GLOBAL COMPENSATION GUIDELINES

MSC

Global HR

V1.3 – September 2023

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 Contents
1. Introduction 4

2. Philosophy 4

3. Scope and Application 5

4. Annual Salary Review Process 5

4.1 Eligibility 6
4.2 Special Cases 7
4.2.1 Internal Transfers 7
4.2.2 Changes from temporary/short-term contract to permanent contract 7
4.2.3 Maternity leave & other long leaves 7
4.3 Types of Salary Increase 7
4.3.1 Inflation 7
4.3.2 Merit Increase 8
4.3.3 Promotion 9
4.4 Allocation of the budget: Merit & Bonus matrices 9
4.4.1 Merit Matrix 9
4.4.2 Bonus Matrix 10
4.5 Process Steps and Responsibilities 10
4.6 Annual Salary Review in the Agencies 11
4.7 Annual Salary Review for Managing Directors 12
4.8 Annual Salary Review in the Shared Service Centres 13
4.9 Off-Cycle Salary Increases due to High Inflation 14

5. Process Monitoring & Escalations 15

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 Version Control

Version # Date Changes Authored by Approved by

1.0 24.08.2022 Document issued Maisa Dias Anna Rossetti

Lawrence Matthews
Claudio Bozzo

1.1 03.10. 2022 Added process and approval flow for Maisa Dias Claudio Bozzo
SSCs

1.2 21.02.2023 Bonus matrix Maisa Dias Anna Rossetti

Maternity leave & other long leaves Lawrence Matthews
Inflation (amendment)
Expats & staff with offshore salaries
Promotion caps (amendment)
1.3 29.09.2023 Amendment of the performance Maisa Dias N/A
ratings (4.4.1 and 4.4.2)

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 1. INTRODUCTION
The Global Compensation Guidelines provide guidance on the salary increase processes for staff members of all
MSC agencies and Shared Service Centres (SSCs) worldwide (herein after “MSC”).

The contents of this document set a global standard to be followed, however, it shall not replace the applicable
legal rules of each country in which MSC operates. Local laws within each country must be complied with and,
therefore, may influence some aspects of the implementation of the guidelines.

Moreover, this document is not a contract (express or implied), nor does it guarantee compensation of any kind.
No legal rights or entitlements may be derived from anything stated herein.

MSC reserves the right to modify, supplement, or withdraw the Guidelines with or without notice and at any time.

This document is confidential and agency access is restricted to Managing Directors, Human Resources
Managers and CFOs/Financial Managers (when their involvement is required).

These guidelines are applicable to all MSC entities as of 1st of September 2022.

2. PHILOSOPHY
MSC strives to carry out a solid salary strategy aiming to attract, engage and retain its workforce.
We are committed to responsible compensation practices, which are reviewed and assessed regularly to ensure
the most up to date and reliable practices are in place.

MSC is committed to equal opportunities (including in compensation), and therefore it does not tolerate any form
of discrimination based on ethnicity, nationality, gender, sexual orientation, gender identity, age, religion, marital
or family status, disability, or any other status that is protected by law.
MSC encourages a work environment free from any form of discrimination, harassment and/or retaliation.

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 3. SCOPE AND APPLICATION
The Global Compensation Guidelines apply to all employees1 working full-time or part-time within any of MSC
entities. The Guidelines are not applicable to staff under the following groups (except as required by local law):

• Workers with a temporary/short-term contract (contract with end-date defined)2.

• Contingent/external workers.
• Consultants/service providers.
• Workers under an apprenticeship/internship contract.

4. ANNUAL SALARY REVIEW PROCESS

The Annual Salary Review (ASR) is the official cycle in which salary increases and bonuses are defined for staff
members in the different entities of the company.
This process should take place once a year, with salary increases to take effect on January 1st (unless local legislation
requires otherwise) and must follow the governance model and steps that are described3 below.

When local legislation prescribes a different timeline, Local HR is required to inform in advance Global HR –
Compensation & Benefits department.

The ASR for each country will be based on financial parameters issued by the CEO. Based on such parameters, and
considering the budget assigned, countries will be asked to draft a merit matrix and a bonus matrix4 and submit it
for the approval of head office.
The performance review / appraisal rating ought to be integrated into the merit and bonus matrices in all cases.
Additionally, the agencies can decide to integrate the following optional elements into their matrices:
• Tenure/length of service.
• Salary levels, with the aim of bridging salary gaps (when different percentages of increase are assigned
according to the salary level – i.e. higher salaries would have smaller percentages of increase than lower
salaries).
• Salary benchmark – applicable only for countries that have an updated5 salary benchmark carried out by
one of MSC’s global accredited vendors6 in place; or carried by a local vendor approved by Global HR -
Compensation & Benefits.

1
Employee: staff member hired, paid, and working for one of MSC’s entities with a permanent contract.
2
When local legislation obliges you to use only end-date defined contracts, employees who hold the position on a permanent
basis should be considered as eligible. In this case, please consider that the criteria of eligibility and seniority still apply.
3
See point 4.5 for details.
4
See point 4.4 for details.
5
Are considered ‘updated’ any salary benchmark dating back up to two years at the moment of the ASR.
6
Currently MSC recognizes Korn Ferry and Mercer as accredited vendors for salary benchmark.
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 The merit and bonus matrices require approval from Global HR - Compensation & Benefits, hence, the countries
will be asked to allocate the assigned budget to their staff members following the eligibility criteria and according
to the agreed merit and bonus matrices.

The allocation proposal should be made in the ASR excel template7 shared by Global HR.

All amounts indicated should be always gross amounts and based on the basic salary of the current year, to be
applied as of January 1st of the following year. This rule is valid for both salary increases and bonuses.

For example, the bonus and salary increase that will be applied in January 2024, should be calculated based on the
salaries in place in 2023.

The increase approved should be applied to the basic salary exclusively. This means that no allowances or other
cash benefits (when applicable) should be increased based on the approvals provided during the ASR, unless
otherwise agreed by Global HR and Regional Agency Director.

As soon as the allocation proposal on the ASR excel template is finalised, the entities should send it to Global HR –
Compensation & Benefits for due assessment and validation.

The detailed approval flow for the agencies/entities and involved stakeholders are described in point 4.6.
The detailed approval flow for Managing Directors and involved stakeholders are described in point 4.7.
The detailed approval flow for the Shared Service Centres and involved stakeholders are described in point 4.8.

It is important to remark that salary increases can only be communicated to the concerned individuals after the
entity receives written approval from the head office.

4.1 ELIGIBILITY
To be eligible to a salary increase, promotion, bonus, or any other cash-related component, employees must meet
the following criteria:
• Have been in continuous employment within any MSC entity/entities for at least 6 months8 by December
31 st (this means that employees who joined on or before June 30 are eligible).
• Have not been subject to any disciplinary measures for at least the past 6 months, or subject to any
unexpired disciplinary sanction if longer than 6 months.
• Not be under notice period or garden leave.

7
The most recent version of the ASR file will be shared timely by Compensation & Benefits department.
8
Trial and onboarding periods are counted as continuous employment if they form part of a permanent employment
contract.
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 For employees who have less than one year of continuous employment in the company, any increases and/or
bonuses should be prorated to their time with the company, in number of months (rounded to the nearest whole
month). For example, an employee who has been working for MSC for seven months should receive 7/12th of the
percentage of increase as per the merit matrix, when applicable. Same rule should be applied to bonus.

4.2 SPECIAL CASES

4.2.1 INTERNAL TRANSFERS

Employees that have been subject to an internal transfer between different legal entities will remain entitled to a
salary review in their country of destination, provided they meet the criteria described in point 4.1.

4.2.2 CHANGES FROM TEMPORARY/SHORT-TERM CONTRACT TO

PERMANENT CONTRACT
Temporary/short-term contract period are not counted as continuous employment and therefore should not be
accounted for the purposes of the eligibility for the salary review process, unless required by local law. Therefore,
a 6-month period of contractual permanent employment with the company must be observed for eligibility.

4.2.3 MATERNITY LEAVE & OTHER LONG LEAVES

Employees on maternity leave or other long leaves remain eligible for a salary review. In case the employee's
performance review was not completed due to their being on leave, we recommend using as a reference a
performance rating of “3 - Meets Expectations” as per default, which will allow them to remain within the scope
for review eligibility.

4.3 TYPES OF SALARY INCREASE

The decision of the individual increases proposed will be based on the following elements:
• Increase due to inflation.
• Increase due to merit.
• Increase due to promotion.

The budget assigned for the country during the ASR comprises all the elements above. This means there will be
no separate nor specific budget to allocate increases for promotions.

4.3.1 INFLATION
Salary increases for adjusting inflation rates are defined during the official ASR cycle.
The official source for determining the inflation rate as well as the inflation rate itself will be provided by Global HR
– Compensation & Benefits at the beginning of the ASR process.
In general, the company recommends the application of inflation adjustments to all staff members. However, for
determining such application, Managing Directors and Local HR should assess some key elements such as:

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 • Overall financial performance of the agency/entity.
• Individual level of performance and behaviour.

Note that the inflation rates should be embedded into the merit matrix, meaning that the matrix submitted for
approval of the head office must show the total maximum percentages to be applied (merit + inflation, when
applicable).
Any additional local labour requirement impacting on salary costs, other than inflation, must be equally integrated
into the total budget approved for the country and duly highlighted to the head office.

It is important to remark that for exceptional cases where an off-cycle, inflationary adjustment is approved by Head
Office and granted to staff in a specific agency, such increase must be deducted from the inflation figure announced
by Global HR during the official ASR cycle.
MD and Local HR should observe that the final figure is respected, by making the proper calculations so to avoid a
compound effect of increase over increase, leading to a total a higher annual inflation figure.

Kindly liaise with Global HR – Compensation & Benefits for guidance on the correct application of the budget for
these exceptional cases.

4.3.1.1 EXPATRIATES AND STAFF WITH OFFSHORE SALARY

Employees under an Expatriate contract are those with a contract set by Geneva, likewise their salaries are
determined by the head office and set in hard currency (USD, EUR or CHF).
Therefore, Expatriate salaries are not subject to normal inflation increase as per determined for staff earning in
local currency in the country where they are based.
The increases for Expatriates will generally follow guidelines applied by Geneva (as opposed to guidelines set for
the agencies) and will be properly communicated directly by Global HR to each individual concerned.
Equally, staff with a local contract but with part or totality of their salaries paid offshore (meaning paid in a different
currency and/or paid in a country different than the one they are working for) shall be subject to different criteria
for the application of inflation.
Kindly consult with Global HR - Compensation & Benefits for the specific guidelines to these special cases.

4.3.2 MERIT INCREASE

Salary increases due to merit are a direct reflection of the employee’s individual performance and achievements.
Therefore, to determine individual increases due to merit, it is mandatory that an official performance management
process is in place in the agency. The decision of percentages of increases must not be discretionary, but it should
follow a merit matrix9 previously validated by the head office.
These requirements have the purpose of asserting that merit increases are granted with objectivity and fairness.

9
See topic 4.4 for details
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 4.3.3 PROMOTION
Promotions are cases in which the employee is appointed to a position with an increased level of responsibility,
accountability, workload, and impact to the organization when compared to their previous role.
Therefore, to determine a salary increase following a promotion, it is required that the scope of the new role and
the new job title are clarified (i.e., via a job description, in the organizational chart, etc.).

It is recommended to provide a salary increase when a promotion takes place. However, entities are encouraged
to channel their promotions, whenever possible, to the same moment of the ASR.
Employees who received an increase for promotion are also eligible for merit/inflation increase.

Kindly note that the percentage of salary increases for promotions should observe a cap. Such cap will be
communicated by the head office in due time.

MSC’s global approach is that substantial increases (defined as above 15%, inflation excluded) are exceptional and
should not be granted at one single moment. Instead, care should be taken to phase large increases as part of a
considered and appropriate plan.
Such plans should allow opportunity for performance of the individual to be closely tracked and assessed against
expectations set as each step of the plan of increase is implemented.

4.4 ALLOCATION OF THE BUDGET: MERIT & BONUS MATRICES

4.4.1 MERIT MATRIX

As previously mentioned, the merit matrix should be based on the performance rating system. Performance should
be the main driver during the decision-making process.
No overlap of percentages between ratings is expected in this matrix, as it is not justifiable to grant a higher or
equal salary increase to staff members with different levels of performance. An exception could be accepted if
objective criteria (elements such as tenure and current salary level) are integrated into the matrix.

Merit Matrix Template (percentages are fictitious)

Merit Matrix (example) Salary Increase

4 - Exceeds Expectations
7%
(3.3 to 4.0)
Performance Rating

3 - Meets Expectations
5%
(2.5 to 3.2)

2 - Partially Meets Expectations

2%
(1.8 to 2.4)

1 - Below Expectations
0
(1.0 to 1.7)

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 4.4.2 BONUS MATRIX

Similar to the merit matrix, the bonus distribution should also be based on the performance rating system.
The total bonus amounts (in number of gross monthly salaries or fixed percentages) should be properly disclosed
in the matrix, so to give HQ the appropriate visibility of the total disbursement of funds under the concept of bonus
throughout the year.
This means that bonuses that are mandatory by law, a general market practice and/or not related to performance
(i.e. Christmas, EID or other festivity bonus) should be fully declared to the head office and integrated into the
bonus matrix.

Bonus Matrix Template (figures are fictitious)

Merit Matrix (example) Number of monthly salaries
4 - Exceeds Expectations
2 monthly salaries
(3.3 to 4.0)
Performance Rating

3 - Meets Expectations
1 monthly salary
(2.5 to 3.2)

2 - Partially Meets Expectations

0.5 monthly salary
(1.8 to 2.4)

1 - Below Expectations
N/A
(1.0 to 1.7)

4.5 PROCESS STEPS AND RESPONSIBILITIES

The steps of the process and associated responsibilities during the ASR are described below, based on a RACI
matrix.
MSC has decided for a specific ASR process for Managing Directors, therefore, below there are two processes
specified: one applicable for the agencies/entities or the SSCs; and another one specific for MDs.

How to read the RACI matrix:

Responsible – the person who will take the action or decides.
Accountable – individuals who must sign off or approve tasks and decisions.
Consulted – individuals whose opinion is considered for input before the work is signed off.
Informed – individuals that need to receive updates on the progress of the process.

In most actions of the ASR, the same person is both responsible and accountable for a task, therefore, these two
roles have been combined into one column for easier reading. In such cases, the one who is accountable is not only
charged with the successful execution of the task but is also answerable in case there are potential issues that need
to be raised.

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 4.6 ANNUAL SALARY REVIEW IN THE AGENCIES

# Process Steps Responsible / Consulted Informed

Accountable
1 Issues budget guidelines for the ASR process (increase % and bonus instructions). CEO COO + Boards of Directors
Agencies’ SVP + RAD
Global HR
2 Contacts all countries to share budget guidelines, ASR template and process Global HR Agencies’ SVP + RAD MD
timeline. Regional and Local HR

3 Based on info received from head office, proposes local merit & bonus matrices. MD Regional HR Agencies’ SVP + RAD
Local HR Global HR Global HR

4 Assesses and validates proposed matrices, based on eligibility criteria, budget Global HR RAD MD
and cost impact (no assessment of individual cases). Regional and Local HR

5 Determines individual increases (via the ASR file), ensuring to respect elements MD Local Managers RAD
of the local compensation policy and a proper distribution of funds among staff Local HR Global HR
members (this step may be combined with step #3 if the agency wishes to do so).
6 Validates the ASR file for each agency. Global HR RAD MD
Local HR

7 Confirms to head office the application of the increases, highlights any MD Global HR
exceptional cases when applicable. Local HR

Agencies SVP: Mr. Lawrence Matthews

RAD: Regional Agency Directors

Are exempted from this ASR process all Managing Directors (MDs) of MSC agencies and SSCs, as they are subject to an ASR specifically designed for their position.
Please see section below for detailed information around ASR for MDs.

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 4.7 ANNUAL SALARY REVIEW FOR MANAGING DIRECTORS

# Process Steps Responsible / Consulted Informed

Accountable
1 Issues budget guidelines for the ASR process (increase % and bonus instructions). CEO COO + Boards of Directors
Agencies’ SVP + RAD
Global HR
2 Carries out performance assessment of the MDs. Boards of Directors Agencies’ SVP Agencies’ SVP
RAD Global HR

3 Based on agencies’ financial results and their proposed merit/bonus matrices RAD Agencies’ SVP
and individual performance assessment, presents a recommendation of Global HR COO
individual increases + bonuses per MD. Liners SVP
Boards of Directors
4 Shares list of MD salaries + increase/bonus proposals and gets validation/inputs Global HR Agencies’ SVP + RAD
from the CEO. COO
CEO
5 Communicates MDs individually of their salary increases. Global HR MD
RAD
Local HR

Agencies SVP: Mr. Lawrence Matthews

RAD: Regional Agency Directors

This process is applicable to all Managing Directors of all MSC agencies and SSCs.

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 4.8 ANNUAL SALARY REVIEW IN THE SHARED SERVICE CENTRES

# Process Steps Responsible / Consulted Informed

Accountable
1 Issues budget guidelines for the ASR process (increase % and bonus instructions). CEO COO
Sebastien Kauffman
Global HR
2 Sends email to all SSCs sharing budget guidelines, ASR template and process Global HR MD
timeline. Regional and Local HR

3 Based on info received from head office, proposes local merit and bonus MD Sebastien Kauffman
matrices. Local HR Global HR

4 Assesses proposed matrices, based on eligibility criteria, budget and cost impact Sebastien Kauffman MD
(no assessment of individual cases). Global HR Regional and Local HR

5 Determines individual increases (via the ASR file), ensuring to respect elements MD Local Managers Global HR
of the local compensation policy and a proper distribution of funds among staff Local HR
members.
6 Validates the ASR file for each agency. Global HR Sebastien Kauffman MD
Local HR

7 Confirms to head office the application of the increases, highlights any MD Global HR
exceptional cases when applicable. Local HR

Are exempted from this ASR process all Managing Directors (MDs) of the Shared Service Centres, as they are subject to an ASR specifically designed for their position.
Please see section above for detailed information around ASR for MDs.

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 4.9 OFF-CYCLE SALARY INCREASES DUE TO HIGH INFLATION
Requests for salary increases to cover for inflation outside the official ASR cycle are exceptional and considered “off-cycle”, and therefore must be submitted to the
head office for approval, supported by detailed justification. The process for submitting off-cycle requests is:

# Steps RACI
Responsible / Accountable Consulted Informed
1 Requests off-cycle increase, providing detailed reasoning MD Regional HR Global HR
for the exception. Local HR Boards of Directors
Agencies’ SVP / COO
RAD (if Agencies) / S. Kauffman (if SSCs)
2 Assesses the request and, if approved in first level, Global HR Agencies’ SVP / COO Boards of Directors (if Agencies)
advances it for second level approval (CEO). RAD (if Agencies) Regional HR COO (if SSCs)
Sebastien Kauffman (if SSCs)

3 Approves/declines the request. CEO Global HR

Agencies’ SVP / COO
RAD (if Agencies) / S. Kauffman (if SSCs)

4 Communicates approval/decline Global HR MD

Local and Regional HR
Boards of Directors
Agencies’ SVP + RAD (if Agencies)
COO + Sebastien Kauffman (if SSCs)
5 If approved, proceeds with implementation. MD RAD (if Agencies)
Local HR Sebastien Kauffman (if SSCs)
Global HR

6 Shares updated list of salary increase for the country. MD Global HR

Local HR

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 5. PROCESS MONITORING & ESCALATIONS
The ASR process in all agencies and SSCs will be monitored by Global HR and any potential deviations from the steps
agreed will be assessed jointly with Regional Agency Directors (if Agencies) and Sebastien Kauffman (if SSCs).
Cases where further escalation is required will be submitted to the evaluation of the Boards of Directors,
consequently to the COO and the CEO.

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