Executive Compensation Why, What and How Philadelphia Bar Association HR Committee April 27, 2007 Philadelphia Bar Association HR Committee April 27, 2007

2 Human Capital Philosophy Human Capital Strategy Shareholder Value Business Strategy

3 Define the people who you want to attract, engage, and retain. Human Capital Processes Define the pay and incentive systems that will attract, engage, and retain the right people. Define the benefit programs that will provide the appropriate level of protection for people and their families. Talent Management Compensation Benefits Culture Alignment Define your values and the cultural dynamics that will attract, engage, and retain the right people. HR Operations Define the HR function that will align your human capital and business strategies.

4 Themes  Regulatory environment  Press coverage  Board of Director sensitivity  Compensation committee processes  Company corporate culture  Shareholder push back  Regulatory environment  Press coverage  Board of Director sensitivity  Compensation committee processes  Company corporate culture  Shareholder push back

5 Themes  Disclosure practices  Outside consultants  Plan design alternatives  Disclosure practices  Outside consultants  Plan design alternatives

6 The Why of Executive Compensation  Attraction & Retention  Competitive landscape  Company practice  “I had it before” syndrome  Drive business success  Improve shareholder return (?)  Attraction & Retention  Competitive landscape  Company practice  “I had it before” syndrome  Drive business success  Improve shareholder return (?)

7 The What of Executive Compensation  Base pay  Cash incentives  Stock incentives  Deferred compensation  Retention awards  Base pay  Cash incentives  Stock incentives  Deferred compensation  Retention awards

8 The What of Executive Compensation  Perks  Employment contracts  Severance arrangements  Change-in-control agreements  Perks  Employment contracts  Severance arrangements  Change-in-control agreements

9 The How of Executive Compensation  Compensation philosophy  Mix of compensation  Annual bonus plan  Long-term bonus plan  Legal, tax and financial implications  Board accountability  Compensation philosophy  Mix of compensation  Annual bonus plan  Long-term bonus plan  Legal, tax and financial implications  Board accountability

10 About Jim Geier  25 plus years of global and board-level corporate and consulting experience  President and founder of Human Capital Consulting Partners  Previously Vice President, Human Resources at Quaker Chemical Corporation  Former Vice President, Human Resources, for the Americas Region at Rhône-Poulenc Rorer Pharmaceuticals (today Sanofi-Aventis)  Board of Directors at Franklin Mint Federal Credit Union and Philadelphia Young Playwrights  25 plus years of global and board-level corporate and consulting experience  President and founder of Human Capital Consulting Partners  Previously Vice President, Human Resources at Quaker Chemical Corporation  Former Vice President, Human Resources, for the Americas Region at Rhône-Poulenc Rorer Pharmaceuticals (today Sanofi-Aventis)  Board of Directors at Franklin Mint Federal Credit Union and Philadelphia Young Playwrights

11 Human Capital Consulting Partners Contact: Jim Geier President Human Capital Consulting Partners Contact: Jim Geier President Human Capital Consulting Partners