Originally Posted by
TCMC17RES
Statement:
5.74% of variable compensation converted to fixed compensation in the form of hourly pay rates, assuming the Company achieves PTIX of $6.0+ billion every year o This impact is reduced if PTIX is less than $6 billion
Please back me up on my napkin math...
Last year I earned a PS bonus at 16.58% on 4.5B
If I turn this into an equation we can find the %rate (x) earned per B$ profit:
2.5X + 2(4.5-2.5)X = 16.58
2.5X + 4X = 16.58
6.5X = 16.58
X = 2.55 %/B$
This is the rate that we earned last year per billion profit @10% return
With this TA we give up (6.0-2.5) = 3.5X = 8.9%
How does Alpa come up with 5.74%?
I'm not even going to attempt public math
In addition to what Sailing posted, I think some of the difference you're coming up with might be due to the fact that the new 10% piece (2.5B-6B) is multiplied off of a rate 14ish% higher than the current rates. Other than that someone else will have to correct it. I have heard the reps challenge some of the slides/assumptions. The 5.74% isn't one that has been challenged.
Btw the NC Q&A is finished....