Original Date: 07/14/1997
Revision Date: 01/18/2007
Best Practice : Sharing the Wealth
Considered to be the most important asset, Thermacore’s employees represent the key to the company’s performance and competitiveness. Thermacore’s success in transforming from a low volume, research and development enterprise to a high volume, production facility and technology leader has primarily occurred because of the dedication and commitment of its employees. To enable employees to participate in and benefit from the company’s strong growth and performance in recent years, Thermacore has developed excellent bonus and employee stock purchase programs.
The annual employee bonus is a very effective way to let employees share in the wealth generated by operations during the year. All employees of Thermacore and its parent corporation, DTX, are eligible for the bonus program. The most unique aspect of the program is that all employees receive the same amount of bonus regardless of total compensation, seniority, or position in the company. Although Thermacore provides other methods for rewarding and recognizing performance, the bonus program affects all employees and has proven to be a very effective incentive.
The bonus pool is based on pre-federal tax income minus a minimum, threshold guarantee to the stockholders. The threshold guarantee is typically 15% of equity at the beginning of the year. The income subject to the bonus pool is multiplied by an employee bonus pool rate determined by the Board of Directors and senior management. Last year, the bonus pool rate was 12%. The number of eligible employees is an equivalent, determined number based on regular hours worked, excluding overtime and including full-year, regular hours plus part-time, disability, and lay-off hours as a percentage of regular hours. The total hours are added to give a total equivalent number of employees used for calculating the full share bonus rate. The full share bonus rate is calculated simply by dividing the bonus pool amount by the equivalent number of employees. Full-year, regular employees receive a full share, and part-time employees receive a share based on the percentage of time worked compared to full-year, regular employees. Last year, the full bonus share was more than $1,300 per employee.
Thermacore also has a stock ownership plan open to all employees. Each year, the stockholders and the Board of Directors approve a gross dollar value to be offered to active employees of the company. For example, the Board may decide to increase the equity in the company by $100,000. A subscription period (normally one month) is announced for purchase of stock at a price per share set by the Board. No one employee may subscribe for more than $10,000 worth of stock. Thermacore is a private company so stock is only traded within the company. Shares are sold to the employees at a small discount, in consideration for the company receiving the right-of-first refusal should the employee wish to leave the company or sell stock. Payment may be made in cash at the closing of the subscription period or by payroll deduction.
Thermacore’s programs provide effective ways to reward all employees for the growth and profitability of the company and to acquire equity. These programs are an effective incentive and means of sharing the wealth.
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