2012 – 2013 COMPENSATION TRENDS WEBINAR

1. 2012 – 2013 COMPENSATION TRENDS WEBINAR HARRINGTON & ASSOCIATES, INC. PRESENTS

2. PROGRAM OVERVIEW • Major Issues In Compensation In 2012 • Preview! • Survey Statistics • National data • South East data • Florida data • Base Salary Increase Budgets • Salary Structure Adjustments • Variable Pay • Retention Practices

3. 2012: THE HARD ROAD BACK • The slow recovery continued: • Employers spent an average of 2.8% of base salaries on pay adjustments in 2012; the same as 2011 • Employers are budgeting 3.0% for pay increases in 2013 • Pay adjustments continue to be lower than in years previous to the recession • Most employees (88.5%) received a raise in 2012 • Employers say 9% more received increases than did in 2011 • Employers say 6% fewer received increases in 2011

4. 2012: Unemployment may signal economic improvement • Unemployment went up a tic in October from 7.8% to 7.9%, but analysts were hopeful since the increase was due to more people entering in the job market, not more job losses. • Florida’s unemployment level remains one of the highest rates in the country at 8.7% and new numbers will be reported in mid-November.

5. 2012: FLORIDA MINIMUM WAGE INCREASES • Florida:As of January 1, 2013 the Florida Minimum Wage goes from $7.67/hr. to $7.79 /hr. • At least $4.77 /hr. for tipped employees, plus tips, up from $4.65 /hr. • National: Despite earlier signals from Congress to the contrary, no federal minimum wage increase materialized in 2012. • Alabama: Does not have it’s own minimum wage and therefore follows the federal program which requires $7.25/hr. and $2.13/hr. for tipped employees (where tips received monthly are at least $30.00).

6. 2011: CPI CLIMBS FASTER THAN SALARY BUDGETS • In 2011 CPI at 3.2% was higher than the average total salary increase budget - First time since 1980! • Prices for consumers are fluctuating greatly month to month, but the price of labor is still fairly flat.

7. 2012: CPI ON THE RISE • The Consumer Price Index rose in September by 0.6%, that’s twice the increase we reported at this time last year. • The 12 month change in the CPI is now 2.0% (as of 9/12) with new numbers due out November 15th . • The 12 month change is projected to be 2.3% by year end.

8. 2012: CPI IN PERSPECTIVE • Projected 2012 increase to be 2.3% over 2011 • Energy & Food Prices are the greatest contributors to the increase, as they were in 2011

9. 2012: PPI IN PERSPECTIVE • Producer Price Index: Cost of goods produced. • Employers who produce a product are seeing costs increasing slightly faster than consumer prices.

10. PREVIEW! With our eyes wide open…

11. signs of better things to come: During Recession zeros had huge impact • In most years about 3% of employers schedule “zero spending” on salaries * Depending on category of employee

12. signs of better things to come: SALARY STRUCTURE ADJUSTMENTS • Between 1999 and 2008 salary structure adjustments averaged 2.5% each year. * Projected

13. 2012: MERIT INCREASES * Lower than projected **Projected

14. 2012: MERIT INCREASES • Employers continue to focus on pay-for-performance • Lowest performers consistently get 0.6%

15. 2012: PROMOTIONAL INCREASES • Of companies that do not budget for promotional increases: • 59% pay for promotional increases with savings from vacancies and other payroll savings • 27% pay from merit budget

16. VARIABLE PAY • Organizational success continues to be the largest component of measures for variable pay plans • Employers are not shifting from their continued belief in the value of variable pay with 82% reporting they use it. (Up from 79% in 2011) • A strong commitment remains to pay for performance

17. SURVEY STATISTICS

18. BUDGET INCREASES NATIONAL DATA

19. SALARY BUDGET INCREASES BY INDUSTRY - NATIONAL

20. SALARY BUDGET INCREASES BY EMPLOYMENT SIZE - NATIONAL

21. SALARY BUDGET INCREASE BY REVENUE - NATIONAL

22. % OF EMPLOYEES RECEIVING INCREASES - NATIONAL PERSPECTIVE-

23. YEAR TO YEAR COMPARISON OF PERCENT OF EMPLOYEES TO RECEIVE PAY INCREASES - NATIONAL

24. PAY INCREASE BY TYPE

25. SALARY BUDGET INCREASE:NATIONAL vs. SOUTH east

26. YEAR TO YEAR COMPARISON OF PERCENTAGE OF EMPLOYEES BY PERFORMANCE RATING

27. YEAR TO YEAR COMPARISON OF PERCENTAGE OF INCREASE GRANTED BY PERFORMANCE LEVEL

28. FLORIDA DATA SALARY BUDGET INCREASES

29. AVERAGE PAY ADJUSTMENT: MANUFACTURING - FLORIDA

30. AVERAGE PAY ADJUSTMENT NON-MANUFACTURING - FLORIDA

31. PAY ADJUSTMENTS BY EMPLOYMENT CATEGORY - FLORIDA • 36 Non-Manufacturing Firms Responding for • 2011-2012 Actual and 2012-2013 Projected

32. AVERAGE actual PAY ADJUSTMENTFLORIDA

33. AVERAGE projected PAY ADJUSTMENTFLORIDA next 12 months

34. FLORIDA & NATIONAL DATA RANGE STRUCTURE ADJUSTMENTS

35. RANGE ADJUSTMENTS BY EMPLOYEE GROUP: ACTUALS & PROJECTED FLORIDA

36. ACTUAL RANGE ADJUSTMENTS BY REGION – past 12 monthsFLORIDA

37. PROJECTED RANGE ADJUSTMENTS BY REGION – Next 12 MonthsFLORIDA

38. ORGANIZATIONS REPORTING NO SALARY STRUCTURE INCREASE (0%) - NATIONAL

39. SALARY STRUCTURE INCREASES: NATIONAL vs. SOUTH REGION

40. 15 YEAR PERSPECTIVE!SALARY & STRUCTURE INCREASES

41. VARIABLE PAY

42. ORGANIZATIONS USING VARIABLE PAY COMPONENTS

43. Features of Variable Pay Awards

44. REMINDER! MAKING VARIABLE PAY WORK FOR YOU • Create meaningful and measureable goals that are aligned with business strategy • Clear and effective communication with employees • Ensure employees understand the expectations and measures • Measure results and be specific • Communicate performance updates throughout the year

45. RETENTION PRACTICES

46. TOP COMPENSATION PRACTICES USED FOR EMPLOYEE RETENTION: IN LAST 12 MONTHS

47. WE’RE HERE WHEN YOU NEED US… Thank you