COMPENSATION, RETIREMENT AND BENEFITS TRENDS REPORT

COMPENSATION, RETIREMENT AND BENEFITS TRENDS REPORT 2014/2015

Table of Contents BACKGROUND & EXECUTIVE SUMMARY Page 3 COMPENSATION PRACTICES Page 8 Factors Impacting Decisions Page 9 Compensation Philosophy Page 15 Salary Increases Page 18 Salary Structures Page 24 Pay for Performance Page 31 Incentive Plans Page 36 Sales Page 57 Advisors Page 64 Integrated Use of Retirement and Compensation Advisors Page 65 RETIREMENT PLANS Page 67 Retirement Plan Types Page 68 Pre-Tax and Roth - Eligible Employee Participation Page 71 Automatic Enrollment Page 75 Criteria for Choosing Providers Page 79 2014/2015 Compensation, Retirement and Benefits Trends Report 1

Table of Contents (continued) RETIREMENT PLANS (continued) Investment Options Page 84 Investment Options Default Page 90 Lifetime Income Options and Financial Wellness Programs Page 94 Employer Plan Contributions Page 98 Distribution Payments Page 101 Plan Costs and Participant Awareness Page 104 Retirement Plan Concerns Page 118 Investment Advisors Page 123 Advising Plan Participants Page 126 HEALTH AND WELFARE BENEFITS Page 128 Health Plan Options Page 129 Health Plan Costs Page 133 Health Plan Premiums Page 136 Actions to Reduce Healthcare Costs Page 139 Healthcare Reform Page 149 Other Benefits Page 153 Wellness Programs Page 166 Health/Welfare Advisors Page 172 Advising Plan Participants Page 174 2014/2015 Compensation, Retirement and Benefits Trends Report 2

Background The annual Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey is designed to reveal key trends across a full range of compensation, retirement, health and welfare benefits and employee rewards programs. The result is a comprehensive view of firms' total employee rewards programs that is rarely available from a single source. The 2014/2015 survey includes information from more than 1,000 organizations across the country, and spanning a range of industries, with the highest response rates from manufacturing, not-for-profit, healthcare and professional service industries. 2014/2015 Compensation, Retirement and Benefits Trends Report 3

Manufacturing Not-For-Profit Healthcare Professional Services Finance & Banking Technology Distribution/Wholesale Construction/Real Estate Education Insurance Retail Energy/Utility Restaurant Government Transportation Other DISTRIBUTION BY INDUSTRY SECTOR 5% 5% 4% 4% 3% 3% 2% 1% 1% 1% 8% 14% 13% 12% 12% 12% DISTRIBUTION BY SIZE FULL TIME EQUIVALENTS (FTEs) 13% 6% 6% 7% 34% 34% 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,000+ Base = 1097 2014/2015 Compensation, Retirement and Benefits Trends Report 4

DISTRIBUTION BY REGION 7% 15% 28% 50% Midwest South West Northeast Base = 820 2014/2015 Compensation, Retirement and Benefits Trends Report 5

Executive Summary Employment-based benefit systems continue to be a major expense for employers, and at the same time, a critical component of employee recruitment, motivation and retention. Sharing benefit expenses with employees, and implementing creative approaches to lower overall compensation costs, while still maintaining a productive workforce, are continually evolving strategies employers are focusing on when making their total compensation decisions. Consistent with the last couple of years, employers reported that "health and welfare benefit costs" had the most significant impact on their total rewards decisions over the last 12 months (61%), followed by organizational performance (47%) and the challenge of attracting and retaining key employees (47%). Overall, while the number of organizations implementing or planning to implement cost reduction and containment strategies has declined slightly from 2013, many employers continue to focus on costs through various measures. By far, the most prominent strategy employers have implemented or are considering, is requiring employees to pay a greater portion of health and welfare costs. Nearly one-quarter (22%) of surveyed employers shared health and welfare costs with employees in 2014, up from 17 percent last year. Another 38 percent either planned to do so in 2015, or were considering doing so. Reducing staff (27%) and overtime (36%), and relying more on part-time or contingent staff (28%) are other common approaches to cost reduction. In looking at cost reduction measures by industry, significantly more healthcare organization respondents implemented overtime reduction over the past year than organizations in other sectors. This is likely due to healthcare organizations attempting new staffing models and dealing with the implications of the Affordable Care Act. Larger organizations with more than 5,000 employees are much more likely to take measures to contain costs through staff reduction. Continued on next page 2014/2015 Compensation, Retirement and Benefits Trends Report 6

Executive Summary As organizational plans for implementing cost reduction techniques continue to evolve, in 2015 nearly half (48%) of employers plan to implement a wellness program within their organization, in addition to the already significant number of 39 percent who currently have a wellness program. Moreover, of those with a wellness program, nearly a third (31%) plan to build on their programs and expand the types of wellness activities and education they offer. Thus, as employers move in the direction of sharing costs with employees, they are increasingly providing their employees with new ways to take an active role in their overall health and wellness. 2014/2015 Compensation, Retirement and Benefits Trends Report 7

2014/2015 Compensation, Retirement and Benefits Trends Report COMPENSATION PRACTICES 2014/2015 Compensation, Retirement and Benefits Trends Report 8

Factors Impacting Decisions While the number of organizations implementing or planning to implement cost reduction and containment strategies has declined somewhat from last year, many employers continue to focus on costs through various measures such as sharing a greater portion of health and welfare costs with employees, reducing staff and overtime, and relying more on part-time or contingent staff. Significantly more healthcare organizations implemented overtime reduction over the past year than organizations in other industries. This is likely due to the industry attempting new staffing models and dealing with the implications of the Affordable Care Act. Larger organizations with over 5,000 employees are significantly more likely to take measures to contain costs through staff reduction, compared to smaller organizations. Which cost reduction and/or containment strategies have you implemented, plan to implement or are considering implementing? Increase Employee Share of Health and Welfare Costs 22% 9% 29% 60% Overtime Reduction 22% 3% 11% 36% Increase Number of Part-time/Contingent Staff 10% 4% 14% 28% Staff Reduction 18% 3% 6% 27% Reduce Health and Welfare Benefits 5% 13% 20% 2% Pay Freeze 10% 6% 17% 1% Hiring Freeze 8% 6% 16% 2% Reduce/Suspend 401(k) Match 6% 6% 14% 2% Shift Compensation to Variable Compensation 2% 7% 10% 1% Reduce Paid Time Off 2% 5% 8% 1% Unpaid Leave/Furlough 2% 5% 3% Implemented in Past 12 Months Plan to Implement in Next 12 months Considering Implementing at Some Point Base = 473 Compensation Practices 9

Factors Impacting Decisions by Industry Which cost reduction and/or containment strategies have you implemented, plan to implement or are considering implementing? Industry Increase Employee Share of Health and Welfare Costs Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services 74% 52% 57% 65% 44% 52% 59% Overtime Reduction 40% 41% 23% 66% 32% 21% 21% Increase Number of Part-Time or Contingent Staff 22% 13% 28% 28% 27% 27% 26% Staff Reduction 27% 8% 18% 28% 14% 22% 31% Reduce Health and Welfare Benefits 8% 13% 18% 33% 9% 19% 20% Pay Freeze 23% 4% 4% 25% 9% 14% 16% Hiring Freeze 26% 13% 15% 22% 14% 9% 8% Reduce/Suspend 401(k) Match 13% 13% 9% 12% 5% 11% 18% Shift Compensation to Variable Compensation 8% 13% 18% 9% 0% 3% 16% Reduce Paid Time Off 3% 8% 4% 7% 0% 10% 12% Unpaid Leave/Furlough 5% 5% 4% 5% 14% 0% 8% Base 69 23* 49 49 23* 75 52 Compensation Practices 10

Factors Impacting Decisions by Full Time Employees Which cost reduction and/or containment strategies have you implemented, plan to implement or are considering implementing? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Increase Employee Share of Health and Welfare Costs 49% 62% 70% 70% 91% 67% Overtime Reduction 23% 44% 36% 45% 61% 50% Increase Number of Part-Time or Contingent Staff 31% 29% 26% 16% 25% 14% Staff Reduction 21% 25% 32% 38% 37% 73% Reduce Health and Welfare Benefits 18% 19% 24% 5% 40% 27% Pay Freeze 18% 14% 21% 5% 12% 20% Hiring Freeze 11% 19% 18% 16% 24% 33% Reduce/Suspend 401(k) Match 15% 14% 7% 5% 19% 13% Shift Compensation to Variable Compensation 11% 7% 13% 5% 16% 20% Reduce Paid Time Off 9% 6% 15% 0% 11% 13% Unpaid Leave/Furlough 4% 6% 9% 12% 0% 7% Base 172 177 63 20* 22* 15* Compensation Practices 11

Factors Impacting Decisions As with the last couple of years, employers reported that health and welfare benefits costs" had the most significant impact on their total rewards decisions over the last 12 months, followed by corporate performance and the challenge of attracting and retaining key employees. What factors had significant impact on your total compensation/rewards (salary, bonus, benefits, and retirement) decisions for the past 12 months? Health and Welfare Benefits Costs 61% Corporate Performance 47% Challenge of Retaining Key Employees 47% Challenge of Attracting Key Employees 45% Desire to Incent Employee Performance 37% Labor Costs 25% Challenge of Engaging Key Employees 22% Retirement Plan Costs 15% Other 5% Base = 511 Compensation Practices 12

Factors Impacting Decisions by Industry What factors had significant impact on your total compensation/rewards (salary, bonus, health and welfare benefits, and retirement) decisions for the past 12 months? Industry Health and Welfare Benefits Costs Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services 62% 63% 61% 66% 58% 60% 59% Corporate Performance 63% 54% 47% 36% 67% 34% 47% Challenge of Retaining Key Employees Challenge of Attracting Key Employees Desire to Incent Employee Performance 44% 38% 43% 42% 29% 49% 48% 54% 46% 49% 48% 42% 40% 50% 24% 38% 45% 31% 38% 40% 35% Labor Costs 31% 25% 12% 34% 29% 18% 24% Challenge of Engaging Key Employees 18% 13% 16% 22% 25% 29% 16% Retirement Plan Costs 18% 8% 12% 19% 8% 15% 9% Other 0% 0% 2% 7% 4% 9% 2% Base 71 24* 49 59 24* 82 58 Compensation Practices 13

Factors Impacting Decisions by Full Time Employees What factors had significant impact on your total compensation/rewards (salary, bonus, health and welfare benefits, and retirement) decisions for the past 12 months? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Health and Welfare Benefits Costs 58% 63% 65% 59% 57% 86% Corporate Performance 45% 46% 53% 46% 48% 71% Challenge of Retaining Key Employees Challenge of Attracting Key Employees Desire to Incent Employee Performance 45% 44% 39% 41% 70% 50% 42% 51% 52% 50% 48% 50% 37% 35% 42% 32% 48% 43% Labor Costs 18% 30% 21% 36% 30% 43% Challenge of Engaging Key Employees 18% 23% 27% 32% 22% 21% Retirement Plan Costs 16% 10% 20% 14% 17% 43% Other 4% 6% 6% 0% 9% 7% Base 193 189 66 22* 23* 14* Compensation Practices 14

Compensation Philosophy The total compensation philosophy of the majority of employers is to position base salary at market. However, a fairly large segment of employers (34%), typically from firms with 500 or fewer employees, has no formal philosophy for positioning bonus and incentive compensation. Larger organizations with more than 1,000 employees, are more likely to have formal philosophies surrounding all aspects of total rewards -- compensation, incentives, benefits and retirement. What is your organization s total compensation philosophy? 14% 22% 37% 30% 62% 36% 8% 44% 47% Position Above Market Position at Market Position Below Market No Formal Philosophy 10% 34% 5% 7% 14% 14% 16% Base Salary Incentive Compensation Health and Welfare Benefits Retirement Benefits Base = 521 Compensation Practices 15

Compensation Philosophy by Industry What is your organization s total compensation philosophy? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Base Salary Position Above Market 7% 17% 15% 7% 17% 14% 18% Position at Market 69% 54% 70% 78% 58% 55% 64% Position Below Market 9% 17% 4% 5% 13% 18% 5% No Formal Philosophy 16% 13% 11% 10% 13% 13% 13% Incentive Compensation Position Above Market 17% 50% 28% 16% 42% 11% 25% Position at Market 47% 29% 43% 46% 25% 24% 35% Position Below Market 11% 0% 4% 9% 4% 11% 5% No Formal Philosophy 24% 21% 25% 30% 29% 54% 35% Health and Welfare Benefits Position Above Market 37% 38% 30% 24% 58% 52% 30% Position at Market 48% 46% 47% 53% 21% 37% 46% Position Below Market 4% 0% 4% 9% 8% 4% 7% No Formal Philosophy 11% 17% 19% 14% 13% 7% 18% Retirement Benefits Position Above Market 25% 33% 30% 29% 42% 39% 26% Position at Market 47% 38% 49% 50% 38% 44% 49% Position Below Market 10% 0% 4% 7% 13% 8% 5% No Formal Philosophy 18% 29% 17% 14% 8% 8% 20% Base 71 24* 53 59 24* 84 61 Compensation Practices 16

Compensation Philosophy by Full Time Employees What is your organization s total compensation philosophy? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Base Salary Position Above Market 17% 14% 6% 13% 13% 7% Position at Market 57% 59% 76% 61% 70% 87% Position Below Market 9% 12% 9% 9% 17% 0% No Formal Philosophy 18% 15% 9% 17% 0% 7% Incentive Compensation Position Above Market 27% 15% 25% 26% 13% 20% Position at Market 31% 38% 38% 35% 48% 73% Position Below Market 9% 8% 0% 9% 26% 0% No Formal Philosophy 33% 39% 38% 30% 13% 7% Health and Welfare Benefits Position Above Market 38% 40% 29% 35% 35% 13% Position at Market 40% 40% 61% 52% 44% 73% Position Below Market 5% 6% 3% 4% 13% 7% No Formal Philosophy 18% 15% 8% 9% 9% 7% Retirement Benefits Position Above Market 33% 30% 24% 30% 17% 20% Position at Market 45% 42% 56% 52% 70% 60% Position Below Market 6% 9% 5% 9% 4% 7% No Formal Philosophy 17% 19% 15% 9% 9% 13% Base 198 192 66 23* 23* 15* Compensation Practices 17

Salary Increases Identical to the past two years, median salary increases for executive, managerial, salaried and hourly non-exempt workers remained at 3.0 percent. Please indicate the percentage amount allocated for base salary increases in 2014 and the amount anticipated for 2015, as a percent of base pay. Executives 2014 Actual Base Salary Increases 2015 Anticipated Base Salary Increases Mean 2.8% 2.8% Median 3.0% 3.0% Salaried (Exempt) Mean 2.6% 2.8% Median 3.0% 3.0% Salaried (Non-exempt) Mean 2.5% 2.6% Median 3.0% 3.0% Hourly (Non-exempt) Mean 2.6% 2.7% Median 3.0% 3.0% Hourly (Union) Mean 1.8% 2.0% Median 2.3% 2.5% Date includes zeros (i.e., salary freezes) Compensation Practices 18

Salary Increases by Industry Please indicate the percentage amount allocated for base salary increases in 2014, as a percent of base pay. 2014 Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Executives Mean 2.7% 2.9% 2.8% 3.0% 2.1% 3.2% 2.2% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 2.2% Salaried (Exempt) Mean 2.6% 3.1% 2.7% 2.5% 2.4% 3.0% 3.0% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Salaried (Non-exempt) Mean 2.4% 2.9% 2.5% 2.2% 2.2% 2.7% 3.2% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Hourly (Non-exempt) Mean 2.6% 3.5% 2.6% 2.4% 2.9% 2.7% 2.6% Median 3.0% 3.0% 3.0% 2.7% 3.0% 3.0% 3.0% Hourly (Union) Mean 2.0% 2.8% 2.0% 2.0% 2.8% 2.2% 1.0% Median 2.6% 3.0% 3.0% 2.3% 2.5% 3.0% 1.0% Base 67 21* 49 54 21* 79 46 Data includes zeros (i.e., salary freezes) Compensation Practices 19

Salary Increases by Full Time Employees Please indicate the percentage amount allocated for base salary increases in 2014, as a percent of base pay. 2014 Industry 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Executives Mean 2.8% 2.8% 2.7% 2.4% 3.3% 2.7% Median 2.8% 3.0% 3.0% 3.0% 3.0% 2.9% Salaried (Exempt) Mean 2.5% 2.9% 2.5% 2.6% 2.7% 2.5% Median 3.0% 3.0% 3.0% 3.0% 3.0% 2.7% Salaried (Non-exempt) Mean 2.3% 2.6% 2.4% 2.5% 2.5% 2.5% Median 3.0% 3.0% 3.0% 3.0% 2.8% 2.7% Hourly (Non-exempt) Mean 2.4% 2.8% 2.4% 2.6% 2.4% 2.3% Median 3.0% 3.0% 3.0% 2.8% 2.7% 2.6% Hourly (Union) Mean 1.0% 2.0% 2.2% 2.7% 2.3% 1.8% Median 1.0% 2.6% 2.6% 2.9% 2.9% 2.1% Base 159 175 64 20* 23* 14* Data includes zeros (i.e., salary freezes) Compensation Practices 20

Salary Increases Projected for 2015 by Industry Please indicate the percentage amount allocated for base salary increases for 2015, as a percent of base pay. 2015 Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Executives Mean 3.3% 2.6% 2.6% 2.8% 3.5% 2.9% 2.9% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Salaried (Exempt) Mean 3.0% 3.3% 3.1% 2.5% 2.6% 3.0% 3.4% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Salaried (Non-exempt) Mean 2.9% 3.3% 2.6% 2.3% 2.1% 2.6% 3.2% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Hourly (Non-exempt) Mean 2.9% 3.2% 2.6% 2.5% 2.6% 2.7% 2.9% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Hourly (Union) Mean 2.3% 2.8% 1.9% 2.1% 3.0% 2.1% 2.8% Median 2.8% 3.0% 3.0% 2.7% 3.0% 3.0% 3.0% Base 60 21* 44 49 21* 79 38 Data includes zeros (i.e., salary freezes) Compensation Practices 21

Salary Increases Projected for 2015 by Full Time Employees Please indicate the percentage amount allocated for base salary increases for 2015, as a percent of base pay. 2015 Industry 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Executives Mean 2.9% 2.7% 2.9% 2.6% 3.1% 2.8% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Salaried (Exempt) Mean 2.9% 2.9% 2.7% 2.7% 2.7% 2.7% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Salaried (Non-exempt) Mean 2.5% 2.7% 2.7% 2.7% 2.5% 2.8% Median 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Hourly (Non-exempt) Mean 2.5% 2.8% 2.7% 2.8% 2.4% 2.5% Median 3.0% 3.0% 3.0% 3.0% 3.0% 2.9% Hourly (Union) Mean 1.3% 2.0% 2.6% 2.9% 2.4% 2.0% Median 1.0% 2.5% 3.0% 3.0% 3.0% 2.6% Base 146 152 57 18* 22* 14* Data includes zeros (i.e., salary freezes) Compensation Practices 22

Salary Increases The number of months between base pay increases averages 13 months for non-exempt employees, 14 months for salaried exempt, and 16 months for executives. Smaller organizations are more likely to extend timeframes between salary increases. Please indicate the number of months between base pay increases. Executives Salaried (Exempt) 14 14 14 16 Salaried (Non-Exempt) Hourly (Non-Exempt) Hourly Non-Exempt (Union) 13 13 13 14 14 14 Average Median Base = 455 Compensation Practices 23

Salary Structures Only half of organizations (50%) have a formal salary structure with grades, minimums, midpoints and maximums to manage compensation. The Financial/Banking/Insurance, Healthcare and Not-forprofit industry sectors are far more likely than other industry groups to have a formal salary structure to manage their compensation investment, as are larger organizations with more than 1,000 employees. Do you have a formal salary structure (i.e., ranges with a minimum and maximum) to manage compensation across levels within the organization? No 50% Yes 50% Base = 515 Compensation Practices 24

Salary Structures by Industry and by Full Time Employees Do you have a formal salary structure (i.e.. ranges with a minimum and maximum) to manage compensation across levels within the organization? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes 41% 38% 54% 61% 21% 64% 41% No 59% 62% 46% 39% 79% 36% 59% Base 70 24* 52 59 24* 83 58 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes 36% 56% 60% 52% 86% 73% No 64% 44% 40% 48% 14% 27% Base 196 191 65 23* 22* 15* Compensation Practices 25

Salary Structures Salary structures are anticipated to move up slightly in 2015 compared to 2014. Average salary structure movement is expected to range anywhere from 1.0 percent to 1.7 percent, compared to from 0.9 percent to 1.4 percent this year, depending on the employee group. Please indicate the percentage salary range/structure movement for 2014 and the amount anticipated for 2015. 2014 Actual Salary Structure Adjustments 2015 Anticipated Salary Structure Adjustments Compensation Practices Executives Mean 1.1% 1.4% Median 1.0% 1.5% Salaried (Exempt) Mean 1.4% 1.6% Median 1.7% 2.0% Salaried (Non-exempt) Mean 1.2% 1.5% Median 1.2% 1.8% Hourly (Non-exempt) Mean 1.4% 1.7% Median 1.7% 2.1% Hourly (Union) Mean 0.9% 1.0% Median 0.9% 0.9% Base 163 148 Data includes zeros (i.e., no adjustments) 26

Salary Structures by Industry Please indicate the percentage salary range/structure movement for 2014. 2014 Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Executives Mean 1.1% ** 1.3% 0.6% ** 1.8% 0.6% Median 0.8% ** 1.8% 0.8% ** 1.9% 0.7% Salaried (Exempt) Mean 1.4% ** 1.2% 1.2% ** 1.9% 1.0% Median 1.0% ** 1.8% 1.0% ** 2.2% 0.9% Salaried (Non-exempt) Mean 1.1% ** 0.8% 1.1% ** 1.7% 1.0% Median 0.9% ** 0.9% 0.9% ** 1.9% 0.7% Hourly (Non-exempt) Mean 1.3% ** 1.2% 1.4% ** 1.7% 1.6% Median 1.0% ** 1.8% 1.6% ** 1.9% 2.1% Hourly (Union) Mean 0.9% ** 0.7% 1.1% ** 1.3% 0.0% Median 0.8% ** 0.8% 1.1% ** 1.5% 0.5% Base 22* ** 23* 27* ** 33 16* Data includes zeros (i.e., no adjustments) ** (insufficient data) Compensation Practices 27

Salary Structures by Full Time Employees Please indicate the percentage salary range/structure movement for 2014. 2014 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Executives Mean 1.1% 1.3% 0.9% 0.5% 1.0% 1.3% Median 0.8% 1.0% 1.0% 0.8% 1.5% 1.0% Salaried (Exempt) Mean 1.3% 1.6% 1.4% 0.7% 1.0% 2.0% Median 1.8% 2.0% 1.8% 0.8% 1.6% 2.3% Salaried (Non-exempt) Mean 1.1% 1.3% 1.2% 0.6% 0.9% 1.5% Median 1.0% 1.4% 1.0% 0.8% 0.9% 2.2% Hourly (Non-exempt) Mean 1.4% 1.5% 1.3% 0.5% 1.2% 1.6% Median 2.0% 2.0% 1.7% 0.8% 1.7% 2.1% Hourly (Union) Mean 0.4% 1.0% 1.0% 1.0% 0.9% 1.1% Median 0.6% 0.9% 1.0% 1.3% 0.9% 1.0% Base 41 60 26* 10* 17* 9* Data includes zeros (i.e., no adjustments) Compensation Practices 28

Salary Structures by Industry - 2015 Please indicate the percentage salary range/structure movement anticipated for 2015. 2015 Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Executives Mean 2.2% 1.5% 1.6% 0.9% 0.0% 1.8% 1.2% Median 2.3% 1.0% 2.1% 1.0% 0.0% 2.0% 0.9% Salaried (Exempt) Mean 2.4% 2.7% 1.6% 1.1% 0.0% 2.0% 1.8% Median 2.4% 3.0% 2.1% 1.3% 0.0% 2.3% 2.0% Salaried (Non-exempt) Mean 2.2% 2.5% 1.4% 1.1% 0.0% 0.7% 1.6% Median 2.4% 2.5% 1.0% 1.4% 0.0% 2.1% 1.0% Hourly (Non-exempt) Mean 2.2% 2.5% 1.6% 1.4% 0.0% 2.0% 2.2% Median 2.3% 2.5% 2.1% 1.7% 0.0% 2.3% 2.4% Hourly (Union) Mean 1.4% 1.5% 1.7% 1.1% 0.0% 1.6% 0.0% Median 1.0% 1.0% 1.0% 1.4% 0.0% 1.8% 0.5% Base 20* 4* 19* 22* 0* 34 14* Data includes zeros (i.e., no adjustments) Compensation Practices 29

Salary Structures by Full Time Employees - 2015 Please indicate the percentage salary range/structure movement anticipated for 2015. 2015 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Executives Mean 1.2% 1.4% 1.8% 1.2% 1.0% 1.1% Median 0.9% 1.1% 2.0% 2.0% 1.3% 0.8% Salaried (Exempt) Mean 1.4% 1.7% 1.9% 1.3% 1.4% 1.5% Median 1.0% 2.1% 2.1% 2.1% 1.6% 1.3% Salaried (Non-exempt) Mean 1.3% 1.5% 1.9% 1.3% 0.8% 1.1% Median 1.0% 1.8% 2.1% 2.1% 1.0% 1.0% Hourly (Non-exempt) Mean 1.7% 1.7% 1.9% 1.2% 1.2% 1.2% Median 2.1% 2.1% 2.1% 2.0% 1.4% 1.0% Hourly (Union) Mean 0.6% 1.1% 1.4% 1.8% 0.4% 1.0% Median 0.6% 0.9% 1.8% 2.0% 0.7% 1.0% Base 38 55 24* 9* 15* 7* Data includes zeros (i.e., no adjustments) Compensation Practices 30

Pay for Performance Following health and welfare benefit costs; attracting, challenging, and retaining key employees are among the top factors impacting employer total compensation decisions in 2014. Therefore, it is not surprising that more than half (56%) of the organizations surveyed have implemented or considered implementing some type of pay-forperformance program. Larger organizations with more than 1,000 employees are much more likely to utilize pay-forperformance compared to smaller organizations. Have you implemented any pay-for-performance programs within your organization? 27% 20% 9% Implemented Throughout the Organization Implemented with Some Employee Groups Considered Implementing in Next 12 Months Not Implemented 41% Previously Implemented But Eliminated 3% Base = 508 Compensation Practices 31

Pay for Performance by Industry and by Full Time Employees Industry Have you implemented any pay-for-performance programs within your organization? Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Implemented Throughout the Organization 32% 9% 45% 32% 17% 34% 18% Implemented with Some Employee Groups 30% 43% 13% 16% 9% 5% 25% Considered Implementing in Next 12 Months 7% 4% 8% 5% 22% 10% 10% Not Implemented 27% 44% 34% 47% 52% 48% 44% Previously Implemented But Eliminated 4% 0% 0% 0% 0% 3% 3% Base 71 23* 53 56 23* 81 57 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Implemented Throughout the Organization 16% 28% 41% 36% 38% 67% Implemented with Some Employee Groups 19% 22% 14% 14% 28% 20% Considered Implementing in Next 12 Months 8% 11% 8% 14% 5% 0% Not Implemented 54% 38% 28% 36% 24% 13% Previously Implemented But Eliminated 3% 1% 9% 0% 5% 0% Base 195 186 65 22* 21* 15* Compensation Practices 32

Pay for Performance Increasingly, dollars continue to be allocated to differentiate high performers and less money is being utilized, as a percent of payroll, to reward low performers. While average salary increases for high performers and satisfactory performers increased slightly from 2012 to 2013, they remained relatively steady over last year at 4.8 percent and 2.9 percent respectively. However, low performer average salary increases fell from 1.8 percent in 2013 to 1.1 percent this year. In general, please indicate the average base salary increases in 2014 for each of the following categories. High Performers 4.4% 4.8% Satisfactory Performers 2.9% 3.0% Low Performers 1.1% 1.2% Base = 390 Mean Median Compensation Practices 33

Pay for Performance by Industry In general, please indicate the average base salary increases in 2014 for each of the following categories. Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services High Performers Mean 4.7% 6.0% 5.1% 4.1% 4.5% 4.7% 5.6% Median 4.4% 5.2% 5.0% 4.0% 5.0% 4.1% 5.2% Satisfactory Performers Mean 2.8% 3.2% 2.6% 2.9% 2.7% 2.8% 3.2% Median 3.0% 3.0% 3.0% 2.7% 3.0% 3.0% 3.0% Low Performers Mean 1.0% 1.0% 1.0% 1.3% 0.8% 1.4% 1.2% Median 1.2% 0.9% 1.2% 1.3% 0.9% 1.5% 1.4% Base 62 16* 42 46 17* 70 39 Compensation Practices 34

Pay for Performance by Full Time Employees In general, please indicate the average base salary increases in 2014 for each of the following categories. Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ High Performers Mean 5.5% 4.8% 3.9% 3.7% 4.2% 5.3% Median 5.1% 4.5% 4.2% 4.1% 4.0% 4.3% Satisfactory Performers Mean 2.9% 2.9% 2.6% 2.4% 2.5% 5.2% Median 3.0% 3.0% 2.8% 2.4% 2.7% 2.9% Low Performers Mean 1.1% 1.2% 1.0% 0.5% 0.8% 1.5% Median 1.0% 1.4% 1.2% 0.7% 0.9% 0.9% Base 133 153 52 19* 17* 13* Compensation Practices 35

Incentive Plans Eligibility for short-term incentive pay is substantially more available to executives and salaried-exempt management than to hourly and non-exempt workers. Long-term incentive pay remains largely reserved for executives. The manufacturing, construction/real estate and finance/banking industries are more likely to extend incentive opportunity to hourly employees compared to the other industry sectors. Which employee groups are eligible to participate in a short-term and/or long-term incentive or bonus program? Executives 34% 59% Salaried (Exempt) 14% 60% Salaried (Non-exempt) 7% 35% Hourly (Non-exempt) 7% 41% Hourly (Union) 1% 6% Short-Term Incentives (1 year or less) Long-Term Incentives (More than 1 year) Base = 462 Compensation Practices 36

Incentive Plans by Industry Which employee groups are eligible to participate in a short-term and/or long-term incentive or bonus program? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Short-Term Incentives Executives 72% 62% 81% 51% 67% 48% 65% Salaried (Exempt) 71% 71% 83% 39% 67% 44% 65% Salaried (Non-exempt) 40% 38% 38% 20% 57% 27% 37% Hourly (Non-exempt) 52% 43% 49% 26% 71% 29% 40% Hourly (Union) 12% 0% 4% 4% 24% 5% 4% Long-Term Incentives Executives 57% 52% 43% 20% 43% 15% 42% Salaried (Exempt) 21% 29% 6% 6% 24% 7% 15% Salaried (Non-exempt) 6% 10% 4% 2% 14% 5% 8% Hourly (Non-exempt) 6% 5% 2% 6% 14% 5% 6% Hourly (Union) 0% 0% 0% 0% 5% 1% 2% Base 68 21* 47 51 21* 75 52 Compensation Practices 37

Incentive Plans by Full Time Employees Which employee groups are eligible to participate in a short-term and/or long-term incentive or bonus program? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Short-Term Incentives Executives 54% 56% 61% 70% 79% 93% Salaried (Exempt) 57% 59% 65% 70% 58% 73% Salaried (Non-exempt) 32% 38% 37% 45% 16% 40% Hourly (Non-exempt) 40% 42% 40% 35% 37% 47% Hourly (Union) 7% 6% 5% 0% 11% 13% Long-Term Incentives Executives 28% 32% 42% 55% 32% 80% Salaried (Exempt) 10% 15% 11% 15% 15% 40% Salaried (Non-exempt) 5% 9% 7% 5% 5% 13% Hourly (Non-exempt) 5% 10% 3% 5% 0% 7% Hourly (Union) 1% 1% 0% 0% 0% 0% Base 173 170 62 20* 19* 15* Compensation Practices 38

Incentive Plans What is the targeted short-term incentive pay opportunity at your company for 2014? What is the maximum short-term incentive pay opportunity at your company for 2014? Executives 20% 23% Executives 32% 47% Salaried (Exempt) 12% 12% Salaried (Exempt) 21% 21% Salaried (Non-exempt) 6% 7% Salaried (Non-exempt) 12% 12% Hourly (Non-exempt) 5% 5% Hourly (Non-exempt) 9% 9% Hourly (Union) 6% 8% Hourly (Union) 10% 8% Mean Median Mean Median Base = 133 Base = 133 Compensation Practices 39

Incentive Plans by Industry Targeted Pay What is the targeted short-term incentive pay opportunity at your company for 2014? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Executives Mean 28% 33% 21% 22% 19% 7% 17% Median 29% 30% 23% 16% 23% 5% 16% Salaried (Exempt) Mean 12% 18% 10% 9% 18% 5% 10% Median 12% 14% 11% 8% 20% 6% 12% Salaried (Non-exempt) Mean 6% 7% 5% 3% 6% 3% 9% Median 7% 8% 4% 4% 6% 3% 12% Hourly (Non-exempt) Mean 4% 6% 4% 3% 6% 5% 4% Median 5% 8% 4% 3% 8% 4% 4% Hourly (Union) Mean 6% 0% 0% 0% 0% 0% 0% Median 3% 0% 0% 0% 0% 0% 0% Base 25* 8* 18* 13* 5* 13* 17* Compensation Practices 40

Incentive Plans by Full Time Employees Targeted Pay What is the targeted short-term incentive pay opportunity at your company for 2014? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Executives Mean 16% 21% 20% 31% 30% 35% Median 13% 16% 23% 35% 25% 48% Salaried (Exempt) Mean 10% 10% 12% 17% 23% 15% Median 11% 10% 13% 14% 15% 13% Salaried (Non-exempt) Mean 7% 6% 9% 10% 5% 5% Median 8% 5% 11% 10% 5% 7% Hourly (Non-exempt) Mean 5% 4% 8% 5% 4% 4% Median 6% 4% 11% 8% 5% 3% Hourly (Union) Mean 0% 0% 10% 0% 2% 6% Median 0% 0% 13% 0% 3% 8% Base 46 43 17* 9* 10* 13* Compensation Practices 41

Incentive Plans by Industry Maximum Pay What is the maximum short-term incentive pay opportunity at your company for 2014? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Executives Mean 60% 69% 35% 53% 30% 15% 41% Median 52% 60% 33% 26% 29% 14% 26% Salaried (Exempt) Mean 22% 28% 19% 28% 28% 10% 17% Median 20% 24% 22% 13% 28% 12% 18% Salaried (Non-exempt) Mean 10% 16% 10% 6% 9% 5% 17% Median 12% 15% 8% 8% 11% 6% 21% Hourly (Non-exempt) Mean 7% 12% 7% 4% 13% 9% 10% Median 8% 14% 7% 4% 14% 10% 11% Hourly (Union) Mean 10% 0% 0% 0% 0% 0% 0% Median 5% 0% 0% 0% 0% 0% 0% Base 25* 8* 18* 13* 5* 13* 17* Compensation Practices 42

Incentive Plans by Full Time Employees Maximum Pay What is the maximum short-term incentive pay opportunity at your company for 2014? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Executives Mean 32% 48% 35% 56% 58% 102% Median 24% 25% 32% 58% 50% 108% Salaried (Exempt) Mean 17% 18% 20% 30% 43% 34% Median 20% 16% 21% 23% 30% 28% Salaried (Non-exempt) Mean 12% 10% 13% 25% 11% 12% Median 13% 9% 16% 25% 10% 12% Hourly (Non-exempt) Mean 10% 7% 14% 15% 8% 7% Median 11% 7% 16% 15% 8% 5% Hourly (Union) Mean 0% 0% 15% 0% 4% 10% Median 0% 0% 18% 0% 5% 8% Base 46 39 17* 9* 10* 13* Compensation Practices 43

Incentive Plans The most important measurement criteria for executives is organizational performance, while for workers at most other levels, individual performance is most important. For hourly union employees, both organizational and individual performance are nearly equal in importance, likely stressing the increasing importance of both individual and "team" performance. 87% What performance measures are utilized to determine short-term incentive awards? 62% 70% 69% 63% 58% 46% 55% 67% 49% 46% Organization Performance Division/Department Performance 37% 34% 31% 36% Individual Performance Other Measures 18% 8% 6% 8% 10% Executives Salaried (Exempt) Salaried (Nonexempt) Hourly (Nonexempt) Hourly (Union) Base = 325 Compensation Practices 44

Incentive Plans by Industry Performance Measures What performance measures are utilized to determine short-term incentive awards? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Executives Organization Performance 91% 82% 88% 82% 88% 87% 82% Division/Department Performance 26% 29% 42% 36% 31% 51% 27% Individual Performance 51% 47% 63% 64% 69% 76% 73% Other Measures 7% 6% 9% 11% 13% 4% 11% Salaried (Exempt) Organization Performance 73% 47% 71% 59% 69% 63% 53% Division/Department Performance 29% 47% 55% 46% 50% 54% 38% Individual Performance 57% 53% 71% 68% 75% 83% 93% Other Measures 9% 6% 10% 5% 13% 0% 3% Salaried (Non-exempt) Organization Performance 78% 78% 55% 57% 62% 52% 54% Division/Department Performance 31% 22% 45% 29% 15% 37% 25% Individual Performance 50% 44% 70% 64% 77% 78% 92% Other Measures 9% 11% 10% 7% 16% 0% 8% Continued on next page Compensation Practices 45

Incentive Plans by Industry Performance Measures (Cont d) What performance measures are utilized to determine short-term incentive awards? (Continued from previous page) Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Hourly (Non-exempt) Organization Performance 66% 67% 67% 50% 53% 54% 50% Division/Department Performance 32% 33% 38% 19% 18% 29% 25% Individual Performance 42% 44% 71% 63% 65% 86% 88% Other Measures 17% 11% 8% 6% 18% 0% 8% Hourly (Union) Organization Performance 60% 0% 0% 0% 67% 60% 50% Division/Department Performance 10% 0% 0% 0% 17% 20% 50% Individual Performance 40% 0% 33% 0% 67% 60% 100% Other Measures 40% 0% 67% 100% 17% 0% 50% Base 57 17* 43 28* 16* 45 44 Compensation Practices 46

Incentive Plans by Full Time Employees Performance Measures What performance measures are utilized to determine short-term incentive awards? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Executives Organization Performance 76% 89% 98% 94% 94% 100% Division/Department Performance 17% 49% 50% 25% 63% 62% Individual Performance 58% 67% 57% 63% 69% 62% Other Measures 8% 5% 20% 6% 6% 0% Salaried (Exempt) Organization Performance 60% 57% 73% 79% 83% 90% Division/Department Performance 31% 57% 55% 36% 67% 70% Individual Performance 69% 73% 66% 64% 75% 60% Other Measures 7% 4% 11% 7% 8% 10% Salaried (Non-exempt) Organization Performance 54% 56% 64% 56% 80% 83% Division/Department Performance 19% 43% 39% 33% 60% 67% Individual Performance 68% 72% 71% 67% 60% 50% Other Measures 11% 6% 4% 11% 20% 0% Continued on next page Compensation Practices 47

Incentive Plans by Full Time Employees Performance Measures (Cont d) What performance measures are utilized to determine short-term incentive awards? (Continued from previous page) Number of FTEs ) 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Hourly (Non-exempt) Organization Performance 52% 53% 73% 43% 43% 67% Division/Department Performance 19% 34% 42% 29% 43% 83% Individual Performance 68% 72% 65% 57% 57% 33% Other Measures 11% 6% 4% 14% 43% 33% Hourly (Union) Organization Performance 39% 70% 67% 0% 33% 0% Division/Department Performance 11% 20% 33% 0% 0% 50% Individual Performance 50% 60% 33% 0% 33% 0% Other Measures 33% 10% 33% 0% 100% 100% Base 121 115 46 16* 16* 13* Compensation Practices 48

Incentive Plans By far, the most commonly used measure for organizational performance continues to be earnings before income, taxes, depreciation and amortization (EBITDA), cited by 60 percent of respondents, and up from 55 percent in 2013. If you utilize organization performance measures for short-term incentives, which of the following are used? EBITDA 60% ROA 8% ROE 8% ROIC 6% Other 38% Base = 227 Compensation Practices 49

Incentive Plans by Industry and by Full Time Employees Short Term Industry If you utilize organization performance measures for short-term incentives, which of the following are used? Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services EBITA (Earnings before Interest, Taxes, Depreciation, and Amortization) 68% 71% 32% 53% 71% 38% 61% ROA (Return on Assets) 4% 0% 26% 0% 7% 0% 13% ROE (Return on Equity) 9% 0% 16% 0% 14% 0% 13% ROIC (Return on Invested Capital) 9% 7% 7% 0% 7% 0% 13% Other 28% 21% 52% 47% 29% 62% 32% Base 47 14* 31 15* 14* 21* 31 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ EBITA (Earnings before Interest, Taxes, Depreciation, and Amortization) 56% 59% 62% 90% 67% 46% ROA (Return on Assets) 8% 8% 13% 0% 8% 0% ROE (Return on Equity) 6% 9% 13% 0% 8% 8% ROIC (Return on Invested Capital) 4% 8% 8% 10% 0% 0% Base 73 78 39 10* 12* 13* Compensation Practices 50

Incentive Plans The most common long-term incentive vehicles offered to eligible employees include stock options, stock appreciation rights and phantom stock. The largest organizations are significantly more likely to offer performance units, stock options and restricted stock than smaller organizations. Which long-term incentive vehicles are offered to eligible employees? Stock Options 17% Stock Appreciation Rights 17% Phantom Stock 17% Performance Units 12% Restricted Stock 10% Other 64% Base = 109 Compensation Practices 51

Incentive Plans by Industry Long Term Which long-term incentive vehicles are offered to eligible employees? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Stock Appreciation Rights (SARs) 23% 40% 7% 17% 13% 0% 17% Phantom Stock 23% 20% 7% 0% 25% 0% 33% Performance Units 16% 0% 13% 0% 25% 0% 0% Stock Options (SO) 16% 20% 13% 0% 25% 0% 25% Restricted Stock (RS) 16% 20% 7% 17% 0% 0% 0% Other 58% 60% 73% 83% 50% 100% 50% Base 31 5* 15* 6* 8* 6* 12* Compensation Practices 52

Incentive Plans by Full Time Employees Long Term Which long-term incentive vehicles are offered to eligible employees? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Stock Appreciation Rights (SARs) 9% 11% 20% 50% 17% 30% Phantom Stock 24% 14% 13% 38% 17% 0% Performance Units 9% 6% 0% 0% 33% 60% Stock Options (SO) 6% 20% 7% 0% 17% 70% Restricted Stock (RS) 0% 6% 7% 0% 17% 70% Other 59% 74% 67% 13% 50% 90% Base 34 35 15* 8* 6* 10* Compensation Practices 53

Incentive Plans - Vesting Exactly half of all organizations reported having vesting schedules of 4 years or less What is the vesting schedule or performance period for the most common long-term incentive program? 10+ years 5% 7-9 years 3% 3 years or less 40% 4 years 10% 6 years 11% 5 years 31% Base = 99 Compensation Practices 54

Incentive Plans Spot Bonuses While most incentive plans are designed to set expectations up front, spot bonuses, which are usually more subjective, are also used by 40 percent of responding organizations, however it appears that spot bonuses are being used less often, since usage is down from 53 percent last year. Do you offer spot bonuses to provide immediate rewards for performance above and beyond expectations? Under Consideration 10% Yes 40% No 50% Base = 484 Compensation Practices 55

Incentive Plans by Industry and by Full Time Employees Spot Bonuses Do you offer spot bonuses to provide immediate rewards for performance above and beyond expectations? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes 36% 24% 45% 49% 41% 34% 52% No 52% 57% 47% 40% 55% 57% 39% Under Consideration 12% 19% 8% 11% 4% 9% 9% Base 69 21* 49 53 22* 79 56 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes 41% 35% 40% 57% 42% 77% No 50% 55% 47% 29% 47% 23% Under Consideration 9% 10% 13% 14% 11% 0% Base 182 181 63 21* 19* 13* Compensation Practices 56

Sales What is the size of your sales force (including outside sales, telesales/inside sales, channel sales, etc.)? 1-5 FTEs 25% 6-25 FTEs 19% No sales force 44% 26-75 FTEs 6% 76-200 FTEs 3% 201+ FTEs 3% Base = 480 Compensation Practices 57

Sales by Industry What is the size of your sales force? (Include outside sales, telesales/inside sales roles, channel sales, etc.) Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services 1 5 Full-Time Employees (FTEs) 44% 5% 17% 13% 45% 20% 25% 6 25 FTEs 34% 66% 21% 9% 14% 8% 12% 26 75 FTEs 9% 19% 19% 2% 0% 3% 0% 76 200 FTEs 3% 5% 4% 0% 0% 1% 0% 201+ FTEs 9% 5% 9% 2% 0% 0% 0% We don t have a sales force. 1% 0% 30% 74% 41% 68% 63% Base 68 21* 47 54 22* 78 57 Compensation Practices 58

Sales by Full Time Employees What is the size of your sales force? (Include outside sales, telesales/inside sales roles, channel sales, etc.) Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ 1 5 Full-Time Employees (FTEs) 34% 25% 11% 5% 0% 0% 6 25 FTEs 17% 23% 21% 25% 16% 7% 26 75 FTEs 1% 7% 17% 15% 11% 0% 76 200 FTEs 0% 1% 6% 15% 5% 21% 201+ FTEs 1% 1% 2% 10% 26% 43% We don t have a sales force. 47% 43% 43% 30% 42% 29% Base 183 178 63 20* 19* 14* Compensation Practices 59

Sales Contributing to employer uncertainty, two-thirds (67%) of responding companies reported that they missed some or all of their sales targets over the past 12 months. Did your sales force meet the overall sales target for the last completed annual performance period? Yes 33% Some, but not all 41% No 26% Base = 245 Compensation Practices 60

Sales Despite two-thirds of employers missing some or all of their sales targets, only 13 percent made or planned making changes to their sales compensation plans over the past 12 months to better align sales objectives with rewards. However, another 15 percent are considering making changes in 2015. Larger organizations with more than 1,000 employees are much more likely to make regular changes to their sales compensation programs compared to smaller organizations. Are you considering implementing changes to your sales compensation plan(s)? Implemented/Planning to Implement for 2014 13% Considering for 2015 15% Not Considering for 2014 or 2015 44% Don't know yet 28% Base = 262 Compensation Practices 61

Sales by Industry and by Full Time Employees Industry We implemented, or are planning to implement sales compensation plan changes in 2014. We are considering sales compensation plan changes for 2015. We are not yet considering sales compensation plan changes in 2014 or 2015. Are you considering implementing changes to your sales compensation plan(s)? Manufacturing Distribution / Wholesale Finance / Banking / Insurance Healthcare Construction / Real Estate Not-For- Profit Professional Services 14% 14% 15% 8% 0% 4% 5% 11% 14% 21% 8% 8% 16% 20% 42% 62% 52% 23% 67% 52% 45% We don t know yet. 33% 10% 12% 61% 25% 28% 30% Base 66 21* 33 13* 12* 25* 20* Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ We implemented, or are planning to implement sales compensation plan changes in 2014. We are considering sales compensation plan changes for 2015. We are not yet considering sales compensation plan changes in 2013 or 2015. 10% 11% 8% 23% 30% 60% 15% 14% 22% 23% 10% 0% 53% 40% 42% 39% 40% 10% We don t know yet. 22% 35% 28% 15% 20% 30% Base 94 97 36 13* 10* 10* Compensation Practices 62

Sales Most of those organizations who made changes or are planning changes to their sales compensation plan(s) are doing so to increase the plan's motivational impact (reported by nearly three-quarters). If you made changes to your sales compensation plan(s) in 2014 or plan changes in 2015, what are the drivers for change? Increase the motivational impact of the plan 73% Reflect changes to the sales strategy 39% Attraction and retention of top sales talent 35% Reduce sales compensation costs 17% Integrate incentive compensation following a merger or acquisition 10% Other 1% Base = 69 Compensation Practices 63

Advisors While more than two-thirds of organizations do not engage an outside advisor or consultant for compensation services, most of those who do use advisors use them for executive compensation plan design and for the purpose of pricing their compensation plans against the market. Fewer (40%) use outside advisors for workforce compensation strategy and design. Do you use an outside advisor for compensation? Please select the types of compensation services for which you engage an advisor/consultant. Executive Compensation Plan Design 51% Yes 32% Market Pricing 49% Workforce Compensation Strategy and Design 40% No 68% Performance Management System Design 21% Sales Compensation Plan Design 20% Base = 459 Compensation Practices 64

Integrated Use of Retirement and Compensation Advisors Fewer than one quarter of the organizations surveyed reported using the same firm they use for retirement plan consulting, for their compensation consulting. Do you use the same retirement plan advisory or consulting firm for compensation consulting? Yes 21% No 79% Base = 52 Compensation Practices 65

Integrated Use of Retirement and Compensation Advisors by Industry and by Full Time Employees Do you use the same retirement plan advisory or consulting firm for compensation consulting? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes 29% 33% 0% 75% 0% 25% 0% No 71% 67% 100% 25% 100% 75% 100% Base 7* 3* 3* 4* 3* 8* 9* Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes 25% 29% 20% 0% 33% 0% No 75% 71% 80% 100% 67% 100% Base 16* 14* 10* 2* 3* 7* Compensation Practices 66

2014/2015 Compensation, Retirement and Benefits Trends Report RETIREMENT PLANS 2014/2015 Compensation, Retirement and Benefits Trends Report 67

Retirement Plan Types The results of the 2014 survey are fairly consistent with the last two years' findings, with the majority (94%) of employers offering a defined contribution plan that provides for employee contributions. What type of retirement plan(s) do you offer? Defined Contribution - Employee Contribution 94% Defined Contribution - No Employee Contribution 20% Defined Benefit - Traditional 12% Defined Benefit - Hybrid 4% ESOP - Employee Contribution 1% ESOP - No Employee Contribution 4% SIMPLE 2% Base = 548 Retirement Plans 68

Retirement Plan Types by Industry What type of retirement plan(s) do you offer? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Defined Contribution Plan with employee contributions (401k / 403b / 457 plan) 95% 85% 91% 92% 88% 96% 94% Defined Contribution Plan with no employee contributions (Profit Sharing, Money Purchase Pension Plan) 20% 27% 20% 26% 12% 15% 29% Defined Benefit Plan Traditional 20% 8% 12% 10% 4% 6% 4% Defined Benefit Plan Hybrid (i.e. cash balance) 4% 8% 3% 5% 0% 0% 3% ESOP with employee contributions (KSOP) 0% 0% 2% 2% 4% 0% 3% ESOP with no employee contributions 5% 12% 5% 0% 16% 0% 7% Simple 3% 0% 3% 0% 4% 1% 3% Other 1% 0% 8% 0% 0% 0% 0% Base 75 26* 66* 62 25* 78 68 Retirement Plans 69

Retirement Plan Types by Full Time Employees What type of retirement plan(s) do you offer? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Defined Contribution Plan with employee contributions (401k / 403b / 457 plan) 90% 93% 97% 93% 100% 100% Defined Contribution Plan with no employee contributions (Profit Sharing, Money Purchase Pension Plan) 21% 25% 16% 7% 17% 3% Defined Benefit Plan - Traditional 8% 7% 14% 21% 30% 35% Defined Benefit Plan Hybrid (i.e. cash balance) 3% 2% 0% 0% 0% 35% ESOP with employee contributions (KSOP) 1% 1% 1% 0% 0% 3% ESOP with no employee contributions 4% 5% 7% 0% 0% 0% Simple 3% 2% 1% 0% 4% 0% Other 4% 1% 1% 11% 4% 3% Base 201 191 73 28* 23* 29* Retirement Plans 70

Eligible Employee Participation On average, slightly more than half of employees who were eligible to make pre-tax contributions actually deferred. In comparison, just under 10 percent of those eligible to make Roth contributions took advantage of this option. What percent of eligible employees made Pre-Tax and Roth contributions? 0.6 0.5 54% 0.4 0.3 0.2 0.1 0 9% Average Participation % Base 961 Base 504 Pre-Tax Roth Retirement Plans 71

Eligible Employee Participation The highest percentage of pretax deferrals was from employees age 50 and above. Average deferral percent by age Loans 18-29 30-39 40-49 50-59 60-69 70+ Average pretax deferral percent 2% 4% 4% 6% 7% 8% Average Roth deferral percent 1% 1% 1% 1% 2% 4% Retirement Plans 72

Employee Pre-Tax Participation by Industry and Full Time Employees What percent of eligible employees made pre-tax deferrals to your plan? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Professional Services Employee Pre-Tax Participation 57% 56% 67% 49% 54% 61% 50% Base 170 54 86 141 94 155 261 Other Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001 + Employee Pre-Tax Participation 61% 54% 48% 45% 35% Base 379 360 124 49 49 Retirement Plans 73

Employee Roth Participation by Industry and Full Time Employees What percent of eligible employees made Roth deferrals to your plan? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Professional Services Employee Roth Participation 9% 11% 13% 9% 6% 11% 8% Base 78 18* 54 84 49 98 123 Other Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001 + Employee Roth Participation 11% 10% 8% 5% 4% Base 193 189 68 26* 28* Retirement Plans 74

Automatic Enrollment While less than half (44%) reported that their plans currently have an automatic enrollment feature, many plan sponsors are considering adding it. More than one-third (39%) of those not currently utilizing automatic enrollment are either planning to add the feature next year, or are considering it for the future. Does your plan have an automatic enrollment feature? 5% 44% Yes 56% No 34% 61% No, not considering for future No, but considering for future No, but planning to add next year Base = 558 Retirement Plans 75

Automatic Enrollment by Industry and By Full Time Employees Does your plan have an automatic enrollment feature? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes 51% 41% 51% 43% 50% 30% 36% No, but planning to add next year 3% 0% 5% 2% 5% 4% 3% No, but considering for future 15% 23% 22% 28% 4% 30% 12% No, not considering for future 31% 36% 22% 27% 41% 36% 49% Base 71 22* 59 58 22* 74 65 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes 32% 37% 56% 48% 48% 79% No, but planning to add next year 4% 3% 0% 8% 4% 0% No, but considering for future 19% 21% 19% 20% 26% 7% No, not considering for future 45% 39% 25% 24% 22% 14% Base 179 178 72 25* 23* 29* Retirement Plans 76

Automatic Enrollment Automatic Escalation One-third of respondents whose plans have an automatic enrollment feature, also have an automatic escalation feature (34%). If you have an automatic enrollment feature, does your auto enrollment include an automatic escalation feature? 47% 16% 34% 3% Plan has automatic escalation No, but planning to add next year No, but considering for future No, not considering for future Base = 239 Retirement Plans 77

Automatic Escalation by Industry and by Full Time Employees If your plan has an automatic enrollment feature, does it also include an automatic escalation feature? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes 43% 27% 46% 29% 18% 16% 25% No, but planning to add next year 5% 9% 4% 4% 0% 4% 0% No, but considering for future 13% 18% 11% 29% 0% 20% 10% No, not considering for future 39% 46% 39% 38% 82% 60% 65% Base 40 11* 28* 28* 11* 25* 20* Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes 22% 27% 26% 53% 29% 72% No, but planning to add next year 4% 0% 10% 6% 0% 3% No, but considering for future 9% 19% 12% 12% 43% 14% No, not considering for future 65% 54% 52% 29% 18% 11% Base 55 79 42 17* 14* 29* Retirement Plans 78

Criteria for Choosing Providers Unlike 2013, when the cost of investments - i.e., fees - topped the list of employer criteria for evaluating their retirement plan offerings, in 2014, employers focused most on the level and quality of services offered. The cost of services and the cost of investments follow close behind in importance. Top THREE and most important SINGLE item that you consider when evaluating your retirement plan offering. Level and Quality of Services 33% 68% Cost of Services Cost of Investments 13% 18% 57% 62% Number of Investment Options 6% 26% Availability of Specific Investment Options 10% 23% Reputation of Provider Recommendation of Advisor 9% 7% 22% 20% Single MOST IMPORTANT Top THREE Continuity of Service Provider 2% 9% Ability to Offer Company Stock Option for Bundled/Unbundled Plan 1% 2% 1% 2% Base = 522 Other 1% 2% Retirement Plans 79

Criteria for Choosing Providers by Industry Identify the top THREE items from the following list that you consider most important when evaluating your retirement plan offering. Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction / Real Estate Not-For- Profit Professional Services Cost of Services (Recordkeeping, Compliance and Administration, Trust and Custody) 54% 54% 55% 51% 55% 66% 51% Cost of Investments (Mutual Fund Management Fees) 61% 58% 71% 56% 86% 63% 62% Level and Quality of Service 66% 73% 65% 69% 73% 71% 69% Number of Investment Options 32% 19% 32% 30% 5% 21% 23% Availability of Specific Investment Options 20% 23% 23% 20% 14% 28% 25% Reputation of the Provider 24% 27% 19% 28% 14% 21% 23% Recommendations of Advisor 27% 27% 18% 16% 23% 18% 23% Continuity of Service Providers 4% 8% 2% 8% 9% 7% 17% Option for Bundled or Unbundled Plan 0% 4% 7% 5% 0% 0% 0% Ability to Offer Company Stock 1% 0% 8% 2% 9% 0% 3% Other 0% 8% 0% 3% 0% 1% 3% Base 74 26* 62 61 22* 76 65 Retirement Plans 80

Criteria for Choosing Providers by Full Time Employees Identify the top THREE items from the following list that you consider most important when evaluating your retirement plan offering. Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Cost of Investments (Mutual Fund Management Fees) 56% 56% 45% 63% 77% 68% Cost of Services (Recordkeeping, Compliance and Administration, Trust and Custody) 61% 59% 63% 67% 64% 79% Level and Quality of Service 64% 70% 73% 67% 59% 86% Number of Investment Options 32% 23% 24% 29% 23% 14% Availability of Specific Investment Options 27% 23% 18% 17% 23% 14% Reputation of the Provider 23% 24% 18% 21% 9% 7% Recommendations of Advisor 19% 20% 30% 21% 9% 21% Continuity of Service Providers 7% 11% 14% 0% 18% 0% Option for Bundled or Unbundled Plan 3% 2% 3% 0% 5% 4% Ability to Offer Company Stock 3% 2% 1% 8% 5% 0% Other 1% 3% 4% 0% 0% 4% Base 193 181 71 24* 22* 28* Retirement Plans 81

Criteria for Choosing Providers by Industry Industry Identify the ONE item from the following list that you consider MOST IMPORTANT when evaluating your retirement plan offering. Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For-Profit Professional Services Cost of Investments (Mutual Fund Management Fees) 16% 11% 21% 22% 14% 17% 14% Cost of Services (Recordkeeping, Compliance and Administration, Trust and Custody) 18% 15% 6% 8% 27% 14% 15% Level and Quality of Service 31% 35% 24% 34% 32% 34% 40% Number of Investment Options 6% 0% 16% 10% 0% 3% 5% Availability of Specific Investment Options 7% 4% 13% 8% 0% 11% 11% Reputation of the Provider 10% 8% 5% 13% 9% 15% 5% Recommendations of Advisor 11% 15% 8% 2% 14% 5% 6% Continuity of Service Providers 0% 4% 2% 0% 0% 0% 2% Option for Bundled or Unbundled Plan 0% 0% 3% 0% 0% 0% 0% Ability to Offer Company Stock 1% 0% 2% 0% 4% 0% 1% Other 0% 8% 0% 3% 0% 1% 1% Base 73 26* 62 60 22* 76 65 Retirement Plans 82

Criteria for Choosing Providers by Full Time Employees Identify the ONE item from the following list that you consider MOST IMPORTANT when evaluating your retirement plan offering. Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Cost of Investments (Mutual Fund Management Fees) 16% 16% 16% 13% 36% 32% Cost of Services (Recordkeeping, Compliance and Administration, Trust and Custody) 12% 13% 17% 25% 0% 11% Level and Quality of Service 33% 33% 28% 38% 32% 39% Number of Investment Options 6% 5% 7% 0% 5% 4% Availability of Specific Investment Options 14% 11% 3% 4% 4% 7% Reputation of the Provider 9% 11% 9% 12% 5% 4% Recommendations of Advisor 6% 7% 13% 4% 9% 0% Continuity of Service Providers 2% 1% 4% 0% 9% 0% Option for Bundled or Unbundled Plan 1% 0% 1% 0% 0% 0% Ability to Offer Company Stock 0% 1% 1% 4% 0% 0% Other 1% 2% 1% 0% 0% 3% Base 191 181 71 24* 22* 28* Retirement Plans 83

Investment Options Employers continue to offer participants a large selection of investment options. Nearly all (96%) offer plan participants more than 10 options, and close to a quarter of the organizations offer more than 20 investment options. How many investment options are participants able to choose from in your plan, excluding brokerage windows? <1% 4% 23% 1-5 6-10 11-20 21 or more 73% Base = 995 Retirement Plans 84

Investment Options by Industry and by Full Time Employees How many investment options are participants able to choose from in your plan, excluding brokerage windows? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Professional Services Other 1-5 0% 0% 1% 1% 1% 1% 6-10 6% 5% 1% 0% 3% 7% 11-20 73% 76% 58% 71% 73% 73% 21 or more 21% 19% 40% 28% 23% 19% Base 174 54 92 146 204 326 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001+ 1-5 0% 0% 1% 2% 2% 6-10 3% 6% 5% 2% 4% 11-20 76% 72% 67% 82% 59% 21 or more 21% 22% 27% 14% 35% Base 396 365 132 49 54 Retirement Plans 85

Investment Options The most common type of investment offered is mutual funds (98%). In 2014, more respondents included model portfolios in their plans as compared to 2013 (52% versus 35%). What type of investments do you offer in the plan? Mutual Funds/ CCTs 98% Model Portfolios 52% Insurance Funds 8% Brokerage Window 5% ETFs 4% Other 1% Base = 1,013 Retirement Plans 86

Investment Options by Industry What type of investments do you offer in the plan? Industry Manufacturing Distribution / Wholesale Finance / Banking / Insurance Healthcare Construction / Real Estate Services Other Mutual Funds/CCTs 98% 98% 97% 95% 99% 96% 92% Model Portfolios 55% 48% 39% 50% 56% 57% 43% ETFs 5% 9% 2% 2% 3% 5% 1% Brokerage Window 0% 0% 6% 15% 5% 3% 3% Insurance Funds 9% 7% 5% 8% 9% 9% 11% Other 0% 0% 2% 0% 0% 1% 1% Base 176 54 94 153 98 208 207 Retirement Plans 87

Investment Options by Full Time Employees What type of investments do you offer in the plan? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1001+ Mutual Funds/CCTs 97% 99% 97% 94% 83% Model Portfolio 49% 58% 55% 44% 37% ETFs 3% 4% 6% 0% 2% Brokerage Window 5% 5% 5% 4% 7% Insurance Funds 9% 6% 10% 8% 6% Other 0% 0% 1% 2% 7% Base 410 367 134 48 54 Retirement Plans 88

Investment Options Employers continue to offer participants a wide variety of investment options, including cash, fixed income, equity, asset allocation and specialty funds. Designate all options offered in your plan. Total Cash Money Market 47% Stable Value/GIC 54% Fixed Income Active Bond 94% Indexed Bond 23% Global Bond - Active 47% Global Bond Indexed Bond 1% Equity Domestic Equity - Active 97% Domestic Equity - Indexed 70% Emerging Markets - Active 57% Emerging Markets - Indexed 6% International Global Equity - Active 96% International Global Equity Indexed 16% Company Stock 1% Total Specialty/Other Real Estate 48% Self-Directed Brokerage Window 5% Commodities 6% Precious Metals 8% Hedge/Private Equity 0% Asset Allocation Target Date 53% Balanced Fund 14% Managed Investment Accounts/Model Portfolios 60% Lifestyle 10% Base = 950 Retirement Plans 89

Investment Options Default Please indicate your Qualified Default Investment Alternative (QDIA). Total Cash Money Market 22% Asset Allocation Target Date 44% Balanced Fund 11% Managed Account/Model Portfolio 18% Lifestyle 5% Base 967 Retirement Plans 90

Investment Options by Industry Default Please indicate your Qualified Default Investment Alternative (QDIA). Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcar e Construction/ Real Estate Professional Services Cash Money Market 24% 31% 24% 18% 22% 17% Asset Allocation Target Date Balanced Fund Managed Account/Model Portfolios Lifestyle 39% 34% 45% 52% 36% 44% 12% 13% 8% 15% 11% 12% 19% 18% 21% 14% 25% 21% 6% 4% 2% 1% 6% 6% Base 168 54 89 143 93 150 Retirement Plans 91

Investment Options by Full Time Employees Default Please indicate your Qualified Default Investment Alternative (QDIA). Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001+ Cash Money Market 26% 20% 18% 15% 17% Asset Allocation Target Date Balanced Fund Managed Account/Model Portfolios Lifestyle 39% 46% 47% 42% 58% 11% 12% 12% 17% 12% 18% 17% 21% 21% 12% 6% 5% 2% 5% 1% Base 384 354 129 48 52 Retirement Plans 92

Investment Options Default While around one-quarter of organizations have 10 percent or less of their employees invested in QDIAs, about another quarter have 40 percent or more employees invested in QDIAs. Number participants 100% invested in Qualified Default Investment Alternative (QDIA) More Than 50% 16% 40% to 49% 8% 30% to 39% 12% 20% to 29% 17% 10% to 19% 20% Less than 10% 27% Base = 968 Retirement Plans 93

Lifetime Income Options To date, only 20 percent of companies have implemented or plan to implement lifetime income options as part of their retirement plan. Has your company implemented "lifetime income" options (i.e., annuitization) as part of your retirement plan to help employees manage longevity risk? 14% 80% 6% Yes, have already implemented No, but planning to implement No, no plans to implement Base = 478 Retirement Plans 94

Financial Wellness Programs Just over one-third of organizations (35%) have implemented or plan to implement financial wellness programs to help employees prepare for current and future financial needs. Has your company implemented "financial wellness" programs to help employees prepare for current and future financial needs -- whether separately or as part of the overall health and wellness program? 17% 65% 18% Yes, have already implemented No, but planning to implement No, no plans to implement Base = 478 Retirement Plans 95

Lifetime Income Options & Financial Wellness Programs by Industry Has your company implemented "lifetime income" options (i.e., annuities), as part of your retirement plan to help employees manage longevity risk? Has your company implemented "financial wellness" programs to help employees prepare for current and future financial needs -- whether separately or as part of the overall health and wellness program? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Lifetime Income Options Yes, have already implemented 13% 27% 16% 17% 0% 14% 5% No, but planning to implement 4% 0% 9% 7% 5% 11% 2% No, no plans to implement 83% 73% 75% 76% 95% 75% 93% Base 68 22 56 54 21* 74 62 Financial Wellness Programs Yes, have already implemented 17% 14% 25% 17% 5% 16% 11% No, but planning to implement 21% 18% 21% 17% 19% 16% 11% No, no plans to implement 62% 68% 54% 66% 76% 70% 78% Base 68 22 57 53 21* 74 62 Retirement Plans 96

Lifetime Income Options & Financial Wellness Programs by Full Time Employee Has your company implemented "lifetime income" options (i.e., annuities) as part of your retirement plan to help employees manage longevity risk? Has your company implemented "financial wellness" programs to help employees prepare for current and future financial needs -- whether separately or as part of the overall health and wellness program? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Lifetime Income Options Yes, have already implemented 12% 14% 14% 23% 28% 13% No, but planning to implement 7% 5% 5% 0% 5% 22% No, no plans to implement 81% 81% 81% 77% 67% 65% Base 179 170 63 22* 18* 23* Financial Wellness Programs Yes, have already implemented 10% 21% 20% 9% 16% 35% No, but planning to implement 12% 12% 28% 41% 26% 43% No, no plans to implement 78% 67% 52% 50% 58% 22% Base 177 171 65 22* 19* 23* Retirement Plans 97

Employer Plan Contributions The percentage of organizations who currently offer matching contributions has increased slightly over the past couple of years (up from 74% in 2012 to 79% in 2014). An additional 5 percent reported they either plan to add a matching feature next year, or they are considering adding one in the future. Does your company offer matching contributions? 16% Yes 1% 4% No, but planning to next year No, but considering for future 79% No, and not considering for the future Base = 501 Retirement Plans 98

Employer Plan Contributions by Industry and by Full Time Employees Does your company offer matching contributions? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes Company Offers Matching Contribution 89% 73% 88% 74% 82% 81% 72% Base 70 22* 58 57 22* 75 63 Does your company offer matching contributions? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes Company Offers Matching Contribution 72% 80% 78% 96% 83% 93% Base 177 172 72 26* 23* 28* Retirement Plans 99

Employer Plan Contributions Most plans (two-thirds) have a graduated vesting schedule for employer contributions. What is your vesting schedule for employer contributions? Immediate 21% Graduated Schedule 67% Cliff Vesting 11% Other 1% Base = 1,085 Retirement Plans 100

Distribution Payments by Industry and by Full Time Employees The most frequently requested form of distribution payment is a lump sum payment which includes rollovers to IRAs. What form of distribution payment is frequently requested by plan participants? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Professional Services Lump sum (includes rollover to IRA) 100% 100% 100% 100% 100% 100% Installment Payments 0% -% 0% 0% 0% 0% Annuity 0% 0% 0% 0% 0% 0% Base 146 48 79 115 85 168 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001+ Lump sum (includes rollover to IRA) 100% 100% 100% 100% 100% Installment Payments 0% 0% 0% 0% 0% Annuity 0% 0% 0% 0% 0% Base 274 331 123 48 54 Retirement Plans 101

Distribution Payments Most organizations allow plan participants to make hardship withdrawals from their retirement accounts (83%). Nearly three-fourths (74%) of defined contribution plan respondents allow participant loans. How many outstanding loans does the plan allow per participant? Hardships 83% No Loans 26% One Loan 47% Two 21% Three 4% Four or more 2% Base = 969 Base = 996 Retirement Plans 102

Distribution Payments Approximately one quarter of participant accounts represent participant loans for those participants who range in age from 18 to 39. Hardship withdrawals impact every age group with those near retirement (60 69) representing the lowest percentage at 11 percent. The highest percentage of account balances distributed in 2014 were to participants below age 40. Participants requesting hardship withdrawals by age Loans 18-29 30-39 40-49 50-59 60-69 70+ Average loan balance as a % of average account balance 25% 27% 8% 5% 3% 0% Average Loan Balance $3,358 $7,851 $10,698 $9,298 $11,533 $4,730 Withdrawals & Distributions Average # of hardship withdrawals taken as a % of total hardship distributions 14% 20% 20% 18% 11% 18% Average distributions as a % of average account balance 27% 46% 19% 20% 17% 1% Average Account Balance $13,281 $28,870 $141,931 $208,318 $353,728 $8,697,854 Retirement Plans 103

Plan Costs and Participant Awareness Consistent with the 2013 survey results, more than two-thirds (70%) of employers indicated they understood the total plan costs. After reviewing fee disclosures from service providers, have you calculated the total cost of your plan? 30% 10% 60% Yes, I didn't realize the total costs before the disclosure Yes, I already understood the total costs No, I still do not understand the plan costs Base = 523 Retirement Plans 104

Plan Costs and Participant Awareness by Industry and by Full Time Employees Industry After reviewing fee disclosures from service providers, have you calculated the total cost of your plan? Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes, I didn't realize the total costs before the disclosure 11% 21% 8% 10% 14% 17% 5% Yes, I already understood the total costs 56% 58% 70% 52% 59% 51% 69% No, I still do not understand the plan costs 33% 21% 22% 38% 27% 32% 26% Base 73 24* 63 61 22* 76 65 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes, I didn't realize the total costs before the disclosure 10% 13% 6% 11% 9% 4% Yes, I already understood the total costs 52% 60% 61% 58% 65% 89% No, I still do not understand the plan costs 38% 27% 33% 31% 26% 7% Base 193 181 69 26* 23* 28* Retirement Plans 105

Plan Costs and Participant Awareness Although 70 percent of plan sponsors surveyed indicated they understood their total plan costs, 41 percent indicated they did not know the total cost per participant. What is the total annual cost of the plan on a per participant basis? $1-$50 20% $51-$100 18% $101-$200 10% $201-$300 3% $301 or more 8% Don t Know 41% Base = 507 Retirement Plans 106

Plan Costs and Participant Awareness by Industry and by Full Time Employees What is the total annual cost of the plan on a per participant basis? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services $1-$50 18% 13% 16% 23% 9% 26% 10% $51-$100 14% 21% 21% 26% 19% 17% 15% $101-$200 11% 17% 10% 8% 9% 9% 11% $201-$300 1% 4% 3% 2% 6% 1% 7% $301 or more 6% 8% 5% 8% 24% 5% 8% Don t Know 50% 37% 45% 33% 33% 42% 49% Base 72 24* 58 61 21* 78 61 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ $1-$50 19% 21% 22% 13% 21% 19% $51-$100 17% 19% 12% 18% 26% 35% $101-$200 9% 9% 9% 13% 11% 19% $201-$300 4% 2% 5% 0% 0% 0% $301 or more 13% 6% 6% 4% 0% 8% Don t Know 38% 43% 46% 52% 42% 19% Base 189 180 67 23* 19* 26* Retirement Plans 107

Plan Costs and Participant Awareness Basis Points What is the total annual cost of the plan in basis points? 10-25 bp 5% 26-50 BP 4% 51-75 BP 2% 76-100 BP 2% 101 or more BP 2% Don t Know 85% Base = 203 Retirement Plans 108

Plan Costs and Participant Awareness by Industry and Full Time Employees Basis Points What is the total annual cost of the plan in basis points? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services 10-25 BP 3% 0% 4% 5% 0% 3% 14% 26-50 BP 8% 0% 8% 5% 0% 3% 0% 51-75 BP 0% 0% 7% 5% 0% 0% 0% 76-100 BP 0% 11% 0% 0% 14% 0% 0% 101 or more BP 6% 0% 0% 0% 29% 0% 3% Don t Know 83% 89% 81% 85% 57% 94% 83% Base 35 9* 26* 20* 7* 30 29* Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ 10-25 BP 3% 8% 10% 0% 0% 0% 26-50 BP 1% 5% 7% 0% 12% 25% 51-75 BP 0% 1% 7% 0% 0% 0% 76-100 BP 0% 3% 0% 8% 0% 0% 101 or more BP 1% 4% 0% 0% 0% 0% Don t Know 95% 79% 76% 92% 88% 75% Base 73 76 29* 12* 8* 4* Retirement Plans 109

Recordkeeping Costs and Participant Awareness Most of those who are aware of their annual cost for recordkeeping services on a per participant basis reported costs to be 100 dollars or less per participant. What is the total annual cost for recordkeeping services on a per participant basis? $1-$50 37% $51-$100 15% $101-$200 8% $201-$300 2% $301 or more 2% Don t Know 36% Base = 497 Retirement Plans 110

Recordkeeping Costs and Participant Awareness by Industry and by Full Time Employees What is the total annual cost for recordkeeping services on a per participant basis? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services $1-$50 38% 48% 37% 39% 33% 37% 24% $51-$100 17% 9% 10% 13% 24% 14% 17% $101-$200 7% 13% 9% 8% 10% 5% 13% $201-$300 0% 0% 4% 2% 0% 1% 5% $301 or more 1% 4% 0% 3% 0% 1% 3% Don t Know 37% 26% 40% 35% 33% 42% 38% Base 71 23* 57 60 21* 74 60 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ $1-$50 33% 41% 35% 33% 40% 44% $51-$100 14% 15% 12% 19% 15% 36% $101-$200 9% 6% 11% 5% 5% 0% $201-$300 2% 2% 1% 0% 0% 0% $301 or more 4% 1% 0% 0% 0% 0% Don t Know 38% 35% 41% 43% 40% 20% Base 189 173 66 21* 20* 25* Retirement Plans 111

Recordkeeping Costs and Participant Awareness Basis Points What is the total annual cost for recordkeeping services in basis points? 10-25 BP 7% 26-50 BP 2% 51-75 BP 1% 76-100 BP 1% 101 or more BP 1% Don t Know 88% Base = 176 Retirement Plans 112

Recordkeeping Costs and Participant Awareness by Industry and by Full Time Employees What is the total annual cost for recordkeeping services in basis points? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services 10-25 BP 8% 0% 4% 9% 14% 0% 18% 26-50 BP 0% 0% 9% 5% 0% 3% 0% 51-75 BP 0% 0% 4% 0% 0% 0% 0% 76-100 BP 0% 0% 0% 5% 0% 0% 0% 101 or more BP 0% 0% 0% 5% 0% 0% 0% Don t Know 92% 100% 83% 76% 86% 97% 82% Base 24* 6* 23* 21* 7* 29* 22* Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ 10-25 BP 3% 10% 11% 0% 0% 20% 26-50 BP 3% 2% 0% 0% 13% 0% 51-75 BP 0% 0% 4% 0% 0% 0% 76-100 BP 0% 0% 0% 13% 12% 0% 101 or more BP 1% 0% 0% 0% 0% 0% Don t Know 93% 88% 85% 87% 75% 80% Base 69 59 27* 8* 8* 5* Retirement Plans 113

Plan Costs and Participant Awareness Most plan sponsors continue to take on the responsibility for funding recordkeeping costs (57%), with the largest concentration of these plan sponsors being from organizations with 50 or fewer employees. Most of those who deduct the expense from participant accounts are from organizations with over 5,000 employees. Who pays for the recordkeeping costs of the plan? Plan sponsor 57% Deducted from participant accounts 37% Paid from forfeiture account 16% Paid from ERISA budget account 3% Other 4% Base = 495 Retirement Plans 114

Plan Costs and Participant Awareness by Industry and by Full Time Employees Who pays for the recordkeeping costs of the plan? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Deducted from participant accounts 40% 46% 31% 32% 38% 40% 38% Paid from ERISA budget account 7% 0% 0% 5% 5% 1% 0% Paid from forfeiture account 23% 13% 10% 21% 10% 13% 21% Plan sponsor 57% 46% 70% 58% 48% 57% 62% Other 1% 0% 3% 2% 10% 6% 3% Base 70 24* 59 57 21* 72 61 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Deducted from participant accounts 29% 41% 37% 22% 55% 73% Paid from ERISA budget account 2% 2% 0% 9% 0% 15% Paid from forfeiture account 11% 16% 24% 26% 35% 12% Plan sponsor 75% 52% 52% 44% 20% 23% Other 2% 5% 6% 9% 10% 4% Base 185 171 67 23* 20* 26* Retirement Plans 115

Plan Costs and Participant Awareness Overall, 63 percent of employers, slightly more than last year, believe that plan participants have a very limited understanding of plan costs, suggesting that additional employee education may be necessary regarding how costs are impacted by investment choices. How well do you think plan participants understand the full cost of their plan? 3% Fully understand all costs 34% Have a moderate understanding of the costs 63% Have a very limited understanding of the costs Base = 508 Retirement Plans 116

Plan Costs and Participant Awareness by Industry and by Full Time Employees How well do you think plan participants understand the full cost of their plan? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Fully understand all costs 3% 0% 5% 3% 0% 1% 2% Have a moderate understanding of the costs 29% 25% 49% 15% 29% 31% 50% Have a very limited understanding of the costs 68% 75% 46% 82% 71% 68% 48% Base 73 24* 59 59 21* 77 62 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Fully understand all costs 5% 3% 0% 0% 5% 0% Have a moderate understanding of the costs 36% 32% 23% 42% 28% 52% Have a very limited understanding of the costs 59% 65% 77% 58% 67% 48% Base 189 176 68 24* 21* 27* Retirement Plans 117

Retirement Plan Concerns Retirement plan concerns for most organizations center on fiduciary responsibilities and compliance issues. Concerns about fiduciary responsibilities, administrative requirements, and complying with legal and regulatory laws were mentioned by over two-thirds of survey respondents. Identify the top three and the single most important item that cause you the most concern about your retirement plan Fiduciary responsibilities (e.g. investment due diligence, prudent processes, measuring plan expenses, avoiding conflicts of interest, etc.) 78% 32% Administrative requirements (e.g., fulfilling ongoing notice and disclosure rules, nondiscrimination testing, etc.) Legal and regulatory compliance (e.g. keeping up with law changes, plan document restatements, etc.) 71% 67% 21% 21% Properly designed plan to achieve company goals (e.g. employee retention, benefitting target group, etc.) 37% 13% Top Three Lifetime income for participants 28% 11% Single Most Important Macroeconomic factors (e.g. interest rates, inflation, etc.) Other 11% 3% 2% 1% Base = 490 118

Retirement Plan Concerns by Industry Identify the top three and the single most important item that cause you the most concern about your retirement plan. Industry Manufacturing Distribution/ Wholesale Finance/ Banking/ Insurance Healthcare Construction/R eal Estate Not-For- Profit Professional Services Properly designed plan to achieve company goals 45% 24% 40% 32% 38% 26% 35% Administrative requirements 58% 86% 75% 73% 62% 82% 81% Fiduciary responsibilities 81% 86% 77% 75% 67% 90% 71% Legal and regulatory compliance 67% 67% 65% 70% 43% 68% 75% Lifetime income for participants 33% 24% 25% 23% 52% 25% 18% Macroeconomic factors 13% 5% 11% 8% 29% 8% 13% Other 1% 0% 5% 3% 10% 1% 0% Base 69 21* 57 60 21* 77 63 119

Retirement Plan Concerns by Full Time Employees Identify the top three and the single most important item that cause you the most concern about your retirement plan. Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Properly designed plan to achieve company goals 37% 34% 32% 57% 35% 46% Administrative requirements 75% 75% 68% 57% 80% 38% Fiduciary responsibilities 74% 82% 79% 83% 70% 83% Legal and regulatory compliance 66% 66% 67% 74% 70% 63% Lifetime income for participants 27% 25% 30% 22% 30% 42% Macroeconomic factors 12% 11% 15% 4% 5% 17% Other 2% 2% 5% 4% 5% 4% Base 183 171 66 23* 20* 24* 120

Retirement Plan Concerns by Industry Identify the single most important item that causes you concern about your retirement plan. Industry Manufacturing Distribution/ Wholesale Finance/ Banking/ Insurance Healthcare Construction/R eal Estate Not-For- Profit Professional Services Properly designed plan to achieve company goals 17% 5% 13% 14% 10% 9% 11% Administrative requirements 12% 19% 19% 27% 24% 25% 21% Fiduciary responsibilities 35% 29% 30% 33% 19% 32% 35% Legal and regulatory compliance 22% 33% 14% 20% 14% 23% 21% Lifetime income for participants 14% 14% 16% 3% 28% 8% 6% Macroeconomic factors 0% 0% 4% 1% 0% 3% 6% Other 0% 0% 4% 2% 5% 0% 0% Base 69 21* 57 60 21* 77 63 121

Retirement Plan Concerns by Full Time Employees Identify the single most important item that causes you concern about your retirement plan. Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Properly designed plan to achieve company goals 13% 14% 9% 9% 15% 17% Administrative requirements 23% 20% 14% 30% 25% 12% Fiduciary responsibilities 33% 29% 35% 35% 30% 29% Legal and regulatory compliance 18% 23% 23% 22% 15% 17% Lifetime income for participants 12% 10% 12% 4% 15% 21% Macroeconomic factors 1% 3% 7% 0% 0% 0% Other 0% 1% 0% 0% 0% 4% Base 183 171 66 23* 20* 24* 122

Investment Advisors While most organizations continue to use outside advisors/consultants for retirement plan advice, usage has changed for the specific types of services. In 2014, plan sponsors were relying more on assistance from third-party advisors for plan design, cost analysis or management, ERISA 3(21) and for vendor selection, compared to 2013. Does your plan currently utilize an outside advisor/consultant? If yes, please select the types of retirement plan services for which you engage them. No 19% Plan Design Cost Analysis/Management 53% 78% ERISA 3(21) 46% ERISA 3(38) 11% Yes 81% Investment Advisor Who Is Not a Fiduciary 36% Vendor Selection 40% Base = 480 Base = 390 ERISA Section 3(21) - plan sponsors and advisors have co-fiduciary responsibilities regarding the plan s investments and both parties share in the liability. ERISA Section 3(38) - advisors select and adjust investment options without explicit direction from sponsors. Retirement Plans 123

Investment Advisors by Industry Industry Does your plan currently utilize an outside advisor/consultant? If yes, please select the types of retirement plan services for which you engage an outside advisor/consultant. Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes, utilize an outside advisor/consultant 91% 87% 70% 78% 85% 75% 85% Plan Design 80% 90% 69% 69% 71% 88% 75% Cost Analysis / Management 61% 45% 38% 51% 41% 56% 59% Investment advisor-cofiduciary (ERISA 3 (21)) 57% 50% 44% 42% 53% 42% 35% Investment advisor with full decision making authority (ERISA 3(38)) 13% 10% 8% 7% 12% 9% 12% Investment advisor who is not a fiduciary 28% 30% 31% 51% 41% 42% 26% Vendor Selection 46% 40% 44% 37% 29% 37% 39% Base 61 20 39 43 17 57 51 Retirement Plans 124

Investment Advisors by Full Time Employees Does your plan currently utilize an outside advisor/consultant? If yes, please select the types of retirement plan services for which you engage an outside advisor/consultant. Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes, utilize an outside advisor/consultant 76% 82% 81% 91% 95% 96% Plan Design 81% 83% 72% 65% 67% 59% Cost Analysis / Management 43% 49% 76% 75% 50% 50% Investment advisor-cofiduciary (ERISA 3 (21)) 36% 45% 61% 70% 56% 36% Investment advisor with full decision making authority (ERISA 3(38)) 13% 8% 17% 10% 6% 5% Investment advisor who is not a fiduciary 40% 40% 22% 25% 33% 46% Vendor Selection 33% 36% 52% 65% 44% 55% Base 55 88 80 21* 27* 28* Retirement Plans 125

Advising Plan Participants Similar to 2013, the dominant delivery method for investment advice or education is through online internet tools. However, in 2014, significantly more employers were also providing more interaction with plan participants by offering education through both group meetings and one-on-one counseling (around two-thirds this year compared to about half in 2013). Please indicate the items your plan provides to participants as investment advice or education. Education - online tools 75% Education - group meetings 69% Advice - one-on-one counseling 67% Advice - do-it-yourself internet tools 66% Education - hard copy materials 63% Advice - managed personal accounts 28% Base = 513 Retirement Plans 126

Advising Plan Participants by Industry and by Full Time Employees Industry Please indicate the items your plan provides to participants as investment advice or education. Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Education - online tools 75% 61% 81% 63% 67% 84% 76% Advice - do-it-yourself internet tools 61% 57% 61% 70% 67% 72% 65% Education - hard copy materials 72% 65% 65% 62% 71% 61% 60% Education group meetings 85% 87% 66% 58% 67% 76% 73% Advice - one-on-one counseling 64% 74% 47% 68% 81% 72% 60% Advice - managed personal accounts 32% 13% 23% 32% 19% 24% 22% Base 72 23* 62 60 21* 75 63 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Education - online tools 68% 78% 72% 88% 78% 89% Advice - do-it-yourself internet tools 63% 64% 70% 72% 57% 86% Education - hard copy materials 56% 65% 72% 72% 65% 57% Education group meetings 60% 73% 83% 76% 57% 64% Advice - one-on-one counseling 66% 72% 58% 76% 65% 57% Advice - managed personal accounts 28% 23% 31% 44% 22% 39% Base 182 181 71 25* 23* 28* Retirement Plans 127

2014/2015 Compensation, Retirement and Benefits Trends Report HEALTH AND WELFARE BENEFITS 2014/2015 Compensation, Retirement and Benefits Trends Report 128

Health Plan Options Preferred Provider Organization (PPO) plans remain the most widely available health plan, offered by two-thirds (67%) of all employers. However, since last year when PPO plans were offered by nearly three-quarters (74%), there appears to be a shift away from PPO plans toward High Deductible Health Plans and Traditional Indemnity Plans. Which of the following plans do you offer as health plan options? Preferred Provider Organization (PPO) Plan 67% High Deductible Health Plan (HDHP) with HSAs or HRAs 47% Health Maintenance Organization (HMO) Plan 29% Traditional Indemnity Plan 10% Do Not Offer Health Insurance 1% Other 2% Base = 478 Health and Welfare Benefits 129

Health Plan Options by Industry and by Full Time Employees Industry Which of the following plans do you offer as health plan options? Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Preferred Provider Organization (PPO) Plan 64% 59% 66% 62% 95% 70% 60% High Deductible Health Plan (HDHP) with HSAs or HRAs 51% 53% 55% 48% 43% 25% 51% Health Maintenance Organization (HMO) Plan 17% 29% 28% 15% 38% 47% 28% Traditional Indemnity Plan 9% 24% 15% 14% 5% 12% 9% Do Not Offer Health Insurance 1% 0% 0% 2% 0% 0% 5% Other 0% 0% 2% 0% 0% 3% 5% Base 70 17* 53 52 21* 77 57 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Preferred Provider Organization (PPO) Plan 62% 64% 76% 78% 67% 84% High Deductible Health Plan (HDHP) with HSAs or HRAs 35% 47% 60% 44% 57% 88% Health Maintenance Organization (HMO) Plan 26% 34% 24% 26% 14% 32% Traditional Indemnity Plan 21% 9% 8% 13% 5% 12% Do Not Offer Health Insurance 3% 0% 0% 0% 0% 0% Other 2% 1% 3% 0% 5% 0% Base 165 172 67 23* Base = 21* 25* Health and Welfare Benefits 130

Health Plan Options Similar to last year, PPOs continue to be the most popular option among employees, especially employees in organizations with over 1,000 employees. Overall, 44 percent selected PPOs during the most recent open enrollment period. High Deductible Health Plans continue to grow in popularity, and are now preferred by more than a quarter of employees, up from 16 percent two years ago, and up from 22 percent in 2013. For your most recent open enrollment, which of the following health insurance options was selected by the largest number of employees? 5% 24% 44% Preferred Provider Organization (PPO) Plan High Deductible Health Plan with HSAs or HRAs Health Maintenance Organization (HMO) Plan Traditional Indemnity Plan 27% Base = 207 Health and Welfare Benefits 131

Health Plan Options by Industry and by Full Time Employees For your most recent open enrollment, which of the following health insurance options was selected by the largest number of employees? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Preferred Provider Organization (PPO) Plan 54% 72% 44% 47% 43% 29% 38% High Deductible Health Plan with HSAs or HRAs 23% 0% 37% 26% 21% 17% 29% Health Maintenance Organization (HMO) Plan 19% 14% 19% 16% 29% 46% 29% Traditional Indemnity Plan 4% 14% 0% 11% 7% 9% 4% Base 26* 7* 27* 19* 14* 35 24* Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Preferred Provider Organization (PPO) Plan 42% 31% 41% 46% 100% 86% High Deductible Health Plan with HSAs or HRAs 30% 28% 31% 36% 0% 14% Health Maintenance Organization (HMO) Plan 24% 34% 25% 9% 0% 0% Traditional Indemnity Plan 4% 8% 3% 9% 0% 0% Base 54 80 32 11* 8* 21* Health and Welfare Benefits 132

Health Plan Costs While most employers (85%) saw an increase in health plan costs in 2013, up from 79 percent the previous year, this year, the same percentage of employees (85%) experienced increases, with half reporting increases from 4.1 percent up to 12 percent. What was the average percentage change in your health plan costs for the 2014 plan year? 8% 5% 5% 8% 7% Decreased No Change 0.1%-4% 17% 4.1%-8% 22% 8.1%-12% 12.1%-16% 16.1%-20% Over 20% 28% Base = 441 Health and Welfare Benefits 133

Health Plan Costs by Industry What was the average percentage change in your health plan costs for the 2014 plan year? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Decreased 8% 6% 8% 4% 11% 8% 6% No Change 3% 6% 6% 6% 6% 7% 2% 0.1-4% 19% 11% 30% 15% 22% 13% 20% 4.1-8% 36% 11% 22% 38% 17% 24% 29% 8.1-12% 19% 22% 24% 17% 33% 26% 31% 12.1-16% 8% 22% 4% 6% 0% 12% 8% 16.1-20% 5% 22% 2% 6% 0% 3% 2% Over 20% 2% 0% 4% 8% 11% 7% 2% Base 62 18* 50 48 18* 74 49 Health and Welfare Benefits 134

Health Plan Costs by Full Time Employees What was the average percentage change in your health plan costs for the 2014 plan year? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Decreased 11% 7% 6% 10% 6% 4% No Change 8% 6% 6% 5% 6% 0% 0.1-4% 17% 17% 16% 19% 39% 17% 4.1-8% 22% 26% 30% 43% 28% 74% 8.1-12% 23% 23% 29% 10% 22% 4% 12.1-16% 9% 10% 3% 9% 0% 0% 16.1-20% 4% 7% 5% 5% 0% 0% Over 20% 7% 4% 5% 0% 0% 0% Base 151 161 63 21* 18* 23* Health and Welfare Benefits 135

Health Plan Premiums Overall, the percentage increase in average monthly premium since 2013 was the largest for employee plus one dependent (10% increase), up to $1,006 with the employees sharing close to onethird of the premium. Family coverage increased by 7 percent, employee plus children by 8 percent, and the smallest percentage increase of 3 percent for employee only. For the health plan option selected by the majority of your employees, what is your average total premium amount? What percentage do your employees contribute to the premium amount? Average Monthly Premium Employee Share of Premium Family $1,334 33% Employee + One (Spouse or Child) $1,006 31% Employee + Children $923 31% Employee Only $492 21% Base 383 387 Health and Welfare Benefits 136

Health Plan Premiums by Industry For the health plan option selected by the majority of your employees, what is your average total premium amount? What percentage do your employees contribute to the premium amount? Industry Average Monthly Premium Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Family $1,126 $1,251 $1,271 $1,368 $1,048 $1,679 $1,343 Employee + One (Spouse or Child) $793 $1,012 $924 $988 $960 $1,259 $1,031 Employee + Children $807 $888 $949 $864 $762 $1,087 $889 Employee Only $423 $514 $473 $535 $445 $577 $474 Employee Share of Premium Family 29% 36% 32% 43% 30% 36% 36% Employee + One (Spouse or Child) 26% 36% 30% 39% 20% 34% 34% Employee + Children 25% 39% 28% 40% 25% 32% 34% Employee Only 23% 27% 17% 22% 10% 17% 24% Base 56 17* 46 39 16* 68 42 Health and Welfare Benefits 137

Health Plan Premiums by Full Time Employees For the health plan option selected by the majority of your employees, what is your average total premium amount? What percentage do your employees contribute to the premium amount? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Average Monthly Premium Family $1,348 $1,448 $1,196 $1,239 $1,201 $1,100 Employee + One (Spouse or Child) $1,092 $1,054 $885 $916 $866 $765 Employee + Children $941 $987 $857 $902 $806 $698 Employee Only $507 $517 $477 $430 $426 $396 Employee Share of Premium Family 30% 37% 30% 42% 28% 26% Employee + One 29% 35% 29% 43% 22% 24% Employee + Children 28% 33% 29% 47% 23% 22% Employee Only 18% 20% 25% 35% 24% 24% Base 133 143 57 19* 13* 18* Health and Welfare Benefits 138

Actions to Reduce Healthcare Costs - 2014 Requiring employees to pay a greater share of healthcare costs through increased premium payments, higher deductibles and larger co-payments, remains the most common method of addressing healthcare costs among organizations of all sizes. However, the smallest firms with 50 or fewer employees are more likely than larger firms to not take any action to address their healthcare costs. As was previously noted, consumer-driven healthcare options are becoming more popular with employees; and slightly over one-quarter of organizations reported that they offer this option as a way to address their costs. What actions were taken for the 2014 plan year to address healthcare costs? Raised Employee Portion of Premium Payment Raised Employee Deductibles 38% 38% Offered Consumer Driven Healthcare Option 26% Implemented Wellness Program 20% Conducted Dependent Audit Discontinued Coverage to Dependents Offered Opt-Out Incentive 6% 6% 7% Discontinued Coverage to Part-Time Employees Discontinued Retiree Medical Pursued Coverage Through a Private Exchange Instituted On-Site Health Center Discontinued Coverage, Provided Subsidy for Employee Coverage in State or Federal Exchange No Actions Taken 2% 1% 1% 1% 0% 33% Base = 409 Health and Welfare Benefits 139

Actions to Reduce Healthcare Costs by Industry - 2014 Industry What actions were taken for the 2014 plan year to address healthcare costs? Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Raised Employee Portion of Premium Payment 46% 53% 39% 42% 24% 24% 31% Raised Employee Deductibles 42% 27% 41% 51% 29% 31% 36% Offered Consumer Driven Healthcare Option 33% 13% 13% 33% 35% 10% 27% Implemented Wellness Program 37% 13% 13% 16% 24% 17% 18% Conducted Dependent Audit 9% 7% 9% 5% 12% 3% 4% Offered Opt-out Incentive 5% 0% 4% 5% 12% 13% 4% Discontinued Coverage or Implemented Surcharge for Dependents (if covered under another plan) 11% 7% 4% 7% 12% 3% 0% Discontinued Retiree Medical 2% 0% 0% 0% 0% 0% 0% Discontinued Coverage to Part-Time Employees 2% 0% 0% 0% 0% 0% 0% Continued on next page Health and Welfare Benefits 140

Actions to Reduce Healthcare Costs by Industry - 2014 (Cont d) Industry What actions were taken for the 2014 plan year to address healthcare costs? (Continued from previous page) Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Discontinued Coverage and Provided Subsidy for Employee to Obtain Coverage in State or Federal Exchange 0% 0% 0% 0% 0% 0% 0% Pursued Employee Coverage Through a Private Exchange 2% 0% 0% 2% 0% 0% 0% Instituted On-site Health Center 2% 0% 0% 2% 0% 0% 0% No Actions Taken/Planned 21% 33% 37% 28% 47% 43% 44% Base 57 15* 46 43 17* 70 45 Health and Welfare Benefits 141

Actions to Reduce Healthcare Costs by Full Time Employees 2014 What actions were taken for the 2014 plan year to address healthcare costs? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Raised Employee Portion of Premium Payment 24% 37% 57% 50% 61% 65% Raised Employee Deductibles 21% 43% 45% 50% 33% 74% Offered Consumer Driven Healthcare Option 19% 27% 33% 28% 17% 48% Implemented Wellness Program 10% 20% 24% 22% 50% 48% Conducted Dependent Audit 4% 3% 9% 11% 22% 30% Offered Opt-out Incentive 4% 10% 10% 0% 0% 0% Discontinued Coverage or Implemented Surcharge for Dependents (if covered under another plan) 2% 4% 10% 11% 22% 13% Discontinued Retiree Medical 0% 1% 0% 0% 6% 4% Discontinued Coverage to Part-Time Employees 1% 1% 2% 6% 0% 0% Continued on next page Health and Welfare Benefits 142

Actions to Reduce Healthcare Costs by Full Time Employees 2014 (Cont d) What actions were taken for the 2014 plan year to address healthcare costs? (Continued from previous page) Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Discontinued Coverage and Provided Subsidy for Employee to Obtain Coverage in State or Federal Exchange 0% 0% 0% 0% 0% 0% Pursued Employee Coverage Through a Private Exchange 1% 1% 0% 0% 0% 0% Instituted On-site Health Center 0% 0% 0% 6% 6% 4% No Actions Taken/Planned 54% 25% 22% 22% 11% 9% Base 140 148 58 18* 18* 23* Health and Welfare Benefits 143

Actions to Reduce Healthcare Costs - 2015 Organizations anticipate further cost-sharing with employees in 2015. Again, smaller firms with 50 or fewer employees are less likely to take action to reduce healthcare costs. What actions do you plan to take for the 2015 plan year to address healthcare costs? Raise Employee Portion of Premium Payment 36% Raise Employee Deductibles 30% Implement Wellness Program Offer Consumer Driven Healthcare Option 20% 22% Conduct Dependent Audit Discontinue Coverage to Dependents Offer Opt-Out Incentive 6% 6% 7% Pursue Coverage Through a Private Exchange 4% Discontinue Coverage to Part-Time Employees Discontinue Retiree Medical Pursue Coverage in State or Federal Exchange Institute On-Site Health Center 2% 1% 1% 1% No Actions Planned 35% Base = 341 Health and Welfare Benefits 144

Actions to Reduce Healthcare Costs by Industry - 2015 Industry What actions do you plan to take for the 2015 plan year to address healthcare costs? Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Raise Employee Portion of Premium Payment 38% 39% 32% 51% 36% 29% 21% Raise Employee Co- Payment or Co-Insurance 33% 15% 18% 39% 46% 29% 29% Offer Consumer Driven Healthcare Option 25% 8% 16% 22% 36% 10% 21% Implement Wellness Program 35% 23% 11% 17% 9% 15% 24% Conduct Dependent Audit 6% 0% 5% 7% 0% 3% 3% Offer Opt-out Incentive 6% 0% 5% 5% 0% 15% 0% Discontinue Coverage or Implement Surcharge for Dependents (If covered under another plan) 4% 8% 5% 7% 9% 2% 3% Discontinue Retiree Medical 0% 0% 5% 0% 0% 0% 0% Discontinue Coverage to Part-time Employees 0% 0% 3% 2% 0% 2% 0% Continued on next page Health and Welfare Benefits 145

Actions to Reduce Healthcare Costs by Industry 2015 (Cont d) Industry What actions do you plan to take for the 2015 plan year to address healthcare costs? (Continued from previous page) Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Discontinue Coverage and Provide Subsidy for Employee to Obtain Coverage in State or Federal Exchange 0% 0% 0% 0% 9% 2% 0% Pursue Employee Coverage Through a Private Exchange 2% 0% 0% 7% 18% 2% 8% Institute On-site Health Center 2% 0% 0% 0% 0% 0% 0% No Actions Planned 25% 54% 42% 29% 45% 42% 42% Base 48 13* 38 41 11* 59 38 Health and Welfare Benefits 146

Actions to Reduce Healthcare Costs by Full Time Employees - 2015 What actions do you plan to take for the 2015 plan year to address healthcare costs? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Raise Employee Portion of Premium Payment 26% 39% 40% 44% 33% 52% Raise Employee Co- Payment or Co-Insurance 23% 37% 25% 28% 27% 48% Offer Consumer Driven Healthcare Option 13% 26% 17% 17% 20% 38% Implement Wellness Program 11% 24% 33% 11% 20% 48% Conduct Dependent Audit 2% 2% 10% 6% 13% 43% Offer Opt-out Incentive 4% 8% 12% 0% 0% 0% Discontinue Coverage or Implement Surcharge for Dependents (If covered under another plan) 2% 3% 12% 6% 20% 19% Discontinue Retiree Medical 0% 1% 0% 0% 0% 14% Discontinue Coverage to Part-time Employees 1% 3% 4% 6% 0% 0% Continued on next page Health and Welfare Benefits 147

Actions to Reduce Healthcare Costs by Full Time Employees 2015 (Cont d) What actions do you plan to take for the 2015 plan year to address healthcare costs? (Continued from previous page) Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Discontinue Coverage and Provide Subsidy for Employee to Obtain Coverage in State or Federal Exchange 1% 1% 0% 0% 0% 0% Pursue Employee Coverage Through a Private Exchange 3% 4% 6% 0% 0% 19% Institute On-site Health Center 0% 0% 0% 6% 7% 0% No Actions Planned 50% 33% 31% 28% 27% 5% Base 110 123 52 18* 15* 21* Health and Welfare Benefits 148

Healthcare Reform The majority of employers recognize the importance of offering employee group health coverage, and will continue to provide this benefit through their current plan. What actions are you most likely to take for the next plan year regarding your group healthcare coverage? 2% 2% 1% 11% Continue current group health coverage Obtain group health coverage through a state exchange Not offer group health coverage 84% Undecided Other Base = 436 Health and Welfare Benefits 149

Healthcare Reform by Industry and by Full Time Employees Industry What actions are you most likely to take for the next plan year regarding your group healthcare coverage? Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Continue current group health coverage 90% 94% 92% 78% 89% 84% 81% Obtain group health coverage through a state exchange 0% 0% 2% 0% 0% 0% 4% Not offer group health coverage 0% 0% 0% 0% 0% 0% 0% Undecided 10% 6% 6% 17% 11% 12% 12% Other 0% 0% 0% 4% 0% 4% 2% Base 61 18* 49 46 18* 73 52 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Continue current group health coverage 79% 83% 95% 90% 83% 91% Obtain group health coverage through a state exchange 3% 1% 2% 0% 0% 0% Not offer group health coverage 2% 0% 0% 0% 0% 0% Undecided 14% 13% 3% 0% 11% 5% Other 2% 3% 0% 10% 6% 5% Base 150 160 62 20* 18* 22* Health and Welfare Benefits 150

Healthcare Reform This year, more organizations (85%) do not intend to increase the number of employees working less than 30 hours per week due to healthcare reform, up from around three-quarters last year. Do you intend to increase the number of employees working less than 30 hours/week due to healthcare reform (e.g. cap hours below 30 hours/week, add part-time staff)? Not Sure 8% Yes 7% No 85% Base = 437 Health and Welfare Benefits 151

Healthcare Reform by Industry and by Full Time Employees Do you intend to increase the number of employees working less than 30 hours/week due to health care reform (e.g. cap hours below 30 hours/week, add part-time staff)? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes 0% 11% 4% 9% 0% 7% 12% No 90% 83% 88% 85% 94% 93% 86% Not Sure 10% 6% 8% 6% 6% 0% 2% Base 61 18* 49 46 18* 73 52 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes 7% 4% 13% 5% 17% 0% No 85% 87% 82% 90% 67% 96% Not Sure 8% 9% 5% 5% 16% 4% Base 150 160 62 20* 18* 23* Health and Welfare Benefits 152

Other Benefits The majority of organizations currently offer various types of health and wellness benefits to their employees. Next year, only a small percentage of organizations plan to discontinue certain benefits. While there is expected to be some growth seen in wellness programs, as one might expect, smaller organizations with 50 or fewer employees are less likely to offer wellness programs than larger firms. Which of the following benefits do you currently offer? Dental 95% Life 93% Long-term Disability 83% Short-term Disability 72% Vision 67% Wellness Programs 39% Long-Term Care Insurance 16% Retiree Medical 12% On-site Health Center 6% Base = 427 Health and Welfare Benefits 153

Other Benefits by Industry Currently Offered Which of the following benefits do you currently offer? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Dental 97% 94% 96% 93% 100% 99% 90% Life 100% 88% 100% 91% 88% 93% 92% Long-term Disability 82% 94% 96% 71% 77% 89% 78% Short-term Disability 90% 82% 90% 69% 77% 63% 66% Vision 61% 47% 80% 67% 59% 76% 60% Wellness Programs 61% 24% 53% 31% 18% 27% 32% Long-Term Care Insurance 8% 6% 29% 9% 0% 18% 18% Retiree Medical 15% 6% 18% 13% 0% 8% 12% On-site Health Center 7% 0% 4% 13% 0% 3% 0% Base 62 17* 49 45 17* 71 50 Health and Welfare Benefits 154

Other Benefits by Full Time Employees Currently Offered Which of the following benefits do you currently offer? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Dental 91% 96% 97% 100% 94% 100% Life 85% 96% 97% 100% 100% 100% Long-term Disability 72% 82% 90% 100% 94% 100% Short-term Disability 58% 70% 84% 100% 89% 91% Vision 55% 67% 74% 95% 61% 100% Wellness Programs 20% 36% 60% 50% 72% 83% Long-Term Care Insurance 14% 12% 26% 20% 11% 17% Retiree Medical 8% 8% 19% 10% 33% 35% On-site Health Center 3% 4% 3% 15% 22% 22% Base 141 159 62 20* 18* 23* Health and Welfare Benefits 155

Other Benefits Please indicate which benefits you plan to offer next year. Dental 89% Life 85% Long-term Disability 75% Vision 66% Short-term Disability 65% Wellness Programs 48% Retiree Medical 16% Long-Term Care Insurance 12% On-site Health Center 60% Base = 427 Health and Welfare Benefits 156

Other Benefits by Industry Plan to Offer in 2015 Please indicate which benefits you plan to offer next year. Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Dental 89% 64% 93% 81% 100% 91% 83% Life 95% 64% 93% 78% 82% 81% 92% Long-term Disability 76% 73% 93% 61% 73% 76% 78% Short-term Disability 84% 55% 79% 61% 64% 62% 58% Vision 57% 36% 75% 69% 55% 72% 64% Wellness Programs 68% 55% 64% 42% 9% 36% 44% Long-Term Care Insurance 5% 9% 29% 11% 0% 23% 11% Retiree Medical 8% 9% 18% 11% 0% 8% 11% On-site Health Center 8% 9% 4% 14% 0% 6% 0% Base 37 11* 28* 36 11* 53 36 Health and Welfare Benefits 157

Other Benefits by Full Time Employees Plan to Offer in 2015 Please indicate which benefits you plan to offer next year. Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Dental 84% 90% 91% 88% 80% 100% Life 77% 88% 89% 88% 80% 100% Long-term Disability 66% 71% 84% 88% 87% 100% Short-term Disability 52% 63% 80% 88% 73% 94% Vision 51% 67% 69% 81% 67% 100% Wellness Programs 25% 46% 76% 63% 60% 82% Long-Term Care Insurance 16% 14% 20% 6% 13% 24% Retiree Medical 9% 6% 16% 6% 27% 35% On-site Health Center 2% 5% 2% 25% 20% 24% Base 88 112 45 16* 15* 17* Health and Welfare Benefits 158

Other Benefits Consistent with the last couple years, most employers plan to make no changes in 2015 to dental, vision, life insurance, short-term and long-term disability and long term care insurance. While onefifth plans to increase dental insurance, another one-fifth plans to reduce or discontinue this coverage. Like last year, close to one-third expect to increase wellness programs. Please indicate which of the following changes you intend to make for each of the following benefits in the upcoming year. Wellness Programs -1% 31% On-site Health Center 0% 11% Vision Insurance -1% 2% Dental Insurance Short-term Disability -20% -1% 2% 20% Reduce/Discontinue Increase Life Insurance -1% 2% Long-Term Care Insurance -2% 2% Long-Term Disability -2% 2% Retire Medical -11% -30% -20% -10% 0% 10% 20% 30% 40% Base = 455 Health and Welfare Benefits 159

Other Benefits by Industry Changes Planned Please indicate which of the following changes you intend to make for each of the following benefits in the upcoming year. Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Dental Increase benefit 0% 0% 2% 2% 0% 1% 4% Reduce benefit 0% 0% 6% 2% 0% 3% 2% Discontinue benefit 0% 0% 0% 0% 0% 0% 0% No change 100% 100% 92% 96% 100% 96% 94% Vision Increase benefit 0% 0% 5% 3% 0% 2% 6% Reduce benefit 0% 0% 0% 3% 0% 0% 0% Discontinue benefit 0% 0% 0% 0% 0% 4% 0% No change 100% 100% 95% 94% 100% 94% 94% Life Increase benefit 2% 0% 6% 0% 0% 0% 2% Reduce benefit 0% 0% 0% 0% 0% 5% 0% Discontinue benefit 0% 0% 0% 0% 0% 0% 0% No change 98% 100% 94% 100% 100% 95% 98% Continued on next page Health and Welfare Benefits 160

Other Benefits by Industry Changes Planned (Cont d) Please indicate which of the following changes you intend to make for each of the following benefits in the upcoming year. (Continued from previous page) Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Short-Term Disability Increase benefit 0% 0% 2% 6% 0% 9% 0% Reduce benefit 2% 0% 2% 0% 0% 2% 0% Discontinue benefit 0% 0% 0% 0% 0% 2% 0% No change 98% 100% 96% 94% 100% 89% 100% Long-Term Disability Increase benefit 0% 0% 0% 3% 0% 3% 3% Reduce benefit 0% 0% 0% 0% 0% 2% 0% Discontinue benefit 0% 0% 0% 0% 0% 0% 2% No change 100% 100% 100% 97% 100% 95% 95% Long-Term Care Insurance Increase benefit 0% 0% 7% 0% 0% 0% 0% Discontinue benefit 0% 0% 0% 0% 0% 0% 11% No change 100% 100% 100% 100% 100% 100% 89% Continued on next page Health and Welfare Benefits 161

Other Benefits by Industry Changes Planned (Cont d) Please indicate which of the following changes you intend to make for each of the following benefits in the upcoming year. (Continued from previous page) Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Wellness Programs Increase benefit 33% 43% 24% 38% 0% 41% 30% Reduce benefit 3% 0% 0% 0% 0% 0% 0% Discontinue benefit 0% 0% 3% 0% 0% 0% 0% No change 64% 57% 73% 62% 100% 59% 70% Retiree Medical Increase benefit 0% 0% 0% 0% 0% 0% 0% Reduce benefit 0% 0% 11% 0% 0% 20% 0% Discontinue benefit 0% 0% 22% 0% 0% 0% 0% No change 100% 100% 67% 100% 100% 80% 100% On-Site Health Center Increase benefit 20% 0% 50% 0% 0% 33% 0% No change 80% 100% 50% 100% 100% 67% 100% Base 62 16* 49 42 15* 69 48 Health and Welfare Benefits 162

Other Benefits by Full Time Employees Changes Planned Please indicate which of the following changes you intend to make for each of the following benefits in the upcoming year. Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Dental Increase benefit 1% 1% 5% 0% 6% 4% Reduce benefit 2% 3% 2% 0% 0% 0% Discontinue benefit 0% 0% 0% 0% 0% 0% No change 97% 96% 93% 100% 94% 96% Vision Increase benefit 1% 2% 2% 0% 8% 9% Reduce benefit 0% 1% 0% 0% 8% 0% Discontinue benefit 1% 1% 0% 0% 0% 0% No change 98% 96% 98% 100% 84% 91% Life Increase benefit 2% 1% 2% 0% 6% 4% Reduce benefit 3% 0% 0% 0% 0% 4% Discontinue benefit 0% 0% 0% 0% 0% 0% No change 95% 99% 98% 100% 94% 92% Continued on next page Health and Welfare Benefits 163

Other Benefits by Full Time Employees Changes Planned (Cont d) Please indicate which of the following changes you intend to make for each of the following benefits in the upcoming year. (Continued from previous page) Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Short-Term Disability Increase benefit 1% 1% 6% 0% 6% 5% Reduce benefit 0% 0% 2% 0% 6% 5% Discontinue benefit 0% 0% 0% 0% 0% 0% No change 99% 99% 92% 100% 88% 90% Long-Term Disability Increase benefit 0% 2% 4% 0% 6% 4% Reduce benefit 2% 0% 0% 0% 6% 0% Discontinue benefit 2% 0% 0% 0% 0% 0% No change 96% 98% 96% 100% 88% 96% Long-Term Care Insurance Increase benefit 5% 0% 0% 0% 0% 0% Discontinue benefit 0% 0% 6% 0% 0% 0% No change 95% 100% 94% 100% 100% 100% Continued on next page Health and Welfare Benefits 164

Other Benefits by Full Time Employees Changes Planned (Cont d) Please indicate which of the following changes you intend to make for each of the following benefits in the upcoming year. (Continued from previous page) Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Wellness Programs Increase benefit 19% 30% 36% 30% 23% 35% Reduce benefit 0% 0% 2% 0% 0% 0% Discontinue benefit 0% 1% 0% 0% 0% 0% No change 81% 69% 62% 70% 77% 55% Retiree Medical Increase benefit 0% 0% 0% 0% 0% 0% Reduce benefit 9% 8% 0% 0% 17% 0% Discontinue benefit 9% 8% 0% 0% 0% 13% No change 82% 84% 100% 100% 83% 87% On-Site Health Center Increase benefit 0% 0% 33% 33% 20% 0% No change 100% 100% 67% 67% 80% 100% Base 124 154 60 19* 17* 23* Health and Welfare Benefits 165

Wellness Programs What types of wellness programs/activities do you offer your employees? Health Risk Assessment 65% Group Wellness Activities 61% Education Programs Focused on Wellness and Disease Prevention 58% Tabacco Cessation 58% Biometric Screening 57% Weight Management Program 44% Health Coaching 38% On-Site Health Clinic 23% Base = 190 Health and Welfare Benefits 166

Wellness Programs by Industry Industry What types of wellness programs/activities do you offer your employees? Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Education programs focused on wellness and disease prevention 72% 17% 64% 58% 20% 60% 33% Health risk assessment 69% 83% 61% 63% 60% 53% 67% Group wellness activities 72% 17% 57% 68% 40% 53% 27% Tobacco cessation 80% 83% 54% 68% 60% 33% 60% Biometric screening 64% 67% 68% 53% 40% 47% 47% Weight management program 49% 50% 43% 32% 40% 30% 53% Health coaching 42% 17% 46% 47% 20% 17% 20% On-site health clinic or subsidy to outside facility 23% 17% 25% 26% 40% 7% 27% Base 3 6* 28* 19* 5* 30 15* Health and Welfare Benefits 167

Wellness Programs by Full Time Employees What types of wellness programs/activities do you offer your employees? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Education programs focused on wellness and disease prevention 37% 56% 62% 60% 93% 75% Health risk assessment 40% 61% 69% 90% 86% 85% Group wellness activities 29% 64% 62% 60% 86% 85% Tobacco cessation 40% 49% 64% 70% 86% 85% Biometric screening 26% 54% 69% 70% 71% 85% Weight management program 34% 29% 54% 50% 71% 80% Health coaching 14% 31% 31% 60% 86% 80% On-site health clinic or subsidy to outside facility 26% 14% 28% 20% 43% 25% Base 35 70 39 10* 14* 20* Health and Welfare Benefits 168

Wellness Programs What types of incentives do you provide employees to encourage participation and positive wellness program outcomes? Raffles or Giveaways 49% Employee Contribution Discount/Account Credit for Participation 32% Employee Contribution Discount/Account Credit for Improvement 12% Limit Medical Plan Choices 1% Base = 176 Health and Welfare Benefits 169

Wellness Programs by Industry - Incentives What types of incentives do you provide employees to encourage participation and positive wellness program outcomes? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Employee contribution discount/account credit for participation in certain wellness activities 42% 0% 32% 41% 50% 0% 54% Employee contribution discount/account credit for improvement in outcomes related to wellness 17% 0% 14% 0% 0% 7% 23% Limit medical plan choices based on participation in certain wellness activities 0% 0% 0% 12% 0% 0% 0% Raffles or giveaways 50% 40% 57% 41% 50% 46% 15% Base 36 5* 28* 17* 4* 28* 13* Health and Welfare Benefits 170

Wellness Programs by Full Time Employees - Incentives What types of incentives do you provide employees to encourage participation and positive wellness program outcomes? Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Employee contribution discount/account credit for participation in certain wellness activities 12% 20% 41% 67% 77% 53% Employee contribution discount/account credit for improvement in outcomes related to wellness 6% 11% 15% 0% 23% 21% Limit medical plan choices based on participation in certain wellness activities 0% 0% 0% 0% 8% 5% Raffles or giveaways 36% 56% 56% 33% 31% 53% Base 33 66 34 9* 13* 19* Health and Welfare Benefits 171

Health and Welfare Advisors More than two-thirds (70%) of organizations utilize an outside advisor or consultant for employee health and welfare plan services. Of this group, around four-fifths (83%) use the advisor for plan design, cost analysis / management, and vendor selection. Does your plan currently utilize an outside advisor/consultant? If yes, please select the types of health/welfare plan services for which you engage them. Vendor Selection 83% No 30% Cost Analysis/Management 83% Yes 70% Plan Design 81% Base = 433 Base = 302 Health and Welfare Benefits 172

Health and Welfare Advisors by Industry and by Full Time Employees Please select the types of health and welfare plan services for which you engage an outside advisor or consultant. Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Cost Analysis / Management 85% 92% 87% 76% 100% 87% 70% Plan Design 85% 85% 84% 79% 92% 85% 67% Vendor Selection 77% 100% 90% 76% 83% 85% 87% Base 48 13* 31 29* 12* 52 30 Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Cost Analysis / Management 69% 82% 91% 100% 81% 82% Plan Design 73% 83% 89% 87% 88% 96% Vendor Selection 83% 82% 89% 93% 75% 73% Base 88 113 44 15* 16* 22* Health and Welfare Benefits 173

Advising Plan Participants Most organizations who use a retirement plan advisory or consulting firm for their retirement plan, use the same firm for health and welfare plan consulting. If you use a retirement plan advisory or consulting firm, do you also use this same advisory or consulting firm for health and welfare plan consulting? No 19% Yes 81% Base = 52 Health and Welfare Benefits 174

Advising Plan Participants by Industry and by Full Time Employees If you use a retirement plan advisory or consulting firm, do you use the same advisory or consulting firm for health and welfare plan consulting? Industry Manufacturing Distribution/ Wholesale Finance / Banking / Insurance Healthcare Construction/ Real Estate Not-For- Profit Professional Services Yes 71% 100% 100% 25% 100% 75% 100% No 29% 0% 0% 75% 0% 25% 0% Base 7* 3* 3* 4* 3* 8* 9* Number of FTEs 50 or Fewer 51-200 201-500 501-1,000 1,001-5,000 5,001+ Yes 75% 71% 90% 100% 67% 100% No 25% 29% 10% 0% 33% 0% Base 16* 14* 10* 2* 3* 7* Health and Welfare Benefits 175

Since 1985, Verisight s mission remains the same to be the best client-centric service provider of 401(k) and other retirement plans; recordkeeping and administration; actuarial services; ESOP; compensation and employee benefits consulting. We are our clients trusted partner, combining in-depth insight and expertise with a fully transparent fee model that allows us to deliver unbiased solutions that meet the unique needs of each of our clients. Discover the Verisight difference. Call 855.751.2127, visit www. or email CRBTrends@. McGladrey LLP is the leading U.S. provider of assurance, tax and consulting services focused on the middle market, with more than 7,000 people in 75 offices nationwide. McGladrey is a licensed CPA firm and serves clients around the world through RSM International, a global network of independent assurance, tax and consulting firms. McGladrey uses its deep understanding of the needs and aspirations of clients to help them succeed. DailyAccess, a Verisight company, is a retirement and benefit plan service provider delivering comprehensive, cost-effective, and easy-to-use benefits services. DailyAccess provides, either directly or through its wholly owned subsidiaries, InterServ, LLC and DailyAccess Health and Welfare Services, LLC, recordkeeping, administration, consulting, actuarial, investment advisory, and health and welfare services customized to its clients needs. For more information, visit www.dailyaccess.com. We are pleased to have the support of the American Benefits Institute and DailyAccess for the 2014/2015 Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey. For more information, visit www.mcgladrey.com, like us on Facebook at McGladrey News, follow us on Twitter @McGladrey and/or connect with us on LinkedIn. The contents of this report are provided for informational purposes only and should not be relied upon or considered legal or tax advice. While Verisight makes every effort to ensure the accuracy of the report, it assumes no responsibility for the accuracy thereof and accepts no liability for any reliance on the report. 2014 Verisight, Inc. All Rights Reserved, including the right to produce any portion of this report without prior written consent.