1	Compensation Trends 2007
2	Discussion Points External Factors Internal Pressures Trends Retention and Succession Planning What’s your Compensation Philosophy?
3	External Factors Econ 101—Global and Local Labor Market Unemployment 4.1%---very low! Focus on Retention Internship programs Comp Gains eroded by gas & health costs
4	Regulations & Corporate Governance FASB & Expensing SEC 2006 Exec Comp Disclosure Rules Sarbanes-Oxley, IRS, Media Vocal large Investors (ISS & Vanguard)
5	Internal Pressures Salary pressures of new hires Hold salary costs; but ineffective incentives Align Compensation to Business Strategies Compensation will be “the” issue in 2007
6	Internal Pressures (con’t) Differentiate High/Low performers Workforce seeks non-monetary rewards Professional Development Career planning Work/Life Balance
7	Compensation Components Attract: Base Salary Attract/Neutral: Benefits Reward: Performance Incentive Plans Retain: Long Term Incentives Deferred Compensation Work/Life Balance
8	Current Trends Merit Increase 2006 Actual….3.7 to 4.0% 2007 Projected: 4.0% Salary Structure Movement Midpoints moved 3.2% (Radford) Stock Options aren’t dead yet, but….
9	Bonus Trends Sign-on Bonuses—they’re back! Retention Bonuses are more frequent “Hot Skills” Bonus
10	Compensation Philosophy Is it aligned with business? Pay for performance?? Really? What is your Compensation horizon? Performance measures Tiffany vs. Wal-Mart?
11	Short Term Incentive Plans Profit Sharing Discretionary Bonuses Formal Incentive Plans
12	Long-Term Incentives Alternatives to Stock Options Restricted Stock Grants Non-Qual Deferred Compensation Plans Executive Plans Deferred Compensation Non-qualified Deferred Compensation Retention & Succession Planning
13	Total Rewards Chart
14	Annual Comp Checklist Define Your Compensation Philosophy Calculate Real Turnover Costs & Reasons Review and Realign Identify Misalignments & Fix them Educate managers Effective and Frequent Communication
15	Resource Allocation…. Identify high impact components Select business comparisons appropriately Deliver highest value reward to recipient Align business plans with business metrics Design HR processes for optimal resource allocation
16	HR’s 2007 Challenges #1 Stock Options: What to do? #2 Align incentives to business performance #3 Long Term alternatives to Stock Options #4 Align Incentive Pay to Performance Metrics #5 Retention will require non-comp strategies #6 HR’s role with Executive Comp issues
17	Your questions…
18	For more information… Cherryll Sevy Cypress Ridge Solutions & Insurance Services, Inc. 607 N. First St. San Jose, CA 408.358.7794 csevy@cypressridgesolutions.com www.cypressridgesolutions.com