Dallas  Seattle  Austin  Cleveland THE WATERS CONSULTING GROUP, INC. Presented by: Report on Total Compensation Presentation to the City of Greenville and Greenville Utilities Commission January 11, 2011

Today’s Discussion  Classification and Compensation Study Status  Definition of Total Compensation  Analysis of Public and Private Sector Data  Methodologies  Summary of Total Compensation Comparison  Proposed Compensation Philosophy  Retiree Benefits Review 2©2011 The Waters Consulting Group, Inc.

Focus on Total Compensation  Simply Defined: An Organization’s commitment to how it values its employees  Goal of the Philosophy: Attract, Retain, and Motivate Qualified Employees 3©2011 The Waters Consulting Group, Inc.

Standard Components of Total Compensation ©2011 The Waters Consulting Group, Inc.4 Direct Pay Wages/Salaries Benefits Medical/Life Insurance Retirement Workers Comp Paid Leave Rewards Merit Pay Bonuses Total Compensation

Project Update Job Analysis Salary Structure System Administration Compensation Philosophy Salary, Benefits, and Pay Practices Survey COMMUNICATION ©2011 The Waters Consulting Group, Inc.5 Job Evaluation Goals & Objectives

Greenville Compensation Components  Salaries  Benefits − Paid Time Off (Holidays, Vacation and Sick) − Health, Dental and Vision Benefits − Disability and Life/AD&D Insurance − Retirement, Social Security, Medicare, Deferred Comp. − Longevity Pay* *discontinued for all Commission/City employees hired after June 30, ©2011 The Waters Consulting Group, Inc. Review of Total Compensation Components

Public Sector Methodology: Salaries  Selected comparable organizations  Collected salary data on 150 similar positions  Analyzed the salary data: - Applied geographical adjustment -Applied “aging” factor (to July 1, 2011) – 2.5% -Average salary for each position surveyed  Determined average salary for selected positions included in Total Compensation Analysis 7©2011 The Waters Consulting Group, Inc.

Public Sector Benchmark Organizations: Salary and/or Benefits Study 8©2011 The Waters Consulting Group, Inc. Asheville, NC Cary, NC Clarksville, TN Concord, NC Denton, TX* Durham, NC Fayetteville, NC Flower Mound, TX* Garland, TX* Gastonia, NC Greenwood, SC Greenwood CPW Greer CPW, SC *EMS Providers Guilford County, NC* High Point, NC Jacksonville, NC Kissimmee, FL* Kissimmee Utility Authority, FL Lafayette, LA Ocala, FL Pitt County, NC Rocky Mount, NC Smithfield, NC Springfield, IL* Wilmington, NC Wilson, NC

Public Sector Benchmark Organizations Albany, Georgia Albany Water, Gas, and Light Commission Alexandria, VA Duluth, MN Fayetteville Public Works Florence, AL Florence Utilities (Gas, Water, Wastewater, Electric) City of Greer, SC Hamilton, OH City of Independence, MO / Independence Power & Light Johnson City, TN Johnson City Power Board Naperville, IL Orange County Water & Sewer Authority Terrebonne Parish, LA ©2011 The Waters Consulting Group, Inc.9 Contacted but Unable/Declined to Participate

Public Sector Benchmark Organizations for Total Compensation Study 10©2011 The Waters Consulting Group, Inc. Asheville, NC Cary, NC Clarksville, TN Denton, TX* Durham, NC Flower Mound, TX* Garland, TX* Greenwood, SC Greer CPW, SC Guilford County, NC* High Point, NC Kissimmee, FL* Kissimmee Utility Authority, FL Lafayette, LA Pitt County, NC Springfield, IL* Wilmington, NC Wilson, NC *EMS Providers Date of Data Collection: June-October 2010 Key Factors in Participant Review  Commonality of Positions  Competition for Jobs  Location/Proximity  Services Provided  Comparable in Size and Budget  Benchmark would work for City and Commission

Private Sector Methodology: Salaries  Included: Published Private Sector Salary Data − Direct match to Commission and City positions based on duties and requirements (Mercer, Watson/Wyatt, and Capital Associated Industries data utilized in WCG Market Analysis) − Data is available for clerical, technical, skilled, maintenance, professional and management positions − Determined average salary for employee groups included in Total Compensation Analysis  Rejected: Bureau of Labor Statistics Report “Employer Costs for Employee Compensation–June 2010,” issued September 8, 2010 − Unable to identify appropriate matches − Includes many jobs that are not comparable to City and Commission jobs – e.g., jobs in sales and manufacturing − Caution by BLS regarding comparisons to public sector 11©2011 The Waters Consulting Group, Inc.

Public Sector Methodology: Benefits  Collected data on costs of benefits  Utilized appropriate calculation method to arrive at cost per employee per year for each benefit  Calculated average employee cost per year for all benefits 12©2011 The Waters Consulting Group, Inc.

Private Sector Methodology: Benefits  Included: Bureau of Labor Statistics Report for benefits analysis  Differentiate Based on Comparable Size : Table 8 of BLS Report, Employers with more than 500 Workers  Convert value of benefits to a “% of base salary” - Reported as “Cost per Hour Worked” - Convert to “% of Base Salary” Example: Health Benefits 13©2011 The Waters Consulting Group, Inc. BLS Value = $3.42/hour worked BLS Salary = $26.35/hour worked Health benefits = 13% of base salary

Comparison to Public and Private Sectors  Public Sector -Average salary for clerical, technical, skilled, maintenance, professional and management positions (from salary survey conducted by WCG for the Market Analysis) -Value of benefits calculated by WCG for public sector based on data reported by public sector organizations  Private Sector -Average salary for clerical, technical, skilled, maintenance, professional and management positions (from published surveys utilized by WCG in Market Analysis) -Value of benefits for private sector based on applying “Benefit as a % of Base Salary” to the average private sector salary 14©2011 The Waters Consulting Group, Inc.

Comparison of Average Total Compensation 15©2011 The Waters Consulting Group, Inc. Organization Benefits as % of Base Salary Base Salary as % of Total Comp Benefits as % of Total Comp Public Sector48%67.6% 32.4% Private Sector43.0%69.9% 30.1% City and Commission 47.4%67.8% 32.2%

Comparison of Benefits as % of Base Salary 16©2011 The Waters Consulting Group, Inc.

Comparison of Benefits as % of Total Compensation 17©2011 The Waters Consulting Group, Inc.

Comparison of Salary as a % of Total Compensation 18©2011 The Waters Consulting Group, Inc.

Policy Maker Direction Needed A compensation philosophy that directs:  Prioritization of dollars between direct pay, benefits, and rewards  Relationship of pay structures to market 19©2011 The Waters Consulting Group, Inc.

Proposed Total Compensation Philosophy ©2011 The Waters Consulting Group, Inc.20 GUC/COG will:  Provide a competitive base salary- not an aggressive one but a salary comparable to what an employee could get in its defined market  Provide affordable benefits that meet the general needs of employees while focusing on options to control costs  Continue benefits options for retirees that allow continued access while focusing on cost sharing and cost control measures  Consider additional options to encourage high levels of job performance  Focus on employee growth, motivation, and performance through professional development and training

©2011 The Waters Consulting Group, Inc.21 Pay Policy Options Above Market Strategy Range midpoints above market average pay At Market Strategy (recommended) Range midpoints at market average pay Below Market Strategy Range midpoints below market average pay

©2011 The Waters Consulting Group, Inc.22 Benefits of Recommended Approach  Balances employer cost with compensation needs  Continues ability to compete in the market, attracting quality employees  Maximizes retention in key positions  Minimizes impact on current employees  Provides flexibility to respond to market changes  Clearly communicates values to all employees  Offers employees the opportunity to grow and develop  Continues the focus on employee recognition and pay for performance

©2011 The Waters Consulting Group, Inc.23 Pay Policy Options Above Market Strategy Range midpoints above market average pay At Market Strategy (recommended) Range midpoints at market average pay Below Market Strategy Range midpoints below market average pay

©2011 The Waters Consulting Group, Inc.24 Next Steps  Decision Regarding Pay Policy  Development of Pay Ranges Based on Pay Policy Decision  Reviews by Leadership Team  Options and Costing for Implementation  Adoption of Plan  Final Report Development and Presentation  Communication and Training

Retiree Health Benefits 25©2011 The Waters Consulting Group, Inc.

Retiree Benefits: Methodology  Public Sector: Gathered public sector data on retiree benefit offerings and cost  Private Sector Retiree Benefit Offerings: Available in Capital Associated Industries Survey  Retiree Costs: Cost data not included in Bureau of Labor Statistics Report 26©2011 The Waters Consulting Group, Inc.

Comparison of Retiree Medical Benefits to Private Sector 27©2011 The Waters Consulting Group, Inc. Employer Medical Benefits Under 65 – Average % of Premium Paid by Employer - “Retiree Only” Medical Benefits Over 65 – Average % of Premium Paid by Employer – “Retiree Only” Private Sector – CAI Survey – “Over 500 Employees” - PPO 34% provide health benefits to retirees. Cost Share is 67% Cost Share is 95% Greenville City/Commission Cost Share is 95%

Comparison of Retiree Medical Benefits to Public Sector 28©2011 The Waters Consulting Group, Inc. Employer Medical Benefits Under 65 – Average % of Premium Paid by Employer - “Retiree Only” Medical Benefits Over 65 – Average % of Premium Paid by Employer – “Retiree Only” Annual Cost of Health Benefit/Retiree/ Year Public Sector Benchmarks who pay a % of premium 69% provide health benefits Cost Share is 80% 44% provide health benefits Cost Share is 81% $8,801 Greenville City/Commission Cost Share is 95% $4,975

Cost Containment Measures Question: Are you considering taking any steps to reduce the cost of retiree benefits? Responses:  6 of 14: No changes at this time.  4 of 14: Increasing amount retirees pay for health benefits  2 of 14: Within last two years, retirees hired after a certain date will not receive health benefits  1 of 14: Must be 62 when retiring to be eligible to receive health benefits and organization only pays for three (3) years – until retiree eligible for Medicare  1 of 14: Evaluating establishing a health clinic for employees and retirees 29©2011 The Waters Consulting Group, Inc.

Summary Of Retiree Benefits Analysis  Wide variety of: - Health benefit offerings for retirees - Cost-sharing with retirees - Eligibility requirements for health benefits  No definitive conclusion can be drawn  Philosophy of each organization should guide retiree benefit decisions 30©2011 The Waters Consulting Group, Inc.