PSU's as part of bonus payment?

[nzwasp]

So my wife works for cenovus (think i have asked this question before too).

And as part of her compensation she gets a bonus and these PSU's which I think stand for performance share units. She has no idea what they are and is unwilling to ask HR what they are. She always just asks me and I am also not sure.

Does anyone else work for cenovus and know how they are calculated and why they sometimes get paid and sometimes do not?

For instance in 2016 they paid out about 25k in PSU's (the shares if they are tied to them have been going down constantly for the last couple of years).

Then last year they did not pay out them and then again this year they are saying they are not paying them out. I think the PSU's are different from vested shares as well, as when the compensation letter comes each year it says you will be paid: $XXXXXX salary, $XXXXX bonus and $XXXXX PSU.

[vengie]

Is it potentially "Profit Sharing Units"?

I know my company does profit sharing and the amount is directly to related to how the company did within that fiscal year.
Which would make sense why it isn't paid out consistently.

[nzwasp]

Your 2017 long-term incentive grant:
Estimated value of long-term incentive grant* $20,000.00
* Your 2017 long-term incentive ("LTI") grant will be comprised of restricted share units. The grant is stated as an estimated value, it
does not represent the actual value that you may realize, which may be higher or lower depending on certain variables (such as
vesting, market conditions or commodity prices).

I think the PSU's are this thing above from the letter I was reading from last year. I think its cashed out and then just deposited less tax into the employees bank account.

[Neil4Speed]

Finally something I can help with!

First, You should reach out to your compensation team, their job is to effectively communicate these plans and generally they are more than happy to explain the in's and out's and provide insight.

PSU's are Performance Share Units, they are tied with the stock price and multiplied by a performance variable, you are granted them and in 3 years they vest based on the performance variable. Essentially they are a long term carrot. The performance for Cenovus is based on Total Shareholder Return Percentile Rating (how the companies shares have done compared to their peer group i.e. other large organizations that are similar to Cenovus). I havn't looked at the Cenovus stocks relative to their Peer group, but if TSR is below the 25th Percentile, they won't pay out.

You can read more in the proxy ciruclar.

http://www.cenovus.com/invest/docs/2017/proxy-circular.pdf

[sabad66]

the company i work for has a similar program. Basically we can be awarded with x # of shares every year, but then you get a multiplier anywhere from 0 - 2 depending on how well the company does in the next 3 years. if the company does extremely well, the multiplier is 2 and you get 2x the number of your x shares after 3 years. if the company does poorly, it can go all the way down to 0 (you get no shares after 3 years). TSR is one of our measures as well but there are a few other factors.

if they aren't paying them out then it probably means the company didn't hit its targets. this is the way the program works and they implicitly agreed to when they accepted the PSUs. it's an incentive for everyone collectively to work hard and make sure their company succeeds, but if they don't hit the targets then they don't get anything.

[nzwasp]

Finally something I can help with!

First, You should reach out to your compensation team, their job is to effectively communicate these plans and generally they are more than happy to explain the in's and out's and provide insight.

PSU's are Performance Share Units, they are tied with the stock price and multiplied by a performance variable, you are granted them and in 3 years they vest based on the performance variable. Essentially they are a long term carrot. The performance for Cenovus is based on Total Shareholder Return Percentile Rating (how the companies shares have done compared to their peer group i.e. other large organizations that are similar to Cenovus). I havn't looked at the Cenovus stocks relative to their Peer group, but if TSR is below the 25th Percentile, they won't pay out.

You can read more in the proxy ciruclar.

thanks for the explanation.

[killramos]

Yea psu’s are essentially the same thing as an RSU except they can have a performance multiplier attached for various conditions.

The way RSU’s work is on vest day you are given X number of shares of the company.

With PSU’s you are given X number of shares multiplied by Y based on performance.

Also sometimes with RSU’s and PSU’s they have the option of either giving them to you in the form of shares or cash at their discretion (whichever works better for them at time of vesting).

[bjstare]

For something as important as this, you should be convincing your wife to just suck it up and ask HR. They get paid to deal with these things. I don't doubt that the advice given in this thread is valuable, but at the end of the day if any of it is slightly wrong, you have zero recourse. The alternative is your wife sending a 2 min email to someone (or cruising around on the intranet where this info is also probably available), and you can ensure that you 100% have the right information. :dunno:

[killramos]

^ yea I’m shocked at a company as big as Cenovus this wasn’t covered in a town hall or a lunch and learn series etc.

Pretty important since it can make up a not insignificant portion of total compensation.

No one would ever leave any unclarity on the table about their salary, but stuff like this it’s amazing how much people don’t understand.

[ExtraSlow]

It's an insignificant portion when the multiplier is 0 like it is this year, :rofl:

[Swank]

My Encana PSUs were worthless the last few years before the company downsized. As stated, be prepared for the possibility that those Cenovus PSU also can end up worthless (i.e. don't make a big purchase in 2.5 year relying on them paying out in 3). I agree with cjblair, if we're all wrong, lying, or PSUs work differently at Cenovus this year (they often rejig the long term incentive packages) your wife might miss out on a chunk of change that may require her to act in 3-5 year to receive the money. She needs to get the info from the horse's mouth.

[Xtrema]

My Encana PSUs were worthless the last few years before the company downsized. As stated, be prepared for the possibility that those Cenovus PSU also can end up worthless (i.e. don't make a big purchase in 2.5 year relying on them paying out in 3). I agree with cjblair, if we're all wrong, lying, or PSUs work differently at Cenovus this year (they often rejig the long term incentive packages) your wife might miss out on a chunk of change that may require her to act in 3-5 year to receive the money. She needs to get the info from the horse's mouth.

It easy to say, for all incentive programs, unless it landed in your account(s), it's just promises.

Decade or so ago, friend of mine bought a $1M house in San Diego, planning to paid if off with vested Sun shares. Sun went down the toilet and he lose his job AND his house.

[dandia89]

^ yea I’m shocked at a company as big as Cenovus this wasn’t covered in a town hall or a lunch and learn series etc.

Pretty important since it can make up a not insignificant portion of total compensation.

No one would ever leave any unclarity on the table about their salary, but stuff like this it’s amazing how much people don’t understand.

it depends on the department. I've worked at two very similar companies, and one they walk you through the entire compensation package, any questions they'll explain it. a second company, they just throw you at a computer and give you a website link to figure it out yourself. a lot of people here still don't have a clear understanding of their benefits/compensation, it took me quite a bit of time to understand the small details that make it essential.

[lasimmon]

I am shocked someone would turn to the internet to figure out their compensation instead of talking to their place of work.

[speedog]

I am shocked someone would turn to the internet to figure out their compensation instead of talking to their place of work.

But isn't that the norm for Gen X and Millennials?

[mr2mike]

I am shocked someone would turn to the internet to figure out their compensation instead of talking to their place of work.
Yes, I generally take to asking HR these questions as to justify their existence and to prove that they don't know their job.
Generally, your manager should be able to answer this question.

But yes in short as said above, they're golden hancuffs. So really not a bonus unless you stay there and the company as a whole adds value to their shareholders and moves the stock price up higher than the PSU purchase price.
It's also funny how the share price moves up high right when these PSU's are granted, then trickles down throughout the year.

[sabad66]

So really not a bonus unless you stay there and the company as a whole adds value to their shareholders and moves the stock price up higher than the PSU purchase price.
It's also funny how the share price moves up high right when these PSU's are granted, then trickles down throughout the year.

what do you mean by PSU purchase price? the employee doesn't purchase anything with these... are you mixing them up with stock options?

or do you mean the taxable benefit value of the shares when they are granted? easiest way to get around this is to sell them as soon as you get them.

[Xtrema]

I am shocked someone would turn to the internet to figure out their compensation instead of talking to their place of work.

Probably given the environment at Cenovus, OP's wife may be scared to ask in case it triggers something.

OP's Wife: I have a question about PSUs.
HR Rep: Oh don't worry about it, while you are here, why don't you have a seat....

Although, given she is a seasoned employee, strange that she never found out during the good times.

[lasimmon]

Probably given the environment at Cenovus, OP's wife may be scared to ask in case it triggers something.

OP's Wife: I have a question about PSUs.
HR Rep: Oh don't worry about it, while you are here, why don't you have a seat....

Although, given she is a seasoned employee, strange that she never found out during the good times.

I mean if I didn't fully understand it would have been a question day 1 of employment...

[nzwasp]

On day one she was with encana.

Xtrema has it right