European Top Executive Compensation Survey

1. European Top Executive Compensation Survey Presentation - WECBF Meeting Dublin March 22, 2007

2. About • Created by Michel de Tymowski in 1999 • MDT credentials • Specializes in Reward Management • Work with a network of independent consultants • Started sponsored survey business in 2003 • 2003 - Company Car Survey - HQs positions • 2004 - 2005 Compensation & Benefit Survey - Nigeria • 2005 - 2006 European Top Executive Compensation (TEC) Survey • Major clients : • Amadeus Bunge Compaq Getronics Hewlett Packard IATA • JTI Medtronic Orange Philip Morris RJ Reynolds Serono • SGS Tag Aviation Temenos WEF European Top Executive Compensation Survey

3. Current Issues • Were you ever confronted with issues such as having to assess the competitive pay level of your international executives with multi-country, regional or even worldwide responsibilities? • Where such information can be found? • In Europe such data tends to be highly confidential and very difficult to access. • Many organizations, to address this problem, extrapolate executive data from US annual reports. Does it make sense? It is one source, but how reliable when exchange rates have been so volatile these past couple of years. And the US are not Europe! • Some countries appear better covered survey wise on competitive remuneration, while others have no information at all requiring a lot of imagination and/or educated guess from compensation gurus to establish estimated salary levels. European Top Executive Compensation Survey

4. Current Issues • Today's competitive Executive Compensation is no more limited to a specific country remuneration where a headquarter is established. • We are competing within a global market in which Europe is one of the key players. • When it comes to Executive Compensation, Corporations need to be aware of how much an executive should be paid in Europe, not only in the country where he or she is paid from. • This is the backbone of the TEC survey. • No other surveys on the market will bring you such global coverage and flexibility within one product! European Top Executive Compensation Survey

5. Competitive Market Surveys • Some big players out there • Towers Perrin • INSitE • Country HQs survey • Hay • PayNet • Mercer • iMercer • Watson Wyatt • Compensation report - CompTrack • Hewitt • Country HQs survey • Major European Clubs : • Consumer Group WECBF Mercer • High Tech Group HP European Mgmt Survey Western Management • Pharma Group EPEX Hewitt • Finance Sector In Bank Towers Perrin European Top Executive Compensation Survey

6. The Survey • A new Compensation Survey concept developed by professionals having solid C&B Corporate and Consulting experiences • It addresses exclusively Senior European Executive Management compensation packages • Because of its distinctive design, it is a reliable source of information for Corporations to assess : • its senior management compensation levels • specific/hybrid executive positions usually not covered by conventional surveys or that are hard to match. European Top Executive Compensation Survey

7. TEC Background • TEC concept developed in 2003 and 2004 • Survey initially developed for Compaq senior executive group • Job matching system derives from the COMPASS computer aided job evaluation system initially designed and developed at Mercer by MDT • Light version adopted by the FCG Forum group in 1994,1995 & 1996 • Used for HQs surveys in Switzerland and local surveys in East Europe • COMPASS went into further development to become NETCOMP in 1999 • NETCOMP job evaluation system fully integrated into the TEC program • TEC launched in 2005 with the support of Philip Morris and Hewlett Packard European Top Executive Compensation Survey

8. Why TEC ? • The survey focuses on senior executive positions throughout Europe with international responsibilities • It is built around a user friendly database application enabling you to model various scenarios • It focuses specifically on individual remuneration data • There is no extensive policy questionnaire to be completed • It has a "Cafeteria approach“ European Top Executive Compensation Survey

9. Why TEC ? • The report is run and customized by the participant • It is a dynamic database (updated on a bi-annual basis) • Positions can be mixed (and compared) across Europe as we provide a Country Salary Coefficient (CSC) factor in the TEC application • Unique positions (usually not covered in any surveys) can be simulated through the application using the TEC built-in position evaluation module European Top Executive Compensation Survey

10. Our Competitive Edge • We have a long experience in surveys, either as users (Watson Wyatt, Hewitt, Towers Perrin, Hay, Mercer, and Western Management surveys) or as previous consultant with Towers Perrin, Mercer and MCS. • As a result, we better understand what the customer is looking for! • We believe that the TEC survey and the way it is designed will fill a gap that currently exists today in European Executive Compensation. • Due to the way we are structured, the overall TEC design and process are performed by experienced and dedicated compensation consultants. • No work is, or will be, delegated to junior staff. This ensures the utmost quality of the output European Top Executive Compensation Survey

11. Survey Design Some of the features of this survey are quite unique and are structured as follows: • 15 top benchmark positions within six regional/divisional levels for a reported entity (up to a total of 81 positions throughout Europe, from Corporate down to Area levels) • Cash compensation is the main driver • Data security is ensured through a multi password process • In addition survey results on the website cannot be read without the initial application which resides at the participant's site location European Top Executive Compensation Survey

12. Survey Design Some of the features of this survey are quite unique and are structured as follows (continued) : • Beside the job code to identify the position to be reported, each job is individually assessed through a position evaluation process which is integrated into the TEC program survey • As the survey covers positions within multiple countries, the Country Salary Coefficient (with preset values that can be modified by the participant) will be provided for each country to enable cross-European job analysis European Top Executive Compensation Survey

13. Survey Design European Top Executive Compensation Survey

14. Survey Design • One of the unique features of the TEC survey is the possibility for the participants to make their own customized reports • comparing any executive jobs in their organization with the surveyed positions (by combining one or more positions) • the option to select specific industry sectors • the companies reported data by geography (within one country, or multi-countries) • the revenue dimension • the evaluation score Participant Selection Head of Regional R&D & Head of Regional Engineering Head of Corporate Legal & Head of Regulatory Affairs Head of BU Finance & Head of Regional Finance Head of BU Finance Position(s) Consumer Goods & Fast Moving CG Industrial Goods & Consumer Goods Pharma/Chemical All Sector(s) Germany & France All Germany F, UK, G, CH Geography Euro 3 - 5 bio All Below Euro 1 billion Euro 1 – 3 bio Dimension > 500 pts All > 200 pts & < 400 pts < 400 pts Evaluation score Position Report Output 4 Position Report Output 3 Position Report Output 2 Position Report Output Position Report Output 1 European Top Executive Compensation Survey

15. Survey Design • With the country selection, you can define the different pay values of executives in any of the countries covered by the survey. This can also be used for evaluating expatriate transfer salaries. • Another key feature, is the possibility to assess the value of any executive profiles by using the job matching program built-in the TEC program • It will deliver a point value for any jobs you will enter into the system (whether or not the position is listed in the survey) • The program gives you the opportunity to store in the program your own specific positions • For Hay user, a point equivalence chart can be provided European Top Executive Compensation Survey

16. Survey Design • This point value results from the job matching process which is part of the database questionnaire. • It is structured around a multiple choice questionnaire • The evaluation table is built around six main factors and is the heart of the survey. • A. Qualification C. Organizational Resources E. Leadership • B. Communication D. Organizational Effectiveness F. Challenge • Each factor has a number of corresponding sub-factors with multiple choice questions to be entered. • The position evaluation questionnaire can be printed or directly accessed on the application as the questionnaire is built-in the program. European Top Executive Compensation Survey

17. Survey Improvements • The survey program has a a built-in job matching process. • Following a strong request coming from a non negligible number of participants (as well as our sponsors), we have updated in 2006 our current program to include a link to existing well known evaluation systems. • As of the 2006 software version, participants using HAY, Mercer or Watson Wyatt evaluation systems can now bypass the TEC job matching process by reporting directly their point scores which is a great time saving process! • In addition, not only inputs but also output results can show the point system of their choice. • Companies having no job evaluation system in place (and doing the full job analysis of the TEC survey) produce not only TEC points, but also, if desired, HAY, Mercer or Watson Wyatt points. • Word of caution : it is not the intention of the TEC survey to replace competitive well recognized job evaluation systems, but just to correlate the results European Top Executive Compensation Survey

18. Survey Timing • This is a dynamic database that is updated on a bi-annual basis • (April - October) • to accommodate varied focal point review timelines • new companies joining the survey at a later stage. • You can take a drawdown at any time that suits you. • The good news is that you are requested to complete the survey only once in the calendar year. • One month after the submission time, the list of participating companies will be updated on the website in order for the participants to decide whether or not they want to download the latest updated version. • Update will be required once executive merit increase process (focal point review) is implemented European Top Executive Compensation Survey

19. Surveyed Positions European Top Executive Compensation Survey

20. Input Screen European Top Executive Compensation Survey

21. Query Screen European Top Executive Compensation Survey

22. Output Screen European Top Executive Compensation Survey

23. Output Screen European Top Executive Compensation Survey

24. Output Screen European Top Executive Compensation Survey

25. TEC Participation • TEC participants list 2005/2006 • Alcatel • British Petroleum • Brocade • Bünge • Cargill • ebay • Edwards Lifesciences • Hewlett Packard • Hilti • Ingram Micro • Johnson & Johnson • Kraft Europe • Masterfoods Europe • Nokia • Novartis Consumer Health • Novelis • Orange • Philip Morris Int'l • Serono • SGS • SICPA • SITA • Swiss Re • Temenos • Tetra pak • TNT • Missed the deadline • Barclay’s Bank Microsoft • Getronics Procter & Gamble • Medtronic European Top Executive Compensation Survey

26. TEC Participation Fees • First time participant entry fees for 2007 is € 1’475.- • Continuing participants pay a flat annual fee of € 1’000.- • Fees are paid at registration • Once data provided, participant gets immediate access to the existing database • An additional 7.6% of VAT will be charged on the above fees for companies invoiced in Switzerland European Top Executive Compensation Survey

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