Compensation Trends

1
Compensation Trends Forecasts

• AEB HR CB Sub-Committee
• November 2005

2
Main Areas

• Overall Comp Level Trends
• Hot compensation items
• Hot market segments
• Surprises
• Predictions and the wider HR Agenda

3
Overall Compensation Trends

• 2004 estimate was for average 10 pay increases
  2004-2005
• Actual was more in the region of 12
• age comp rises for more senior positions have
  been higher than for junior positions
• Pay increases in 2005 have been higher than in
  2004 across the board
• Use of ruble as currency of pay denomination
  increasing

4
Overall Compensation Trends

• Percentage of variable pay increasing slightly
  (range of 9-19 2005 compared to 7-16.5 2004)
• Bonuses still overwhelmingly annual
• Increased use of LTIPs (up from 18 to 22), with
  more organisations rolling out world wide share
  plan (53 to 59) if they have one

5
Hot compensation areas

• Company Cars up from 80 to 83 in general, and
  increase in luxury car (gt50k) provision from 16
  to 21
• Life Assurance up from 54 to 63
• Disability Accident Insurance up from 62 to
  86
• Mobile Phones only 7 of companies now forcing
  employees to pay all private calls

6
Hot market segments

• Corporate Affairs Director up 60, all customer
  service positions up by more than market
• Internal Auditor up 51 (maybe a changing role).
  Most internal audit roles are up, as are quality
  assurance positions.
• Production Operator 47
• Junior Sales positions up significantly (30
  plus)
• Supply chain and distribution positions (20-40)
• Programmers 21
• GAAP Accountants 38

7
Cold market sectors

• Drivers and couriers (down 7)
• Translators and interpreters (down 22)
• Marketing positions - consistently less than
  average
• IT operators (by contrast with programmers) from
  -3 to plus 7

8
Surprises

• Companies with corporate sponsored pensions
  consistent at 13 for the fifth year running
• Senior sales positions (consistent with
  marketing) do not see major pay rises
• Fewer companies looking to increase headcount
  (60 2005 compared to 65 2004) and planned
  median increase down (15.5 2005 compared to
  18.2 2004) Stabiliasation?

9
Predictions Pay Rises

• Planned median pay rise for 2005 is 10 (same as
  2004 planned figure). However average planned
  pay rise is up a little (about 1 on average)
• We would not expect major movement on pensions
• We would expect more focus on incentives,
  especially longer term incentives

10
The wider HR agenda

• Greater array of priority issues than 2004, but
  the chief ones remain the same
• 2004- recruitment 17 training 17 comp ben
  13
• 2005 comp ben 14 recruitment 14 training
  13