PLR design in a high-inflation year

Be careful about changing indicators to rescue a low payout. Our labour counsel is strict that PLR rules need to be clear, objective and agreed in advance for the plan to keep its treatment, and that anything resembling a discretionary top-up after the fact puts that at risk. We left the low payout alone and dealt with pay through the collective agreement increase.

Industrial company in the interior of the state, about 6,000 employees. Our union asked for a guaranteed minimum of 0.8 salary whatever the results. We refused the guarantee but agreed a lower threshold: payout starts at 85 percent of target, where it used to start at 92. In a volatile year the starting point matters more to employees than the ceiling.

Have you looked at the split between company and unit indicators? Ours was 50 and 50 like yours, and operations people felt punished for margin pressure they could not influence. We changed to 30 company and 70 unit for non-management, with safety, quality and productivity measures. Payout variance between units rose, which we had to explain carefully.