The decision appears to be illogical and doesn't make sense for two reasons.
Firstly, the variable pay that we are receiving in the current year is for the previous year performace and it is determined at the end of the previous year. Hence, it doesn't make sense to reduce the variable pay in the current year. If the company performance is not good or "EVA targets are not met" in the current year, it makes sense to reduce the variable pay that will be paid for the next year.
Secondly, we were told that there is something called "Bankable EVA" that will be used to balance the variable pay in situations where the "EVA targets are not met". This bankable EVA is accumlated with the difference (EVA when targets are exceeded - Expected EVA) whenever our performance exceeds expectation. What happened to this bankable EVA? Does it have zero amount in it? Are we not always meeting internal targets? Are we always underperforming?
