Originally Posted by Flyby1206

Current plan is 15% of pretax profit, minus 5% of eligible wages.

Let's say we had $1bil in pretax profit for the year. 15% of that is $150mil. JetBlue spent $900mil on eligible wages that same year, so 5% of $900 mil is $45mil. That leaves $105mil to be given out for PS. To find the percentage everyone gets you take $105mil divided by $900mil and get 11.6% payout.

New plan is just focused on pretax margin. So let's say we had $1bil in pretax profit. We then look at our total revenue for that period, which we'll say was $6bil total revenue. That comes out to 16.6% pretax profit margin. Since that's less than 18% we would get 10% of the pretax profit ($1bil * 10% = $100mil for profit sharing).

If we had $1bil pretax profit, and only $5bil in total revenue that would equal a 20% profit margin. We'd get $100mil for PS like the above example, plus 20% of everything above 18% margin. 18% margin on $5bil is $900mil (we had $1bil pretax profit). So you take that extra $100mil * 20% and get an additional $20mil. Making a total of $120mil for PS.

Confused yet?