit percentage with board/management discretion
• Eligibility: All full-time equivalent employees
• Target Levels: Net profit % (bonus pool amount allocated)
• Performance measures (company and employees): Company financial performance and employee's objectives & KPIs
• Bonus Pool Allocation: Bonus pool allocation of net profit %
• Payout Scheme: Balance between upside (150%) and downside (0%)
  
  

Short-Term Incentive Plan Framework

Performance Weighting

​The following guidelines are subject to board/management discretion.

• Employee Level: Management (Directors)
  • Company Performance Weight is 70%
  • Employee Performance Weight is 30%

• Employee Level: Middle Management (Managers)
  • Company Performance Weight is 50%
  • Employee Performance Weight is 50%

• Employee Level: Professionals (Engineers)
  • ​Company Performance Weight is 30%
  • Employee Performance Weight is 70%

• Employee Level: Junior Professional or Support Staff
  
  • ​Company Performance Weight is 20%
  • Employee Performance Weight is 80%

Bonus Pool Allocation 

​The following guidelines for bonus pool allocation of net profit % are subject to board/management discretion.

• Employee Level: Management (Directors)
  • Bonus pool allocation is 50%

• Employee Level: Middle Management (Managers)
  • Bonus pool allocation is 35%

• Employee Level: Professionals (Engineers)
  • ​Bonus pool allocation is 10%

• Employee Level: Junior Professional or Support Staff
  • ​​Bonus pool allocation is 5%

Performance & Incentive Payout Matrix

​Each objective is assigned four different levels of performance and payout.

• “Exceeded”: represents the above target performance at which the COMPANY is willing to pay additional incentive
• “Achieved”: represents the target performance level at which the COMPANY is willing to pay incentive
• “Partially Achieved”: represents the minimum performance level at which some incentive may be payout
• “Not Achieved”: represents the below threshold performance level at which no incentive will be paid out  

​The below payout range for this calculator is between 0 - 150% of target incentive.

• ​Employee Performance Rating: 3.50 – 4.00
• Summary Performance Description: Exceeded
• Company Performance Rating: 106%-115%
• Payout as % of target: 150%

• ​Employee Performance Rating: 2.75 – 3.49
• Summary Performance Description: Achieved
• Company Performance Rating: 90%-105%
• Payout as % of target: 100%

• ​Employee Performance Rating: 2.00 – 2.74
• Summary Performance Description: Partially Achieved
• Company Performance Rating: 75%-89%
• Payout as % of target: 50%

• ​Employee Performance Rating: 1.00 – 1.99
• Summary Performance Description: Not Achieved
• Company Performance Rating: Below 75%
• Payout as % of target: 0%

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