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ERNST & YOUNG

COMPENSATION PLAN

1 December 8, 2021
Ernst & Young

Type Member firms have different legal


structures, USA and UK:
Limited Liability Partnership
Industry Professional services
Founded 1989; individual components from 1849
Headquarters London, United Kingdom
Area served Worldwide
Key people Jim Turley (Chairman & CEO)[1]
Services Audit
Tax
Financial Advisory
Consultancy
Revenue ▼US$21.3 billion (2010)[2]
Employees 144,000 (Global)
Divisions Assurance, Advisory, Tax, Corporate
Finance
Website EY.com

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Compensation strategies
Factors to be considered:

• Internal Factors
• Alignment with corporate strategy
• Shareholders’ interests and global compensation policy
• History&Culture
• Total reward design (not just salaries)
• Current Financial Situation

• External factors
• Legislative environment (tax rules)
• Benchmarking

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Setting salaries – job grading
• Job grading – grouping jobs based on their importance
for the company
– Assists in establishing competitive pay structures and rates
– Produces a job-worth hierarchy that reflects a company’s internal structure
and priorities
– Provides a system for assigning pay rates to newly created positions
– Sets a platform for effective performance management for various job levels
– Ensures compliance with legal requirements (pay system policy, “equal pay
for equal work”)
– Easy to explain to employees - clearly indicate relativities
– Useful in communicating opportunities to progress through the range

• Job grading does not:


– Set pay levels as such
– Evaluate performance

4 December 8, 2021
Setting salaries – job evaluation
• How do you determine relative importance of a
job? Job evaluation methodologies
– Factor/points based job evaluation (focus on internal
priorities)
• A job is evaluated in respect of several factors and is
assigned with a number of points
• Resultant number of points is used for
grouping/grading jobs

– Market based (focus on external practice)


• A job is evaluated in terms of its value in the market,
i.e. how other companies view this job’s importance

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Setting salaries – pay ranges

Pay ranges for a graded


structure

Basic Salary
• provide flexibility of pay
within a grade
• allow to increase salary
without moving to another
grade

Role Size/job importance

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Pay range spreads
Employee group Typical range
spread
Service, production and Narrow ranges (20% - 30%)
maintenance

Clerical, technical and Relatively narrow ranges


supervisory (30% - 50%)

Professional and Wider ranges (40% - 50%)


administrative

Managerial and executive Widest ranges (50% and up)

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Benchmarking
• Why do benchmarking?
• How to do benchmarking?
– Knowledge sharing
– Executive search companies
– Compensation surveys

• When to do benchmarking?
• Who are the comparators?

8 December 8, 2021
Benchmarking hints

• Where do I want to be in the market and why?


• Overall policy – where do I stand as the employer
• Specific jobs policy – what happens if they leave

• Not only cash


• Less cash more benefits or vice versa

9 December 8, 2021
Important steps

• Communication - How do you communicate


your pay policy to employees?
• Monitor and revise – regular market
monitoring, participating in compensation
surveys
• Get feedback – what do employees think and
value

10 December 8, 2021
COMPENSATION GRADE

11 December 8, 2021
GRADES OF MIDDLE EAST

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Forms of Pension Benefit Payment

 Life-long pension benefit means that you may receive pension benefit for the duration of your
life. Pension benefit ceases upon death. No payments will be made to your heirs under this
scheme
 Life-long pension benefit with a Beneficiary/Beneficiaries means that you have the right for a
life-long pension benefit and can appoint a Beneficiary who will inherit the pension savings in case
your death within a stipulated period of time
 Payment of pension benefit within a fixed period means that you can establish a fixed period of
time (not shorter than 5 (five) years) during which you will receive pension benefit. If you die
before the expiration of such a period, pension savings accrued on your Individual Account will be
paid as a lump sum to your Beneficiary or heir in accordance with the Russian legislation

 Payment of pension benefit until full depletion of funds means that pension benefit may be paid
to the you as a fixed amount until full depletion of the pension saving accrued on the Individual
Account. Such a fixed period shall be at least 5 (five) years. If you die before the expiration of this
period, pension savings accrued on your Individual Account shall be paid as a lump sum to your
Beneficiary or heir in accordance with the Russian legislation
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Individual income tax consequences

Pension benefits Surrender value

Depends on the Agreement: Depends on the Payor:

Only the amount of


Agreement in Contributions investment return is
Pension benefit is tax
his/her own made subject to individual
exempt
favour by him/herself income tax

Pension benefit is
Agreement in Contributions The whole surrender
subject to individual
favour made value is subject to
income tax
of a 3rd Party by a 3rd Party individual income tax

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