1. New Ideas for Compensation Plans Paul Edgerton Blau Mancino Associates

2. 2000 Candidate Supply Tight Inflated Expectations Reluctant to Move Dot Com Fueled

3. 2001 Companies Cut Back Dot Com > Dot Bomb Candidate Supply Increases Candidates Expectations More Realistic

4. 2002 Realism Continues Business Has Increased Environment Remains Sober

5. Evaluating Candidates Career Flow - Linkage to Your Needs Achievements vs Responsibilities Logic For Moves What Would Your References Say? Names of Bosses CHEMISTRY

6. Compensation - New Executive Base Salary - 10-30% Bump for a Move Bonus - 20-70% - Tied to Performance Sign on Bonus - Expected (Not Always Given) Stock Options - Expected (But Not As Valued) Benefits - Competitive Weapon Potential

7. Stock Options - Towers Perrin U.S. companies should not assume that favorable option accounting treatment will continue indefinitely. Exactly how or when changes will occur is unclear:

8. Stock Options Potential impact on future option grants –Reduced eligibility to reduce “cost” –Greater use of restricted stock (which also has an expense associated with it, but less dilution) –Greater use of “True” performance-based stock options –(From Bob Gore - Towers Perrin)

9. Enron Impact Various proposals are pending – mostly related to retirement benefit security and 401(k)s –Diversification rights and/or limits on forced ownership of company stock under 401(k) plans –Access to investment advice –Enhanced fiduciary obligations of plan administrators –Limits on executive sales during black-outs, etc. –(From Bob Gore - Towers Perrin)

10. Long Term Incentives Helps Private Companies Compete Value the Company Create an Escrow Account Payout % 15-30% Timelines 3-5 years Tie payouts to milestones Backload vesting ie 4/4/7 or 5/10/15

11. Benefits Underutilized Selling Tool 401K Choices Pension Plan Flexible Health Benefits Menu Insurance Relocation

12. Summary Be Sure of Your Candidate Know the Baseline Be Flexible (within reason) Pay for Performance Long Term Incentive vs Stock Options Payout Over Time vs Up Front Use Benefits as Selling Tool