Strategic Allocation of Rewards Budgets

Today s Discussion Objectives To share the results from the 2012 Salary Increase Survey. Agenda Salary Increase Trends Hot skill jobs/locations Igniting a High Performance Culture Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 3

Survey Demographics Salary Increase Survey data based on data from 422 organizations 2 major categories: Manufacturing 162 organizations Service 260 organizations Geographic Representation: British Columbia 8% Alberta 14% Saskatchewan 5% Manitoba 4% Ontario 48% Quebec 19% Atlantic Canada 2% Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 4

Survey Demographics Number of Full-Time Employees: Under 250 29% 250 500 11% 501 1000 15% 1001 1500 9% 1501 2000 7% 2001 5000 15% Over 5000 14% Ownership: Publically Traded: 47% Privately Held: 53% Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 5

Regional Pay Differentials in Canada Yukon 106% NWT 108% Fort McMurray 106% Vancouver 100% Calgary 102% Saskatchewan Montreal 98% Atlantic 93% 98% Manitoba 96% n = 422 Professional-Specialist Employees Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 9

Canadian Industry Actual 2012 Overall Salary Increase All Employees Actual Overall Salary Increases for 2012 Percent of Payroll 5 4 3 2 1 Energy (Oil/Gas) 4.3 Energy Services 3.1 2.5 Health Care/ Medical Services Aerospace 3.4 2.9 Government Banking/ Finance 3.2 1.9 Hospitality/ Restaurant Mining/Milling & Smelting 3.8 2.9 Transportation Food/ Beverage/ Tobacco 3.0 2.4 Business/ Computer Services Research & Development 3.6 2.8 Retail Construction/ Engineering 4.1 Chemical 3.2 2.1 Life & Health Insurance 0 Industry Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 10

Canadian Industry Projected 2013 Overall Salary Increase All Employees Projected Salary Increases for 2013 5 Percent of Payroll 4 3 2 1 Energy (Oil/Gas) 3.9 Energy Services 3.4 2.8 Health Care/ Medical Services Aerospace 3.4 2.9 Government Banking/ Finance 3.1 1.9 Hospitality/ Restaurant Mining/Milling & Smelting 3.9 3.0 Transportation Food/ Beverage/ Tobacco 3.0 2.6 Business/ Computer Services Research & Development 3.4 2.8 Retail Construction/ Engineering 3.4 2.1 Life & Health Insurance 0 Industry Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 11

Hot Skill Jobs Special Compensation Arrangements ( Hot Skill Jobs) Job Groups Primary Skill Shortage Secondary Skill Shortage Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 15 Tertiary Skill Shortage Accounting 2.5 % 3.3 % 2.5 % Business Development 1.7 % 4.2 % 0.8 % Engineering 24.2 % 8.3 % 1.7 % Finance 3.3 % 5.0 % 3.3 % Human Resources 0.8 % 0.0 % 0.8 % Information Technology 20.8 % 13.3 % 5.0 % Logistics 0.8 % 0.0 % 2.5 % Marketing 2.5 % 2.5 % 1.7 % Medical/Nursing 3.3 % 0.0% 0.0% Operations 6.7 % 2.5 % 2.5 % Purchasing/Procurement 1.7 % 0.0% 0.8 % Research & Development 3.3 % 2.5 % 0.8 % Sales 1.7 % 3.3 % 4.2 % Other 26.7 % 18.3 % 9.2 % n = 120

Prevalence of Hot Skill Arrangements Monetary Awards* Non-Monetary Awards* Additional Base Pay 69% Additional Perquisites (e.g. cellphone, PC, Internet hookup/fees, car allowance, etc.) Sign-on Bonuses 38% Retention Bonuses 27% Flexible Work Arrangements (e.g. flex hours, compressed work week, telecommuting, job sharing, etc.) Additional Shift Allowances 9% Special Overtime Rates 6% Other 21% Enhanced Annual Bonuses 21% Long-Term Incentives 13% Other 6% 30% 49% n = 117 n = 47 *Multiple responses Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 16

Hot Location Jobs Of the participating organizations, sixteen percent (20%) make special compensations arrangements to attract and retain employees in specific areas of the country Job Locations First Location Second Location Third Location Calgary 28.3 % 8.3 % 1.7 % Edmonton 5.0 % 15.0 % 1.7 % Fort McMurray 33.3 % 0.0 % 0.0% Grand Prairie 1.7 % 8.3 % 3.3 % Nunavut 1.7% 0.0 % 0.0 % North West Territories 0.0 % 3.3 % 0.0 % Vancouver 5.0 % 5.0 % 5.5 % Yukon 1.7 % 0.0 % 3.3 % Ontario 5.0 % 0.0 % 1.7 % Saskatchewan 6.7 % 1.7 % 0.0 % Wood Buffalo 0.0 % 1.7 % 0.0 % Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 17

Prevalence of Hot Location Arrangements Monetary Awards* Non-Monetary Awards* Additional Base Pay 64% Additional Perquisites (e.g. cellphone, PC, Internet hookup/fees, car allowance, etc.) COLA/ Living Allowance 23% Housing Allowance/ Subsidies/ Loans 19% Flexible Work Arrangements (e.g. flex hours, compressed work week, telecommuting, job sharing, etc.) Retention Bonuses 36% Other 17% Assistance in Locating Housing 39% Company Paid Trips to Urban Centers 6% Company Provided Housing 9% Addition Vacation Time 23% Sign-On Bonuses 20% Enhanced Annual/ Lump Sum Bonuses 8% Other 7% Additional Shift Allowances 5% Free/ Subsidized Meals 8% Long-Term Incentives 17% Special Overtime Rates 2% n = 64 n = 31 23% 45% *Multiple responses Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 18

Rewarding & Retaining High-Performers Performance Rating and Increases Performance Rating Percentage of Full-Time Employees Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 20 Performance Based Salary Increase Highest Performer 20.9% (311) 5.0% (272) Average Performer 69.9% (311) 3.7% (273) Lowest Performer 6.7% (304) 0.8% (268) Rewarding and Retaining High-Performance Employees Approaches Provide additional learning and development opportunities to high-performing employees Percent of Organizations* 49.3% (183) Reserve portion of salary increase budget for highest-performing employees 31.5% (117) (i.e. split merit budget) Grant discretionary restricted stock and/or stock options 10.8% (40) to high performing employees Create supplemental, discretionary incentive pool 14.0% (52) for high performing employees Offer retention bonuses for specified period of employment 15.6% (58) Other 8.1% (30) None 20.5% (76) *Multiple responses n = 371

Variable Compensation Prevalence by Award Type Type of Plan Percent of Organizations with Variable Pay Plans Corporate Performance 76.4% (236) Individual Performance Awards 68.6% (212) Divisional/Group Performance 37.5% (116) Team Awards 10.7% (33) Gain Sharing/Productivity Awards 9.1% (28) n = 309 *Multiple responses Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 21

Variable Compensation Eligibility of Variable Pay Plans by Employee Group Manager Supervisor Professional Specialist Eligible Employees* Administrative Support Hourly Union Individual Performance Awards 67.0% (207) 64.4% (199) 51.5% (159) 17.8% (55) 4.2% (13) Team Awards 10.0% (31) 9.1% (28) 7.8% (24) 2.9% (9) 1.3% (4) Garnishing (Productivity Awards) 6.5% (20) 7.1% (22) 6.1% (19) 5.8% (18) 3.9% (12) Divisional/Group Performance 38.2% (118) 32.7% (101) 27.2% (84) 12.0% (37) 4.5% (14) Corporate Performance 76.1% (235) 67.6% (209) 57.0% (176) 24.6% (76) 7.4% (23) *Multiple responses Aon Hewitt 2012 Aon Hewitt Inc. All Rights Reserved. 22