Trends in International Stock Plans NASPP Phoenix Chapter Meeting November 13, 2007 Carine Schneider CEO Global Shares

2 General Trends Participation rates continue to decline Increased mix of equity vehicles in play Decreased use of stock options Increased use of restricted stock and other share grants Overall value delivered to employees is down, especially below the executive levels Geographic use of equity has increased Equity programs in general are gaining flexibility as companies are preparing to better meet stakeholder needs Expensing has had a tremendous affect on plan design and backdating has had a tremendous affect on corporate America The sub-prime mortgage mess will impact stock plan administration

3 Results from Buck Global Equity Survey Roots of survey date back to 1995 New survey format in 2004 Detailed look at actual LTI award practices in 35 countries Current database includes data from 147 companies Primarily U.S.-based multinationals Primarily technology corporations 8 of 10 largest tech firms 72% of Fortune 500 technology companies

4 All Equity Participation Rates % 90% 91% 81% 59% 24% 78% 85% 86% 75% 56% 26% 76% 85% 83% 70% 51% 24% 0% 25% 50% 75% 100% CEOVice PresidentDirectorManagerIndirect LaborDirect Labor % fewer employees overall received any form of equity in 2006 vs Greatest impact seen at Manager level

5 Use of Equity is Expanding Despite trends to deliver less value to employees, companies expanding use of equity compensation on a global basis Companies increased geographic coverage of equity programs by 25.4% between 2004 and 2006 Greatest gains in use of full value shares (restricted stock) Modest increases in appreciation vehicles also occurred Ongoing Full Value Shares - 102% New Hire Full Value Shares - 99% Ongoing Stock Options - 8% New Hire Stock Options - 7%

6 Use of Equity is Expanding Greatest gains seen in key Asian markets India Use of appreciation vehicles up by ~35% Use of full value awards up by ~140% South Korea Appreciation vehicles up by ~20% Full value awards up by ~210% China Appreciation vehicles up by ~12% Full value awards up by ~110% Some decline in use of appreciation vehicles, primarily in smaller European countries (e.g., Belgium, Finland) and New Zealand

7 LTI Program Prevalence 2006 LTI Vehicle Prevalence 94% 33% 30% 64% 57% 42% 35% 17% 0% 25% 50% 75% 100% Stock Options S-SARSC-SARSRestricted Stock RSU/DSUPRSPARSUnrestricted Stock Companies with Vehicles Appreciation Vehicles Full Value Awards

Equity Vehicle Usage % 90% 77% 5% 10% 23% 0% 25% 50% 75% 100% Full Value Awards Appreciation Vehicles Equity Vehicle Mix While options are still king, restricted stock awards are coming on strong Not just in reaction to IASB/FAS Lower stock price appreciation in recent years reduces perceived value of options Greater retention value for key employees

9 Ongoing Awards - Average LTI Pay Mix 0% 25% 50% 75% 100% CEOVPDIRMGRICILICDLAll Cash LTIFull Value SharesAppreciation Vehicles

10 Although equity delivery remains concentrated at the higher levels, restricted stock and other full value awards are also moving down in the organization

11 63 cornerstone companies in the survey granted approximately $6.6 billion in equity awards in 2006, an average of $107 million per company This represents a decrease of 10.8% in value delivered over 2004 During same period, value delivered in the U.S. decreased by 12.5% Losers Philippines -60% Ireland -47% Israel -45% Winners Austria +47% China +14% Finland +13%

12 When looking at the data from a pay band perspective, a more predictable result appears — lower level staff is disproportionately affected From there has been a significant drop in the overall value for employees with salaries below $200,000.

13 Although U.S.-based employees still receive highest overall levels of equity, differences between countries are closing Grant Values as a % of Headquarters Country % 20% 40% 60% 80% 100% Australia China Hong Kong India Japan Korea Malaysia New Zealand Philippines Singapore Taiwan Austria Belgium Denmark Finland France Germany Ireland Israel Italy Netherlands Poland Spain Sweden Switzerland United Kingdom Brazil Canada Mexico United States Asia-PacificEurope/Middle EastAmericas

14 Building Flexibility into Equity Programs Companies increasingly are preparing to offer more customized equity compensation solutions in the future More companies are establishing award guidelines at local or regional levels Companies continue to adjust equity vehicle mix Use of single equity vehicle is declining

15 Building Flexibility into Equity Programs From a design perspective, more companies are building in a performance equity option 46% of companies now have ability to make awards Use of full value awards with performance attachments more than doubled between 2004 and 2006 – from 12% to 26% 10% of companies also granted options with performance attachments in 2006, up from 4% in 2004 Overall, 2% of all awards made in 2006 incorporated performance measures, up from 1% in 2004

16 Building Flexibility into Equity Programs New attitudes appear to be developing around Employee Stock Purchase Plans 87% of companies continued to use a 15% discount, despite the accounting charge associated under FAS 123R Lookback features have fallen off due to FAS 123R, but not as much as some may have feared In % still had some form of lookback feature, vs. 83% in 2005 The predominant practice is still a 6 month offering/purchase periods Predicted shorter periods have not yet become reality

17 Other Findings Equity awards are typically made on an annual basis 38.2% of all awards are made during the first quarter (Jan-Mar) 12.5% made in Q2 (Apr-Jun) 22.7% made in Q3 (Jul-Sep) 26.6% made in Q4 (Oct-Dec)

18 Other Findings Average vesting period for stock options has declined from 4.0 to 3.73 years between 2004 and 2006 During the same period, option term dropped from 9.1 to 8.5 years Number of new employees receiving awards upon hire is also declining, especially below the Director level ~8% decline at Manager level; ~12% at individual contributor level

19 Creative Plan Designs Playing with vesting Creating a “sub company” Stock  Cash (Phantom) Using stock in a sales comp program Stock units (psychological plans) Net share ESPP plans

20 Thank you Carine Schneider