“Someone is sitting in theshade today becausesomeone planted a tree along time ago.”― Warren Buffett                      ...
3,2,1, Compensation!A Countdown to Annual Planning          Dan Walter, CEP        Sam Reeve, CCP, GRP
DAN WALTER                                Performensation was founded by Dan Walter, CEP as a response to                 ...
SAM REEVE                                Sam Reeve is a global certified compensation consultant                          ...
Key Concepts•   Compensation Planning is about far more than your annual increase percentage    and executive compensation...
Combination    Code     toCompensation  Planning Top Down    and Bottom Up  Planning               5D-4W-3M-2Q-1Y         ...
Compensation Planning is all about the numbers1 Year: Planning for Annual Events2 Quarters: Process Reviews, Major Project...
1 Year =                                                      245 work days (including 3 weeks of vacation)               ...
1 Year   Typical Annual Compensation Committee Schedule             Jan      Feb       Mar        Apr     May          Jun...
1 Year    Comp Committee Vs Comp Department                   Jan       Feb      Mar        Apr     May        Jun       J...
1 Year    Typical Annual Compensation Department Schedule                    Jan       Feb    Mar       Apr     May      J...
One Year - Planning for Annual Events         Factors that are common to all planning are centered around         resource...
It takes 6                                            months to                                            build a Rolls  ...
2 Quarters                 What should be done every 6 months?      Sep            Oct         Nov         Dec            ...
Two Quarters - Planning for 6 Month Cycles           Thinking Strategically – Planning to Plan …every 6 months            ...
The S&P 500 has projected it                              will have cumulative                              QUARTERLY earn...
Performance                             Stakeholder                                                 Metric3 Months        ...
Three Months - Planning by Quarter         Public Firms         Public companies are driven by financial performance and  ...
Phases of the moon                           There are between 28 and 31 days in a                           month, but on...
4 Weeks Monthly processes are the shortest segment of time that allow preplanning                                         ...
Four Weeks - Planning by Month         Months and quarters are related…             The first and last week of the month a...
Nearly half (48 percent) of executives                         surveyed recently said employees hit peak                  ...
5 Days (not 7) in a work week. How can you optimize this time?(#1: no more Monday meetings)  Monday  Execute your plan  fr...
Five Days - Planning the Week         Tactical Tuesdays and Strategic Fridays         Know how to leverage your week      ...
“6 hours is only 25% of a full day, but it is 100% of your productively scheduled                                         ...
6 Hours                   How should you plan your day?          9 AM                                   Catch up on Emails...
Six Hours- Planning a Day?          How many hours in a day do you actually own?          6 hours? What happened to the ot...
Conclusions6 Hours: Less than half of your days is owned by you. Block that time out and  give it the same respect you wou...
Where to find Performensation                       www.performensation.comTwitter: www.twitter.com/performensationCompens...
Performensation was founded in 2006 in response to the demand for more strategic andeffective compensation programs.Succes...
We would like to thank Peter Djokovich, of Certain Strategy, for his contributionto this planning structure. http://certai...
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5, 4, 3, 2, 1: The Code to Better Compensation Planning

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This presentation provides an entirely new approach to planning everything from your year down to your day. Designed for HR and Compensation professionals, we unveil our 5D-4W-3M-2Q-1Y code and how to put in action to become more efficient and effective.

This presentation was originally given on February 6, 2013 to more than 600 compensation professionals webinar attendees. Don't be the only compensation professional to miss out on this excellent program.

Learn how to more effectively plan and manage: Executive compensation, Long term incentives, Short Term Incentives, Bonuses, Merit increases, Performance appraisals, Performance reviews, Survey analysis and much more.

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5, 4, 3, 2, 1: The Code to Better Compensation Planning

  1. 1. “Someone is sitting in theshade today becausesomeone planted a tree along time ago.”― Warren Buffett ©2013 Performensation 1
  2. 2. 3,2,1, Compensation!A Countdown to Annual Planning Dan Walter, CEP Sam Reeve, CCP, GRP
  3. 3. DAN WALTER Performensation was founded by Dan Walter, CEP as a response to regular requests for better expertise in the area of Equity Compensation Design and Administration. Dan has more than a decade of experience in the industry. His work includes both executive and broad-based programs. He has provided end-to-end solutions for private and public companies both within the United States and abroad. Dan has worked extensively in both the Silicon Valley and New York. His work with young entrepreneurial companies and established Fortune 100 companies provides his clients with an uniqueDAN WALTER, CEP perspective on compensation issues. His focus is on effective, and atPresident and CEO times innovative, company-specific solutions. He also provides post-TF 1 877 803 9255 ext 700 consultation support to help ensure programs are working asOffice 1 415 625 3406Mobile 1 917 734 4649 designed.dwalter@performensation.com Dan is also a highly sought after speaker on a broad range of topics.Skype: Performensation He is board member for the National Center for Employee OwnershipTwitter: Performensation and the Institute for Human Resources, an award winning member of the National Association of Stock Plan Professionals and an active member of World at Work, Global Equity Organization and the Society for Certified Equity Professionals.
  4. 4. SAM REEVE Sam Reeve is a global certified compensation consultant (CCP, GRP) with 15 years of experience in Total Reward Strategies. He is an expert in broad-based compensation and focuses his talents on enhancing performance through the effective use of incentive and recognition programs. Prior to joining the firm, Sam has worked in the corporate compensation functions of notable firms such asSAM REEVE, CCP, GRP BlackRock, McKesson and Automatic Data ProcessingExecutive Vice President (ADP).TF 1 877 803 9255 ext 702Office 1 415 625 3088 Sam currently lives in Colorado and aside from hisMobile 1 970 403 5775 professional life, enjoys numerous outdoor activities withsreeve@performensation.com his 4 children and wife, Jessica. Skype: SamReeveTwitter: @SamReeve3 Sam has a degree in Finance and Economics from California State University, Sacramento.
  5. 5. Key Concepts• Compensation Planning is about far more than your annual increase percentage and executive compensation updates• When should you train yourself? When should you train your staff and stakeholders?• You can structure performance appraisals to be more effective with less work• Variable pay planning requires data analysis and an understanding of business strategy and goals that starts long before you start talking about dollars a cents• Smooth out your work flow through efficient scheduling to reduce spikes in work• Use “slow times” to advance your cause. You can only gain ground when the avalanche chasing you is at its slowest• Seasonal vs. Calendar Schedules. Using off-cycle planning to help reduce overlap, overwork and errors
  6. 6. Combination Code toCompensation Planning Top Down and Bottom Up Planning 5D-4W-3M-2Q-1Y ©2013 Performensation 6
  7. 7. Compensation Planning is all about the numbers1 Year: Planning for Annual Events2 Quarters: Process Reviews, Major Projects3 Months: 10Qs, Performance Reviews etc.4 Weeks: Monthly closes, Commission Cycles etc.5 Days: Weekly processes, checks and balances6 Hours: Maximum amount of scheduled time in a day ©2013 Performensation 7
  8. 8. 1 Year = 245 work days (including 3 weeks of vacation) 11,205 work hours (45 hr/week) 25,757 emails (avg*)*Source: Email Statistics Report 2011-2015, The Radaciti Group ©2013 Performensation 8
  9. 9. 1 Year Typical Annual Compensation Committee Schedule Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Fiscal Executive and CEO Market Pay Year Analysis End Compensation Education & Trends • Review market trends in pay, short & long-term grants • Update to remain in line with continuing • Prepare and review tally sheets educational requirements for a full view of executive total rewards Plan Review Incentive Payments • Test effectiveness against Year-End Preparation • Calculate and deliver actual company strategy prior year short & long-term • Set goals/targets for next year’s short & award payments • Review pay and long-term awards performance linkage • Evaluate CEO performance • Prepare preliminary current year incentive calculations Implementation Support Issue Support • Answer feature questions and • Availability during non- provide guidance during standard events implementation with service provider • Support regarding questions on plan features ©2013 Performensation 9
  10. 10. 1 Year Comp Committee Vs Comp Department Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Fiscal Executive and CEO Market Pay Year Analysis Pay Competitive End Compensation Education Market Benchmarking Assessment & Trends • Review market trends in • Update•to remain inparticipant Review benchmark job matches and line • short & long-term grants pay,Review market data with continuing in surveys • Prepare and review tally sheets educational requirements •Identify market for a full view of executive total rewards pay concerns Plan Review Incentive Payments Communicate Sales • Test effectiveness against Year-End Preparation Plans Calculate and deliver actual • company strategy • Set goals/targets for next year’s short & • Calculate and deliver short & long-term prior year • Review pay and Year End Performance long-term awards actual prior year short & payments award performance linkage Reviews long-term award • Evaluate CEO performance payments Mid Year Performance Reviews • Prepare preliminary current year incentive calculations • Check in with team on status of annual objectives Implementation Support Goal and Objective Setting Issue Support • Answer feature questions and • Company goals cascaded to • Availability during non- standard events Pay for Performance provide guidance during departments implementation with service • Support regarding questions • Determine Merit, Market and Incentive •Comp Tem goal setting to provider pay decisions align to the company goals on plan features ©2013 Performensation 10
  11. 11. 1 Year Typical Annual Compensation Department Schedule Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Fiscal Year Pay Competitive End Market Benchmarking Assessment •Review benchmark job • Review market matches and participant data in surveys •Identify market pay concerns Communicate Sales Plans • Calculate and deliver Year End Performance actual prior year short & Reviews long-term award payments Mid Year Performance Reviews • Check in with team on status of annual objectives Goal and Objective Setting • Company goals cascaded to Pay for Performance departments • Determine Merit, Market and Incentive •Comp Tem goal setting to pay decisions align to the company goals ©2013 Performensation 11
  12. 12. One Year - Planning for Annual Events Factors that are common to all planning are centered around resources and expectation setting. Resources include: • People on your comp team • Resources from other departments • Software and external services • and of course, time and money Expectation Setting includes: • What you expect from your Team Members • What your Team Members can expect from the Year "Execution is the ability to mesh strategy with reality, align people with goals, and achieve the promised results." — Larry Bossidy ©2013 Performensation 12
  13. 13. It takes 6 months to build a Rolls Royce and 13 hours to build a Toyota.Source: UberFacts ©2013 Performensation 13
  14. 14. 2 Quarters What should be done every 6 months? Sep Oct Nov Dec Jan Feb Mar Job Analysis | Survey Analysis | Merit Increases | Reporting | Filings Mar Apr May Jun Jul Aug Sep Training | Process Review | Stakeholder Meetings | New Plan Design ©2013 Performensation 14
  15. 15. Two Quarters - Planning for 6 Month Cycles Thinking Strategically – Planning to Plan …every 6 months 1st Strategic Planning Session Best time…early in the year Objective: • Review Overall Company Goals and Realign Comp Team Objectives • Revisit successes and failures of the last cycle 2nd Strategic Planning Session Best time…second half of the year during your slowest month Objective: • Long Term Planning – at least a year and a half ahead • Revisit successes and failures of the last cycle • Prepare for the year end process ©2013 Performensation 15
  16. 16. The S&P 500 has projected it will have cumulative QUARTERLY earnings of $6.42 Billon (as of 1/24/2013 )Source: Standard and Poors ©2013 Performensation 16
  17. 17. Performance Stakeholder Metric3 Months Reviews Tracking STI Goals 10Q Bonus Reconciliation Approval Review Plan Review Comp Effectiveness Committee Charter Financial Communications Reporting Quarterly Considerations ©2013 Performensation 17
  18. 18. Three Months - Planning by Quarter Public Firms Public companies are driven by financial performance and shareholder disclosure Private companies are driven by internal metrics and projects Week 1 Answer questions about last quarter and clean up Weeks 2 - 3 Finalize plans for all deliverables this quarter Weeks 4 – 7 Focus on internal Compensation Department deliverables Weeks 8 – 10 Focus on deliverables with and for stakeholders Weeks 11 and 12 Finalize results and reporting Gather quarterly performance numbers for STI and Commissions ©2013 Performensation 18
  19. 19. Phases of the moon There are between 28 and 31 days in a month, but only 8 Oreo cookies in this pictureSource: http://www.stevespanglerscience.com/experiment/using-oreo-cookies-to-learn-about-the-phases-of-the-moon ©2013 Performensation 19
  20. 20. 4 Weeks Monthly processes are the shortest segment of time that allow preplanning Monthly closes, Commission Cycles etc. T O O B U S Y P R I M E T I M E T O O B U S Y ©2013 Performensation 20
  21. 21. Four Weeks - Planning by Month Months and quarters are related… The first and last week of the month are often the busiest When planning cross functional meetings consider their business cycle • Deadlines often loom at the end of each month • Critical reports are often generated the first week of each month Schedule important cross functional meetings in the middle Leverage the 2nd and 3rd week for the greatest productivity • Strategic and creative thinking occur when people are engaged in the discussion • Meeting participants are more engaged when they are free from other stresses in their work duties ©2013 Performensation 21
  22. 22. Nearly half (48 percent) of executives surveyed recently said employees hit peak performance on Tuesdays. Not surprisingly, Fridays were viewed as the least productive day of the week.*Source: AccountTemps 2012 ©2013 Performensation 22
  23. 23. 5 Days (not 7) in a work week. How can you optimize this time?(#1: no more Monday meetings) Monday Execute your plan from Friday Tuesday Strategy Meetings Tactical Meetings Wednesday Check relevant Invest in yourself – Check on your industry news and Webinars and Thursday deliverables for inform network on Training Keep a few hours the week. Are Friday findings free on your you on track? Complete schedule to Strategy Meetings deliverables for complete tasks Deliverables to other Tuesday Tactical that have taken departments Meetings longer than Plan, prioritize and anticipated. schedule work time for next week How are you tracking to your goals and objectives? Clean off your desk and remove work troubles from your mind. The weekend is YOURS! ©2013 Performensation 23
  24. 24. Five Days - Planning the Week Tactical Tuesdays and Strategic Fridays Know how to leverage your week The Unproductive Days - Monday and Friday Schedule the bulk of your work time on Tuesday and Wednesday • Monday – tough mental day • Friday – Is it over yet? Tactical Tuesdays – The Most Productive Day Meet with others and focus on completing the ground level actions that gets things done. Strategic Fridays – Make this Day Your Own It is important to take some time to reflect on what occurred during the week and to plan for the week ahead • How are you tracking towards your goals and objectives? • Your performance appraisal • Plan, prioritize and schedule work time for next week ©2013 Performensation 24
  25. 25. “6 hours is only 25% of a full day, but it is 100% of your productively scheduled time.”*Source: This presentation, Dan Walter, Sam Reeve ©2013 Performensation 25
  26. 26. 6 Hours How should you plan your day? 9 AM Catch up on Emails 10 AM 11 AM 3,2,1 Compensation Planning Webinar 12 PM Lunch (not at my desk today) 1 PM 2 PM 3 PM Meeting that other department that needs something by tomorrow 4 PM Finish that project up for tomorrow’s meeting 5 PM ©2013 Performensation 26
  27. 27. Six Hours- Planning a Day? How many hours in a day do you actually own? 6 hours? What happened to the other 2? Plan for Fire Drills! An inherent part of the Compensation environment A Calendar is not just for Meetings Schedule your work time or someone will steal it from you Schedule Time Wasters – Email and Social Networking Calendar time to check in on communication • FOCUS – Multi-tasking is a myth • Categorize what is important (Now and Later) • Head of HR, CEO = Now! • Colleague, Aunt Beth = Later… The Last Half Hour of the Day Plan the Perfect Day called “Tomorrow” • First 3 things to do tomorrow ©2013 Performensation 27
  28. 28. Conclusions6 Hours: Less than half of your days is owned by you. Block that time out and give it the same respect you would if it was carved out for your CEO5 Days: Schedule your week to be productive when others aren’t. Focus strategy meetings on Friday and key tactical meetings on Tuesdays. Saturdays and Sundays are not work days4 Weeks: Schedule your important meetings for the middle of the month. Stakeholders will be less distracted and you will be able to do immediate follow up to gauge success of any new ideas.3 Months: Look at each quarter like a hill. Do most of the work in the middle month so the final month is a downhill coast, with the except of external stakeholders2 Quarters: Seasonal cycles will focus critical work away from calendar cycles.1 Year: Break your year down into smaller, schedule bites. “What gets planned, simply gets put on a list”. Things that get scheduled, get done. ©2013 Performensation 28
  29. 29. Where to find Performensation www.performensation.comTwitter: www.twitter.com/performensationCompensation Café (blog): www.compensationcafe.comLinkedIn: http://www.linkedin.com/company/performensationFacebook: https://www.facebook.com/pages/Performensation-Consulting/371636619516008?fref=tsSlideshare (presentations and documents): http://www.slideshare.net/performensationQuora (Q&A): http://www.quora.com/Dan-Walter 514 Precita Ave, Suite 100, San Francisco, CA 94110 877-803-9255 (toll free) ext. 701 info@performensation.com ©2013 Performensation 29
  30. 30. Performensation was founded in 2006 in response to the demand for more strategic andeffective compensation programs.Successful compensation requires four key elements. Each component must be carefullycrafted to your unique goals and culture.Vision: We understand where you are headed and have the skills to get you there. We arerespected throughout the industry for our forward-thinking perspective and our ability to executeon it.Foundation: Long-term solutions are based on evidence, not founded on gimmicks or fads. Theyare built to allow for adjustments to organizational and market conditions. Your program’sfoundation must reflect your company and the goals it is designed to support.Design: A great program combines creativity with practicality. We utilize our broad and deepunderstanding of rules, regulations, processes and providers to ensure your program delivershigh- performance results. Our designs are easy to understand, compliant and effective.Communication: Participants only value what they understand. Communication must be built into every step of the process. We ensure that all program elements are relevant and make senseto your targeted audience. ©2013 Performensation 30
  31. 31. We would like to thank Peter Djokovich, of Certain Strategy, for his contributionto this planning structure. http://certainstrategy.com/ ©2013 Performensation 31

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