Understanding Variable Compensation Plan Types

When you define a variable compensation (VC) plan, you must specify its type. The system provides ten plan types. The topics in this section describe the unique steps required to set up plans in each of these categories. Additional setup options and procedures common to all plan types are in the discussion of the VC Plan setup pages.

This section discusses:

  • Monetary plan types.

  • Non-Monetary plan types.

  • Stock-type variable compensation plans.

  • Other plan types.

This describes the monetary plan types:

Field or Control

Definition
Discretionary Bonus

Select this type to label a plan for your own tracking. No special plan setup steps apply. Plan options are available according to the plan member rule.
Goal Sharing

Select either Weighted Goals or Matrix Goals and specify weighted goal percents or matrix columns on the Plan Definition page.

See Defining Goals.
Profit Sharing

Select this type to label a plan for your own tracking. No special plan setup steps apply. Plan options are available according to the plan member rule.

A non-monetary plan generates awards in terms of units rather than money. Use this plan type to manage the award of various kinds of gifts and merchandise to workers. The plan is administered in terms of units. Setup of valuation of units for reporting purposes.

To set up non-monetary plans:

  1. Define units of non-monetary awards and the value per unit on the Valuations page.

  2. Identify the number of units to be distributed to a worker on the Payout Formulas page.

    Select Constant as the operand and enter the number of units in the Value/Rec/Rate Code column.

  3. Set up a plan with a Non-Monetary plan type and select a valuation ID on the Plan Definition page.

  4. Assign the payout formula to a worker, group, or plan.

Use the Non Monetary report to track the number of units awarded under a plan and the value to workers.

See Understanding Data Element Setup.

Stock-type variable compensation (VC) plans require setup of valuation and funding. Use goals and other optional plan rules. The system uses valuation only for variable compensation reporting purposes because stock prices can change so rapidly.

The variable compensation system provides five stock plan types for your organization's tracking purposes. Within the Variable Compensation business process, the system treats them all the same. Select one of these stock plan types:

Field or Control

Definition
Stock ISO

Incentive Stock Option
Stock NQ

Nonqualified Stock Option
Stock NSAR

Stock Appreciation Rights in tandem with a Nonqualified Stock Option
Stock RSA

Restricted Stock Award
Stock ISAR

Stock Appreciation Rights in tandem with an Incentive Stock Option

Stock-type variable compensation plans are supported only for users of PeopleSoft Stock Administration. The system provides specific functionality to support this integration.

Summary of Setting Up Stock-Type Plans

To set up stock-type plans:

  1. Define valuation of stock units on the Valuations page.

  2. Specify a stock ID and stock plan on the Plan Definition page.

    The Stock administrator sets up stock IDs on the stock plans on the Stock Plan Table page.

  3. Specify a valuation ID on the Plan Definition page.

  4. Set up plan funding on the Plan Funding page.

See Understanding Data Element Setup.

Most plans fit into one of the named plan types. If you have a plan that is not described by one of these plan types, use the plan type Other. The Variable Compensation business process provides no specific functionality to support plans labeled Other, so we recommend selecting one of the remaining nine plan types whenever possible.