Originally Posted by
kronan
Having the hurdle rate allows the Trust to continue to gain in value without passing that value on to US. It acts as a stabilizing source for down years.....
Thanks for your detailed response. But, I'm still uncertain I understand. How does the "hurdle rate: allow the Trust to continue to gain in value without passing that value on to us? How is it a stabilizing source in down years?
Your example states our pancakes "grow" when ROI > Hurdle Rate. But, isn't that "passing the value on to us"?
If we negotiate (agree) to a Hurdle Rate that ends up being too high, and ROI < Hurdle Rate, how will the guaranteed 2% floor be maintained?
Won't the company have to add additional funds, above the agreed upon percentage of earnings?
Isn't this precisely what the company wants to avoid?
I fully understand why pilots voiced concerned about having a Variable Benefit Plan, so the Union added the word Stablized - I'm still don't understand the mechanism for this stabilization/floor. If the hurdle is set too high, and ROI doesn't perform, the money has to come from somewhere. The company?? Isn't this what we already have with our current A Plan?
(Note: Yes, I admit current A Fund has earnings cap and YOS cap, and the VBP or PSPP seeks to remove those)
I guess, I just don't see the company agreeing to this "floor", especially if we are asking to raise the earnings cap & allow no CAP on YOS.
Of course, the company will clearly see the benefit of us giving up the "High 5" FAE calculation....and enticing guys to upgrade at 100% and max fly every year,. Like PBS, they want to have guys work harder & harder, so they can minimize the size of the crew force.
In Unity,
DLax