Competitive Market Compensation Review July 2009 Project Overview

1 Initial Charge/ Background  In an effort to identify and define an appropriate compensation structure for Ocean Leadership (OL), Nonprofit HR Solutions (NPHRS), OL’s human resources partner, was tasked with: Collecting and analyzing job content data (i.e., duties, responsibilities and work requirements) on covered positions; Collecting and analyzing job content data (i.e., duties, responsibilities and work requirements) on covered positions; Articulating a protocol for benchmarking compensation among comparable organizations; Articulating a protocol for benchmarking compensation among comparable organizations; Benchmarking total pay (base salary plus other cash) levels and practices using published surveys sources; Benchmarking total pay (base salary plus other cash) levels and practices using published surveys sources; Comparing how Ocean Leadership’s current cash compensation compares to developed market pay rates for similar positions; and Comparing how Ocean Leadership’s current cash compensation compares to developed market pay rates for similar positions; and

2 Initial Charge/ Background  Preparing and presenting our study methodologies, market findings, as well as observations and conclusions.  OL did not have a formal program in place to manage employee pay.  Although there was no formal structure in place, OL’s compensation practices have generally maintained salaries at competitive levels.

3 Market Review Objectives  To attract, motivate and retain capable employees  To ensure equity (internal and external) and fairness  To pay commensurate with duties and responsibilities  To identify career progression opportunities  To ensure consistency with position titling

4 Job Analysis: Foundation of Pay Program Employee Job Description Employee Job Description OL Review Consultant Review Basis for position evaluation and market pricing.

5 Basic Design Elements Market Pricing Job Analysis Position Evaluation Salary Range Base Salary Delivery  Published surveys  “Whole Job”  Position Leveling  Salary increases  Job Bands  Job Descriptions  Titling

6 Market Pricing: External Valuation  NPHRS believes an organization’s actual pay is competitive if it falls within 85% to 115% of developed market pay rates for management or within 90% to 110% for all other employees, since market pricing is not an exact science.  Compared how OL’s current cash compensation “stacks up” against developed market pay rates for similar positions

7 Pay Survey Sources Used Cordom Associates, Salary Survey for Non-Profit Organizations, 2008 Human Resources Association, National Capital Area Compensation Survey, 2008 PRM Consulting, Management Compensation Report of Not-for- Profit Organizations, 2008 Salary.com, CompAnalyst, 2009 Total Compensation Solutions, Not-for- Profit Compensation Survey, 2008 Watson Wyatt, Middle Management Report, 2007 Watson Wyatt, Professional Administrative Services Report, 2007 Watson Wyatt, Professional Specialized Services Report, 2007 Mercer, Benchmark Database – Metropolitan Benchmark Survey, 2008 Mercer, Information Technology Compensation Survey, 2008

8 Findings  OL’s current actual pay is competitive on average, in relation to the market median for similar positions in comparable organizations. Market median represents the figure above and below which half of all reported figures fall.  This is consistent with OL’s articulated desire to compensate its staff at or close to the market median wherever possible.  Although there was no formal structure in place, OL’s compensation practices have maintained salaries at competitive levels. OL’s base salaries have been adjusted through COLAs of 3.5% - 4.0% over the past few years. The average market movement in base salaries in both the profit and not-for-profits sectors has been, on average, at 3.5% - 4.0% per annum over the past 5 years.OL’s base salaries have been adjusted through COLAs of 3.5% - 4.0% over the past few years. The average market movement in base salaries in both the profit and not-for-profits sectors has been, on average, at 3.5% - 4.0% per annum over the past 5 years.

9 Actions Taken  We articulated OL’s employee pay philosophy and objectives in a manner that conveys OL’s desire to have a compensation program that reflects equity, fairness and recognition of the internal and external value of all positions;  We constructed a base salary structure, including grades and ranges to reflect OL’s pay philosophy;  We assigned positions to salary grades using the developed market base salaries, and reflecting internal equity and organizational value;  We established formal career levels and developed consistent job titling ensuring consistency and clarity going-forward;  We estimated the cost to implement the approved salary structure; and  We agreed on a communications plan for program roll-out.

Approved Salary Structure 85%100%120% GradeMinimumMidpointMaximum ($000)

11 Summary of OL’s Competitive Position  Salary adjustments have been made in response to review  Salary Increase: Factors Considered  Current Salary vs Competitive Market Salary  Internal equity  Individual performance  Annual Salary Increase Budget Competitive Range Degree of Competitiveness All Employees Median # Ees % Total > 115%59.6% 85% - 115%4688.5% < 85%11.9% Total %

12 Next Steps  OL will administer and maintain the program on an on- going basis to help ensure fair and equitable employee pay in the future.  NPHRS believes the adoption of the recommended changes will improve the external competitiveness of OL’s employee pay program as well as help to attract, engage and retain qualified talent in the future.  OL will regularly (i.e. bi-annually) review the approved salary structure to ensure that it remains consistent with competitive pay rates of comparably situated organizations

13 Quick Note on Salary Structure Rationale  The purpose of each component of the approved salary structure is as follows: The minimum is the rate paid an employee who possesses minimal qualifications and is expected to be able to perform the basic duties and responsibilities of a job after normal training. The minimum is the rate paid an employee who possesses minimal qualifications and is expected to be able to perform the basic duties and responsibilities of a job after normal training. The midpoint is the “going rate” for an employee whose performance satisfactorily fulfills the requirements of the position and who typically is fully proficient in his/her primary areas of responsibility The midpoint is the “going rate” for an employee whose performance satisfactorily fulfills the requirements of the position and who typically is fully proficient in his/her primary areas of responsibility The maximum is the highest rate available for an employee whose performance consistently exceeds its position requirements or for whom longevity with the organization causes him/her to reach the top of the range for his/her position. The maximum is the highest rate available for an employee whose performance consistently exceeds its position requirements or for whom longevity with the organization causes him/her to reach the top of the range for his/her position.