Variable Compensation

Agenda Variable Compensation Overview MACO Distribution POCE What is MACO? How is MACO Calculated? Monitoring your MACO KPI performance MACO Points and Variable Compensation MACO Payment Scale Distribution What is Distribution? Monitoring your distribution progress Distribution payment scale POCE What is POCE? Monitoring your POCE progress POCE payment scale Initiative What is the initiative? Monitoring your Initiative progress

Total Compensation Philosophy: Focus of Module: What: Why: Fixed compensation Mandatory fixed payment Variable compensation Achievement of targets in each month Incentive program Achievement of periodical challenges Special awards Other recognition rewards (CHEERS) Total compensation

Variable Compensation What is it? Monthly pay-for-performance program ($$$) YOU can directly impact your compensation Target values set monthly

Variable Compensation How is it Measured? Performance measured by 4 KPIs: MACO (65%) Total Variable Compensation Distribution (15%) Execution/POCE (10%) Initiative (10%)* *Market Share in Ontario

Higher Brand MACO Point Rate = Higher Profitability of Brand MACO Overview What is MACO? MACO = Margin Contribution or ‘Profitability’ MACO = Revenue – Taxes – Brewing & Shipping Costs Brands bucketed into 1 of 3 MACO Point rates based on Brand profitability & Brand positioning High End 20 points, Core 15 points, Tactical/Value 10 points MACO 65% Total Variable Compensation Higher Brand MACO Point Rate = Higher Profitability of Brand

MACO Overview What is MACO? Brands bucketed into 1 of 3 MACO Point rates based on Brand profitability & Brand positioning High End - 20 Points High End Portfolio High End Portfolio MACO 65% Total Variable Compensation Core - 15 Points Tactical/Value - 10 Points

MACO Overview Total MACO Calculated: Total MACO points= Sum of volume (HLs) by Brand x MACO points/HL of Brand Example: MACO 65% Total Variable Compensation

MACO Overview How to influence your Sales Mix Increase your monthly MACO actuals by influencing the brand mix you sell in Example: John is an SR in Toronto whose July Target is 1,000 MACO Points MACO 65% Scenario A Total Variable Compensation For the same total HL sold (60), Scenario B results in a higher achievement % due to selling more high end brands Scenario B Higher total monthly MACO Actuals = Higher Variable Compensation Payout

MACO Overview How to monitor your MACO Progress 1 2 3 Consult your 09X MACO Progress Reports weekly to monitor: Your month to date progress Your projected monthly achievement Your performance by Brand MACO 65% Total Variable Compensation 1 2 3

MACO Overview MACO Points & Variable Compensation Makes up 65% of your total variable compensation opportunity Eligibility to overachieve up to 130% payout MACO 65% Total Variable Compensation

MACO Overview MACO Points & Variable Compensation What if I Meet a Target Partway? Partial achievement rules apply Partial pay for partial achievement, triggers at 80% achievement Higher % of achievement = higher % payout MACO 65% Total Variable Compensation KPI Achievement % KPI Payout % 130% 100% 95-99.9% 90% 90-94.9% 80% 85-89.9% 70% 80-84.9% 60% Less than 80% No Payout

MACO Overview How are MACO Targets Set? Monthly MACO target set in previous month Volume targets proposed by Regional Sales Intelligence Final territory targets adjusted by DSM Next month’s targets approved by Regional Manager DSM provides you with next month’s targets in advance of month MACO 65% Total Variable Compensation

MACO Recap MACO: Margin contribution Measure of Brand profitability & positioning Each brand assigned to one of three buckets MACO is important to your role Helps you focus on selling the right mix of SKUs Helps you make more variable compensation MACO impacts Variable Compensation MACO is most significant KPI (65%)

Distribution Overview What is Distribution? Measures the # of POC’s in your territory that have a particular SKU available in the month Actuals are measured through: !Sell questionnaire in Atlantic & West Sales Data in Ontario & Quebec Total Variable Compensation Distribution 15% Distribution measures the availability of our focus brands in your territory

Distribution Overview What is Distribution? Off-Premise Distribution Each Focus Brand has several Focus SKUs You have a listings target for each Focus SKU Actual listings for all Focus SKUs within a Focus Brand are summed together Target listings for all Focus SKUs within a Focus Brand are summed together If Actuals >= Target, then distribution target is achieved for that Focus Brand Total Variable Compensation Distribution 15%

Distribution Overview What is Distribution? On-Premise Distribution Each Focus Brand is split into Draught & Package (if both are applicable) You have a listings target for both Draught & Package Actual listings for both draught & package within a Focus Brand are summed together Target listings for both draught & package within a Focus Brand are summed together If Actuals >= Target, then distribution target is achieved for that Focus Brand Total Variable Compensation Distribution 15%

Distribution Overview What is Distribution? For Off-Premise Distribution, you can over-deliver # of listings on one SKU to offset a gap in another SKU, as long as they are both in the same Focus Brand For On-Premise Distribution, you can over-deliver # of listings on draught to offset a gap in package (and vice versa), as long as they are both in the same focus brand Total Variable Compensation Distribution 15%

Distribution Overview Monitor Distribution Progress The 005 report is used to track Distribution progress Distribution by SKU by Account Distribution achievement by focus brand Distribution achievement across all focus brands within that channel Total Variable Compensation Distribution 15% 1 3 2

Distribution Overview Distribution Partial Achievement Targets are set for each Focus Brand, for each channel called on To achieve 100% on the distribution KPI, you must achieve all of your brand distribution targets Partial achievement is paid on distribution based on the number of brand targets missed Total Variable Compensation Distribution 15%

Distribution Recap DISTRIBTUION: Measures availability of our focus brands & SKUs within your territory DISTRIBUTION is important to your role Drive MACO relevant sku’s DISTRIBUTION impacts Variable Compensation Distribution is (15%)

POCE Overview What is POCE? Measures level of in-POC execution (visibility) Draught taps, POS, Glassware Measured using a POCE Survey in !Sell Each POC assigned a survey Separate survey for basic vs. winning POCs Each survey question assigned a point value Examples of POCE Survey questions: Is branded glassware used for Keith's & Stella? (applicable to Draught listings only) Does Labatt have more visibility vs. any other competitor on patio, at entrance and on table? Total Variable Compensation POCE 10% The more impactful our in-POC execution, the more likely the consumer will purchase our products

Ted’s Restaurant 29 / 45 points = 64% POCE Overview How is POCE measured? Points across all surveys totaled and divided by # of eligible points in your territory Methodology example: Joe’s Pub 43 / 45 points = 95% Ted’s Restaurant 29 / 45 points = 64% Total score 72 /90 = 80% Total Variable Compensation POCE 10%

*Report also shows POCE Score for each POC in your territory POCE Overview Monitoring POCE Progress The POCE Report, located on your !Sell Report Dashboard, is used to monitor POCE progress # of POCs with POCE completed in the month POCE Score in Basic & Winning POCs Total POCE Score for territory Total Variable Compensation POCE 10% *Report also shows POCE Score for each POC in your territory

POCE Overview POCE Partial Achievement What if I Meet a Target Partway? Partial achievement rules apply Partial pay for partial achievement, triggers at 85% achievement Higher % of achievement = higher % payout Reps MUST have completed a survey in at least 80% of completed calls within the month to be eligible for VC payout Total Variable Compensation POCE 10%

POCE Overview POCE Audit Process Monthly POCE audits are conducted A POCE audit qualifies for failure when 5 or more “yes” questions are answered “no” (by the auditor) throughout the course of the total audit, based on 5 POCs being audited A failed POCE and/or Distribution (ATL/West) audit will result in the below deductions for the current VC month: 1st Offence: no KPI payout for the current month 2nd Offence & Offences thereafter: 100% Disqualification from VC for the current month Total Variable Compensation POCE 10%

POCE Recap POCE: Surveys to determine if in-POC executions meet standards set by the business Build Action Plan against the GAP’s to achieve POCE is important to your role Consistent execution in market Directly relates to distribution and visibility of brands in market POCE impacts Variable Compensation POCE is (10%)

Initiative Overview What is the Initiative? Tactical KPI changed each month Will change depending on focus of the business Examples: Bud Light Lime Distribution (when launched in 2009) Total Bud Light Volume (Caribbean Cruise 2010) Approved by VP of Sales each month There is no partial achievement Total Variable Compensation Initiative 10% *In Ontario, the initiative is market share every month

Initiative Overview Monitoring Initiative Progress? You can track your initiative progress on the 101 – Target Progress Report Total Variable Compensation Initiative 10%

Initiative Recap INITIATIVE: Dynamic KPI adjusted monthly to drive a focus of the business Track your GAP’s weekly INITIATIVE is important to your role Drives specific actions for the month Relative to key in market programs or pricing INITIATIVE impacts Variable Compensation Initiative is (10%)

It is your turn to “Shoot The Puck!!!” Development is owned by Employees, Supported by Managers, And enabled by the People Department. How are you going to apply what you learned today in trade? Confirm Variable Compensation understanding with your manager, Discuss Variable Compensation best practices with a peer. Affect your own variable compensation achievement by implementing focus in your daily routine.