Compensation Trends & Negotiations August 2007

1. Compensation Trends & Negotiations August 2007 Whitney Taylor WellPoint, Inc.

2. Water Cooler Speculation • Bet I could get $10,000 more if I left my company and went somewhere else! • Are you in the 80%? How do you really know?

3. Should I Stay or Should I Go? “Instead of counting on a new employer to make us happier, or more successful, let’s keep in mind that to a large extent a job is what WE make of it!” Price Pritchett, New Work Habits for the Next Millennium.

4. Base Salary Paid Time Off (PTO), Holidays, Vacation, Sick Time, etc. 40 Hour Work Week Home Office/Home Office Set Up Part Time Schedule/Job Sharing Pension 401(K) Relocation Stock Options Sign-On Bonus Performance Based Bonus Employee Stock Purchase Plan Insurance – Health, Dental, Vision, Short & Long-Term Disability Healthcare & Childcare Reimbursement Accounts Car allowance Training, Professional Development Travel Perks or Requirements Compensation – What is it?

5. Salary Budget Trends • “2006-07 Salary Budget Survey reported an actual average total salary budget increase of 3.8% for all employee categories.” • Consumer Price Index (CPI) rose 3.5% • “92% of employees are expected to receive an increase in base pay”

6. Salary Trends • Pay rates for average salaried exempt workers will increase 4% while cost of living index increased 4.1% • Employers are moving away from pensions and stock options and are offering more incentives tied to individual contribution and company performance • In 2005, 36% of largest US companies offered no traditional pension, only a 401(K) plan (Watson Wyatt) • “Globalization pressures are forcing companies to focus on improving their cost structures making purchasing managers the new unlikely corporate rock stars.” • Purchasing Managers will earn the highest raise in 2006 (9.35%) Business & Legal Report, Inc. 2006 Exempt Salary Survey. Career Journal

7. Recruiter/Employer Perspectives • 60% leave room for negotiations in first offer • 30% say final offer • 10% say it depends on candidate • 4 out of 5 recruiters are willing to negotiate (Society for Human Resource Management) • Few job seekers ask for more Loeb, Marshall. MarketWatch. www.careerbuilder.com • Base salary drives other aspects of compensation • Impact of title on salary – organizations are flattening • We are negotiators/buyers for our companies; therefore, it should be expected and accepted that we WILL negotiate

8. 2005-06 Salary Averages

9. Impact of Experience

10. Impact of Education 2003 poll conducted National Organization for Competency Assurance (NCOA) as reported by Louise Wehrle in “How Much is Certification Worth?” Contract Management. May 2004.

11. Title Salary Benchmarks Titles apply to contracts, subcontracts, procurement, purchasing, sourcing

12. Impact of Responsibility

13. Impact of Company Size

14. Impact of Location

15. Variable Pay • More organizations (79%) are using variable pay • Sign-on bonuses 69% • Referral bonuses 65% • Spot bonus 45% • Retention/stay bonus 35% • Pay above market 30% • Part time employment w/ benefits 28% • Stock option program 24% • Market adjustments/increase to base salary 64% • 2006-07 Salary Budget Survey • ISM Reports • 61.7% receive bonuses • 15.6% receive stock options

16. Paid Vacation Benchmark • >1 Yr Service – 10.2 Days • >3 Yrs – 12.1 Days • >5 Yrs – 14.7 Days • >10 Yrs – 17.4 Days • >15 Yrs – 19.1 Days • >20 Yrs – 19.9 Days • >25 Yrs – 20.6 Days Averages reported for “White Collar Occupations U.S. Department of Labor, U.S. Bureau of Labor Statistics. National Compensation Survey: Employee Benefits in Private Industry in the United States. March 2006.

17. US Median Household Income 2005 USA Today Snapshot, December 2006

18. Personal Compensation Analysis • Step 1 – Internal Analysis • Step 2 – External Analysis • Company • Industry • Step 4 – Set Realistic Goals

19. Internal Analysis • Develop spreadsheet of salary, bonus, stock options, benefits • Quantify current benefits • Prioritize benefits • Quantify overall spend managed • Analyze your contributions as savings - be realistic! • Define future role, title, responsibility you are seeking

20. External Analysis Company • Revenue • Industry • Location • Research company benefits online and ask HR Rep or other employees likelihood of benefits (work at home, job sharing, part time, increased vacation, flex scheduling, etc.) • Research tax implications (traveling jobs, work at home) Industry • Do homework, know industry averages and where you fit in (salarycalculator.com, salary.com, careerinfonet.org, jobstar.org, professional associations)

21. Set Personal Goals • Discuss locations and life styles/cost of living with family • Define salary ranges for locations • Determine base and variable pay ranges • Prioritize benefits and trade offs

22. Negotiation Tips • Delay salary conversations until you fully understand role • Practice responding “competitive market salary,” “help me understand salary range or midpoint,” or provide a range and state that your actual is TBD • SSS: Sucky Salary Surprise • Offer is greater than 20% off; respond with surprise • Seek to understand variable pay • Ask how they determined the salary; offer benchmark data • Discuss a more senior title • Ballpark • Thank you; I need a few days to fully consider your offer • MSBS: Maybe I should be in SALES! • Over target • Understand expectations, deliverables and confirm ability to meet these

23. Negotiation Tips (Cont’d) • Re-visit your priorities to leverage benefits, quantify and determine trade-offs • Be creative in offering solutions • Ex. Enthused about the possibility of working for X; however, I’d like us to work together to … to enable me to feel comfortable • Some solution ideas that I’ve briefly considered include (mention one at a time; wait for response so you understand likelihood): • Sign-on Bonus • Additional vacation • Performance based bonus • Stock Options • Work from home 2 days a week • Women – Remember you are representing your colleagues, department, company, customers and impacting trends!

24. Communication Tips • Convey enthusiasm/intrigue without clear intent • Be confident • Be tactful – may help confirm you’re worth it • Request additional clarification re cost of living differential, bonus, benefits, travel, etc. • Establish timeframe for response • It’s not what you ask, it’s the way you ask it! • Your negotiation style will reflect how you work with suppliers and team members

25. Communication Tips • Once offer is made, don’t feel obligated to respond • Be appreciative and ask for time to consider • Don’t reveal happiness or disappointment • Get all offers (including revisions) in writing • Obtain full understanding of benefits and quantify their value (expected bonus, stock options, etc.) • Be courageous, ASK FOR MORE!!!! • Review written offer in detail before responding or signing; make sure everything is documented correctly • Once signed, do not go back to bargaining table – done deal!

26. Internal Negotiations • Do research, use benchmarks • Quantify contributions to bottom line • Make sure your accomplishments support strategic objectives • Focus on performance-based pay arrangement • Negotiate if/then milestone accomplishments with agreed to changes including dates • Variable pay is sometimes easier to access

27. Walt Disney - Leadership “Courage is the main quality of leadership, in my opinion, no matter where it is exercised. Usually it implies some risk–especially in new undertakings. Courage to initiate something and to keep it going–pioneering and adventurous spirit to blaze new ways, often, in our land of opportunity.”

28. Sources • Avery, Susan. “Purchasing Compensation: How to negotiate a higher salary.” July 14, 2007.http://www.purchasing.com//index.asp?layout=articleprint&articleID=CA645821 • Capell, Frances. “The Biggest Raise at the Mid-Management Level in BLR’s 2006 Exempt Salary Survey: A Big Surprise. www.WorldatWork.com. June 14, 2006. • Institute for Supply Management (ISM) 2006 Annual Salary Survey (2005 data from 1,223 respondents) • Keller, Walter S. “Ten Commandments of Salary Negotiations.” Careerjournal.com sponsored by WSJ.com. • Loeb, Marshall. MarketWatch. www.careerbuilder.com • National Contract Management Association Annual Salary Survey (2005 data from 2,572 respondents and 2006 data from 4,482 respondents) http://www.ncmahq.org/publications/docs/salarysurvey2006_ExecSum.pdf • Supplier Selection & Management Report, published by Institute of Management & Administration, Inc. (IOMA) October 2004 • Wehrle, Louise. “How Much is Certification Worth?” Contract Management. May 2004 • U.S. Department of Labor, U.S. Bureau of Labor Statistics. National Compensation Survey: Employee Benefits in Private Industry in the United States. March 2006. • Yentes, Lindsey. “ISM’s 2007 Salary Survey.” Inside Supply Management. May 2007.

29. Whitney Taylor WellPoint, Inc. 972-234-1828 Whitney.taylor2@wellpoint.com