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Survey Methodology and Definitions

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8
Survey Methodology and Definitions
Below please find details of the standards and methodologies used in the survey.

8.1.
8.1.1.

Standards
Ageing Standards

In PayMonitor, there is a possibility to age the survey data, this ageing is applied to all elements of total cash (that is Comp1, Comp2 and Comp3).

8.1.2.

Treatment of Zeros

Throughout the reports, zeros have not been used in the calculations unless otherwise specified.

8.1.3.

Treatment of Negative Values

Throughout the reports, negative values have not been used in the calculations unless otherwise specified. Treatment of Expatriates Only data for the local incumbents (not expatriates) are included in the statistics, with the exception of Middle East countries, where local employment standards require otherwise.

8.1.4.

Exchange Rates

When there is a need to change currency in which data is provided, we use the average rate of the last trade rate since 1st January 2010 to 31st March 2010.

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8.2.
th

Statistics

25 Percentile (25th %ile) The data point that is higher than 25% of all other data in the sample when ranked from low to high. Also known as the first quartile. Median The data point that is higher than 50% of all other data in the sample when ranked from low to high. Also known as the 50th percentile. 75th Percentile (75th %ile) The data point that is higher than 75% of all other data in the sample when ranked from low to high. Also known as the third quartile. Mean The sum of all data reported divided by the number of observations in the sample. Also known as average. Receiving Item (Count Obs/Orgs) The number of employees/organizations receiving the compensation or benefit item. Each item, such as base salary or incentive amount, is analyzed individually using the data reported for that item only. If an organization did not provide a piece of data for a position, this organizations information is not included in the calculation of the statistics. Therefore the number receiving the item may differ by item. Frequency (% Obs/Orgs) The percentage of the employees/organizations actually receiving the item based on the total number of employees/organizations in the position. Market Regressed Line The result of applying one of several mathematical models to fit a smooth curve through a series of graphed "X/Y" points (representing IPE Position Class and a compensation figure respectively) such that the curve best represents the overall trend in those points. Market Ratio Nth Percentile A smooth curve related to a Market Regressed Line but offset from it vertically at every "X" value (representing IPE Position Class) by a proportion generally equal to the ratio of the corresponding actual median to the actual Nth percentile at each of those "X" values.

8.3.

Aggregate Compensation Values

These values may appear in either, or both, PayMonitor and PDF reports. Annual Base Salary (Comp1 12-month) Includes only base salary (Monthly Base Salary x 12). Annual Base Salary (Comp1 Actual) Includes only annualized base salary (Monthly Base Salary x Number of Months Paid). Annual Guaranteed Cash (Comp2 Actual) Includes Comp1 Actual plus the annualized value of guaranteed allowances and cash benefits. Annual Total Cash (Comp3 Actual) Includes Comp2 Actual plus the annualized value of any actual Short-term Incentive, Sales Incentive, Profit Sharing, or Other Incentive awards. The figures reported reflect the actual amounts of the last awards received.

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Annual Total Cash (Comp3 Target) Includes Comp2 plus the annualized value of any target Short-term Incentive, Sales Incentive, Profit Sharing, or Other Incentive awards. The figures reported reflect the target amounts applicable to the incumbent. Only incumbents for whom we have a valid response to STI Eligible are included in this sample. Valid responses to STI (Bonus) Eligible include: STI Eligible = Y and Short-term Incentive Percent (Target) > 0, and STI Eligible = N (in this case, we will use zero for the target percent). Annual Total Cash (Comp3 Target) Receivers Includes Comp2 plus the annualized value of any target Short-term Incentive, Sales Incentive, Profit Sharing, or Other Incentive awards. The figures reported reflect the target amounts applicable to the incumbent. Only incumbents for whom STI Eligible = Y and Short-term Incentive Percent (Target) > 0 are included in this sample. Annual Total Direct Comp (Comp4 Actual) Includes Comp3 Actual plus the annualized value of any Long-term Incentive awards, valued using Black-Scholes methodology for appreciation-based awards. Annual Total Direct Comp Accounting Cost (Actual) Includes Comp3 Actual plus the annualized value of any Long-term Incentive awards, valued using the organizations internal accounting cost methodology for appreciation-based awards. Annual Total Remuneration (Comp5 Actual) Includes Comp4 Actual plus the annualized value of the benefits: retirement plan, life and medical insurance, motor vehicle, etc. Annual Non-equity Comp (Actual) Includes Comp5 Actual, but subtracts the value of any long--term incentive awards included in Comp4. Annual Non-equity Comp (Target) Includes Comp5 Target, but subtracts the value of any long--term incentive awards included in Comp4.

8.4.

Compensation Items

These values may appear in either, or both, PayMonitor and PDF reports. Base Salary Items (Comp1) Monthly Base Salary The gross monthly base salary as of the data effective date, excluding any allowances. Number of Months Paid (Including Fixed Bonus) The number of times the incumbent receives monthly base salary in a full year including Fixed/Guaranteed Bonus (e.g. 13 months = 13). Guaranteed Cash Items (Comp2) Meal Allowance The annual guaranteed cash allowance provided for subsidized meals or luncheon vouchers. Transportation Allowance The annual guaranteed cash allowance given to incumbents who are not eligible for company car to subsidize transportation expenses to and from the workplace or other business-related travel requirements (e.g. to take up public transport, gasoline consumption, road tax, parking, etc.). Shift Allowance The annual guaranteed cash allowance for working on a specialized shift schedule.

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Other Guaranteed Allowances Any annual guaranteed cash allowance not specified above. Annual Total Cash Items (Comp3) STI Eligible (Y/N) Indicator that incumbent is eligible for a Short-term Incentive award. Sales Incentive Eligible (Y/N) Indicator that incumbent is eligible for a Sales Incentive award. Short-term Incentive Amount (Actual) All payments received over the 12-month period ending on the data effective date, which are associated with individual, team, and/or corporate performance. Sales Incentive Amount (Actual) All payments received over the 12-month period ending on the data effective date, which are associated with sales achievement. Short-term Incentive Percent (Actual) The Short-term Incentive Amount (Actual) expressed as a percentage of Annual Base Salary (Comp1). Sales Incentive Percent (Actual) The Sales Incentive Amount (Actual) expressed as a percentage of Annual Base Salary (Comp1). Short-term Incentive Amount (Target) The target amount of the Short-term Incentive award, associated with expected individual, team, and/or corporate performance over the next 12-month period. Sales Incentive Amount (Target) The target amount of the Sales Incentive award, associated with sales achievement over the next 12-month period. Short-term Incentive Percent (Target) The target Short-term Incentive award, associated with expected individual, team, and/or corporate performance over the next 12-month period, expressed as a percentage of Annual Base Salary (Comp1 Actual). Sales Incentive Percent (Target) The target Sales Incentive award, associated with expected sales performance over the next 12-month period, expressed as a percentage of Annual Base Salary (Comp1 Actual). Short-term Incentive Amount (Maximum) The maximum Short-term Incentive award, associated with expected individual, team, and/or corporate performance over the next 12-month period. Short-term Incentive Percent (Maximum) The maximum Short-term Incentive award, associated with expected individual, team, and/or corporate performance over the next 12-month period, expressed as a percentage of Annual Base Salary (Comp1 Actual). Annual Total Direct Comp Items (Comp4) LTI Eligible (Y/N) Indicator that incumbent is eligible for a Long-term Incentive award. Long-term Incentive Amount Black-Scholes The annualized value, using Black-Scholes methodology for the appreciation-based awards, of all LTI awards received over the 12-month period ending on the data effective date, which are associated with individual, team, and/or corporate performance over a period longer than one year.

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Long-term Incentive Amount Accounting Cost The annualized value, using the organizations internal accounting cost methodology for the appreciation-based awards, of all LTI awards received over the 12-month period ending on the data effective date, which are associated with individual, team, and/or corporate performance over a period longer than one year. Long-term Incentive Percent Black-Scholes The Long-term Incentive Amount BlackScholes expressed as a percentage of Annual Base Salary (Comp1 Actual). Long-term Incentive Percent Accounting Cost The Long-term Incentive Amount Accounting Cost expressed as a percentage of Annual Base Salary (Comp1 Actual). Annual Total Remuneration Items (Comp5) Defined Benefit Pension Value calculated using the Projected Unit method which reflects the percentage of salary one would need to place in a retirement account to substitute for the benefits expected to emerge from the retirement plan. The contribution level is based on the value of the benefit being earned in the year following the valuation date. Defined Contribution Pension The annual amount of the organizations contribution to organization-sponsored defined contribution pension programs. Share Purchase Plan The value of the discount that employee can obtain on buying organization shares. Usually the organization imposes a limit on amount that employee can use to buy shares. Health Benefits The value provided by the organization for medical (including clinical and hospitalization) and dental coverage to the employee. Death Benefits The value provided by the organization for accident and life insurance coverage to the employee. Disability Benefits The value provided by the organization for disability insurance coverage to the employee. Car Value The value provided to the incumbent, by the organization, for motor vehicles. This value could take the form of a lease payment on a vehicle, an allowance to reimburse an employee, or a purchase of a vehicle (in this case, a valuation formula is applied based on information provided). Flexible Benefits The annual cost for providing flexible benefits to the incumbent.

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Periodically, local terminology is used in place of global standard terminology. Any exceptions to global standard terminology are noted in the table below, which provides a look-up for elements in sections 8.3 Aggregate Compensation Values and 8.4 Compensation Items that have a Local Country label in place of the Global Standard label.
Global Standard Label Local Country Label

Incentive Amount (Actual) Short-term Incentive Percent (Actual) Short-term Incentive Amount (Target) Short-term Incentive Percent (Target) Short-term Incentive Amount (Maximum) Short-term Incentive Percent (Maximum) Long-term Incentive Amount Black-Scholes Long-term Incentive Percent Black-Scholes Health Benefits Flexible Benefits Annual Non-equity Comp (Actual) Annual Non-equity Comp (Target)

Variable Bonus Actual Variable Bonus (Actual) as % of Salary Variable Bonus (Target) Variable Bonus (Target) as % of Salary Maximum Bonus (Target) Maximum Bonus (Target) as % of Salary LTI (Actual) LTI (Actual) as % of salary Medical Plan Flexible Benefits/Cafeteria Annual Total Rem (Comp5 Actual) Excl LTI Annual Total Rem (Comp5 Target) Excl LTI

8.5.

Long-term Incentives Definitions

Stock/Share Options Stock/Share Options allow for the purchase of stock at a fixed price over a specified period. The exercise price (known also as strike or subscription price) is often equal to the market price on the date of grant, but may be less than (with discount) or greater than (with premium) the market price on the date of grant. Share Appreciation Rights (SARs) Share Appreciation Rights provide an incumbent with the appreciation in market value of the share. They may be paid out in cash, stock, or a combination of cash and stock. No investment on the part of the incumbent is required. Share Appreciation Rights include Phantom Appreciation Shares. Phantom Appreciation Shares are an award denominated in hypothetical shares, the value of which is based on an increase in actual share value or another measure of organization value (e.g., book value). There are three types of Share Appreciation Rights: Freestanding SAR grant that is not attached to a stock/share option. Limited SAR that is exercisable only upon the occurrence of a specific event such as a change in control. Tandem SAR that is granted with a stock/share option. The exercise of one cancels the other. Stock/Share/Share Unit Awards Conditional grants of notional, actual or phantom shares of stock with vesting contingent upon employment for a specified period of time or achievement of specified performance goals over a multi-year performance period. The value of each share depends upon the market value of the share at the end of the vesting period. Share Awards include those that are commonly referred to as Restricted Stock, Restricted Stock Units, Performance Shares, Performance Share Units, or Phantom Full Value Shares.

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Performance Units Conditional grant denominated in units other than notional or actual shares, with payment contingent upon achievement of specified performance goals over a multi-year performance period. Performance Units are cash-denominated and not tied to the price of a share of stock. Although units are usually cash-denominated, their value may also be based on other constructs, such as dividends or EPS (Earnings Per Share). Where the value of each unit is equal to 1.00, the incentive type is also known as Long-term Cash. Long-term Cash A pre-determined cash amount paid out contingent upon achievement of specified performance goals over a multi-year performance period.

8.6.

Long-term Incentives Valuation Methodology

Grant data provided by the survey participants was used to calculate the value of Long-term Incentives (LTI) such that the result is a fair, monetary-based measure that can be used with other compensation amounts to determine Total Direct Compensation (i.e., Comp 4). In this report, long-term incentive values have been calculated using Mercers Black-Scholes and Accounting Cost Methodologies. Black-Scholes Method Under the Black-Scholes methodology certain LTI awards are discounted for required performance conditions. A performance discount is applicable to all plan types if vesting is designated as performance based and the plan structure is defined as Fixed Amount or Defined Maximum. Performance-contingent awards with these plan structures are discounted by 20% to 50% to reflect the risk that the award will not vest or be paid out. A 20% discount is applied if the performance measure does not include Relative Total Shareholder Return. Other discounts, ranging from 35% to 50%, are applied depending upon the degree to which Relative Total Shareholder Return is used as the performance measure. Otherwise, LTI values generally have not been adjusted to reflect any discounts for service-based vesting, lack of transferability, or risk of forfeiture. Fixed Amount awards do not have a downside or upside potential and in some markets may commonly be referred to as an All or Nothing type of award. For example, these might include awards where a participant will receive 100 shares if an EPS (Earnings Per Share) goal is met and nothing if the goal is not met. Defined Maximum awards include a maximum number of shares/share units corresponding to performance. The number of shares awarded may be less based upon performance. Fixed Amount and Defined Maximum plans are in contrast to Defined Target Plans. Defined Target awards include a target number of shares/share units corresponding to target performance. The number of shares awarded may be more or less based upon actual performance (e.g., payouts may be 0% to 200% of target). Defined Target awards are valued at the target level with no discount. Appreciation Based Incentives These plans include Stock/Share Options and Share Appreciation Rights (SARs). Annual Dividend Yield based on dividends paid in the 12 months preceding the date of grant. (For grant dates later than December 31, 2009, the annual dividend yield is based on dividends paid from January 1, 2009 to December 31, 2009.)

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Estimated Option Term an assumed estimated term based on SEC safe harbor accounting rules is used. The estimated term is the sum of (option term as reported by survey participants + assumed 3 year vesting)/2. For example, an option with a reported term of 10 years will have an estimated option term of 6.5 years (10+3)/2. If a participant does not provide an option term, then we assume an estimated option term of 6.5 years. Risk-free Rate of Return this value is based on a rate of return for the country in which the stock for the LTI grant trades. For all countries other than the United States, Canada, and Australia, the Risk-free Rate is based on available bond yield data using an estimated 7-year rate as of December 31, 2009. Risk-free Rates for the United States, Canada, and Australia are established using the following values: United States Monthly U.S. Treasury rates in place on the date of the grant, rounded to the nearest year. Canada Monthly Bank of Canada Bond Yields in place on the date of the grant, rounded to the nearest year. Australia Monthly Reserve Bank of Australia Capital Market Yields Government Bond rates in place on the date of the grant, rounded to the nearest year. Stock Price Volatility based on daily closing prices for 36 months preceding the date of grant. (For grant dates later than December 31, 2009, the stock price volatility is based on daily closing prices from January 1, 2007 to December 31, 2009.) If the underlying stock has not existed for three years, then the volatility is calculated for an abbreviated time frame. Stock Price Volatility is capped at 50%. In 2009, Mercer refined the valuation methodology by moving from a monthly to a daily assessment of stock market volatility as an input to the Black-Scholes valuation. The assessment of volatility based on daily rates has a smoothing effect when stock market volatility occurs in the short-term, similar to what existed during the latter half of 2008. The daily volatility calculation also more closely approximates the long-term incentive values typically used for accounting and compensation purposes. The survey value is equal to the product of: (1) the per-share Black-Scholes value, (2) the number of shares granted in the most recent grant and (3) where applicable, discounts detailed above for certain performance-contingent awards to reflect the risk that the award will not vest or be paid out. The result is adjusted for the frequency of awards, as appropriate, to annualize the result (e.g., if awards are made every two years, then the product is divided by two). For privately held companies, we assume that the per-share Black-Scholes value of an appreciation based incentive is equal to 33% of the market price of the underlying shares on the date of the grant as reported by the survey participants. Stock/Share Based Incentives These plans include Stock/Share/Share Unit Awards. The survey value is equal to the product of: (1) the per-share value on the date of the grant as reported by the survey participants, (2) the number of shares granted in the most recent grant and (3) where applicable, discounts detailed above for certain performance-contingent awards to reflect the risk that the award will not vest or be paid out. The result is adjusted for the frequency of awards, as appropriate, to annualize the result (e.g., if awards are made every two years, then the product is divided by two). Cash Denominated Incentives These plans include Performance Units and Long-term Cash. For Performance Units the survey value is equal to the product of: (1) the per-unit value on the date of the grant as reported by the survey participants, (2) the number of units payable for performance granted in the most recent grant and (3) where applicable, discounts detailed above for certain performance-contingent awards to reflect the risk that the award will not vest or be paid out.

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The result is adjusted for the frequency of awards, as appropriate, to annualize the result (e.g., if awards are made every two years, then the product is divided by two). For Long-term Cash, the survey value is equal to the product of the monetary value payable for performance reported by the survey participants and where applicable, discounts detailed above for certain performancecontingent awards to reflect the risk that the award will not vest or be paid out. This amount is adjusted for the frequency of awards, as appropriate, to annualize the result (e.g., if awards are made every two years, then the value is divided by two). Accounting Cost Method We have provided this methodology as a comparison point to that of the Black-Scholes Methodology. Survey participants were asked to report their total accounting cost per share on the date of grant, under either FAS 123R or IFRS2, for Appreciation Based Incentives. Appreciation Based Incentives under the Accounting Cost Method are not discounted for performance conditions. However, Stock/Share Based Incentives and Cash Denominated Incentives are discounted for performance conditions under the Accounting Cost Methodology if the plan structure is defined as Fixed Amount or Defined Maximum. Performance-contingent awards with these plan structures are discounted by 20% to 50% to reflect the risk that the award will not vest or be paid out. A 20% discount is applied if the performance measure does not include Relative Total Shareholder Return. Other discounts, ranging from 35% to 50%, are applied depending upon the degree to which Relative Total Shareholder Return is used as the performance measure. Otherwise, LTI values generally have not been adjusted to reflect any discounts for service-based vesting, lack of transferability, or risk of forfeiture. Fixed Amount awards do not have a downside or upside potential and in some markets may commonly be referred to as an All or Nothing type of award. For example, these might include awards where a participant will receive 100 shares if an EPS (Earnings Per Share) goal is met and nothing if the goal is not met. Defined Maximum awards include a maximum number of shares/share units corresponding to performance. The number of shares awarded may be less based upon performance. Fixed Amount and Defined Maximum plans are in contrast to Defined Target Plans. Defined Target awards include a target number of shares/share units corresponding to target performance. The number of shares awarded may be more or less based upon actual performance (e.g., payouts may be 0% to 200% of target). Defined Target awards are valued at the target level with no discount. Appreciation Based Incentives These plans include Stock/Share Options and Share Appreciation Rights (SARs). The survey value is equal to the product of: (1) the accounting cost on the date of the grant as reported by the survey participants and (2) the number of shares granted in the most recent grant. The result is adjusted for the frequency of awards, as appropriate, to annualize the result (e.g., if awards are made every two years, then the product is divided by two). Note: If an Accounting Cost is not provided by a survey participant for an Appreciation Based Incentive, an assumed cost is not applied to the incentive and the incentive is excluded from the calculation.

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Stock/Share Based Incentives These plans include Stock/Share/Share Unit Awards. The survey value is equal to the product of: (1) the per-share value on the date of the grant as reported by the survey participants, (2) the number of shares granted in the most recent grant and (3) where applicable, discounts detailed above for certain performance-contingent awards to reflect the risk that the award will not vest or be paid out. The result is adjusted for the frequency of awards, as appropriate, to annualize the result (e.g., if awards are made every two years, then the product is divided by two). Cash Denominated Incentives These plans include Performance Units and Long-term Cash. For Performance Units the survey value is equal to the product of: (1) the per-unit value on the date of the grant as reported by the survey participants, (2) the number of units payable for performance granted in the most recent grant and (3) where applicable, discounts detailed above for certain performance-contingent awards to reflect the risk that the award will not vest or be paid out. The result is adjusted for the frequency of awards, as appropriate, to annualize the result (e.g., if awards are made every two years, then the product is divided by two). For Long-term Cash, the survey value is equal to the product of the monetary value payable for performance reported by the survey participants and where applicable, discounts detailed above for certain performancecontingent awards to reflect the risk that the award will not vest or be paid out. This amount is adjusted for the frequency of awards, as appropriate, to annualize the result (e.g., if awards are made every two years, then the value is divided by two).

8.7.

Benefits Valuation Assumptions

This section details the assumptions used by Mercer to value the main benefit plans. We have applied these techniques, with adjustments where necessary, to the actual features of your plan.

8.7.1.

Employee Value

The valuation process has been undertaken from the perspective of employee value as opposed to employer cost. Employee value reflects the amount of gross salary required to purchase an equivalent benefit in the marketplace to replace the benefit provided by the employer. This process takes into account the fact that some benefit plans are tax effective when provided by the employer, so that the valuation is grossed up where the equivalent benefit, if provided by the employee, would be paid out of net salary. Employee contributions have been deducted from these values where appropriate in order to establish the benefit provided by the employer. We value the benefit based on value to a new employee (if he had to purchase this himself). Therefore we assume that all employees are receiving the current benefits available for a new hire.

8.7.2.

Gross Salary Equivalent

Values normally reflect the amount of salary that would be required to purchase the equivalent benefit. Thus, the value of a benefit that enjoys a tax-preferred status in relation to salary (e.g., medical plans) will include a tax "gross-up" to equate it to taxable salary required to purchase a similar benefit.

8.7.3.

Mean Use

Two organizations with the same benefit plan will each have the same value attributed to their plan irrespective of the costs of the plan to the employers.

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Market or Actuarial Valuation

Benefits are valued using the "walkaway" method. The values represent the cost to the employee of employer provided benefits if he or she left the employer and were to duplicate them in the marketplace. In many instances, these amounts will be greater than the cost to the employer. For example, an individual medical plan that is identical to the employers medical plan will cost more because of the greater marketing, administrative, and underwriting costs associated with an individual plan. Valuation reflects market pricing wherever possible. If there is a market yardstick which employees are likely to use to determine the personal value attributed to an employee benefit, this is used. Where market pricing does not exist, an actuarial valuation using standard assumptions and pricing techniques will be used. For example, although individual medical or dental policies containing provisions matching an employer plan would typically not be available in the open market, the value of the employer plan is estimated by valuing the employer plan using the same rate methodology as is used for individual benefit.

8.7.5.

Employee Participation

Values are calculated assuming that all employees participate in the primary plans offered even when they are voluntary and certain employees may have opted out. For example, it is assumed that all employees participate in medical, pension, and stock purchase plans (where offered). This gives a measure of the opportunity value to the employee.

8.7.6.

Personal Substitution

Values reflect as close substitution as possible to the benefit provided by the employer. For example, it has been assumed that employees will replace their life insurance benefit with the same amount of coverage. We understand that in reality this may not always be the case.

8.8.

Benefits Valuation Methodology

On an annual basis benefits valuation methodology is reviewed and updated to take into account changes in market practice, underlying premiums and rates and also changes to legislation. While the valuation methodology is consistently applied across the survey, the participants should expect some variation when making year on year comparisons.

8.8.1.

Retirement Plans Defined Benefit Scheme

The quantification of this benefit is based on the organization cost of benefits accruing in the following year. This means that the funding situation of the plan or the actual organization contributions to the plan is not taken into consideration. Retirement age is a key factor when determining the value of the benefit because it affects both the accumulation period and the pay-out period. Early retirement subsidies such as unreduced benefits or bridge supplements are also a factor. In order to produce values which differ based on plan provisions, we use a single set of retirement probabilities.

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We will assume that the employee will retire at Normal Retirement Age. All the calculations will be based on the benefit that is accrued after service to retirement. Maximum and minimum benefits will be considered. Accessory benefits such as pre-retirement death, disability and vesting benefits would not be considered. For plans with employee contributions, we assume the maximum percent of salary an employee is allowed to contribute. For organizations with a mixed approach, both this section and the following (Defined Contribution) will have to be considered.

8.8.2.

Retirement Plans Defined Contribution Scheme

The benefit is the contribution that is being credited during the year to the employees account. When the organization contribution is defined as a percentage of the employee contribution and where the employee can decide the contribution level, we will assume the maximum employee contribution on which there is an organization match. Accessory benefits such as pre-retirement death, disability and vesting benefits were not considered. Past service contribution were also ignored.

8.8.3.

Medical Plan

Medical and dental benefits are valued using a market representation of a mean cost of employer provided benefits. This means that the benefits are valued as the amount an employee would need to individually pay a medical provider to acquire the same level of coverage. These amounts may be greater or lower than the actual cost to your organization, depending on the organizations overall negotiation with plan providers. Where employee contributions are required in the monthly cost of the plan, the amount is deducted from the final value of the benefit.

8.8.4.

Death Benefits

Death benefits are valued as the amount of insurance premium an individual would need to pay to acquire the same level of coverage. For valuation purposes, the value determined is based on the expected coverage in the year following the valuation date. The coverage amount valued is equal to the amount of coverage which is provided (i.e. paid for) by the employer. The benefit is valued using a representation of an average cost of group insurance premium in the market. Where employee contributions are required, the amount is deducted from the final value of the benefit.

8.8.5.

Long-term Disability Benefits

Disability benefits are valued as the amount of insurance premium an individual would need to pay to acquire the same level of coverage. For valuation purposes, the value determined is based on the expected coverage in the year following the valuation date. The coverage amount valued is equal to the amount of coverage which is provided (i.e. paid for) by the employer.

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The benefit is valued using a representation of an average cost of group insurance premium in the market. Where employee contributions are required, the amount is deducted from the final value of the benefit.

8.8.6.

Share Purchase Plan

We assume that employees sell their stock immediately after the offering period. Each organizations offering period and discount rate are factored into the valuation. The value is taken as the amount of the gain available to the employee on the basis that the stock could be bought and sold on the same day at a defined discount.

8.8.7.

Company Cars

This benefits value is based on the assumption that the employee will replace the company car provided by the employer with the same type of car. The valuation of company cars can be based on the purchase price, lease cost or cash allowance, which may be taken in lieu of the car. Where applicable, the costs of maintenance, insurance, and fuel for private use are included in the valuation.

8.9.

Job Matching Methodology

Mercer surveys around the world are underpinned by the International Position Evaluation (IPE) System. While this survey is based on a set of role descriptions, it is also supported by IPE to assist participants in interpreting the data. As part of the survey process, the participants were provided with job matching tools, designed by Mercer specifically to support this survey. Mercer Consultants are available to discuss the job matching methodology used on this survey in detail as required.

8.10. Mercer's International Position Evaluation System (IPE Version 3.1)

The IPE system is a proven approach to position evaluation and is used by thousands of organizations around the world. As Mercer is dedicated to continuous quality improvements, the IPE system is reviewed regularly based on input and feedback from users and consultants worldwide. The improvements made to the system address the changing environment and evolution of organization structures. The system allows accurate comparisons between positions, as job titles alone can be misleading. For example, the title "finance manager" in one organization may describe a position that has greater operational responsibilities as compared to a finance manager in another organization with more strategic responsibilities. In other words, the scope and content of a finance manager position could be broad in some organizations and limited in others.

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Survey Methodology and Definitions

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By using the IPE method, we can further isolate similar positions and responsibilities. The information in the survey is presented to allow a rapid and precise measurement of salary levels. It is important to remember that, when conducting job matching and position evaluations, it is the "position" that is being matched and not the person holding that position. The qualifications and the performance of the present position holder may differ from what is actually required by the position. Position evaluation is not just a tool for salary comparisons but also instrumental in recruitment, career planning, designing organization structures and, in addition, when dealing with expatriate compensation and planning. The Mercer IPE Methodology is available for internal use in organizations based on licensee terms and conditions. The Mercer eIPE Unlimited web software is available through the license and Mercer consultants offer fee based in-house training and position evaluation expertise in most countries and languages.

8.10.1. The Four Factors of the International Position Evaluation (IPE) System
The user should note that each position evaluation system has its own terminology and peculiarities. It is always easier to learn these details from a specialist so that the "how-to-use" questions are quickly understood. Equally important, the role of the Mercer survey specialist is to ensure proper representation of compensation available in each market, so that organizations can accurately compare their compensation strategy across markets, regions and industries.
Organization 1. Impact Impact Contribution

2. Communication Position 3. Innovation

Communication Frame

Innovation Complexity

Knowledge 4. Knowledge Team Breadth

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Survey Methodology and Definitions

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Factor 1: Impact The organization context specific to the position is sized by a monetary scale such as sales or assets, range of activity and number of employees. Within this context impact and relative contribution to overall results is measured. Factor 2: Communication The required communication skills within as well as outside of the corporation. Factor 3: Innovation Specific responsibilities in the position for development of new ideas, methods, techniques and improvements to products, procedures or services. Factor 4: Knowledge Relates to the knowledge level required, how this is applied in teams and the geographical and intellectual breadth wherein the objectives are accomplish and value created. An additional Risk factor is available for use in high-risk industries or specific professions where the position environment add special constrains to the incumbent. The factors are weighted with points and the summary of points across all factors converts into a Position Class. Table of Typical IPE Classes for each Hierarchical Level
Impact Contribution Communication Frame

Impact Organization Innovation Complexity Knowledge Teams

Communication

Innovation Breadth

Knowledge

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Typically, we found the following distribution of the Mercer IPE Classes for the different hierarchical levels involved:
Hierarchical Levels Mercer IPE Classes

General Directors/Presidents VPs/Directors Managers Supervisors/Specialists Professional/Admin./Staff Blue Collar

60 70 58 62 53 59 50 54 45 51 40 45

8.11. Mercer Universal Position Coding System (MUPCS)

The coding system categorizes positions by: Position Family Position Sub-family Career Stream Career Level Activity Code (this unique identifier is necessary when positions are coded the same in all other categories above) Family and Sub-family The family and sub-family are defined in the first six digits of the code. For example, the code 210.352 represents the Finance family (210) and the Financial Planning/Analysis sub-family (352). Additional sub-families within Finance (e.g., Treasury, Audit, Tax etc.) are represented with unique sub-family codes. These are used to ensure each position in the survey contains a unique code. The system has been designed with enough flexibility to allow future positions to be added to the survey. Career Stream, Level, and Job/Activity Career stream (seventh digit within the position code) defines the level within the organization hierarchy and the knowledge and competency requirements: Executives Typically includes top executives and function heads providing strategic vision and/or tactical/strategic direction across multiple functions or sub-functions. Management Typically management and supervisory professionals focusing on tactical and/or operational activities within a specified area. Professionals Typically professionals with no management responsibility, although may provide mentoring and coaching to less experienced staff. Para-Professionals Typically roles that are semi-skilled or unskilled with no supervisory or management responsibility.

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These career streams, when combined with a level and job activity (eighth and ninth digits), allow all positions within a position family/sub-family to contain unique characteristics which differentiate them from one another. The following chart illustrates how the position code is structured. Example:

8.11.1. MUPCS Career Stream and Career Level Framework

The table below illustrates the breakdown of career streams by career level. When using PayMonitor, Mercers online data analysis tool, you can complete various analyses. For example, you may want to analyze bonuses for all positions at function head level across job families or collapse the para-professional level positions to compare pay regardless of level. Career Streams
1. Executive 1. Head of Organization 2. Management 3. Individual Professional 4. Para-Professional

2. Function Head 3. Sub-function Head 1. Senior Manager 1. Pre-eminent 2. Expert 3. Specialist

Levels

2. Manager 3. Team Leader (professional) 4. Team Leader (paraprofessional)

4. Senior

5. Experienced 6. Entry 1. Senior 2. Experienced 3. Entry

Please contact your local Mercer consultant for more information on MUPCS.

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