Document

CHS Annual Variable Pay Plan                 Exhibit 10.3A
Appendix Fiscal Year 2021



			
	Performance Goals


Financial Performance Goals are established for each Performance Period at the beginning of the Performance Period, including Return on Invested Capital (ROIC) and Return on Assets (ROA) (“Performance Goals”). The following table illustrates ROIC Performance Goals. Contact your Manager or finance contact for your group for more information on business unit ROA Performance Goals.


												
	Performance Goal Level
	Level Definition
	Payout Range
	Return on Invested Capital (ROIC)

	Maximum
	Highest level of Performance
	200%
	6.5%
	Target
	Expected level of Performance
	100%
	5.5%
	Threshold
	Lowest Level of Performance
	50%
	4.1%




			
	Return on Invested Capital (ROIC) Definition


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 fiscal year 2020 July balance sheet for beginning of year funded debt and beginning of year equity. The fiscal year 2021 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) Definition


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 fiscal year 2020 July balance sheet to determine net assets. For individual Business Unit calculations interest income is not netted against interest expense.




2021 CHS Annual Variable Pay Plan Appendix 1



CHS Annual Variable Pay Plan                 Exhibit 10.3A
Appendix Fiscal Year 2021

			
	Award Opportunity Example




																		
	Award Calculation Parameters
	Performance Goal Level	Award Opportunity Percentage	x	Pay Basis	=	Award Opportunity Amount
	Maximum
	10.0%
	x
	$70,000
	=
	$7,000

	Target
	5.0%
	$3,500

	Threshold
	2.5%
	$1,750





			
	Award Calculation Examples




																								
	Example A
Participant Group: Corporate Function
Trigger: Threshold ROIC Met

	Performance Goal
	Performance Goal Weighting
	Award Opportunity Amount
	x
	Performance Goal Level Attained
	Payout Range
	=
	Compensation Awarded

	ROIC
	70%
	$2,450
	x
	Target
	100%
	=
	$2,450
	Individual
	30%
	$1,050
	Maximum
	200%
	$2,100

	Total
	100%
	$3,500
					$4,550




																								
	Example B
Participant Group: Business Unit
Trigger: Threshold ROIC Met

	Performance Goal
	Performance Goal Weighting
	Award Opportunity Amount
	x
	Performance Goal Level Attained
	Payout Range
	=
	Compensation Awarded



	ROIC
	35%
	$1,225
	x
	Target
	100%
	=
	$1,225

	ROA
	35%
	$1,225
	Maximum
	200%
	$2,450

	Individual
	30%
	$1,050
	Maximum
	200%
	$2,100

	Total
	100%
	$3,500
					$5,775





																								
	Example C
Participant Group: Business Unit
Trigger: Threshold ROIC Not Met / Target ROA Met

	Performance Goal
	Performance Goal Weighting
	Award Opportunity Amount
	x
	Performance Goal Level Attained
	Payout Range
	=
	Compensation Awarded



	ROIC
	35%
	$1,225
	x
	Not Met
	0%
	=
	$0

	ROA
	35%
	$1,225
	Maximum
	200%
	$2,450

	Individual
	30%
	$1,050
	Not Met
	0%
	$0

	Total
	100%
	$3,500
					$2,450





2021 CHS Annual Variable Pay Plan Appendix 2



CHS Annual Variable Pay Plan                 Exhibit 10.3A
Appendix Fiscal Year 2021

			
	Additional Information




Refer to the CHS Annual Variable Pay Plan Document for additional Plan details. 
2021 CHS Annual Variable Pay Plan Appendix 3