Vision: HelpYou Become a

Wealth Multiplier Organization

Transform the way you use
compensation to share value
with employees.

-
If you do
•that...
Quality of talent will improve.
• Employee engagement will expand.
• Performance will be magnified.
• Business growth will
b e accelerated.
• Shareholder value will increase.

-
 e least amount you can
''get away with" to attract
the best talent available and
drive
the maximum pe rfo rm a
ce possible.
 higher salaries and price out
the competition?
Competitive salary but high r upside?
A blend of those approaches?
FOCU
S
Value Creation
I
•
•
 A written statement of what
the company is willing to ''pay
for." Tie it to value creation.
 How value creation is defined.
How value is shared-and
with whom.

Market pay standards.

How guaranteed pay and value­

sharing will b e balanced.
How short and lon g-t erm value­
sharing will b e balanced.

When or if equity will be

shared.
• How merit pay
■ Value creation occurs
beyond an appropriate
return on shareholder
capital (12%).
• We believe value should
be shared with those
who are most
responsible for its creat
ion .
■ We believe value-sharing
should be split 50/50 in
rewarding short-term and
long-term performance
■ We believ ·
the 45-5ot h percent,
e with guaranteed pay
but in providing
unlimited upside
earnings through value -
sharing
Pay the least you can to get the work done.

Evei:y dollar spent on pay is one dollar less in profits.

Check the market; ay less if we can get away with ·t.

Maybe; let's wait and see if we have a good year.

Are you
crazy?
We want to pay people we ll 1 but we have to
be very ca ut io us .

We want to be "at ma rket ." KeeP: searching for

it .
We will t to P:ay bonuses as long as we can afford t he
m.
Not ourcupoft ea Seems expensive and un ne
cessa ry.
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J
Pay should turn employees into growth
partners.
 Salaries
Competitive with market standards? An Aligned
Tied to strongperformance management process
(merit)? Managed within a flexible but effective
structure?
Compensation
Performance Incentives
Tied to productivity gains?
Strategy
Clear, achievable and
meaningful? Self-financing?
Sales Incentives
Challenging yet achievable?
Reinforcing the right
behaviors? Differentiating your
offering?
Growth Incentives
Supporting an ownership
Linked to a Securingpremier
mentality? compelling talent?
future?Benefits
Core
Responsive to today's employee marketplace?
Allocating resources where most needed?
Evaluat ed to eliminate unnecessary expense?
Executive Benefits
Flexible enough to address varying
circumstances? Communicating a unique
relationship?
Reducing employee tax expense?
Qualified Retirement Plans
Giving employees an opportunity to optimize retirement
values? Operated with comprehensive fiduciary accountability?
Avoiding conflicts and minimizing expenses?
Nonqualified Retirement Plans
Optimizing tax-deferral opportunities?
Aligning long-term interests of employees with
shareholders? Structured to receive best possible P&L
impact?
26
 Form of Pay Purpose Standard Investment ROI

Provide fo r t he cur rent ca sh 40•5oth percent ile Achie e ROA st andard

Salaries $500,000 v
ofne
oureds
execut ives peerfor
group
of 0.75 %

E hance current cas h ts

15% revenue growt h
Short•term nce nt ive nexecutpaymen to
ives r ac hiev g top and 30•40% base sa lary $168,000 (Target)
and 12% margi n
I s fo bott om lineinannu l goals of
a

Re t n execs ; focus them on Long•t erm growth in

Long•t e rm Ince nt at erm
i long•
ea rning growt h; a lign h earning s (d
15•20% ofbase $84,000 (Target)
ives (Cash s share holder int rests;wit
meet wealt h e arnings =ouble
s are
salary
) e a ccum ulat ion ds h 13%
of new
nee value)

Ret a in ecs; focus them on long• Long•t erm growth in

Long•t e rm Ince nt ex
t erm ea rning growt h; a lign h earning s (d
15•20% ofbase $84,000
ives (Eq uit s share holder int e ts;wit
meet wealth e arnings =ouble
hare
salary (Target )
y) res a ccum ulat nee ds s
of new 13%
ion value)

Me et basic e curit y ne s of t he 50th pe rcent ile for

Core Benefit ed $25,500 RO ofo.75%
s peer group
s exec ut ive A
s
E hance basic se curit needs an d
50th pe rcent ile for
Exe ive nefit n meet ket sty and ards for $24,000 RO ofo.75%
peer group
cut Be s mar pe rquisi t A
es
Provide wealth accum ulat 40t h pe rcent ile (3%
Q ua lifi Ret ireme $1 000 RO ofo.75%
ion it y for cut
oppo rtun of sal ry)
ed nt 5, A
exe ives a
St rengt rewards va
30t h ercent
S uppleme nt prohen
posit n to lueelp recru it
p to
com pared ile banks t $135,00 RO of 0.
alRe t ireme io
retain exechut ives and
meet wealt
hat plans
have 0 A 9%
nt ; ion hds
a ccum ulat
• •
1rnarnc1
a
4. Replace ''Incentives'' with Value
Sharing

Incentives imply a
''carrot and stick''
approach while value­
sharing is about
reinforcing outcomes
and forging a
financial partnership.
 This is the behavior that's These are the results that are
expected and rewarded. valued and rewarded.

Assume stewardship for the

Do these things whether you like outcomes we're striving for,
them or not (they're a determine the best ways to get
necessary them done. Here are our
part of the job). standards, patterns, expectations.

Our bonuses are reflective of our

Our bonuses reflect the way we
"market pay'' analysis for your
share value that you help create.
job
classification
 Product
Improvements
Cost
Improve••,e.'its
.,.._ Customer

,.:.-,,f l ,l1l l »•P-roductivity

MyJob lmprove1z1ents
Responsibir.ties $ NewVaue
Quality Employee
Retention
results
Why Long-Term Value Sharing
Matters

..-
\ .,.
•
- • •
•
t
 Why Long-Term Value Sharing
Matters
•
• •

,
#4: Value sharing
promotes an
ownership mindset

,.

•
#5: Value sharing builds
trust and accelerates
results
Restricted Stock Phantom Stock

Performa nee
Phantom Stock
 Yes Full
Grant Equity or Full Value or Value
Performance Based?
Not Equity? Appreciation Only? C-- .._

I',

App Yes No
(
reciation
No
Stock Option Performance Shares Restricted Stock

Value Full
Increase Full Value or Value
Increase or Financial
Appreciation? Performance Based?

App Yes No
reciation
Financial
Phantom Stock Performance
Performance
Option Phantom Stock

'-·
Performance

..
Appreciation­ Base Reward for Profit
,-_::;a, Allocation or
Performance Based or d Profit/Cash Flow or s
Objectives Based?
Employee Directed? Other Metrics?
Objectives

Employee Directed
'
Strategic Deferred
Other Metrics '
f Allo cation \

Compensation
Performance Unit Profit Pool 39
41
■ I like the nature of
the work I'm doing.
• I a m working within
my
abiii
1es
■ have
se.
m of
people t'
horn I work. \.
re channels
and es for
solving sand
--
Short & Long-Term Incentive
Plans

Compre ens1ve,
Ben efit s-Pia

Salary & Bonus

Intrinsic
Purpose, Autonomy, Mastery

Extrinsic
Role Definition
Performance Expectations
Partnership
Contribution Ambitions
 Positive
Work
Environment
Auto11on1y
Role Definition

Financial
Rewards

tVJastery &
Purpose 48
•••
 Salary Range 401k Deferred Deferred Health, Financial
Grade/ Bonus LTIP '6 Phantom ¾ Phantom M atch Comp Comp Max Dental, Vacation Planning Annual Car
Band Min Mid Max Target Target StockFV Stock AO Max % Elegible M at c h life Days Sick Days Perk Allow
1 203,531 271,375 339, 21 50.0%.,.., 1 00% 50% 50% 5% Yes 5% $11 ,1 4 Unli mit U nli mit 15, 20,000
2 150,078 200,103 925 0,1 35 .0 50% 50% S¾ Yes S¾ 1$11 ,1 4 ed
Unli mit ed
Unli mit 000
10, 1 2,50
75%
29 % 1$11 ,1 4 ed ed 000 0 8,000
3 11 9,497 159, 329 199,161 100% 0% 5% Yes 5% 25 5 5,000
25.0 % 1$6,1
4 102,632 136,843 1 71,0 5 4 20. 0% 25% 100% 0% 5% 25 5 5,000
50% .,
5 81, 293 101,61 6 1 21,9 40 1 5. 0% S¾ 27
$6,1 27 25 5 5,000
.
6 69,720 87,150 10 4,580 1 5.0 5% $6,1 15 5
7 58,564 73,205 87,846 %
10.0 % 5% 27
$6,1 15 5
8 5 0,176 62,720 75,264 10. 0% 5% 27
$6,1 15 5
9 44,038 51,8 09 59,580 5.0 % 5% 27
$6,1 15 5
10 37, 211 43,777 50,344 5. 0% 5% 27
$6,1 10 5
11 30,784 36,217 41,649 5.0 5% 27
$6,1 10 5
12 23,562 27,720 31,8 78 %
5. 0% 5% 27
$6,1 10 5
13 1 9,529 22,975 26,421 0. 0% 5% 27
$6,1 10 5
., 27
14 1 7,354 20, 23,479 0. . S¾ $6,1 27 10 5
417 0%

53
 How are Why no Should we
these values LTI to be
balance addressing
determined? the STI? these needs?

54
■Salary ■ STI ■LTl%
% SI%
■H& W % ■ ORP 55
%
 But we've This can
We've
balanced with strengthen
reduced the
a LTIP (wealth partnership and
STI
creation). improve retention.
targets.

56
■Salary ■ STI ■LTl%
% SI%
■H &W % ■ ORP
%
57
t:omm unii ir_ .o
&t e
growth partnershipr
Demonstrate commitment •

To the future business

To key contributors
Promote don't just
communicate
Be consistent
 H ·ft
ow we're going ophilosophy abolffi'
to t there pay and rewards
e's the role we Here are our
picture specific pay
programs
Here's how we Here's how our
encourage our people to pay programs
row and contribute could work for you
if we achieve our
plan
Target 100% 100% 100% 100% 100%
ed
Results
$160,000 $166, 400 $173,056

Salary
$66,560 $69,222 $71,991 74,'is/1

STVS
$74,000 $186,000 $311,000 $448,000
LT VS
(EOY) $17,1 20 $36,1 23 $57,169 $80,428 $106,086
401(k)
@7% $224,000 $232,960 $242,278 $ 251,970 $262,048
Tot
al $17,1 20 $110,1 23 $243,169 $391, 428 $554,086
Cash

Wealth $241,1 20 $567,083 $942,407 $1,342,636 $1, 767,343

Accrual

Tot al
 Shareholders
Stakeholders
■ Magnet for p
■ Associated with a winner
■ p rpetuate gro
■ Positive work environment
■ ncreased
■ Personal and professional
busines::s.\

' ■
Accelerated wealth
accumulatio
' e p
cia
nt

ewards
of