Variable Compensation Agenda Variable Compensation Overview MACO What
Variable Compensation
Agenda • • Variable Compensation Overview MACO – – • What is MACO? How is MACO Calculated? Monitoring your MACO KPI performance MACO Points and Variable Compensation • MACO Payment Scale Distribution – What is Distribution? – Monitoring your distribution progress – Distribution payment scale • POCE – What is POCE? – Monitoring your POCE progress – POCE payment scale • Initiative – What is the initiative? – Monitoring your Initiative progress
Total Compensation Philosophy: • Focus of Module: What: Fixed compensation Variable compensation Incentive program Special awards Why: Mandatory fixed payment Achievement of targets in each month Achievement of periodical challenges Other recognition rewards (CHEERS) Total compensation
Variable Compensation What is it? • Monthly pay-for-performance program ($$$) • YOU can directly impact your compensation • Target values set monthly
Variable Compensation Total Variable Compensation How is it Measured? • Performance measured by 4 KPIs: MACO (65%) Distribution (15%) Execution/POCE (10%) Initiative (10%)* *Market Share in Ontario
Total Variable Compensation MACO Overview MACO 65% What is MACO? • MACO = Margin Contribution or ‘Profitability’ • MACO = Revenue – Taxes – Brewing & Shipping Costs • Brands bucketed into 1 of 3 MACO Point rates based on Brand profitability & Brand positioning • High End 20 points, Core 15 points, Tactical/Value 10 points Higher Brand MACO Point Rate = Higher Profitability of Brand
High End - 20 Points High End Portfolio MACO 65% High End Portfolio Total Variable Compensation MACO Overview Core -15 Points Tactical/Value - 10 Points What is MACO? • Brands bucketed into 1 of 3 MACO Point rates based on Brand profitability & Brand positioning
Total Variable Compensation MACO Overview MACO 65% Total MACO Calculated: • Total MACO points= Sum of volume (HLs) by Brand x MACO points/HL of Brand • Example:
MACO Overview Total Variable Compensation How to influence your Sales Mix • MACO 65% • Increase your monthly MACO actuals by influencing the brand mix you sell in Example: John is an SR in Toronto whose July Target is 1, 000 MACO Points Scenario A Scenario B Higher total monthly MACO Actuals = Higher Variable Compensation Payout For the same total HL sold (60), Scenario B results in a higher achievement % due to selling more high end brands
MACO Overview Total Variable Compensation How to monitor your MACO Progress • MACO 65% Consult your 09 X MACO Progress Reports weekly to monitor: 1. Your month to date progress 2. Your projected monthly achievement 3. Your performance by Brand 1 2 3
Total Variable Compensation MACO Overview MACO 65% MACO Points & Variable Compensation • Makes up 65% of your total variable compensation opportunity • Eligibility to overachieve up to 130% payout
Total Variable Compensation MACO Overview MACO Points & Variable Compensation • What if I Meet a Target Partway? MACO 65% Partial achievement rules apply • Partial pay for partial achievement, triggers at 80% achievement • Higher % of achievement = higher % payout KPI Achievement % KPI Payout % 130% 100% 95 -99. 9% 90 -94. 9% 80% 85 -89. 9% 70% 80 -84. 9% 60% Less than 80% No Payout
Total Variable Compensation MACO Overview How are MACO Targets Set? • MACO 65% Monthly MACO target set in previous month 1. 2. 3. 4. Volume targets proposed by Regional Sales Intelligence Final territory targets adjusted by DSM Next month’s targets approved by Regional Manager DSM provides you with next month’s targets in advance of month
MACO Recap • MACO: – Margin contribution – Measure of Brand profitability & positioning – Each brand assigned to one of three buckets • MACO is important to your role – Helps you focus on selling the right mix of SKUs – Helps you make more variable compensation • MACO impacts Variable Compensation – MACO is most significant KPI (65%)
Total Variable Compensation Distribution Overview What is Distribution? • Measures the # of POC’s in your territory that have a particular SKU available in the month • Actuals are measured through: – !Sell questionnaire in Atlantic & West – Sales Data in Ontario & Quebec Distribution 15% Distribution measures the availability of our focus brands in your territory
Distribution Overview Total Variable Compensation What is Distribution? • Off-Premise Distribution 1. 2. 3. 4. 5. Distribution 15% Each Focus Brand has several Focus SKUs You have a listings target for each Focus SKU Actual listings for all Focus SKUs within a Focus Brand are summed together Target listings for all Focus SKUs within a Focus Brand are summed together If Actuals >= Target, then distribution target is achieved for that Focus Brand
Total Variable Compensation Distribution Overview What is Distribution? • On-Premise Distribution 1. 2. 3. 4. 5. Distribution 15% Each Focus Brand is split into Draught & Package (if both are applicable) You have a listings target for both Draught & Package Actual listings for both draught & package within a Focus Brand are summed together Target listings for both draught & package within a Focus Brand are summed together If Actuals >= Target, then distribution target is achieved for that Focus Brand
Total Variable Compensation Distribution Overview What is Distribution? • For Off-Premise Distribution, you can over-deliver # of listings on one SKU to offset a gap in another SKU, as long as they are both in the same Focus Brand Distribution 15% • For On-Premise Distribution, you can over-deliver # of listings on draught to offset a gap in package (and vice versa), as long as they are both in the same focus brand
Distribution Overview Total Variable Compensation Monitor Distribution Progress • The 005 report is used to track Distribution progress 1. 2. 3. Distribution by SKU by Account Distribution achievement by focus brand Distribution achievement across all focus brands within that channel Distribution 15% 1 3 2
Total Variable Compensation Distribution Overview Distribution Partial Achievement • Targets are set for each Focus Brand, for each channel called on • To achieve 100% on the distribution KPI, you must achieve all of your brand distribution targets • Partial achievement is paid on distribution based on the number of brand targets missed Distribution 15%
Distribution Recap • DISTRIBTUION: – Measures availability of our focus brands & SKUs within your territory • DISTRIBUTION is important to your role – Drive MACO relevant sku’s • DISTRIBUTION impacts Variable Compensation – Distribution is (15%)
POCE Overview Total Variable Compensation What is POCE? • Measures level of in-POC execution (visibility) – Draught taps, POS, Glassware • Measured using a POCE Survey in !Sell – Each POC assigned a survey • Separate survey for basic vs. winning POCs – Each survey question assigned a point value • Examples of POCE Survey questions: POCE 10% – Is branded glassware used for Keith's & Stella? (applicable to Draught listings only) – Does Labatt have more visibility vs. any other competitor on patio, at entrance and on table? The more impactful our in-POC execution, the more likely the consumer will purchase our products
Total Variable Compensation POCE Overview How is POCE measured? • Points across all surveys totaled and divided by # of eligible points in your territory Methodology example: POCE 10% Joe’s Pub 43 / 45 points = 95% Ted’s Restaurant 29 / 45 points = 64% Total score 72 /90 = 80%
Total Variable Compensation POCE Overview Monitoring POCE Progress • The POCE Report, located on your !Sell Report Dashboard, is used to monitor POCE progress 1. 2. 3. POCE # of POCs with POCE completed in the month POCE Score in Basic & Winning POCs Total POCE Score for territory 10% *Report also shows POCE Score for each POC in your territory
Total Variable Compensation POCE Overview POCE Partial Achievement • What if I Meet a Target Partway? – Partial achievement rules apply • Partial pay for partial achievement, triggers at 85% achievement • Higher % of achievement = higher % payout POCE 10% • Reps MUST have completed a survey in at least 80% of completed calls within the month to be eligible for VC payout
Total Variable Compensation POCE Overview POCE Audit Process • Monthly POCE audits are conducted • A POCE audit qualifies for failure when 5 or more “yes” questions are answered “no” (by the auditor) throughout the course of the total audit, based on 5 POCs being audited • A failed POCE and/or Distribution (ATL/West) audit will result in the below deductions for the current VC month: POCE 10% • 1 st Offence: no KPI payout for the current month • 2 nd Offence & Offences thereafter: 100% Disqualification from VC for the current month
POCE Recap • POCE: – Surveys to determine if in-POC executions meet standards set by the business – Build Action Plan against the GAP’s to achieve • POCE is important to your role – Consistent execution in market – Directly relates to distribution and visibility of brands in market • POCE impacts Variable Compensation – POCE is (10%)
Total Variable Compensation Initiative Overview What is the Initiative? • Tactical KPI changed each month • Will change depending on focus of the business – Examples: • Bud Light Lime Distribution (when launched in 2009) • Total Bud Light Volume (Caribbean Cruise 2010) • Approved by VP of Sales each month Initiative 10% • There is no partial achievement *In Ontario, the initiative is market share every month
Total Variable Compensation Initiative Overview Monitoring Initiative Progress? • You can track your initiative progress on the 101 – Target Progress Report Initiative 10%
Initiative Recap • INITIATIVE: – Dynamic KPI adjusted monthly to drive a focus of the business – Track your GAP’s weekly • INITIATIVE is important to your role – Drives specific actions for the month – Relative to key in market programs or pricing • INITIATIVE impacts Variable Compensation – Initiative is (10%)
It is your turn to “Shoot The Puck!!!” Development is owned by Employees, Supported by Managers, And enabled by the People Department. How are you going to apply what you learned today in trade? Confirm Variable Compensation understanding with your manager, Discuss Variable Compensation best practices with a peer. Affect your own variable compensation achievement by implementing focus in your daily routine.
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