Du Pont Workers’ Bet on Firm’s Profit Didn’t Pay Off : Compensation: An incentive pay plan is scrapped after the fibers unit failed to meet its goal and workers didn’t get back what they invested.

Workers in Du Pont Co.’s fibers division, who tied their pay raises to profits under a special incentive plan, had banked on a tidy payout around the holidays.

But the bank went bust--and so did the experimental program.

Because the division failed to reach its $725-million annual profit goal, the department’s 20,000 employees, who had as much as 4% of their pay at risk, won’t see extra payouts or bonuses at year-end.

Du Pont also decided to scrap the innovative three-year plan in its second year after several employees cried foul. Beginning in January, employee wages and raises will be paid in the traditional way.

James F. Kearns, who heads the fibers division, said employees weren’t ready for a pay-at-risk program.

“It was fine when they were getting more back than they put in, which was the case last year. But when they found out they were not going to get back as much as they invested, it began to come out ‘No, this is not fair,’ ” Kearns said.

The pay incentive plan was mandatory for non-union employees at the department’s 10 nationwide plants. Four of the five plants that have unions also agreed to participate.

Here’s how the plan worked:

Employees this year “gambled” as much as 4% of their annual pay that the division would reach its $725-million goal. Last year, it was as much as 2% on a $670-million goal.

An employee with an annual salary of $30,000 this year could have received a one-time payout of as much as $1,200 if the goal were met. His or her regular salary, however, wasn’t touched if the goal wasn’t met.

Last year, that same employee with the same salary earned an extra $600 because the goal was met, plus a small bonus because the target was exceeded.

The Du Pont program was designed to give employees a stake in the department’s profits to help improve the fibers business. The theory was that such a plan would make employees feel that they owned part of the company, encouraging them to become more efficient and to find cost-saving ways to do their jobs.

But the fibers business, which represents nearly a quarter of Du Pont’s total profit, has been hurt by a rise in foreign competition and raw materials costs.

Through the third quarter of this year, Du Pont’s fibers division earned $400 million, about $100 million less than a year ago. The company predicts that fourth-quarter net income will be lower than the $191 million earned in the 1989 quarter and, therefore, well below the $725-million goal.

Under the plan, employees also could have received half of what was at risk if the department achieved 80% of this year’s profit goal, or $580 million.

But Kearns, the fibers division head, said it would take a “heroic effort” to reach that goal by year-end.

When the pay plan was announced in the fall of 1988, chemical industry analysts said it was trend-setting. But in a slumping economy, it’s not a popular plan.

“I thought it was a pretty bold move. . . . (But) workers want stability in their job and compensation, and from that standpoint it may have been too bold a move,” said James H. Wilbur, an industry analyst with Smith Barney, Harris Upham & Co.