Common use of PERFORMANCE SHARING Clause in Contracts

PERFORMANCE SHARING. Performance sharing is intended to recognize that, through the Labor Management Partnership, employees and their unions have a greater opportunity to impact organizational performance, and employees, therefore, should have a greater opportunity to share in performance gains. The parties support the Labor Management Partnership Performance Sharing Program (LMP PSP) as a way to continue the transformation of the organization, through Partnership, to a high- performing organization and to share the success of the organization with employees covered by this Agreement. The Strategy Group will be accountable for the LMP PSP. The Strategy Group may, but is not required to, establish national factors each year that will be included in all regional and local programs, together with regional and local factors. The PSP goals will be aligned with national, regional, facility and unit goals. The PSP goals will be based on the principle of “line of sight” as much as possible. As in the 2008 Reopener Settlement, the regions may continue to pilot PSP demonstration projects during the life of this agreement with the emphasis on achieving simplicity, ease of administration and alignment with organizational and Partnership goals. Relevant sections of the 2008 Reopener Settlement are found in Exhibit 2.A.2. The Strategy Group appointed a PSP Design Team charged with reviewing the 2005 Performance- Based Pay BTG recommendations and making improvements to the LMP PSP. The PSP National Design Team produced and submitted recommendations to the LMP Strategy Group in April 2010. The document informed the 2010 national bargaining Common Issues Committee (CIC) PSP Subgroup and resulted in new language. The PSP National Design Team recommendations are retained and available through the national office of the LMP. This will provide employees a “line of sight” between their performance and the success of Xxxxxx Permanente through development of local programs under the LMP PSP. Performance sharing is over and above base wage rates and will be based on mutually agreed-to performance factors and targets. The LMP PSP is self-funded through operating margin. Performance targets will be set by region or national function and may be based on quality, service, financial performance or other mutually acceptable factors. If targets are met, performance sharing opportunities will be as shown below for each year the Agreement is in effect. All amounts will be based on total payroll for employees covered by the Partnership in each region or national function. The 3 percent payout is a calculation based on total represented payroll by region or national function. A full explanation is contained later in this section. Year 1—3 percent payout at target to be paid out in First Quarter 2016, based on 2015 performance. Year 2—3 percent payout at target to be paid out in First Quarter 2017, based on 2016 performance. Year 3—3 percent payout at target to be paid out in First Quarter 2018, based on 2017 performance. The LMP PSP depends on Partnership structures and processes that empower employees to have an impact on the program’s targeted factors. To afford employees a reasonable opportunity to earn the annual payouts, Partnership structures and processes must achieve critical thresholds to support the PSP. Further, jointly determined factors must be measurable against mutually agreed upon predetermined targets, with progress reported to employees quarterly throughout each year, where possible. As the Labor Management Partnership continues to grow and evolve, an important element is to ensure that employees share in the success of the organization as enhanced performance is achieved through the Partnership. Specifically, all Partnership employees will participate in the LMP PSP, which provides an annual cash bonus opportunity based upon regional or functional area performance in the areas of quality, service, financial health and/ or other mutually acceptable factors. The jointly designed program will reward Partnership employees for reaching mutually agreed upon national, regional and/or local targets. The following agreements are currently reflected in the LMP PSP: » All Xxxxxx Permanente employees covered under this Agreement shall participate in the LMP PSP. This includes full-time, part-time, short-hour, casual, on-call and per diem employees. » Other incentive, gain-sharing or reward programs may currently cover some Labor Management Partnership employees. In such cases, employees may not receive a payment from the LMP PSP in addition to a payment from a current program. Instead, employees shall receive the higher of either the LMP PSP or their current program. » At any time during the term of this Agreement additional sub regional (local) plans may be mutually developed. In these instances, the covered employees will not receive a payment from both programs, but will receive a payment from the program that provides the highest payment. » The program year shall be the calendar year, with a maximum of five mutually agreed-upon factors set by no later than year-end for the following year and communicated in January. The LMP PSP shall run for the calendar year, with final results determined and payments issued during the first quarter of the year following the end of the program year. » The LMP PSP will establish mutually agreed-upon regional or functional annual targets with a bottom threshold (minimum payment) and an upper limit stretch target (maximum payment) in the areas of quality, service, financial health and/or other mutually acceptable factors. Regional or functional factors should be aligned with, and to the extent appropriate and mutually agreeable may be similar or identical to, physician and/or managerial incentive programs. The percentage payouts listed above will be paid for achieving performance at targeted levels. Proportional payouts (i.e., higher or lower than listed above at target level) will be made for performance achieved that is either above or below targeted levels. » While the factors (i.e., quality, service, finance, etc.) may be different from region to region, the opportunity for reaching the selected targets shall be consistent across all regions. » Targets should be set to stimulate and reward improvement; however, from region to region there must be a reasonable and relatively equal opportunity to reach each of the targets. » Employees must be in job classifications covered by this Agreement during the program year and be active on December 31 to receive a payment under the LMP PSP for that year; however, employees who retire during the program year or prior to the payment date or transfer to another Xxxxxx Permanente job classification not covered under this Agreement shall receive a pro-rated payment based upon compensated hours attained during the program year in a job classification covered under the Partnership. » Distribution of the performance sharing pool will be calculated as a percentage of the regional or functional total payroll, defined as total compensated hours times the established weighted average rate (WAR) for all employees represented by local unions who are party to this Agreement. » Payouts will be made in the form of lump-sum bonuses proportional to the compensated hours of each employee; however, employees with 1,800 compensated hours or more in the program year shall be considered full-time employees for the purposes of the LMP PSP and have their hours capped at 1,800 hours. Employees with compensated hours less than 1,800 hours shall receive a bonus pro-rated for compensated hours.

PERFORMANCE SHARING. Performance sharing is intended to recognize that, through the Labor Management Partnership, employees and their unions have a greater opportunity to impact organizational performance, and employees, therefore, should have a greater opportunity to share in performance gains. The parties support the Labor Management Partnership Performance Sharing Program (LMP PSP) as a way to continue the transformation of the organization, through Partnership, to a high- performing organization and to share the success of the organization with employees covered by this Agreement. The Strategy Group will be accountable for the LMP PSP. The Strategy Group may, but is not required to, establish national factors each year that will be included in all regional and local programs, together with regional and local factors. The PSP goals will be aligned with national, regional, facility and unit goals. The PSP goals will be based on the principle of “line of sight” as much as possible. As in the 2008 Reopener Settlement, the regions may continue to pilot PSP demonstration projects during the life of this agreement with the emphasis on achieving simplicity, ease of administration and alignment with organizational and Partnership goals. Relevant sections of the 2008 Reopener Settlement are found in Exhibit 2.A.2. The Strategy Group appointed a PSP Design Team charged with reviewing the 2005 Performance- Based Pay BTG recommendations and making improvements to the LMP PSP. The PSP National Design Team produced and submitted recommendations to the LMP Strategy Group in April 2010. The document informed the 2010 national bargaining Common Issues Committee (CIC) PSP Subgroup and resulted in new language. The PSP National Design Team recommendations are retained and available through the national office of the LMP. This will provide employees a “line of sight” between their performance and the success of Xxxxxx Permanente through development of local programs under the LMP PSP. Performance sharing is over and above base wage rates and will be based on mutually agreed-to performance factors and targets. The LMP PSP is self-funded through operating margin. Performance targets will be set by region or national function and may be based on quality, service, financial performance or other mutually acceptable factors. If targets are met, performance sharing opportunities will be as shown below for each year the Agreement is in effect. All amounts will be based on total payroll for employees covered by the Partnership in each region or national function. The 3 percent payout is a calculation based on total represented payroll by region or national function. A full explanation is contained later in this section. Year 1—3 percent payout at target to be paid out in First Quarter 20162019, based on 2015 2018 performance. Year 2—3 percent payout at target to be paid out in First Quarter 20172020, based on 2016 2019 performance. Year 3—3 percent payout at target to be paid out in First Quarter 20182021, based on 2017 2020 performance. Year 4—3 percent payout at target to be paid out in First Quarter 2022, based on 2021 performance. The LMP PSP depends on Partnership structures and processes that empower employees to have an impact on the program’s targeted factors. To afford employees a reasonable opportunity to earn the annual payouts, Partnership structures and processes must achieve critical thresholds to support the PSP. Further, jointly determined factors must be measurable against mutually agreed upon predetermined targets, with progress reported to employees quarterly throughout each year, where possible. As the Labor Management Partnership continues to grow and evolve, an important element is to ensure that employees share in the success of the organization as enhanced performance is achieved through the Partnership. Specifically, all Partnership employees will participate in the LMP PSP, which provides an annual cash bonus opportunity based upon regional or functional area performance in the areas of quality, service, financial health and/ or other mutually acceptable factors. The jointly designed program will reward Partnership employees for reaching mutually agreed upon national, regional and/or local targets. The following agreements are currently reflected in the LMP PSP: » All Xxxxxx Permanente employees covered under this Agreement shall participate in the LMP PSP. This includes full-time, part-time, short-hour, casual, on-call and per diem employees. » Other incentive, gain-sharing or reward programs may currently cover some Labor Management Partnership employees. In such cases, employees may not receive a payment from the LMP PSP in addition to a payment from a current program. Instead, employees shall receive the higher of either the LMP PSP or their current program. » At any time during the term of this Agreement additional sub regional (local) plans may be mutually developed. In these instances, the covered employees will not receive a payment from both programs, but will receive a payment from the program that provides the highest payment. » The program year shall be the calendar year, with a maximum of five mutually agreed-upon factors set by no later than year-end for the following year and communicated in January. The LMP PSP shall run for the calendar year, with final results determined and payments issued during the first quarter of the year following the end of the program year. » The LMP PSP will establish mutually agreed-upon regional or functional annual targets with a bottom threshold (minimum payment) and an upper limit stretch target (maximum payment) in the areas of quality, service, financial health and/or other mutually acceptable factors. Regional or functional factors should be aligned with, and to the extent appropriate and mutually agreeable may be similar or identical to, physician and/or managerial incentive programs. The percentage payouts listed above will be paid for achieving performance at targeted levels. Proportional payouts (i.e., higher or lower than listed above at target level) will be made for performance achieved that is either above or below targeted levels. » While the factors (i.e., quality, service, finance, etc.) may be different from region to region, the opportunity for reaching the selected targets shall be consistent across all regions. » Targets should be set to stimulate and reward improvement; however, from region to region there must be a reasonable and relatively equal opportunity to reach each of the targets. » Employees must be in job classifications covered by this Agreement during the program year and be active on December 31 to receive a payment under the LMP PSP for that year; however, employees who retire during the program year or prior to the payment date or transfer to another Xxxxxx Permanente job classification not covered under this Agreement shall receive a pro-rated payment based upon compensated hours attained during the program year in a job classification covered under the Partnership. » Distribution of the performance sharing pool will be calculated as a percentage of the regional or functional total payroll, defined as total compensated hours times the established weighted average rate (WAR) for all employees represented by local unions who are party to this Agreement. » Payouts will be made in the form of lump-sum bonuses proportional to the compensated hours of each employee; however, employees with 1,800 compensated hours or more in the program year shall be considered full-time employees for the purposes of the LMP PSP and have their hours capped at 1,800 hours. Employees with compensated hours less than 1,800 hours shall receive a bonus pro-rated for compensated hours.. The Parties jointly recognize that appropriate attendance is essential to the proper functioning of Xxxxxx Permanente as a health care provider from both caregiving and financial sustainability perspectives. As such, the Parties dedicate themselves, over the life of this Agreement, to undertake a sustained joint effort designed to improve attendance, review and potentially modify attendance-related policies, and generally seek affirmative solutions that account for the legitimate perspectives of both labor and management. Beginning in calendar year 2020, for PSP bonuses to be paid in 2021 and beyond, the Parties agree that a concerted effort will be made, through an ongoing campaign that will be jointly planned, implemented and executed through all applicable structures of the LMP, to improve attendance by 2 percent per calendar year for the duration of this Agreement. The goal of the 2 percent annual improvement shall apply to all forms of leave available to KP employees, except vacation, and shall be measured in aggregate, by region, to determine whether the goal is met. Additionally, the Parties agree that attendance will make up a 25 percent portion of each region's overall criteria for determining its Performance Sharing Program for each calendar year. The joint creation and submission of an annual action plan by Xxxxxx Permanente and the Coalition of Xxxxxx Permanente Unions for each region will serve as an Attendance "gate" and count for satisfying two-fifths (10 percent) of the Attendance portion (25 percent) of the annual PSP calculation. The expectation of the parties is that the joint attendance plans shall be completed no later than December 31 for the upcoming calendar year. The remaining three-fifths (15 percent) of the Attendance portion (25 percent) will be dependent on achievement of the 2 percent improvement goal, by region, on an annual basis. The parties further agree to jointly develop strategies to:

PERFORMANCE SHARING. Performance sharing is intended to recognize that, through the Labor Management Partnership, employees and their unions have a greater opportunity to impact organizational performance, and employees, therefore, should have a greater opportunity to share in performance gainsgains (See Exhibit 2.A.2.). The parties support the Labor Management Partnership Performance Sharing Program (LMP PSP) as a way to continue the transformation of the organization, through Partnership, to a high- high-performing organization organization, and to share the success of the organization with employees covered by this Agreement. The Strategy Group will be accountable for the LMP PSP. The Strategy Group may, but is not required to, establish national factors each year that will be included in all regional and local programs, together with regional and local factors. The PSP goals will be aligned with national, regional, facility and unit goals. The PSP goals will be based on the principle of “line of sight” as much as possible. As in Regional PSP goals must include Quality, Affordability, Service, Workplace Safety and Attendance. It is recommended that the 2008 Reopener Settlement, Attendance goal be measured at the regions may continue to pilot PSP demonstration projects during the life of this agreement with the emphasis on achieving simplicity, ease of administration and alignment with organizational and Partnership goals. Relevant sections of the 2008 Reopener Settlement are found in Exhibit 2.A.2. The Strategy Group appointed a PSP Design Team charged with reviewing the 2005 Performance- Based Pay BTG recommendations and making improvements to the LMP PSP. The PSP National Design Team produced and submitted recommendations to the LMP Strategy Group in April 2010. The document informed the 2010 national bargaining Common Issues Committee (CIC) PSP Subgroup and resulted in new language. The PSP National Design Team recommendations are retained and available through the national office of the LMP. This will provide employees a “line of sight” between their performance and the success of Xxxxxx Permanente through development of local programs under the LMP PSPindividual level. Performance sharing is over and above base wage rates and will be based on mutually agreed-to performance factors and targets. The LMP PSP is self-funded through operating margin. Performance targets will be set by region or national function and may be based on function. Regional PSP goals must include quality, affordability, service, financial performance or other mutually acceptable factorsworkplace safety, and attendance. If targets are met, performance sharing opportunities will be as shown below for each year the Agreement is in effect. All amounts will be based on total payroll for employees covered by the Partnership in each region or national function. The 3 percent 3% payout is a calculation based on total represented payroll by region or national function. A full explanation is contained later in this section. » Year 1—3 percent 1: 3% payout at target to be paid out in First Quarter 20162019, based on 2015 2018 performance. » Year 2—3 percent 2: 3% payout at target to be paid out in First Quarter 20172020, based on 2016 2019 performance. » Year 3—3 percent 3: 3% payout at target to be paid out in First Quarter 20182021, based on 2017 2020 performance. The LMP PSP depends on Partnership structures and processes that empower employees to have an impact on the program’s targeted factors. To afford employees a reasonable opportunity to earn the annual payouts, Partnership structures and processes must achieve critical thresholds to support the PSP. Further, jointly determined factors must be measurable against mutually agreed upon predetermined targets, with progress reported to employees quarterly throughout each year, where possible. As the Labor Management Partnership continues to grow and evolve, an important element is to ensure that employees share in the success of the organization as enhanced performance is achieved through the Partnership. Specifically, all Partnership employees will participate in the LMP PSP, which provides an annual cash bonus opportunity based upon regional or functional area performance in the areas of quality, affordability, service, financial health and/ or other mutually acceptable factorsworkplace safety, and attendance. The jointly designed program will reward Partnership employees for reaching mutually agreed agreed-upon national, regional and/or local targets. The following agreements are currently reflected in the LMP PSP: » All Xxxxxx Permanente employees covered under this Agreement shall participate in the LMP PSP. This includes full-time, part-time, short-hour, casual, on-call and per diem employees. » Other incentive, gain-sharing or reward programs may currently cover some Labor Management Partnership employees. In such cases, employees may not receive a payment from the LMP PSP in addition to a payment from a current program. Instead, employees shall receive the higher of either the LMP PSP or their current program. » At any time during the term of this Agreement additional sub regional subregional (local) plans may be mutually developed. In these instances, the covered employees will not receive a payment from both programs, but will receive a payment from the program that provides the highest payment. » The program year shall be the calendar year, with a maximum of five mutually agreed-upon factors set by no later than year-end for the following year and communicated in January. The LMP PSP shall run for the calendar year, with final results determined and payments issued during the first quarter of the year following the end of the program year. » The LMP PSP will establish mutually agreed-upon regional or functional annual targets with a bottom threshold (minimum payment) and an upper limit stretch target (maximum payment) in the areas of quality, affordability, service, workplace safety, and attendance. A financial health and/or other mutually acceptable factorsgate will be established for all Regions. Regional or functional factors should be aligned with, and to the extent appropriate and mutually agreeable may be similar or identical to, physician and/or managerial incentive programs. The percentage payouts listed above will be paid for achieving performance at targeted levels. Proportional payouts (i.e., higher or lower than listed above at target level) will be made for performance achieved that is either above or below targeted levels. » In the event that the Region does not meet its financial gate, the maximum PSP payout will be capped at $1,000 for eligible full-time status employees. Two hundred dollars ($200) is payable for each of the five (5) goals achieving target or better performance. » While the factors (i.e.measuring quality, qualityaffordability, service, financeworkplace safety, etc.) and attendance may be different from region to region, the opportunity for reaching the selected targets shall be consistent across all regions. » Targets should be set to stimulate and reward improvement; however, from region to region there must be a reasonable and relatively equal opportunity to reach each of the targets. » Employees must be in job classifications covered by this Agreement during the program year and be active on December 31 to receive a payment under the LMP PSP for that year; however, employees who retire during the program year or prior to the payment date or transfer to another Xxxxxx Permanente job classification not covered under this Agreement shall receive a pro-rated payment based upon compensated hours attained during the program year in a job classification covered under the Partnership. » Distribution of the performance sharing pool will be calculated as a percentage of the regional or functional total payroll, defined as total compensated hours times the established weighted average rate (WAR) for all employees represented by local unions who are party to this Agreement. » Payouts will be made in the form of lump-sum bonuses proportional to the compensated hours of each employee; however, employees with 1,800 compensated hours or more in the program year shall be considered full-time employees for the purposes of the LMP PSP and have their hours capped at 1,800 hours. Employees with compensated hours less than 1,800 hours shall receive a bonus pro-rated for compensated hours.

PERFORMANCE SHARING. Performance sharing Sharing is intended to recognize that, through the Labor Management Partnership, employees and their unions have a greater opportunity to impact organizational performance, and employees, therefore, should have a greater opportunity to SECTION 2 [ 50 ] | 2012 NATIONAL AGREEMENT share in performance gains. The parties support the Labor Management Partnership Part- nership Performance Sharing Program (LMP PSP) as a way to continue the transformation of the organization, through Partnership, to a high- performing organization and to share the success of the organization with employees covered by this Agreement. The Strategy Group will be accountable for the LMP PSP. The Strategy Group may, but is not required to, establish national factors each year that will be included in all regional and local programs, together with regional and local factors. The PSP goals will be aligned with national, regional, facility and unit goals. The PSP goals will be based on the principle of “line Line of sightSight” as much as possible. As in the 2008 Reopener Settlement, the regions may continue to pilot PSP demonstration projects during the life of this agreement with the emphasis on achieving simplicity, ease of administration and alignment with organizational and Partnership goals. Relevant sections of the 2008 Reopener Settlement are found in Exhibit 2.A.22.A.3. The Strategy Group appointed a PSP Design Team charged with reviewing the 2005 Performance- Performance-Based Pay BTG recommendations recom- mendations and making improvements to the LMP PSP. The PSP National Design Team produced and submitted recommendations to the LMP Strategy Group in April 2010. The document informed the 2010 national bargaining Common Issues Committee (CIC) PSP Subgroup and resulted in new language. The PSP National Design Team recommendations are retained and available through the national office National Office of the LMP. This will provide employees a “line of sight” between their performance and the success of Xxxxxx Permanente through development of local programs under the LMP PSP. Performance sharing Sharing is over and above base wage rates and will be based on mutually agreed-to performance factors and targets. The LMP PSP is self-funded through operating margin. Performance targets will be set by region or national function and may be based on quality, service, financial performance or other mutually acceptable factors. If targets are met, performance sharing Performance Sharing opportunities will be as shown below for each year the Agreement is in effect. All amounts will be based on total payroll for employees covered by the Partnership in each region or national function. The 3 percent payout is a calculation based on total represented payroll by region or national function. A full explanation is contained later in this section. Year 1—3 percent payout at target to be paid out in First Quarter 20162013, based on 2015 2012 performance. Year 2—3 percent payout at target to be paid out in First Quarter 20172014, based on 2016 2013 performance. Year 3—3 percent payout at target to be paid out in First Quarter 20182015, based on 2017 2014 performance. The LMP PSP depends on Partnership structures and processes that empower employees to have an impact on the program’s targeted factors. To afford employees a reasonable opportunity to earn the annual payouts, Partnership structures and processes must achieve critical thresholds to support the PSP. Further, jointly determined factors must be measurable against mutually agreed upon predetermined targets, targets with progress reported to employees quarterly throughout each year, where possible. As the Labor Management Partnership continues to grow and evolve, an important element is to ensure that employees share in the success of the organization as enhanced performance is achieved through the Partnership. Specifically, all Partnership employees will participate in the LMP PSP, which provides an annual cash bonus opportunity based upon regional or functional area performance in the areas of quality, service, financial health and/ or and/or other mutually acceptable factors. The jointly designed program will reward Partnership partnership employees for reaching mutually agreed upon national, regional and/or local targets. The following agreements are currently reflected in the LMP PSP: » All Xxxxxx Permanente employees covered under this Agreement shall participate in the LMP PSP. This includes full-time, part-time, short-hour, casual, on-call and per diem employees. » Other incentive, gain-sharing or reward programs may currently cover some Labor Management Partnership employees. In such cases, employees may not receive a payment from the LMP PSP in addition to a payment from a current program. Instead, employees shall receive the higher of either the LMP PSP or their current program. » At any time during the term of this Agreement additional sub regional subregional (local) plans may be mutually developed. In these instances, the covered employees will not receive a payment from both programs, but will receive a payment from the program that provides the highest payment. » The program year shall be the calendar year, with a maximum of five mutually agreed-upon factors set by no later than year-end for the following year and communicated in January. The LMP PSP shall run for the calendar year, year with final results determined and payments issued during the first quarter of the year following the end of the program year. » The LMP PSP will establish mutually agreed-agreed upon regional or functional annual targets with a bottom threshold (minimum payment) and an upper limit stretch target (maximum payment) in the areas of quality, service, financial health and/or and/ or other mutually acceptable factors. Regional or functional factors should be aligned with, and to the extent appropriate and mutually agreeable may be similar or identical to, physician and/or managerial incentive programs. The percentage payouts listed above will be paid for achieving performance at targeted levels. Proportional payouts (i.e., higher or lower than listed above at target level) will be made for performance achieved that is either above or below targeted levels. » While the factors (i.e., quality, service, finance, etc.) may be different from region to region, the opportunity for reaching the selected targets shall be consistent across all regions. » Targets should be set to stimulate and reward improvement; however, from region to region there must be a reasonable and relatively equal opportunity to reach each of the targets. » Employees must be in job classifications covered by this Agreement during the program year and be active on December 31 to receive a payment under the LMP PSP for that year; however, employees who retire during the program year or prior to the payment date or transfer to another Xxxxxx Permanente job classification not covered under this Agreement shall receive a pro-rated payment based upon compensated hours attained during the program year in a job classification covered under the Partnership. » Distribution of the performance sharing Performance Sharing pool will be calculated as a percentage of the regional or functional total payroll, defined as total compensated hours times the established weighted average rate Weighted Average Rate (WAR) for all employees represented by local unions who are party to this Agreement. » Payouts will be made in the form of lump-sum bonuses proportional to the compensated hours of each employee; however, employees with 1,800 compensated hours or more in the program year shall be considered full-time employees for the purposes of the LMP PSP and have their hours capped at 1,800 hours. Employees with compensated hours less than 1,800 hours shall receive a bonus pro-rated for compensated hours.

PERFORMANCE SHARING. Performance sharing Sharing is intended to recognize that, through the Labor Management Partnership, employees and their unions have a greater opportunity to impact organizational performance, and employees, therefore, should have a greater opportunity SECTION 2 [ 50 ] | 2012 NATIONAL AGREEMENT to share in performance gains. The parties support the Labor Management Partnership Performance Sharing Program (LMP PSP) as a way to continue the transformation of the organization, through Partnership, to a high- high-performing organization and to share the success of the organization with employees covered by this Agreement. The Strategy Group will be accountable for the LMP PSP. The Strategy Group may, but is not required to, establish national factors each year that will be included in all regional and local programs, together with regional and local factors. The PSP goals will be aligned with national, regional, facility and unit goals. The PSP goals will be based on the principle of “line Line of sightSight” as much as possible. As in the 2008 Reopener Settlement, the regions may continue to pilot PSP demonstration projects during the life of this agreement with the emphasis on achieving simplicity, ease of administration and alignment with organizational and Partnership goals. Relevant sections of the 2008 Reopener Settlement are found in Exhibit 2.A.22.A.3. The Strategy Group appointed a PSP Design Team charged with reviewing the 2005 Performance- Performance-Based Pay BTG recommendations recom- mendations and making improvements to the LMP PSP. The PSP National Design Team produced and submitted recommendations to the LMP Strategy Group in April 2010. The document informed the 2010 national bargaining Common Issues Committee (CIC) PSP Subgroup and resulted in new language. The PSP National Design Team recommendations are retained and available through the national office National Office of the LMP. This will provide employees a “line of sight” between their performance and the success of Xxxxxx Permanente through development of local programs under the LMP PSP. Performance sharing Sharing is over and above base wage rates and will be based on mutually agreed-to performance factors and targets. The LMP PSP is self-funded through operating margin. Performance targets will be set by region or national function and may be based on quality, service, financial performance or other mutually acceptable factors. If targets are met, performance sharing Performance Sharing opportunities will be as shown below for each year the Agreement is in effect. All amounts will be based on total payroll for employees covered by the Partnership in each region or national function. The 3 percent payout is a calculation based on total represented payroll by region or national function. A full explanation is contained later in this section. Year 1—3 percent payout at target to be paid out in First Quarter 20162013, based on 2015 2012 performance. Year 2—3 percent payout at target to be paid out in First Quarter 20172014, based on 2016 2013 performance. Year 3—3 percent payout at target to be paid out in First Quarter 20182015, based on 2017 2014 performance. The LMP PSP depends on Partnership structures and processes that empower employees to have an impact on the program’s targeted factors. To afford employees a reasonable opportunity to earn the annual payouts, Partnership structures and processes must achieve critical thresholds to support the PSP. Further, jointly determined factors must be measurable against mutually agreed upon predetermined targets, targets with progress reported to employees quarterly throughout each year, where possible. As the Labor Management Partnership continues to grow and evolve, an important element is to ensure that employees share in the success of the organization as enhanced performance is achieved through the Partnership. Specifically, all Partnership employees will participate in the LMP PSP, which provides an annual cash bonus opportunity based upon regional or functional area performance in the areas of quality, service, financial health and/ or and/or other mutually acceptable factors. The jointly designed program will reward Partnership partnership employees for reaching mutually agreed upon national, regional and/or local targets. The following agreements are currently reflected in the LMP PSP: » All Xxxxxx Permanente employees covered under this Agreement shall participate in the LMP PSP. This includes full-time, part-time, short-hour, casual, on-call and per diem employees. » Other incentive, gain-sharing or reward programs may currently cover some Labor Management Partnership employees. In such cases, employees may not receive a payment from the LMP PSP in addition to a payment from a current program. Instead, employees shall receive the higher of either the LMP PSP or their current program. » At any time during the term of this Agreement additional sub regional subregional (local) plans may be mutually developed. In these instances, the covered employees will not receive a payment from both programs, but will receive a payment from the program that provides the highest payment. » The program year shall be the calendar year, with a maximum of five mutually agreed-upon factors set by no later than year-end for the following year and communicated in January. The LMP PSP shall run for the calendar year, year with final results determined and payments issued during the first quarter of the year following the end of the program year. » The LMP PSP will establish mutually agreed-agreed upon regional or functional annual targets with a bottom threshold (minimum payment) and an upper limit stretch target (maximum payment) in the areas of quality, service, financial health and/or and/ or other mutually acceptable factors. Regional or functional factors should be aligned with, and to the extent appropriate and mutually agreeable may be similar or identical to, physician and/or managerial incentive programs. The percentage payouts listed above will be paid for achieving performance at targeted levels. Proportional payouts (i.e., higher or lower than listed above at target level) will be made for performance achieved that is either above or below targeted levels. » While the factors (i.e., quality, service, finance, etc.) may be different from region to region, the opportunity for reaching the selected targets shall be consistent across all regions. » Targets should be set to stimulate and reward improvement; however, from region to region there must be a reasonable and relatively equal opportunity to reach each of the targets. » Employees must be in job classifications covered by this Agreement during the program year and be active on December 31 to receive a payment under the LMP PSP for that year; however, employees who retire during the program year or prior to the payment date or transfer to another Xxxxxx Permanente job classification not covered under this Agreement shall receive a pro-rated payment based upon compensated hours attained during the program year in a job classification covered under the Partnership. » Distribution of the performance sharing Performance Sharing pool will be calculated as a percentage of the regional or functional total payroll, defined as total compensated hours times the established weighted average rate Weighted Average Rate (WAR) for all employees represented by local unions who are party to this Agreement. » Payouts will be made in the form of lump-sum bonuses proportional to the compensated hours of each employee; however, employees with 1,800 compensated hours or more in the program year shall be considered full-time employees for the purposes of the LMP PSP and have their hours capped at 1,800 hours. Employees with compensated hours less than 1,800 hours shall receive a bonus pro-rated for compensated hours.with

PERFORMANCE SHARING. Performance sharing Sharing is intended to recognize that, through the Labor Management Partnership, employees and their unions have a greater opportunity to impact organizational performance, and employees, therefore, should have a greater opportunity to share in performance gains. The parties support the Labor Management Partnership Performance Sharing Program (LMP PSP) as a way to continue the transformation of the organization, through Partnership, to a high- high-performing organization and to share the success of the organization with employees covered by this Agreement. The Strategy Group will be accountable for the LMP PSP. The Strategy Group may, but is not required to, establish national factors each year that will be included in all regional and local programs, together with regional and local factors. The PSP goals will be aligned with national, regional, facility and unit goals. The PSP goals will be based on the principle of “line Line of sightSight” as much as possible. As in the 2008 Reopener Settlement, the regions may continue to pilot PSP demonstration projects during the life of this agreement with the emphasis on achieving simplicity, ease of administration and alignment with organizational and Partnership goals. Relevant sections of the 2008 Reopener Settlement are found in Exhibit 2.A.22.A.3. The Strategy Group appointed a PSP Design Team charged with reviewing the 2005 Performance- Performance-Based Pay BTG recommendations and making improvements to the LMP PSP. The PSP National Design Team produced and submitted recommendations to the LMP Strategy Group in April 2010. The document informed the 2010 national bargaining Common Issues Committee (CIC) PSP Subgroup and resulted in new language. The PSP National Design Team recommendations are retained and available through the national office National Office of the LMP. This will provide employees a “line of sight” between their performance and the success of Xxxxxx Permanente through development of local programs under the LMP PSP. Performance sharing Sharing is over and above base wage rates and will be based on mutually mutually-agreed-to performance factors and targets. The LMP PSP is self-funded through operating margin. Performance targets will be set by region or national function and may be based on quality, service, financial performance or other mutually acceptable factors. If targets are met, performance sharing Performance Sharing opportunities will be as shown below for each year the Agreement is in effect. All amounts will be based on total payroll for employees covered by the Partnership in each region or national function. The 3 percent payout is a calculation based on total represented payroll by region or national function. A full explanation is contained later in this section. Year year 1—3 percent payout at target to be paid out in First Quarter 20162012, based on 2015 2011 performance. Year ; and year 2—3 percent payout at target to be paid out in First Quarter 20172013, based on 2016 performance. Year 3—3 percent payout at target to be paid out in First Quarter 2018, based on 2017 2012 performance. The LMP PSP depends on Partnership structures and processes that empower employees to have an impact on the program’s targeted factors. To afford employees a reasonable opportunity to earn the annual payouts, Partnership structures and processes must achieve critical thresholds to support the PSP. Further, jointly determined factors must be measurable against mutually agreed upon predetermined targets, targets with progress reported to employees quarterly throughout each year, where possible. As the Labor Management Partnership continues to grow and evolve, an important element is to ensure that employees share in the success of the organization as enhanced performance is achieved through the Partnership. Specifically, all Partnership employees will participate in the LMP PSP, which provides an annual cash bonus opportunity based upon regional or functional area performance in the areas of quality, service, financial health and/ or and/or other mutually acceptable factors. The jointly designed program will reward Partnership partnership employees for reaching mutually agreed upon national, regional and/or local targets. The following agreements are currently reflected in the LMP PSP: » • All Xxxxxx Permanente employees covered under this Agreement shall participate in the LMP PSP. This includes full-time, part-time, short-hour, casual, on-call and per diem employees. » • Other incentive, gain-sharing or reward programs may currently cover some Labor Management Partnership employees. In such cases, employees may not receive a payment from the LMP PSP in addition to a payment from a current program. Instead, employees shall receive the higher of either the LMP PSP or their current program. » • At any time during the term of this Agreement additional sub regional subregional (local) plans may be mutually developed. In these instances, the covered employees will not receive a payment from both programs, but will receive a payment from the program that provides the highest payment. » • The program year shall be the calendar year, with a maximum of five mutually agreed-agreed upon factors set by no later than year-end for the following year and communicated in January. The LMP PSP shall run for the calendar year, year with final results determined and payments issued during the first quarter of the year following the end of the program year. » • The LMP PSP will establish mutually agreed-agreed upon regional or functional annual targets with a bottom threshold (minimum payment) and an upper limit stretch target (maximum payment) in the areas of quality, service, financial health and/or other mutually acceptable factors. Regional or functional factors should be aligned with, and to the extent appropriate and mutually agreeable may be similar or identical to, physician and/or managerial incentive programs. The percentage payouts listed above will be paid for achieving performance at targeted levels. Proportional payouts (i.e., higher or lower than listed above at target level) will be made for performance achieved that is either above or below targeted levels. » • While the factors (i.e., quality, service, finance, etc.) may be different from region to region, the opportunity for reaching the selected targets shall be consistent across all regions. » • Targets should be set to stimulate and reward improvement; however, from region to region there must be a reasonable and relatively equal opportunity to reach each of the targets. » • Employees must be in job classifications covered by this Agreement during the program year and be active on December 31 to receive a payment under the LMP PSP for that year; however, employees who retire during the program year or prior to the payment date or transfer to another Xxxxxx Permanente job classification not covered under this Agreement shall receive a pro-rated payment based upon compensated hours attained during the program year in a job classification covered under the Partnership. » • Distribution of the performance sharing Performance Sharing pool will be calculated as a percentage of the regional or functional total payroll, defined as total compensated hours times the established weighted average rate Weighted Average Rate (WAR) for all employees represented by local unions who are party to this Agreement. » • Payouts will be made in the form of lump-sum bonuses proportional to the compensated hours of each employee; however, employees with 1,800 compensated hours or more in the program year shall be considered full-time employees for the purposes of the LMP PSP and have their hours capped at 1,800 hours. Employees with compensated hours less than 1,800 hours shall receive a bonus pro-rated for compensated hours.