Updated Merit and Bonus Guidelines for FY2008

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Updated Merit and Bonus Guidelines for FY2008

• COMPENSATION TEAM
• As of May 24, 2007

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Components of Total Rewards at NYU
Wellness
Benefits
Annual Bonus / Spot Bonus
Recognition
NEW!
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Two Components of Compensation

• Two Components to FY2008 AMI Process
• 3.5 merit pool incremental add to base salary,
  as historically done.
• 1.0 bonus pool new element to NYU compensation
  program. Each school and administrative unit
  will have incorporated into its financial plan an
  amount equal to 1 of all non-union,
  administrative base salaries (i.e., Code 100/103
  non-union Code 106/107 employees). The bonus
  pool is divided into two components
• Annual Bonus to be paid on January 15, 2008 for
  significant contribution and business unit impact
  or the achievement of goals and objectives over a
  one year period.
• Spot Bonus to be paid throughout the year
  (September 1, 2007 through August 31, 2008) for a
  single instance of superior performance or
  exemplary behaviors.

NEW!
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FY2008 AMI Eligibility Guidelines

• Code 100/110 Administrative/Professional
  employees (and those hired, transferred or
  promoted into these codes) before May 1, 2007
• Code 100 Administrative/Professional Full-time,
  exempt, salaried employees.
• Code 110 Administrative/Professional Part-time,
  exempt, salaried employees.
• Code 103/113 Research/Training Staff
• Code 106 Non-union clerical (those employees
  not covered by a collective bargaining agreement)
  
• (Note non-union service (or parity)
  employees (code 107) are not eligible for the
  3.5 merit pool and will continue to receive
  parity increases.
• FY07 only Eligible employees promoted or
  reclassified during this fiscal year will
  continue to be considered for a September 1, 2007
  AMI (includes codes 104/106/107 employees
  promoted to code 100/110 roles). We expect that
  the amounts of these AMI increases will not be
  automatic, that you will review each employee's
  contribution before awarding the AMI. It is
  expected that the 3.5 contribution for newly
  promoted or reclassified employees should be used
  only for these employees.  Should a leader choose
  to award less than the funding contribution, the
  remaining funds should not be used to bolster
  your unit's merit pool.  This will ensure
  fairness and "best practice" use of our
  compensation program across the University.
• Starting FY08 All employees, including any code
  104/106/107, who were promoted to code 100/110
  (administrative/professional) roles during the
  fiscal year and received a full promotional
  increase (10-12), should only be considered for
  an AMI if they are
• Below external market (external equity)
• Retention risk

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FY2008 AMI Eligibility Guidelines (Contd)

• Employees hired on or after May 1, 2007 are
  eligible for an increase in September 2008. This
  increase can be pro-rated for additional months
  worked, provided employees have a satisfactory
  attendance rating and are in good standing
  relative to performance. Example of pro-rated
  AMI
• New hires from October through May should also be
  pro-rated and receive less than the full 3.5 for
  not having worked the full year, per discretion
  of HRO Department Head.
• Pro-rated increases are not intended to impact
  your current merit pool. Costs for pro-rated
  increases can be off-set by using funds from
  vacant positions.

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FY2008 AMI Administrative Guidelines

• Performance ratings are required for all AMI
  eligible employees (Code 100/110, Code 103/113).
• Supervisors to translate respective employee
  ratings to the rating scale indicated in the AMI
  application via HRO.
• Merit pools will be based on a school or
  administrative units base salary budget for
  eligible, continuing employees, as of April 30th
  of the academic year.
• All HROs should manage as best as possible to
  submit salary changes, promotions and upgrades by
  July 1st to facilitate optimal AMI process.
• Salary increases will no longer be made
  retroactive to prior fiscal year.

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A Word Regarding Off - Cycle Increases

• Off - cycle increases will continue to be allowed
  for the following reasons only
• Promotions
• Necessary upgrades
• Equity or Market Adjustments
• Equity Adjustment Employee salary is low
  relative to internal peer compensation with
  similar positions at same grade level.
• Market Adjustment Employee salary is low
  relative to external market comparator group for
  similar positions at same level.
• Previously agreed upon on special salary programs
  for an employee or group of employees (prior
  agreement between compensation and the HRO is
  required) usually due to a re-organization or
  similar event.
• Other special situations with approval of the
  Compensation Director.

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A Word Regarding Temporary Salary Increases (aka
Additional Compensation)

• NYU also has an existing program, the Temporary
  Salary Increase Program (aka additional
  compensation), that is available to
  recognize/reward employees. This program is
  separate and distinct from the FY2008 AMI/Bonus
  Program, as it is funded separately and is not
  derived from any part of the 3.5 merit pool or
  1 bonus pool.
• This program is a vehicle to reward employees who
  temporarily assume responsibility for a higher
  level vacancy or assume responsibility for a
  short-term project that is outside the scope of
  the employees regular responsibilities.
• Program is a good tool for recognizing employee
  efforts that facilitate smooth operation of
  business-as-usual functions in the absence of
  colleagues or leaders.
• Example
• If an employee assumes everyday workload for a
  supervisor who is currently out on maternity
  leave, the employee would be eligible for
  additional compensation.
• If same employee assumes responsibility for a
  critical project lasting for the bulk of the
  academic year as coverage for a peer or
  supervisor, this should be considered when
  determining the employees annual bonus.
• Annual bonuses or spot bonuses can be used in
  lieu of or in addition to any temporary salary
  increase that would be awarded to an employee.

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Merit Increase/Bonus Performance Matrix
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Performance Based Distribution

• A normal distribution, or a bell curve, assumes
• Bulk of the population will meet expectations
  relative to goals (65 - 70).
• Select subset of the population will exceed
  expectations relative to goals (15 - 20).
• Select subset of the population will not meet
  expectations relative to goals (5 to 10).

Exceeds Expectations 15 - 20
Does Not Meet Expectations 5 - 10
Meets Expectations 65 - 70
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3.5 Pool - No Performance Differentiation An
inability to create merit
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3.5 Pool - Significant Differentiation
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Sample AMI Amounts Recipients by Performance
Rating
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Annual Bonus Plan/Spot Bonus Plan Eligibility
Guidelines

• Applies to all schools, auxiliary services and
  administrative units.
• Annual bonus plan applies to full-time, Code 100
  103 employees as well as all non-union clerical
  service employees, (those employees not covered
  by a collective bargaining agreement), except for
  members of the ULT. Pool is based on 1 of the
  aggregate total of FY2007 continuing employee
  base salaries (as of August 22nd) plus 3.5
  gross-up. Some of these employees will not be
  eligible for bonuses in FY2008 because they were
  hired after April 30th, but the value of their
  salaries will be included within the pool.
• Spot bonus plan applies to all full-time, Code
  100 103 employees as well as all non-union
  clerical and service employees, regardless of
  hire date.
• The annual bonus and spot bonus plans do not
  apply to faculty positions, part-time employees,
  union employees, contractors or members of the
  ULT.
• The 1 pool that is budgeted for ULT members will
  be used as a common pool to reward
  interdisciplinary teams in which team members are
  derived from multiple schools or across
  administrative units or administrative units and
  schools. Business Leaders and HRO's can send
  award recommendations to the Core. The Core will
  serve as the final review team for such
  interdisciplinary team awards. Please see the
  FAQs document for additional details/specificity.

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Annual Bonus Plan/Spot Bonus Plan Eligibility
Guidelines (Contd)

• Eligible employees (as outlined within this
  presentation) should have a satisfactory
  attendance record and be in good standing.
• For payout on October 2nd, as a general rule,
  employees should have been actively employed by
  NYU for at least six months to be eligible for an
  annual bonus.
• To receive a bonus payment, an employee must be
  on the payroll the date the bonus is paid.
• In the case of employees who are employed for
  less than a full 12 months due to illness, date
  of hire, or leaves, the award shall be prorated
  to reflect the proportion of time actually
  employed.
• Any employee who is eligible for a bonus but is
  absent due to a leave at the time the bonus is
  paid, will be paid the bonus upon return from
  leave.

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FY2008 Annual Bonus Plan Administrative Guidelines

• Employees hired after May 1, 2007 are not
  eligible until FY2008 (for FY2009 payout).
• Annual bonus payout should be not less than
  1,000.
• Performance ratings and VP or Dean approval are
  required for all employees recommended for a
  bonus.
• Schools and administrative units should not add
  additional funds to the 1 pool.
• You cannot overspend your pool and bonus dollars
  can not be used for increases to base salary.
• ITS will prepare a report to all schools and
  administrative units which will provide a roster
  of employees in all bonus-eligible object codes
  as of August 22, 2007. Please note that not every
  employee in the roster may be eligible for a
  bonus. You must review the bonus guidelines to
  determine eligibility. The report will be
  available during the last week of August, and
  will include Employee Name, Title, Unit, Date of
  Hire, Salary, and Funding of Salary. Questions on
  where to charge bonus awards should be directed
  to the Budget Office.
• Only top performers should be paid bonuses.
  Therefore, it is the responsibility of each unit
  to identify (through respective performance
  management process) up to their top 20 high
  performers and distribute available bonus dollars
  accordingly.
• Bonuses paid on October 2nd (via separate
  off-cycle check) can be input within the AMI
  application for processing. Otherwise, annual
  bonuses to be paid January 15th will be processed
  within an AMI-like application more information
  about data entry for January 15th bonus payments
  will be forthcoming.
• To receive an annual bonus payment, an eligible
  employee must be active on the payroll the date
  the bonus is paid (e.g., October 2, 2007 or
  January 15, 2008).

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Spot Bonus Administrative Guidelines

• Spot bonus plan applies to all full-time
  employees, including non-exempt/non-union
  employees, except for members of the ULT,
  regardless of hire date.
• As mentioned previously, this pool can be carved
  out from the full bonus pool at the beginning of
  the bonus year for use as special bonuses at the
  discretion of the VP or Dean.
• These bonuses are given on the spot and provide
  immediate recognition for a special achievement.
  These bonuses can be thought of as a punctuated
  thank you, or a spot bonus.
• These special bonuses can be awarded at any time
  during the year at the discretion of the
  department head and it is suggested that the
  unit director consult with their VP or Dean on
  appropriateness and size.
• Recommended spot bonus reserve 10 of total
  pool.
• Size of special bonus awards--recommended range
  250 - 2,500.
• Recommended of population eligible 5 of
  administrators are eligible for a spot bonus.
• Number of spot bonuses payable to one person in
  one fiscal year Maximum of two.
• Spot bonus payouts should be submitted through
  the PASS application.
• You cannot overspend your pool and spot bonus
  dollars cannot be used for incremental increases
  to base salary.

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Sample Criteria for Awarding Annual Bonuses

• Completion of a critical project early and/or
  under budget.
• Identification of a process improvement or cost
  savings for the unit or university.
• Training of new employees.
• Assumption of extra workload outside primary job
  responsibilities for an absent colleague or for a
  vacant position.
• Making a key contribution as part of a
  successful team or task force.

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Sample Criteria for awarding Spot Bonuses

• Specific Criteria
• One-time noteworthy achievements which may not
  meet the criteria for an annual bonus or
  temporary salary increase (for example,
  completion of a project milestone).
• Accomplishments in small special projects of a
  short duration.

• Spot Bonuses should be seen as being on a
  continuum, with greater achievement earning
  greater reward.

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Next Steps

• Each dean has been given ULT approved bonus
  guidelines. It is expected that each dean will
  submit a plan for use of the administrators
  bonus pool to the Provost. If the plan mirrors
  the ULT approved bonus guidelines, it will be
  approved. Alternate plans must provide a
  rationale for deviation from the ULT guidelines
  and be submitted no later than June 1, 2007.
• University Administrative units will be
  consolidated at the level of Senior Vice
  President/Senior Vice Provost (SVPs) or higher
  SVPs will submit their plans, also by June 1,
  2007, to their respective direct reports Mssrs.
  Sexton, McLaughlin, and Alfano.
• We are strongly encouraging all schools and
  administrative units to follow the ULT approved
  bonus guidelines.
• There are a number of ways to model your annual
  bonus and spot bonus payouts the Compensation
  Team can help you do that.

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Communication of FY2008 Salary and Annual Bonus

• Deans, VPs, or designated department heads should
  distribute a memo to each employee in respective
  unit, indicating new fiscal year base salary.
• Deans, VPs, or designated department heads also
  have the option of holding 11 conversations with
  employees to discuss memo contents,
  performance/accomplishments and goals for
  upcoming 2008 academic year.
• Deans, VPs, or designated department heads should
  also distribute a second memo in early January to
  all recipients of the annual bonus, as
  applicable.
• Similar to the AMI, Deans, VPs, or designated
  department heads have the option of holding an
  additional 11 conversation with employees to
  discuss annual bonus memo contents.

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Your Bonus Logistical Information

• Annual bonuses will be distributed to employees
  via off-cycle, paper check.
• Annual bonuses will be taxed at the following
  rates
• Federal - 25
• State - 7.35
• City 4 (if applicable)
• FICA/Medicare 7.65 - Exception is if an employee
  has reached the maximum FICA amount for the year
  if so, taxable rate is 1.45 (which is just
  Medicare portion). Please note that the
  possibility of reaching the maximum is only
  likely for employees receiving a bonus in October
  (with such employees having been contributing to
  FICA for the bulk of the year, i.e., 9 months)
• Employee contributions to the 403(b) Retirement
  Plan or the 457 (b) Deferred Compensation Plan
  will not be taken from bonus payments. Employees
  who wish to tax defer all or part of their bonus
  can increase their contribution amount to those
  plans from remaining future paychecks up to the
  IRS maximums in effect for the year in which the
  bonus is received. Employees should contact the
  Benefits Office or go online and submit a revised
  Salary Reduction Agreement.

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Be Courageous!

• Make distinctions.
• Reward strong contributions.
• Create differentiation of awards.
• Reinforce your message.
• Lay the groundwork for next year.

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FY2008 Annual Increase and Bonus Plan
Information Session

• Compensation will be hosting several information
  sessions to explain the FY2008 annual increase
  program and the new bonus plan guidelines. All
  Human Resources Officers and their professional
  staff should attend one of these sessions as we
  kick-off with a fresh start to this years AMI
  program.
• AMI Sessions
• May 16, 2007 200pm 400pm
• May 17, 2007 1000am 1200pm 200pm
  400pm
• May 18, 2007 1000am 1200pm 200pm
  400pm
• Training will be held at 7 East 12th Street -
  first floor training room
• We look forward to seeing you at one of the
  sessions.

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Questions

• If you have any questions, please call
• Mike Camuso, Director Compensation _at_
  212-998-1261
• Marina Kartanos, Manager, Compensation _at_
  212-998-9071
• Tara OBoyle, Manager, Compensation _at_
  212-998-1266

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APPENDICES

• Appendix A AMI/Bonus SummaryAppendix B
  Screen Shot Performance Ratings
• Appendix C Screen Shot Administer Employee
  Bonuses

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Appendix A AMI/Bonus Summary
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Appendix B AMI 2008 Performance Ratings
Bonuses for AMI-Eligible Positions
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Appendix C AMI 2008 Administer Employee Bonuses