Compensationomics: Latest salary trends and key priorities for Sr. Finance Executives

Compensationomics: Latest salary trends and key priorities for Sr. Finance Executives • Presented by Andrew Reina, Managing Director • Monday, March 14, 2011: Track One is from 1:45 – 2:35 PM

Learning objectives Upon completing this workshop, you will be able to: Understand how the current economic environment is shaping the workforce of today. Examine the latest salary and compensation trends for Sr. Finance Executives. Discover the latest salary negotiation strategies and best practices Learn what employers are focused on and the key strategies that they should implement to maximize company performance and results. Realize the importance of talent retention and leadership 2

Today’s agenda Who is Ajilon Finance, a part of Accounting Principals? How have salaries and compensation impacted the workforce? What does the current Sr. Finance Exec Comp look like What are some best practices and pitfalls in negotiating your salary? Why is Talent Retention Critical? Top 10 Takeaways 3

Our featured presenter Andrew Reina, Managing Director Ajilon Finance 4

About Ajilon Finance, a part of Accounting Principals • Ajilon Finance and Accounting Principals are joining together to help companies looking for top accounting and finance talent achieve their goals more effectively than ever before. • Our combined industry experience and proven recruitment expertise make us the authority in the world of accounting and financial recruiting. • Global leader in talent recruitment and contract professionals for full spectrum F&A positions including: • CFOs • Controllers • Tax Experts • Accounting Managers • Staff Accountants • Audit professionals • A/P & A/R specialists • Financial Analysts • IFRS specialists • Financial Reporting Professionals

The Alligator Pool

What “Alligators” are at your doorstep in 2011? • Sharp increases in financial reform & regulatory compliance • Greater Board of Director emphasis on Risk Management • Extended responsibilities and areas of influence • Greater Voluntary Turnover • Continued SG&A scrutiny • Increased M&A Activity • Poor Employee Morale • Shrinking Margins 7

Today’s agenda Who is Ajilon Finance, a part of Accounting Principals & our Speaker? What is the current outlook? How has the role of the CFO changed? What does the current Sr. Finance Exec Comp look like What are some best practices and pitfalls in negotiating your salary? Why is Talent Retention Critical? Top 10 Takeaways 8

Confidence in the Marketplace HOW MANY OF YOU FEEL MORE CONFIDENT IN OUR ECONOMY? HOW MANY OF YOU BELIEVE WE WILL SEE A STRONG REBOUND THIS YEAR? HOW MANY OF YOU BELIEVE YOUR JOBS ARE SECURE? HOW MANY OF YOU THINK YOU WILL LOOSE SOME KEY PLAYERS ON YOUR TEAM? HOW MANY OF YOU BELIEVE YOUR COMPANY HAS A STRONG RETENTION AND RECOGNITION PROGRAM? 9

Today’s reality…Recovering. Restructuring. Retooling. Rebuilding confidence. Renewed Leadership. Employers are continuing to be cautious on making permanent hires, but adjusting accordingly to build up their talent pipeline U.S. unemployment rate is at 8.9%, the lowest since April ‘09 (February ’11) Non-farm job increased to 192,000 and private jobs increased 222,000 Since September 2009, more than 495,000 temporary and contracting jobs have been added Financial services sector landscape continues to change and evolve with new regulatory and compliance rules All major U.S. financial indices were up by the end of 2010 Dow Jones Industrial = 11.02% NASDAQ = 12.78% S&P = 16.91% 10

How does the latest compliance and risk impact today’s Sr. Finance professional…more alligators in the pool? • When the Dodd-Frank Wall Street Reform and Consumer Protection Act passed, it was the single largest overhaul of the U.S. financial regulatory system since The Great Depression • Financial services affected by the Dodd-Frank Act must implement various new standards and procedures • Mortgage lenders, student-loan companies and payday-loan firms, will be subject to an increasing number of examiners that will probe and investigate when necessary • Section 404 of SOX requires publicly-traded companies that generate more than 75 million USD to not only assess the quality of existing internal controls but allow third-party auditors to review findings • For many small-to-mid-size organizations, the compliance and risk concerns are understandable as many do not have a risk management executive on staff 11

Job Growth Outlook for 2011 • Predicting an estimated 2.4 million private sector jobs will be created this year. • 2011 has the potential to be the best year for private job growth since the 90s. Source: http://globaleconomicanalysis.blogspot.com 12

Snapshot of key metropolitan unemployment (in January ’11) 13

30,000 Ft - The Role of CFO & Sr. Finance Executives The Good News: • The role of the CFO is stronger than ever! • Job Growth is Assured • Unemployment in Minimal • Baby Boomers are Retiring • Finance is still the bedrock of a company The Bad News • The nature of the people who will become a CFO has changed • Bean counting is out • Quantitative Analytics, Project Management, Decision Science & Investor Management • Thought the Controller was your competition…think again • GM, VP of M&A, Strategic Planning, FP&A

Top CFO Trends • The Strategy Paradigm • Sr. Finance leaders are being held accountable to create and implement strategy initiatives and assist in identifying new areas of revenue growth • Bean counting is out…strategy is in. • Focused Attention on Talent Retention • Although unemployment remains high, Finance & Accounting unemployment remains very low at under 6% • Financial leaders who focus efforts on retaining talent will experience an accelerated recovery. • “On-demand” staffing models are becoming the new norm as CFOs are looking for flexibility in labor expense and workflow requirements

Top CFO Trends (continued) • Expanding Empire • Sr. Financial professionals are expanding their levels or responsibility to unprecedented areas • IT, HR, Procurement, Marketing, Operations, etc • The CFO Organizational structure is growing • A new dawn in regulatory reporting • Financial and regulatory scrutiny is creating concern among various segments including Financial Services, Healthcare and International firms. • SG&A Sustainability • CFOs are looking at additional areas to sustain cost efficiency. This includes policy & procedure reviews, looking at business outsourcing and implementing new ERP and Productivity enhancement tools.

Salary Trends 2010 – Senior Finance Executives 19

Alternative Compensation areas and consideration A study conducted by Lee Hecht Harrison examined what employees wanted and expected in their next job. These findings, from those looking for work, can be applied to those who are currently employed as well. Employee programs/benefits Compensation package Want Expect Want Expect Heath club membership 58% 8% Flex time 57% 24% Company car 53% 13% Technology (e.g. laptop, cell, etc.) 52% 58% Career development programs 46% 53% Ongoing training opportunities 41% 70% Tuition reimbursement 40% 46% Child care 32% 4% Concierge service 31% 2% Stock options 65% 30% Signing bonus 61% 10% Annual bonus plan 54% 60% Base salary that exceeds 48% 16% Pension plan 47% 58% 401(k) plan 42% 87% 20

Best practices in negotiating your compensation (1 of 2) • Think about the big picture • Companies are under immense pressure to cut cost. You want to make sure your company can afford to increase your salary. • Look at what your peers are making in similar industries to ensure you are inline with your position’s salary range. • Know your worth • Be confident and know the value you bring to your organization. • Discuss your past performance and how that has aided in your company’s success • Be open to new opportunities • Sometimes a change is required in order to move up in the ranks. 22

Best practices in negotiating your compensation (2 of 2) • The Conversation • The discussion should not start off with, “I deserve this because.” If your ego is playing into the discussion your superior will take offense and will stop listening. • Practice, Practice, Practice • Negotiating your salary is a lot like an interview. You need to rehearse the discussion and be prepared for any and all questions. Go to the discussion with your list of why a raise makes sense. • Money isn’t everything • Although an increase in salary is nice to have, it could be just as nice to negotiate stock options or alternative compensation. 23

8 Negotiating Strategies that are critical • Delay salary and benefit negotiations for as long as possible in the interview process. • Don't negotiate at the time the initial job offer is made. Thank the employer for the offer and express your strong interest and enthusiasm in the job, but state that you'll need time to evaluate the entire compensation package. • Do your research. The greatest tool in any negotiation is information. Make sure you have done a thorough job of determining your fair market value for the job you seek, the salary range of the job for this specific employer, and geographic, economic, industry, and company-specific factors that might affect the given salary. • Just do it. You don't have to be an expert negotiator to get a sweeter deal; you just need to know the rules and strategies of negotiation. • Always ask for a higher salary (within acceptable limits) than you are willing to accept so that when the employer counters your proposal, the salary should be near your original goal. • If the salary you're offered is on the low end -- and the employer has stated that salary is not negotiable (probably because of corporate salary ranges or pay grade levels), consider negotiating for a signing bonus, higher performance bonuses, or a shorter time frame for a performance review and raise. • When presenting a counter-proposal to the employer, be sure and include a few benefits that are expendable so that you can drop them in as a concession to the employer as negotiations continue. • Never stop selling yourself throughout the negotiation process. Keep reminding the employer of the impact you will make, the problems you will solve, the revenue you will generate. And continue expressing interest and enthusiasm for the job and the company. 24

The Do NOTS in Negotiating Comp • Don't feel pressured to divulge a specific figure. Instead, indicate you are "open," "negotiable" or "competitive" during your discussions. • Don't give the employer an actual figure if you are asked directly about the salary you want. Instead, turn the question around and ask what salary range would be offered in the company for this type of job for someone with similar years of experience, level of expertise and knowledge of the business • Don't let your current salary limit your viewpoint of what you're earning potential might be. If your research shows that the industry is paying more than your were being paid, hold out for this higher amount and remind the interviewer of your qualifications and experience • Don’t just focus on salary. Do look at the entire compensation package • Don’t enter salary negotiations as part of an ego trip or part of a game. 25

Alternative Negotiation Considerations 26

Engagement & Retention: By the Numbers – Recent key stats • According to our recent survey, compared to the end of 2008, the percentage of Gen-Y workers looking for a new job in 2010 has more than doubled (from 14% to 30%). • Breakdown of those who plan to go on (or already have gone on) a job interview as the economy begins to recover: • 51% of Gen-Y workers • 30% of Generation X workers • 29% of Baby Boomers • 22% of workers aged 61 and over • Harvard Business Review (May 2010) and Conference Executive Board stated the following: • 33% admits to not putting all their efforts into the job • 25% intend to leave within the year. • 20% believe that personal aspiration are quite different from the organization’s 28

How much is that Turnover Really Costing you Consider the following categories of cost to replace just one employee and hiring another if not carefully managed. Pre-hiring and On-boarding Costs Hiring Costs • Lost productivity costs • Overtime cost for co-workers • HR support costs • Train cost for new hire • Cost of co-worker during training • Project or design delays costs • Opportunity costs • Socialization costs (e.g. travel) • Potential lost of client/s • Search firm / contingency fee • Recruitment costs • Advertising costs • Hiring bonus costs • Relocation costs • Temporary help costs • Testing, reference & verification paperwork • Management costs (interviews, orientation, on-the-job training, etc.) • Employee referral bonus • New employee’s higher salary = + Total True Cost of Turnover – Normally 125% to 150% of the Salary 29

Color Legend = Quit level = Conference Board Confident Index Source: BLS Engagement & Retention: By the Numbers – Quit Level Has a Direct Correlation With Consumer Confidence Index 30

Engagement & Retention: Best practices • Determine if there is a retention issue, specifically the voluntary turnover may be hurting your business. • Uncover to see if departmental management issues are causing consistent turnover. • Analyze any recent turnover patterns and find out who is actually leaving and possibly where…especially for your critical talent. • Gather critical data using employee surveys, exit interviews and focus groups. • Benchmark other companies within your industry • Systemically review your internal retention management program regularly to ensure up-keeping 31

Top 10 Takeaways • The economy and consumer confidence levels continue to see improvement…FINALLY! • The Role of the CFO & Sr. Finance Exec has become more strategic and much broader in scope…expand those soft skills and understand IT • CFO Compensation is rising but be reasonable when negotiating • Flex Time and Health Club memberships rank as the 2 largest employee “Wants” • Extensive due diligence is critical before any comp discussion…know your market value, competitor rates, industry trends, major accomplishments & overall company guidelines • Money isn’t everything, consider alternative forms of compensation • Implementing a retention program is mission critical especially in a recovering economy and as the talent war heats up. • Turnover is a true cost and effects the bottom-line more than most know. • Leadership is being recognized more than ever before! • And the # 1 Takeaway…. • Alligators are all around you, be careful where you step and don’t get pushed in the pool!!

Conclusions

Compensationomics: Latest salary trends and key priorities for Sr. Finance Executives