SHORT-TERM INCENTIVE TRENDS2018

A 10 YEAR REVIEW — SAMPLE

Sample

TABL

E O

F C

ON

TEN

TS

4 MERCER'S GLOBAL PUBLICATIONS

5 INTRODUCTION 7 Report Structure

8 Reading the Report

13 SUMMARY OF KEY FINDINGS

15 How did the Recession Impact Short-Term Incentives?

22

Which Markets Experienced the Greatest (Positive Or Negative) Change in Post-Recession Short-Term Incentives?

29How do Actual Incentive Payouts Compare to the Targets Set Each Year?

31 AMERICAS

32 Argentina

39 Brazil

46 Canada

53 Chile

60 Colombia

67 Mexico

74 Peru

81 United States

88 Uruguay

95 Venezuela

222 EASTERN EUROPE, MIDDLE EAST, AND AFRICA

223 Bulgaria

230 Croatia

237 Czech Republic

244 Egypt

251 Hungary

258 Kazakhstan–Almaty

265 Morocco

272 Poland

279 Romania

286 Russia–Moscow

293 Serbia

300 Slovakia

307 Turkey

314 Ukraine–Kiev

321 United Arab Emirates

102 ASIA PACIFIC 103 Australia

110 China–Beijing

117 China–Shanghai

124 Hong Kong

131 India

138 Indonesia

145 Japan

152 Malaysia

159 New Zealand

166 Pakistan

173 Philippines

180 Singapore

187 South Korea

194 Sri Lanka

201 Taiwan

208 Thailand

215 Vietnam

328 WESTERN EUROPE

329 Austria

336 Belgium

343 Denmark

350 Finland

357 France

364 Germany

371 Ireland

378 Italy

385 Netherlands

392 Norway

399 Portugal

406 Spain

413 Sweden

420 Switzerland

427 United Kingdom

434 ABOUT THIS REPORT435 Methodology

439 Glossary

449 About Mercer

Sample

GLO

BAL

PUBL

ICAT

ION

S

GET EVERY THING IN ONE PLACESubscribe to the Talent All Access® Portal for exclusive access to online tools and all of our publications, or schedule a demo with a Mercer representative to discuss a Mercer Select IntelligenceSM membership.

Stay ahead of today’s tight deadlines and competitive race for labor with these resources from the Mercer Insights Product Group. Covering local benefits, global compensation practices, and emerging HR policy trends, this portfolio contains all of the actionable data, insights, and guidance you need to steer your organization to success. Select a title to learn more about each of our industry-leading reports, or visit imercer.com/global for more information.

HEALTH & BENEFITS

Car Benefit Policies Around the World

Global Parental Leave Global Parental Leave — Industry Scorecard

LGBT Benefits Around The World

Worldwide Benefit & Employment Guidelines

Vacation and Other Leave Around the World

Vacation and Other Leave Industry Scorecard

Car Benefit Policies — Global Industry Findings

Severance Pay Policies Around the World

Severance Pay Policies Industry Scorecard

WORKFORCE & CAREERS

Global Compensation Planning Report

GCPR — 20 Year Look Back

Short-Term Incentives Around the World

Global Pay Summary International Geographic Salary Differentials

Workforce Turnover Around the World

STI Trends —A 10 Year Review

New Graduate Starting Salaries

HANDBOOKS & GUIDES

Compensation Handbook

Global Mobility Handbook

HR Guide to Doing Business

HR Management Terms

HR Atlas Asia Pacific HR Atlas Latin America

HR AtlasSample

4STI TRENDS — A 10 YEAR REVIEW — SAMPLE© 2018 Mercer LLC.

WHAT’ S IN A SHORT-TERM INCENTIVE?There are many forms of short-term incentives, but, generally, they are payment/payments made over a 12-month period associated with an individual, team, and/or corporate performance. Popular types of STI include bonuses, individual incentive plans, and team/unit performance incentives. They are frequently linked to profitability or revenue growth, and achievement of overall company goals determines the size of the company bonus pool. STIs are often capped at a fixed amount or percentage of annual base salary. By capping these payments, HR and business managers can prevent runaway expenses while achieving higher performance.

Short-term incentives are also responsive to market conditions. For instance, companies in highly competitive markets are more likely to offer generous STIs in order to drive employee and company performance, while those in stable or saturated markets may be less concerned with aggressive growth strategies.

A higher proportion of short-term incentive in an employee’s total cash compensation means higher flexibility in rewards. By linking those incentives to individual or company performance there is an opportunity to keep employees engaged, motivated, and rewarded, meet overall business objectives, and maintain overall salary budgets.

INTRODUCTIONRegardless of whether history repeats itself, there are important lessons to learn from the recent past. Between the historic shocks caused by the global financial crisis and prolonged uncertainty and recovery, the last ten years have given rise to innovative cost and talent management strategies.

Paying the right people, the right amount, for the right reason, and at the right time has become the norm of the day. Aligning the goals of the employee to that of company and keeping them motivated to achieve those goals is a common problem across businesses and regions.

Multinational corporations, small firms, and organizations around the world all face the same problem: motivating their employees to contribute to the collective group’s success.

Sample

5STI TRENDS — A 10 YEAR REVIEW — SAMPLE

INTRODUCTIONCONSIDERATIONSHR and business managers should consider the following questions when creating a short-term incentive program:

► What types of employees would benefit most from STIs?

► Should I restrict the total value of STIs available to a single employee in one year?

► How should I discern between high-performing and low- performing employees when distributing STIs?

► What factors should I use when determining the impact an individual has on company success?

© 2018 Mercer LLC. Sample

© 2018 Mercer LLC. 6STI TRENDS — A 10 YEAR REVIEW — SAMPLE

REPORT STRUCTUREINTRODUCTION

Mercer’s 2018 Short-Term Incentive Trends — A 10 Year Review is a unique offering for HR and business managers around the world interested in learning how short-term incentive plans and payouts have changed over the last decade. This publication offers market-level data on the provision of short-term incentives for six distinct career levels, as well as the target and actual payout for this type of compensation. It also provides regional comparisons and ten-year trends to help decision makers understand what the future may hold and anticipate market changes.

The report collates data from 57 markets and offers a unique insight, critical to any business looking to devise a sound and competitive compensation program.

The report includes the following sections:

SUMMARY OF KEY FINDINGSThe section serves as an executive summary for those looking for Mercer’s insights and observations; it provides high-level trends, market comparisons, and other analysis. It aims to address the following questions:

► How did the recession impact short-term incentives?

► Which markets experienced the greatest (positive or negative) change in post-recession short-term incentives?

► How do actual incentive payouts compare to targets set each year?

REGIONAL RESULTSThe regional sections provide critical data to those looking to learn more about specific countries or markets. The regional sections are presented in geographical groupings, each of which contains market-specific information. The report divides the covered markets into the following regions:

► Americas

► Asia Pacific

► Eastern Europe, Middle East, and Africa

► Western Europe

ABOUT THIS REPORTThis section delineates the methods used in the report and lists key definitions.

► Methodology includes data sources used to compile this report, and other details on calculations and assumptions.

► Glossary provides definitions for many of the terms used throughout this report, as well as other HR related terms.

Sample

7© 2018 Mercer LLC. 7STI TRENDS — A 10 YEAR REVIEW — SAMPLE

INTRODUCTION

READING THIS REPORTThe following pages include tips and guidelines to help navigate the report content.

EXECUTIVEDURING RECESSION VS. POST-RECESSION CHANGES

DU

RIN

GP

OS

T

ARGENTINA UNITED STATES UNITED STATES

91.8%69.5%

37.3%16.4%

36.2%16.9%

VENEZUELA URUGUAY URUGUAY

ARGENTINA UNITED STATES UNITED STATES

91.8%69.5%

37.3%16.4%

36.2%16.9%

VENEZUELA URUGUAY URUGUAY

6 0.8% 2.7%-2.6% 5 5

HIGHEST AND LOWEST MARKETS

DU

RIN

GP

OS

T

HONG KONG SINGAPORE JAPAN

85.2%38.6%

23.9%13.2%

23.0%17.0%

NEW ZEALAND NEW ZEALAND PHILIPPINES

HONG KONG SINGAPORE JAPAN

85.2%38.6%

23.9%13.2%

23.0%17.0%

NEW ZEALAND NEW ZEALAND PHILIPPINES

6 0.8% 2.7%-2.6% 5 5

HIGHEST AND LOWEST MARKETS

PO

ST

DU

RIN

GSWITZERLAND GERMANY GERMANY

89.9%58.5%

26.9%12.3%

27.1%14.9%

NORWAY FINLAND SWEDEN

SWITZERLAND GERMANY GERMANY

89.9%58.5%

26.9%12.3%

27.1%14.9%

NORWAY FINLAND SWEDEN

6 0.8% 2.7%-2.6% 5 5

HIGHEST AND LOWEST MARKETS

PERCENTAGE RECEIVING ACTUAL INCENTIVE TARGET INCENTIVE

AMERICASIMPACT OF RECESSION ON REGION OVERALL

ASIA PACIFICIMPACT OF RECESSION ON REGION OVERALL

DU

RIN

GP

OS

T

SLOVAKIA SLOVAKIA SLOVAKIA

89.7%45.5%

22.6%14.4%

21.6%16.6%

SERBIA SERBIA ROMANIA

SLOVAKIA SLOVAKIA SLOVAKIA

89.7%45.5%

22.6%14.4%

21.6%16.6%

SERBIA SERBIA ROMANIA

6 0.8% 2.7%-2.6% 5 5

HIGHEST AND LOWEST MARKETS

EUROPE, MIDDLE EAST, AND AFRICAIMPACT OF RECESSION ON REGION OVERALL

WESTERN EUROPEIMPACT OF RECESSION ON REGION OVERALL

SAMPLE DATAData relating to "actual" incentives is orange. This is the market with the highest average actual STI payout (as a percentage of base salary) during the recession period.

Data relating to "target" incentives is blue. This is the difference between average target incentive payouts in the "during" and "post-recession" periods.

Data relating to the percentage of employees receiving an incentive is purple. This is the market with the lowest percentage receiving in the post-recession period.

The legend provides the color coding used in the graphic.

A regional summary page that compares recession to post-recession incentives is provided for each career level.

Sample

8© 2018 Mercer LLC. 8STI TRENDS — A 10 YEAR REVIEW — SAMPLE

INTRODUCTION

EXECUTIVETOP 3 MARKETS WITH THE GREATEST POST-RECESSION IMPACT

CHANGE IN PERCENTAGE RECEIVING CHANGE IN ACTUAL INCENTIVE CHANGE IN TARGET INCENTIVE

1COLOMBIA UNITED STATES UNITED STATES

6 -8.0% 5 8.2% 5 9.1%

2PERU URUGUAY URUGUAY

6 -8.0% 5 8.2% 5 9.1%

3VENEZUELA VENEZUELA CHILE

6 -8.0% 5 8.2% 5 9.1%

1NEW ZEALAND NEW ZEALAND NEW ZEALAND

6 -8.0% 5 8.2% 5 9.1%

2PHILIPPINES TAIWAN AUSTRALIA

6 -8.0% 5 8.2% 5 9.1%

3JAPAN SOUTH KOREA CHINA-BEIJING

6 -8.0% 5 8.2% 5 9.1%

1SLOVAKIA SERBIA CROATIA

6 -8.0% 5 8.2% 5 9.1%

2MOROCCO CROATIA UNITED ARAB EMIRATES

6 -8.0% 5 8.2% 5 9.1%

3ROMANIA UNITED ARAB EMIRATES BULGARIA

6 -8.0% 5 8.2% 5 9.1%

1AUSTRIA IRELAND SWITZERLAND

6 -8.0% 5 8.2% 5 9.1%

2IRELAND PORTUGAL PORTUGAL

6 -8.0% 5 8.2% 5 9.1%

3BELGIUM GERMANY IRELAND

6 -8.0% 5 8.2% 5 9.1%

AMERICAS ASIA PACIFIC

EASTERN EUROPE, MIDDLE EAST, AND AFRICA WESTERN EUROPE

This arrow indicates the market had a positive change; executives in New Zealand saw their actual incentives increase by +8.2%.

This graphic looks at how STI changed post-recession and whether the change was positive or negative. It provides the top three markets with the greatest change (both positive and negative) in percentage of employees receiving STI , as well as the greatest change in actual and target STI amounts.

This arrow indicates the market had a negative change; the percentage of executives in Slovakia decreased by -12.0%.

Portugal had the 2nd largest change in target incentive in Western Europe; the incentive target for executives increased by +9.1%.

SAMPLE DATA

Sample

9© 2018 Mercer LLC. 9STI TRENDS — A 10 YEAR REVIEW — SAMPLE

INTRODUCTION

AMERICAS ASIA PACIFIC EASTERN EUROPE, MIDDLE EAST, AND AFRICA WESTERN EUROPE

MANAGEMENT — SUPERVISOR & TEAM LEADER

PROFESSIONAL — EXPERIENCED

MANAGEMENT — MANAGER

PROFESSIONAL — SENIOR

PARA-PROFESSIONAL

-10%

-5%

0%

5%

10%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AMERICAS ASIA PACIFIC EEMEA WESTERN EUROPE

EXECUTIVEACTUAL INCENTIVES VS. TARGET INCENTIVES

-10%

-5%

0%

5%

10%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AMERICAS ASIA PACIFIC EEMEA WESTERN EUROPE

-10%

-5%

0%

5%

10%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AMERICAS ASIA PACIFIC EEMEA WESTERN EUROPE

-10%

-5%

0%

5%

10%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AMERICAS ASIA PACIFIC EEMEA WESTERN EUROPE

-10%

-5%

0%

5%

10%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AMERICAS ASIA PACIFIC EEMEA WESTERN EUROPE

-10%

-5%

0%

5%

10%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

AMERICAS ASIA PACIFIC EEMEA WESTERN EUROPE

SAMPLE DATA

A line below the 0% axis indicates actual bonuses were lower than the targets set. The further from the axis, the greater the differential.

Each colored line represents a region. The legend provides the color coding used in the graphic.

This graph provides the difference between the target incentive set during one year to the actual incentive payouts for the following year. A graph is provided for each career level.

A line above the 0% axis indicates actual bonuses were higher than the targets set.

Sample

10© 2018 Mercer LLC. 10STI TRENDS — A 10 YEAR REVIEW — SAMPLE

INTRODUCTION

450STIAW — A 10 YEAR REVIEW© 2018 Mercer LLC.

MARKETOVERALL TREND INDICATOR

10 YR TREND 6 6 5

CAGR -0.2% -0.7% 1.5%

HIGH2008 2008 2017

94% 29.0% 30.7%

LOW2008 2008 2017

94% 29.0% 30.7%

EXECUTIVE MANAGEMENT — MANAGER MANAGEMENT — SUPERVISOR & TEAM LEADER

PROFESSIONAL — SENIOR PROFESSIONAL — EXPERIENCED

PARA-PROFESSIONAL

PERCENTAGE RECEIVING TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARYACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY

6 6 5

-0.2% -0.7% 1.5%

2008 2008 2017

94% 29.0% 30.7%2008 2008 2017

94% 29.0% 30.7%

6 6 5

-0.2% -0.7% 1.5%

2008 2008 2017

94% 29.0% 30.7%2008 2008 2017

94% 29.0% 30.7%

10 YR TREND 6 6 5

CAGR -0.2% -0.7% 1.5%

HIGH2008 2008 2017

94% 29.0% 30.7%

LOW2008 2008 2017

94% 29.0% 30.7%

6 6 5

-0.2% -0.7% 1.5%

2008 2008 2017

94% 29.0% 30.7%2008 2008 2017

94% 29.0% 30.7%

6 6 5

-0.2% -0.7% 1.5%

2008 2008 2017

94% 29.0% 30.7%2008 2008 2017

94% 29.0% 30.7%

SAMPLE DATA

The first page of the each set of market specific content provides a summary of the last 10 years.

The "High" indicates the year with the highest percentage receiving, actual incentive, or target incentive and the highest amount.

The "Low" indicates the year with the lowest percentage receiving, actual incentive, or target incentive and the lowest amount.

The 10 Year Trend provides the overall direction of the change in STI during the last decade.

The CAGR (compound annual growth rate) provides the magnitude of the change during the last decade

The actual and target incentive amounts are a percentage of base salary.

This amount is the percentage of employees receiving an incentive.

Sample

11© 2018 Mercer LLC. 11STI TRENDS — A 10 YEAR REVIEW — SAMPLE

INTRODUCTION

451STIAW — A 10 YEAR REVIEW© 2018 Mercer LLC.

PERC

ENTA

GE

REC

EIVI

NG

PERC

ENTA

GE

OF

BASE

SA

LARY

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY

EXECUTIVE TRENDS

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE 10 10 10 10 10 10 10 10 10 10 10

ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY 10 10 10 10 10 10 10 10 10 10 10

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY 10 10 10 10 10 10 10 10 10 10 10

MARKET

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Each set of market specific pages include detail for each career level.

Figures for each year can be found in the table below the graph.

The actual (orange line) and target (blue line) are aligned with this axis and represent a percentage of base salary.The purple area of

the graph represents the percentage of employees receiving an incentive and is aligned with this axis. SAMPLE DATA

Sample

REG

ION

REGION

Sample

© 2018 Mercer LLC. 13STI TRENDS — A 10 YEAR REVIEW — SAMPLE

MARKETOVERALL TREND INDICATOR

10 YR TREND 6 6 5

CAGR 2.1% 2.1% 2.1%

HIGH2008 2008 2017

90% 30.0% 30.0%

LOW2014 2015 2011

70% 20.0% 20.0%

EXECUTIVE MANAGEMENT — MANAGER MANAGEMENT — SUPERVISOR & TEAM LEADER

PROFESSIONAL — SENIOR PROFESSIONAL — EXPERIENCED

PARA-PROFESSIONAL

PERCENTAGE RECEIVING TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARYACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY

5 6 5

2.1% 2.1% 2.1%

2008 2008 2017

90% 30.0% 30.0%2014 2015 2011

70% 20.0% 20.0%

5 6 5

2.1% 2.1% 2.1%

2008 2008 2017

90% 30.0% 30.0%2014 2015 2011

70% 20.0% 20.0%

10 YR TREND 5 6 6

CAGR 2.1% 2.1% 2.1%

HIGH2008 2008 2017

90% 30.0% 30.0%

LOW2014 2015 2011

70% 20.0% 20.0%

6 6 6

2.1% 2.1% 2.1%

2008 2008 2017

90% 30.0% 30.0%2014 2015 2011

70% 20.0% 20.0%

6 6 6

2.1% 2.1% 2.1%

2008 2008 2017

90% 30.0% 30.0%2014 2015 2011

70% 20.0% 20.0%Sample

PERC

ENTA

GE

REC

EIVI

NG

PERC

ENTA

GE

OF

BASE

SA

LARY

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY

© 2018 Mercer LLC. 14STI TRENDS — A 10 YEAR REVIEW — SAMPLE

EXECUTIVE TRENDS

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE 90 90 90 90 90 90 90 90 90 90 90

ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

MARKET

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Sample

© 2018 Mercer LLC. 15STI TRENDS — A 10 YEAR REVIEW — SAMPLE

PERC

ENTA

GE

REC

EIVI

NG

PERC

ENTA

GE

OF

BASE

SA

LARY

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY

MANAGEMENT — MANAGER TRENDS

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE 90 90 90 90 90 90 90 90 90 90 90

ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MARKET

Sample

© 2018 Mercer LLC. 16STI TRENDS — A 10 YEAR REVIEW — SAMPLE

PERC

ENTA

GE

REC

EIVI

NG

PERC

ENTA

GE

OF

BASE

SA

LARY

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY

MANAGEMENT — SUPERVISOR & TEAM LEADER TRENDS

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE 90 90 90 90 90 90 90 90 90 90 90

ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MARKET

Sample

© 2018 Mercer LLC. 17STI TRENDS — A 10 YEAR REVIEW — SAMPLE

PERC

ENTA

GE

REC

EIVI

NG

PERC

ENTA

GE

OF

BASE

SA

LARY

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY

PROFESSIONAL — SENIOR TRENDS

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE 90 90 90 90 90 90 90 90 90 90 90

ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MARKET

Sample

© 2018 Mercer LLC. 18STI TRENDS — A 10 YEAR REVIEW — SAMPLE

PERC

ENTA

GE

REC

EIVI

NG

PERC

ENTA

GE

OF

BASE

SA

LARY

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY

PROFESSIONAL — EXPERIENCED TRENDS

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE 90 90 90 90 90 90 90 90 90 90 90

ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MARKET

Sample

© 2018 Mercer LLC. 19STI TRENDS — A 10 YEAR REVIEW — SAMPLE

PERC

ENTA

GE

REC

EIVI

NG

PERC

ENTA

GE

OF

BASE

SA

LARY

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY

PARA-PROFESSIONAL TRENDS

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

PERCENTAGE OF EMPLOYEES RECEIVING INCENTIVE 90 90 90 90 90 90 90 90 90 90 90

ACTUAL INCENTIVE AS A PERCENTAGE OF BASE SALARY 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

TARGET INCENTIVE AS A PERCENTAGE OF BASE SALARY 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MARKET

Sample

ABO

UT T

HIS

REPO

RT

ABOUT THIS REPORT

Sample

21© 2018 Mercer LLC. 21 MET

HO

DO

LOG

Y

STI TRENDS — A 10 YEAR REVIEW — SAMPLE

ABOUT THIS REPORTThis section provides information on the methods of collecting, collating, and analysing data for this publication. Below are notes on exceptions and exclusions in the data and a list of data sources and relevant equations. Readers will also find a glossary of key terms.

METHODOLOGY

The following statistics are presented in this publication:

► Compound Annual Growth Rate (CAGR): The year over year growth rate applied to an investment or other part of a company's activities over a multiple-year period. The formula for calculating CAGR is (Current Value/Base Value)^(1/# of years) - 1. It is essentially a number that describes the rate at which an investment would have grown if it had grown at a steady rate.

► Percentage employees receiving: Number of employees receiving the incentive divided by number of total employees

► Median: The data point that is higher than 50% of all other data in the sample when ranked from low to high. Also known as the 50th percentile.

► Average: The sum of all data reported divided by the number of data observations in the sample. Also known as the mean.

► N: The number of companies that reported data for the statistic.

► Endash or “–”: The sample is too small to provide the statistic.

STATISTICS

Sample

ABOUT THIS REPORT

22© 2018 Mercer LLC. 22 MET

HO

DO

LOG

Y

STI TRENDS — A 10 YEAR REVIEW — SAMPLE

DATA MASKINGTo ensure the confidentiality of all companies that provide data to Mercer’s surveys, statistics have been “masked” by displaying an endash or “–” when minimum sample sizes are not met.

► A minimum of three data points are required to report the average and prevalence percentages.

► A minimum of four data points are required to report the median.

DATA ANALYSISThis publication uses job-level STI data sourced from Mercer’s Total Remuneration Surveys (TRS) to calculate STI prevalence rates, STI actual incentives (as a percentage of base salary), and STI target incentive (as a percentage of base salary).

► Organisation-weighted average data are used to calculate the STI prevalence rates and STI actual and target incentives as a percentage of base salary for the years 2016 and 2017. Previous to these years incumbent weighted data were used to calculate the STI prevalence, actual and target payouts.

► Averages are calculated using the number of observations of annual base salary with a threshold value greater than or equal to eight organisations.

► Throughout the report, the “target” is the expected STI percentage for the current performance year, while “actual” is the STI amount paid for the most recently completed performance year.

► The “percentage receiving” indicates the percentage of all employees that received a short-term incentive.

DATA SOURCES ► The data for all markets are calculated using Mercer's Total Remuneration Survey.

Sample

ABOUT THIS REPORT

23© 2018 Mercer LLC. 23 MET

HO

DO

LOG

Y

STI TRENDS — A 10 YEAR REVIEW — SAMPLE

EXCEPTIONS AND NOTESData may vary when compared to previous year for the following reasons:

► The sample of participating companies within a single market may be different from one year to the next.

► The data presented in the report are calculated using the Mercer's Global Benchmark Jobs. Due to variations in data availability year over year, there may be an impact on the final STI data presented.

► It is also important to note that within a sample, a significant amount of data may be reported by one organization, which might vary from year to year.

► Data may change drastically from year to year due to industry-related factors and economic conditions.

AMERICAS ► In Brazil, STI data include both bonus and profit-sharing information.

► For the years 2016 and 2017, the base salary in Colombia represents annual guaranteed cash; therefore the actual and target incentives are a percentage of annual guaranteed cash (not base salary). Prior to 2016, annual base salary was used for the calculations.

► Separate sets of global benchmark jobs were used for Latin America and North America regions to calculate job family and market-level data.

Sample

ABOUT THIS REPORT

24© 2018 Mercer LLC. 24 MET

HO

DO

LOG

Y

STI TRENDS — A 10 YEAR REVIEW — SAMPLE

ASIA PACIFIC ► For the years 2016 and 2017, annual guaranteed cash is used as annual base salary for India; therefore the actual and target incentives are a percentage of annual guaranteed cash (not base salary). Prior to 2016, annual base salary was used for the calculations.

► In Australia and New Zealand, the percentage receiving STI calculation for 2017 is based on the number of incumbents receiving an incentive, divided by the number of incumbents for which "employment cost" data was provided. This calculation differs to previous years; use caution if comparing this year's analyses to previous publications.

► Data for China represent the cities indicated in the report, not countrywide trends.

EUROPE, MIDDLE EAST, AND AFRICA ► Data for Kazakhstan, Russia, and Ukraine represent the cities indicated in the report, not countrywide trends.

Sample

© 2018 MERCER LLC. 25STI TRENDS — A 10 YEAR REVIEW — SAMPLESTI TRENDS — A 10 YEAR REVIEW — SAMPLE

Mercer Select IntelligenceSM is a research-based, decision support platform, offering HR and Business leaders an all-in-one digital portal of cutting-edge analysis, productivity tools, best practices and other thought leadership assets expertly curated from across Mercer. Mercer Select Intelligence offers access to:

• Insights Across HR Functions: From the C-Suite to practitioner level, stay ahead of the curve with qualitative and quantitative insights into globally sourced HR trends, best practices, tools and analysis.

• Legislative Developments: Mitigate risks and close compliance gaps by staying in the know on hard-to-find HR-related legislative, legal and regulatory developments and news.

• Productivity Tools: Deploy analytical and process tools to build readiness, manage performance and increase efficiency across teams, functional units and organizational levels.

• Timely Notifications: Personalized to your area of interest, daily, weekly and monthly alerts and updates are dynamically sent.

• Easy Access: Optimized for secure, anytime, anywhere access, the MSI platform and the iOS and Android app are accessible across devices.

• Global Scope: Enjoy access to over 30 global publications covering rewards, benefits and HR policies and practices. Members also gain access to third-party resources such as newspapers, magazines, and journals covering a variety of emerging and hot topics.

Visit MercerInsights to learn more.

Sample

26STI TRENDS — A 10 YEAR REVIEW — SAMPLE© 2018 Mercer LLC.

ABOUT MERCER At Mercer, we make a difference in the lives of more than 110 million people every day by advancing their health, wealth, and careers. We’re in the business of creating more secure and rewarding futures for our clients and their employees — whether we’re designing affordable health plans, assuring income for retirement, or aligning workers with workforce needs. Using analysis and insights as catalysts for change, we anticipate and understand the individual impact of business decisions, now and in the future. We see people’s current and future needs through a lens of innovation, and our holistic view, specialized expertise, and deep analytical rigor underpin each and every idea and solution we offer. For more than 70 years, we’ve turned our insights into actions, enabling people around the globe to live, work, and retire well. At Mercer, we say we Make Tomorrow, Today.

Mercer LLC and its separately incorporated operating entities around the world are part of Marsh & McLennan Companies, a publicly held company (ticker symbol: MMC) listed on the New York, Chicago, and London stock exchanges.

STI TRENDS — A 10 YEAR REVIEW — SAMPLESample

Copyright 2018 Mercer LLC. All rights reserved.

For further information, please contact your local Mercer office or visit our website at www.imercer.com

STI10YR — SAMPLESample