1. Variable Compensation

2. 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

3. 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

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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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% %
90% %
80% %
70% %
60%
Less than 80%
No Payout

13. 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

14. 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%)

15. 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

16. 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%

17. 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%

18. 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%

19. 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

20. 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%

21. 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%)

22. 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

23. 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%

24. *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

25. 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%

26. 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%

27. 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%)

28. 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

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

30. 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%)

31. 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.