F L I G H T R I S K I N M & A : T H E A R T A N D S C I E N C E O F R E T A I N I N G T A L E N T

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1 H E A L T H W E A L T H C A R E E R F L I G H T R I S K I N M & A : T H E A R T A N D S C I E N C E O F R E T A I N I N G T A L E N T M E R C E R S R E S E A R C H R E P O R T MARCH 30, 2017 Ursula Weiszflog Principal, Mercer M&A Leader for Central Europe and Eastern Europe MERGERMARKET Conference Dusseldorf

2 M E R C E R R E S E A R C H P E O P L E I S S U E S I N T R A N S A C T I O N S MERCER

3 S U R V E Y R E S P O N D E N T D E M O G R A P H I C S 325 Employees Revenue 75% Under 1billion 69% Under 5,000 Survey and interview responses Over 5,000 31% Over 1 billion 25% 6% 7% 10% 15% 10% Industry Distribution 11% 22% 19% High Tech Manufacturing / Industrials Health / Life Sciences Financial Services Energy, Metals & Mining Professional Services Consumer Goods Other MERCER

4 G L O B A L R E A C H 24% 49% 23% 5% MERCER

5 R E A S O N S E M P L O Y E R S O F F E R R E T E N T I O N B O N U S E S T H E T O P T W O R E A S O N S Provide additional layer of 1 protection above usual 2 incentives for key people Align interests with successful completion of transaction 84% Gave #1 or #2 as top reason MERCER

6 R E T E N T I O N B O N U S P R E V A L E N C E 71% Transactions included a Retention Bonus 76% 67% Asia Outbound 93% 42% Energy, Metals & Mining Professional Services 94% MERCER

7 F R A M E W O R K F O R S U C C E S S Integrate 4 % of deal value 1 Understand business objectives Standalone Business Close Integration 3 Program Design Long-Term Workforce Segmentation 2 Bottom-up approach MERCER

8 B U S I N E S S I M P A C T I D E N T I F Y K E Y S T A K E H O L D E R S High impact T A R G E T High impact Eligibility for Retention Low risk High risk 70% CEO, Direct Reports & Senior Management 70% Critical for Integration Low impact Low impact 35% Other Employees Low risk High risk E M P L O Y M E N T R I S K MERCER

9 T O T A L C A S H P A Y M E N T M E R C E R R E S E A R C H P A Y A T T E N T I O N T O P A Y M E N T S & T I M I N G Long-Term Incentive One-Time Payment at Close Retention Built in to Bridge the Gap Long-Term Incentive Grant Payout Base + Bonus S I G N C L O S E MERCER

10 P R O G R A M D E S I G N - P E R C E N T O F B A S E P A Y 25TH PERCENTILE MEDIAN 75TH PERCENTILE CEO 51% 100% 100% 200% Executives (CEO direct reports) 39% 75% 50% 150% Equity Grant Senior Management 25% 50% 30% 100% Payout Other Critical Employees 15% 25% 20% 50% Asia Outbound 46% CEO & Direct Reports High Tech Industry 48% CEO & Direct Reports MERCER

11 P R O G R A M D E S I G N - C O N D I T I O N S F O R P A Y M E N T T i m e 3% Time Based 80% After Close 6% 25% 66% Performance Based Both Other 26% At or before Close P e r f o r m a n c e 22% Financial 20% Integration MERCER

12 P R O G R A M D E S I G N - N U M B E R O F P A Y M E N T S & V E H I C L E Number of Payments One Two 30% 45% 85% 31% Three 18% Four 7% Cash Equity MERCER

13 R E S E A R C H P R E V I E W R E T E N T I O N A S A P E R C E N T O F D E A L V A L U E 25TH PERCENTILE MEDIAN 75TH PERCENTILE Less than 100M 2.0% 3.0% 4.0% 100M 1BN 1.8% 2.2% 3.8% More than 1BN 0.2% 0.3% 0.7% Asia Outbound MERCER

14 M E R C E R R E S E A R C H F L I G H T R I S K I N M & A : A R T & S C I E N C E O F R E T E N T I O N Retention Bonus Framework 4 % of deal value 1 Understand business objectives 3 Program Design 2 Bottom-up approach MERCER

15 M E R C E R M & A R E A D Y E X E C U T I V E D E V E L O P M E N T P R O G R A M - E U R O P E L O C A T I O N D A T E Paris June London July Frankfurt September Are you ready for the next deal? Stockholm November 7-8 Attend one of the executive development workshops across Europe. MERCER

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