incentive compensation plan - performance bonuses

Incentive compensation is an important part of your total compensation package here at wondermart. As Mr. Willy always said: "A company that encourages employee ownership...is simply more efficient, happy, and successful than one that doesn't." Your wondermart incentive compensation is one of several ways wondermart encourages you to own a stake in the company. As a wondermart team member, you are a critical part of our ability to reach and exceed our financial goals today, and in the future. As you do your part to assist in the achievement of those goals, wondermart will share in the financial success of that achievement.

 

Below is an outline which explains how the wondermart incentive plan works (award determination, plan qualifiers, payment, and eligibility) along with an addendum specifically outlining your incentive opportunity. Please review this material carefully for full understanding and speak with your supervisor if you have any questions.
 

eligible participants

All general managers and assistant general managers in wondermart wonderstores and wondermarkets are eligible to receive a profit growth incentive award.

 

participant salary and draw

General managers and AGM's will receive a base salary determined by the store category. Any salary an exempt manager receives in excess of their assigned salary cap will be considered a draw against his/her incentive, in which must be satisfied prior to any Profit Growth Incentive being paid out.

profit growth incentive - low volume stores ($0-30M)

Store must meet an "Adjusted Net Profit" threshold of at least $575,000 to be eligible for the Profit Growth Incentive. Once the $475,000 threshold is met, the following formula applies.

general managers:

percent

 

5%

2%

1%

determinant(s)

of the adjusted net profit equal to or less than $1,525,000

of the next $1,000,000 of adjusted net profit

of the next $1,525,000 of adjusted net profit

assistant general managers:

percent

 

1%

1%

determinant(s)

of the adjusted net profit equal to or less than $1,525,000

of the next $1,000,000 of adjusted net profit

profit growth incentive - base volume stores ($30-72M)

Store must meet an "Adjusted Net Profit" threshold of at least $775,000 to be eligible for the Profit Growth Incentive. Once the $775,000 threshold is met, the following formula applies.

general managers:

percent

 

5%

2%

1%

determinant(s)

of the adjusted net profit equal to or less than $1,425,000

of the next $1,000,000 of adjusted net profit

of the next $1,425,000 of adjusted net profit

assistant general managers:

percent

 

1%

1%

determinant(s)

of the adjusted net profit equal to or less than $1,425,000

of the next $1,000,000 of adjusted net profit

profit growth incentive - high volume stores ($72M+)

Store must meet an "Adjusted Net Profit" threshold of at least $975,000 to be eligible for the Profit Growth Incentive. Once the $975,000 threshold is met, the following formula applies.

general managers:

percent

 

5%

2%

1%

determinant(s)

of the adjusted net profit equal to or less than $1,425,000

of the next $1,000,000 of adjusted net profit

of the next $1,425,000 of adjusted net profit

assistant general managers:

percent

 

1%

1%

determinant(s)

of the adjusted net profit equal to or less than $1,425,000

of the next $1,000,000 of adjusted net profit

general manager

low volume model ($25M)

example incentive bonus statement

net profit (4.0%)

less

inventory overage

team incentive plan payout

last year invoices

add

ancillary services net profit

subtotal:

less:

7% of subtotal for PST

(profit sharing trust)

profit threshold (may vary)

adjusted net profit (ANP)

5% of the first $1,525,000 ANP

2% of the next $1,000,000 ANP

1% of the next $2,525,000 ANP

total bonus:

pro-rated share based on # of days:

(365/365)

total bonus to be paid:

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

1,000,000.00

5,000.00

40,000.00

10,000.00

 

12,000.00

957,000.00

66,990.00

575,000.00

415,010.00

15,750.50

15,750.50

15,750.50

15,750.50

general manager

base volume model ($50M)

example incentive bonus statement

net profit (4.0%)

less

inventory overage

team incentive plan payout

last year invoices

add

ancillary services net profit

subtotal:

less:

7% of subtotal for PST

(profit sharing trust)

profit threshold (may vary)

adjusted net profit (ANP)

5% of the first $1,475,000 ANP

2% of the next $1,000,000 ANP

1% of the next $2,425,000 ANP

total bonus:

pro-rated share based on # of days:

(365/365)

total bonus to be paid:

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

2,000,000.00

5,000.00

80,000.00

50,000.00

 

26,000.00

1,891,000.00

132,370.00

775,000.00

983,630.00

49,181.50

49,181.50

49,181.50

49,181.50

The above is an example of the final incentive bonus statement. The sample can be used to calculate your own bonus.

profit growth incentive components

adjusted net profit

Adjusted net profit is determines by adjusting the net pretax profits on the individual store income statement for the full fiscal year, as used for wondermart's internal accounting purposes. The following are deducted: team member incentive plans (i.e. shareholders); any inventory overages; profit sharing trust contributions; any prior year invoices; any other deduction/adjustment to the profit which may arise from time to time from the implementation of a company policy or procedure during the fiscal year.

shrinkage

If you manage a new store, you will be charged the company established shrinkage provision until the store's first physical inventory. At that time, your store's shrinkage will be adjusted to actual and be shown on your monthly income statement. After the second inventory is taken, a weighted average of the two will be charged. After the third inventory, a weighted average of the three will be charged. After subsequent inventories, your store's shrinkage will be on a "rolling" three year (i.e. the most recent inventory result will be added, the earliest year will be dropped).

incentive payments

The incentive is paid to all team members that are currently employed as a general manager or assistant general manager and are currently employed with the company at the end of the fiscal year. The incentive will be paid by mid-March.

termination or discharge

WonderMart Stores Inc. will deny the incentive payable to any exempt manager who is terminated for "gross misconduct", as defined by corporate policy. In the event you should leave your store and employment or be discharged by the company for reasons other than "gross misconduct", prior to the end of wondermart's fiscal year, your incentive shall be determined on your store's net profit results through the last day of your employment, not on year-end profits. The incentive will be pro-rated based on the total days you were employed as an exempt manager. The incentive will be paid in march following the end of the fiscal year.

eligibility for payment

Managers who are: 1) Placed in a general/exempt manager position during the fiscal year; 2) Demoted prior to the end of the fiscal year but remain employed with the company; 3) Promoted prior to the end of the fiscal year; or are eligible to receive a pro-rated incentive based on the total number of days in the store. The incentive will be determined on the store's net profit results through the entire fiscal year and not just the net profit for the months they were the manager.

Managers that have managed more than one store will receive a pro-rated share based on the total number of days in each store.

General managers and AGM's on a paid leave of absence will continue to be eligible for a pro-rated share of the incentive as long as another exempt manager does not replace them. General managers and AGM's on a leave of absence without pay or long term disability will not be eligible for a pro-rated share of the incentive during that time.

All incentive awards are pro-rated based on the number of days in the fiscal year. The fiscal year is defined as February 1st through January 31st of the plan year.