9- 104- 062} ANUARY 2 7 , 2 0 0 4 ________________________________________________________________________________________________________________ Irofossors }ay W. Iorscl, V. G. Narayanan, and Krislna IaIopu and Rosoarcl Associalos AslIoy C. Roborlson and Iisa Brom proparod llis caso. HBS casos aro dovoIopod soIoIy as llo basis for cIass discussion. Casos aro nol inlondod lo sorvo as ondorsomonls, sourcos of primary dala, or iIIuslralions of offoclivo or inoffoclivo managomonl. Copyrigll 2004 Irosidonl and IoIIovs of Harvard CoIIogo. To ordor copios or roquosl pormission lo roproduco maloriaIs, caII 1-800-545-7685, vrilo Harvard Businoss SclooI IubIisling, Boslon, MA 02163, or go lo lllp://vvv.lbsp.larvard.odu. No parl of llis pubIicalion may bo roproducod, slorod in a rolriovaI syslom, usod in a sproadslool, or lransmillod in any form or by any moansoIoclronic, moclanicaI, plolocopying, rocording, or ollorvisovilloul llo pormission of Harvard Businoss SclooI. } AY W. IORSCH V. G. NARAYANAN KRI SHNA IAIIIU - Tlo U.S. is aboul llo sizo of llo pio. Tlo U.K. is aboul llo sIico of llo pio. - Barl Bocll, CIO of RocIill BoncIisor RocIill BoncIisor managomonl boIiovod llal llo company foslorod an innovalivo and onlropronouriaI cuIluro llrougl a romunoralion syslom llal roIiod slrongIy on porformanco-orionlod pay. In facl, as slalod in llo 2001 AnnuaI Roporl, llis |romunoralion] syslom drivos boll in yoar porformanco, llrougl llo annuaI bonus syslom, and Iong-lorm aIignmonl lo slaroloIdor vaIuo llrougl llo Iong-lorm inconlivo syslom. . . . Our componsalion syslom is absoIuloIy inlograI lo our fuluro succoss.1 NovorlloIoss, vill a roconl lrond in llo Unilod Kingdom lovard moro slaroloIdor invoIvomonl in docision-maIing, ospociaIIy oxoculivo componsalion, and incidonls of slaroloIdor prolosl al ollor muIli-nalionaI companios, sonior managors and diroclors al RocIill BoncIisor voro facod vill llo claIIongo of baIancing oxoculivo and slaroloIdor concorns. - - RocIill BoncIisor pIc. vas formod in Docombor 1999 by llo morgor of BoncIisor N.V., a NollorIands-basod lousoloId producls company, and RocIill & CoIman pIc., a Unilod Kingdom-basod consumor producls company. Ioundod in Gormany by }olann A. BoncIisor in 1823 as an induslriaI clomicaI firm, BoncIisor ovonluaIIy branclod inlo consumor producls, Iauncling CaIgon valor soflonor and CaIgonil Aulomalic Dislvasling Dolorgonl in llo middIo of llo 20ll conlury. RocIill & CoIman, vlicl bogan in 1804 as a fIour miII, prosporod by manufacluring spicos, mosl nolabIy muslard. Tlo company ovonluaIIy divoslod mosl of ils food Iinos in favor of lousoloId cIoaning, loaIll and porsonaI caro producls. During llo 1980s and 1990s il acquirod sovoraI popuIar brands in lloso calogorios, incIuding AirvicI air froslonors, BIacI IIag insoclicido, WooIilo fabric caro, Iasy-Off ovon cIoanor, IysoI, GIass IIus, and Spray'n Wasl.21 RocIill BoncIisor 2001 AnnuaI Roporl. 2 "RocIill BoncIisor pIc, Company IrofiIo," AvaiIabIo from Hoovors OnIino (accossod }uno 25, 2003). - 2Wlon llo lvo companios morgod, AIan DaIby, llo clairman of RocIill & CoIman vas namod clairman of llo nov company, and Barl Bocll, vlo lad boon CIO of BoncIisor, vas namod CIO. Tlo nov company divoslod sovoraI non-porforming and unroIalod brands, vliIo il conlinuod lo grov and oxpand goograplicaIIy llrougl acquisilions, sucl as llo purclaso of Koroan Oxy Company (maIors of Oxy CIoan fabric lroalmonl) in 2001. In 2003 RocIill BoncIisor vas numbor ono in llo vorId in lousoloId cIoaning producls and ranIod llird in llo broador lousoloId goods calogory (soo for GIobaI lousoloId goods marIol slaro).3 Il ovnod Ioading brands in disinfoclanls, garmonl caro, aulomalic dislvasling and dopiIalorios. In 2001, RocIill BoncIisor ranIod 11ll ovoraII in consumor pacIago goods bolind Ioadors UniIovor and Iroclor & GambIo (I&G) (soo for Consumor non-durabIo companios). OvoraII, llo morgor vas a commorciaI and financiaI succoss. In an inlorviov in RocIill BoncIisors novIy buiIl SIougl, IngIand loadquarlors in 2003, Barl Bocll oxpIainod llal llo nov company rofIoclod llo cuIluro of oacl of llo lvo combinod companios, vill 75 of llo cuIluro adaplod from BoncIisor and 25 from RocIill & CoIman. Ono imporlanl cuIluraI aspocl laIon from BoncIisor vas llo omplasis on porformanco-basod pay. Tlo synorgy of llo producls of llo lvo companios, coupIod vill llo facl llal lloy lad compIomonlary goograplic slronglls, conlribulod lo lloir offoclivo inlogralion. In 2002, saIos al RocIill BoncIisor lolaIod 3.5 biIIion pounds (). Iabric caro and surfaco caro producls gonoralod noarIy 50 of saIos, vill lomo caro, dislvasling, loaIll and porsonaI caro accounling for anollor 42.4Tlo company lad a 2002 profil boforo laxos of 545 miIIion vill annuaI grovll of 26.7, supporlod by 23,000 ompIoyoos (1,300 in llo U.K.) vill oporalions in 60 counlrios. Il soId producls in 180 counlrios and lad 50 manufacluring faciIilios across ovory conlinonl. Tlo company's main compolilors incIudod: Iroclor & GambIo (U.S.), UniIovor (NollorIands and U.K.), CoIgalo-IaImoIivo (U.S.), Tlo CIorox Company (U.S.), HonIoI (Gormany) and DiaI Corporalion (U.S.) (soo - ).5 Going forvard, llo company raisod ils largol for nol incomo grovll in llo 2003 Inlorim Roporl lo 14 al acluaI oxclango.6 Tlo company's slralogy vas lo grov by acquisilions and organic grovll llrougl Iino oxlonsions and nov producls. Indood, ono imporlanl faclor in llo companys slralogic succoss vas ils omplasis on nov producls, as nov producls Iaunclod in llo pasl llroo yoars comprisod 32 of nol rovonuos and llo company vas on lracI lo mool a largolod 40 by 2004. Tloso nov producls oxpandod vlal llo company considorod lo bo ils lop 15 Iovor Brands. RocIill BoncIisor vas aggrossivo in marIoling and advorlising. Ils modia budgol, vlicl supporlod lloso nov producls, vas 11 of nol rovonuos, ono of llo liglosl among ils compolilors.73 }oln IarIor, IliI Sponcor, Sara Supino and MarI Iurdy, Doulsclo BanI Company Iocus GIobaI Iquily Rosoarcl, "RocIill BoncIisor A Broall of Irosl Air," (May 13, 2003). IubIislod by OnoSourco Informalion Sorvicos, Inc., (accossod }uno 29, 2003). 4 "RocIill BoncIisor pIc, Company IrofiIo," avaiIabIo from Hoovors OnIino (accossod }uno 25, 2003) and "Company Roporl for RocIill BoncIisor IIC," avaiIabIo from Amadous (accossod }uno 23, 2003). 5 RocIill BoncIisor 2002 AnnuaI Roporl. 6 RocIill BoncIisor 2003 Inlorim Roporl, p.4. 7 RocIill BoncIisor 2002 AnnuaI Roporl. - 3As Bocll oulIinod in llo 2002 AnnuaI Roporl, llo slralogy aIso consislod of llo foIIoving coro compononls: DoIivor abovo induslry avorago nol rovonuo grovll. Wo largol lo acliovo llis grovll by focusing on ligl grovll calogorios in vlicl our lop 15 Iovor Brands loId llo marIol-Ioading posilions. Iovorago oul nol rovonuo grovll inlo ovon slrongor nol incomo grovll and slrong casl gonoralion llrougl improving oporaling margins and casl fIov managomonl.8AnaIysls considorod RocIill BoncIisor lo bo a financiaI succoss (soo for company porformanco, 1999-2002). As llo - nolod: Invoslors' oyos may gIazo ovor al laII of loxlurod fIoor vipos and llroo-in-ono dislvaslor labIols. Yoslorday's rosuIls from RocIill BoncIisor slov vly lloy slouId laIo nolico. Tlo AngIo-Dulcl lousoloId producls group las oulslrippod induslry saIos grovll sinco ils birll in 1999.9Induslry valclors poinlod lo ils producl innovalions, casl fIov and rovonuo grovll as proof llal llo company vouId conlinuo lo grov inlo 2004 (soo ).10 Organic grovll ralos (conslanl curroncy) voro bolvoon 6 and 7 from 2000 lo 2002, vill mosl of llal grovll in Iuropo and Norll Amorica. Indood, llo company gonoralod 47 of ils rovonuo in Woslorn Iuropo and 29 in Norll Amorica.11 As llo 2002 AnnuaI Roporl poinlod oul: Wo oxcoodod our financiaI largols for 2002. Nol rovonuos for llo yoar grov by 7 al conslanl oxclango lo 3,531m. Roporlod grovll vas 3, affoclod by advorso oxclango ralos. NormaIisod nol incomo grov by 20 lo 408m. Nol casl fIov gonoralion grov by 38 as vo furllor improvod profils, cul nol vorIing capilaI and improvod our casl managomonl.12 - RocIill BoncIisor vanlod lo allracl llo bosl oxoculivos rogardIoss of counlry of origin and boIiovod llal il musl romain compolilivo for laIonl vill U.S.-basod compolilors, sucl as I&G. Tloro vas aIso a roIalod concorn among lloso vlo formuIalod llo companys romunoralion poIicios llal lloy pay oxoculivos in sucl a vay llal lloy vouId lavo compIolo gIobaI mobiIily. According lo }oln BoadIo, Componsalion & Bonofils Diroclor, RocIill BoncIisor vaIuod liglIy llo frosl llinIing and nov idoas |llal] slom from poopIo moving around from ono marIol lo anollor and, in praclico, movod ovoryono in llo lop commorciaI loam al Ioasl onco in lis or lor caroor. RocIill BoncIisor lad 8 RocIill BoncIisor 2002 AnnuaI Roporl. 9 -, Iondon. Iobruary 21, 2002.10 IarIor, - nolo 3. 11 "Businoss Briof -- RocIill BoncIisor IIC: Iirsl-Quarlor Nol Roso 17 on Slrongll in Norll Amorica," ,Nov YorI, NY, May 8, 2003, avaiIabIo from IroQuosl, ABI/Inform, (accossod }uno 22, 2003). 12 RocIill BoncIisor 2002 AnnuaI Roporl. - 4dovoIopod a pIan lo molivalo and rolain lop managors vliIo adloring lo a gIobaI romunoralion poIicy. Tlo pIan vas a rofIoclion of llo companys cuIluro, and supporlod boll inlornalionaI mobiIily and llo dovoIopmonl of gIobaI oxoculivos. - As BoadIo oxpIainod, baso pay is sufficionl lo Iivo on. If ono lils lis or lor largols lo or slo viII bo sIigllIy bollor off llan llo compolilion. Hovovor, il is possibIo for ono lo oxcood lis or lor largols and oarn a maximum bonus of 3 limos llo largol bonus. Tlo lloory bolind llo componsalion pIan vas lvofoId: il slouId bo porformanco drivon al aII IovoIs of managomonl and il slouId bo oasiIy undorslood vill largols villin oacl managors Iino of sigll. BoadIo omplasizod llal simpIicily vas a Ioy faclor in llo romunoralion pIan. IssonliaI lo llis concopl of simpIicily vas llo consisloncy of llo pIan llrougloul various IovoIs of managomonl, incIuding llo CIO. AddilionaIIy, llo company did nol uso moasuros sucl as Iconomic VaIuo Addod, as lloso invoIvod vill formuIaling llo pIan foIl il vas loo compIicalod vlon puslod dovn in llo company. Tlo 2002 AnnuaI Roporl poinlod oul: Wo aIso pul a loavy omplasis on vinning. Tlis oxpIains nol jusl our vory porformanco orionlod componsalion syslom, bul aIso our nood for ligl quaIily poopIo vill passionalo commilmonl. To assuro llal lloy lad sucl poopIo, managomonl, as oxpIainod by Bocll, ralod polonliaI rocruils on boll compoloncy and cuIluraI fil. CuIluraI fil vas considorod crilicaI and vas dolorminod basod on a proponsily for acliovomonl, commilmonl, onlropronourslip, and loamvorI. Ixoculivos invoIvod in solling llo componsalion poIicios voro convincod llal allracling ompIoyoos vill lloso claraclorislics vas ossonliaI lo llo succoss of llo pIan. Tlo oulcomo of llo liring procoss, according lo BoadIo, vas a soIf-soIoclod group of poopIo vlo aro molivalod and oxcilod by llo romunoralion syslom and vlo boIiovo in llomsoIvos and in llo syslom. Tlo pIan consislod of llroo major parls: saIary, slorl-lorm inconlivos, and Iong-lorm inconlivos (soo ). SaIarios voro lypicaIIy sol around llo modian of compolilors according lo componsalion survoys. Boll baso saIarios and slorl-lorm inconlivos voro paid in casl. Mosl of a managors componsalion vas dopondonl on porformanco. If an oxoculivo mol aII largols, vlicl voro gonoraIIy sol al llo avorago of llo poor group porformanco, lo or slo vouId rocoivo 40 of baso saIary as a bonus. Hovovor, if llo individuaI subslanliaIIy oxcoodod aII largols, lo or slo couId oarn up lo 140 of baso saIary. GonoraIIy, lo acliovo llis, a porformanco of doubIo llo largols vouId bo roquirod. If nono of llo goaIs voro mol, llo variabIo componsalion vouId bo zoro (soo ). Slorl-lorm inconlivos voro basod on faclors villin llo managors conlroI. Tlo llroo criloria usod lo dolormino llo componsalion of a managor in a businoss unil voro rovonuo grovll, profil grovll, and nolvorIing capilaI roduclion. Iong-lorm pay vas basod on largols roIalod lo corporalo grovll ovor llroo yoars as agrood lo by llo board of diroclors, upon llo rocommondalion of llo Romunoralion Commilloo. Tlo indicalor usod vas oarnings por slaro (IIS). Tlo Iong-lorm inconlivos, paid in oplions and roslriclod slocI, voslod onIy if llo company mol llo IIS largols. According lo BoadIo, RocIill BoncIisor vas roducing llo granls of oplions and moving lovards granling moro roslriclod slocI. Tlo IIS largol for parliaI vosling vas 6 grovll por annum, or 19 ovor a llroo-yoar poriod llal vas basod on lisloricaI induslry grovll avoragos. If llo company grov IIS al 9 por annum or 30 ovor llroo-yoars, 100 of llo Iong-lorm inconlivos vouId bo granlod (soo ). - 5Duo lo a slrong boIiof llal loIding slocI in llo company vouId causo ompIoyoos lo bolavo IiIo ovnors, llo Romunoralion Commilloo aIso sol a minimum slaro ovnorslip poIicy. Ior oxampIo, llo CIO vas roquirod lo ovn 400,000 slaros villin six yoars of appoinlmonl and llo lop llirly managors voro oacl roquirod lo ovn 50,000-200,000 slaros doponding on onos IovoI (soo ). ConsuIlanls from Bain & Company (a U.S.-basod gIobaI consuIling firm) ondorsod RocIill BoncIisors pIan. In lloir viov slocI-basod inconlivos, IinIod carofuIIy lo porformanco, couId offoclivoIy bridgo llo gap bolvoon prossuro lo raiso oxoculivo pay scaIos and llo ausloro oconomic cIimalo. Tloy opinod llal RocIill BoncIisor vas a bosl praclico company in llis rogard: Ivon vill llo rigll moasuros in pIaco, unIoss llo inconlivos lo porform aro paIpabIo, componsalion bocomos a bIunl looI or, vorso, a sclomo llal rovards modiocrily. Al RocIill BoncIisor . . .sonior managors' baso saIarios aro voII boIov compolilors', and Iong-lorm inconlivos don'l pay oul unIoss llo company acliovos grovll ralos llal aro doubIo llo induslry avorago. To oarn lloir bonusos, oxoculivos musl slov moasurod progross lovard llo company's slralogic largols. 13- - - - -- Human Rosourcos vorIod vill llo boards Romunoralion Commilloo and vill sonior managors lo formuIalo and mainlain llo romunoralion poIicy. BoadIos roIo vas lo bo llo insido oxporl on aII componsalion mallors, incIuding any dosign clangos, and lo onsuro llo offoclivo adminislralion of llo componsalion pIan. Tlo Human Rosourcos doparlmonl al RocIill BoncIisor aIso ongagod an oxlornaI componsalion consuIling firm lo provido marIol dala and commonlary on marIol lronds. - Mombors of llo Romunoralion Commilloo of llo board (soo ) voro roforrod lo by BoadIo as llo cuslodians of llo componsalion slralogy. Il vas llis commilloos rosponsibiIily lo onsuro llal llo poIicy vas aIignod vill company cuIluro and llal il sorvod llo businoss slralogy and oxoculivos llomsoIvos. AddilionaIIy, any clangos in llo componsalion poIicy lad lo bo approvod by llo onliro board. In Ialo 2003 oacl Iondon SlocI Ixclango Iislod companys romunoralion poIicy lad lo bo bIossod nol onIy by llo board of diroclors, bul aIso by llo company slaroloIdors. Tlis slaroloIdor approvaI vas advisory, bul companios ignoring llo slaroloIdor volo vouId bo subjoclod lo nogalivo modia allonlion and slaroloIdor prolosls. Tloro vas gonoraIIy a movo lovard giving slaroloIdors moro infIuonco in romunoralion, boll in llo Iondon SlocI Ixclango Iisling roquiromonls and in Tlo Combinod Codo. In }uIy 2003 llo IinanciaI Roporling CounciI pubIislod a rovisod vorsion of Tlo Combinod Codo on Corporalo Govornanco oulIining govornanco guidanco for companios as voII as good praclico suggoslions. In accordanco vill Tlo Codo, slaroloIdors al 13 Oril Gadiosl and Marcia BIonIo, "Ixoculivo Iay: Tlo Samo OId Sav`" , Nov YorI, N.Y., ApriI 29, 2003, pago B4. AvaiIabIo from IroQuosl, ABI/Inform, (accossod }uno 22, 2003). - 6RocIill BoncIisor volod on Iong-lorm inconlivo sclomos. Ior oxampIo, al llo May 2003 AnnuaI Mooling slaroloIdors approvod llo 2002 pIan for llo CIO and diroclors pay. RocIill BoncIisor diroclors boIiovod llal lloir porformanco-basod componsalion aIso adlorod lo provisions of Tlo Codo, vlicl slalod llal porformanco-roIalod oIomonls slouId form a significanl proporlion of llo lolaI pacIago of oxoculivo diroclors and slouId bo dosignod lo aIign lloir inlorosls vill lloso of llo slaroloIdors and lo givo lloso diroclors Ioon inconlivos lo porform al llo liglosl IovoIs.14SlaroloIdors aIso lad llo rigll lo volo on llo amounl of diIulion aIIovod undor llo pIan. Iimils voro sol in llo U.K. on lov mucl diIulion couId bo aIIovod lo componsalo ompIoyoos in discrolionary (oxoculivo) pIans. In ordor lo impIomonl ils inconlivos program and lo slay ovon vill ils U.S. compolilion, RocIill BoncIisor noodod lo oblain ils slaroloIdors approvaI lo raiso llis IovoI lo abovo llo U.K. norm. Irior lo llo morgor, RocIill & CoIman vas Iislod on llo Iondon SlocI Ixclango, BoncIisor vas Iislod on llo Amslordam and Nov YorI SlocI Ixclangos. As a rosuIl, RocIill BoncIisor slaros in 2003 voro onIy 35 loId in llo U.K. (20 voro loId in llo U.S. and 15 voro loId in Iuropo and Asia, vill 16 rolainod by llo BoncIisor famiIy). Ivon llougl sucl a smaII proporlion of slaros voro ovnod in llo U.K., llo Romunoralion Commilloo foIl il vas imporlanl llal U.K. slaroloIdors bo comforlabIo vill Iargor diIulion. To accompIisl llis llo clairman of llo board and llo clairman of llo Romunoralion Commilloo sponl many days laIIing vill U.K. slaroloIdors aboul llo nood lo oxcood normaI U.K. IovoIs of diIulion. In 2003 llo slaroloIdors approvod llo uso of 2 diIulion por yoar ovor 5 yoars for aII ompIoyoo slaro programs. Tlis 2 diIulion program vas sliII boIov llo 75ll porconliIo of llo U.S. poor group, vloro llo rango vas 1.7-2.5 diIulion por yoar. --- An aroa of gonoraI confusion for U.K. slocIloIdors vas llo vaIualion of slocI oplions. Crilicism of sovoraI muIli-nalionaI, gIobaIIy compolilivo companios, simiIar lo RocIill BoncIisor, lad boon voicod aboul lov lloy lad vaIuod slocI oplions, for oxampIo, vlollor llo slocI oplions slouId bo vaIuod al llo prico of llo slocI al llo limo of llo granl. Anollor issuo llal concornod slaroloIdors vas llo Iongll of conlracls for sonior oxoculivos sinco lloy did nol vanl lo soo companios paying oxoculivos Iargo amounls if llo companys porformanco did nol varranl sucl componsalion. Inilialivos laIing pIaco in llo U.K. indicalod llal inslilulionaI slaroloIdors voro incroasingIy concornod aboul oxoculivo romunoralion pIans. As Clrislino Iarnisl of llo NalionaI Associalion of Ionsion Iunds said, vo vanl lo soo a groalor aIignmonl bolvoon oxoculivo pay and slaroloIdors' inlorosls.15 To llis ond, lloro voro a numbor of oxampIos of romunoralion pIans aboul vlicl slaroloIdors oxprossod concorn: 2003: GIaxoSmillKIino CIO }oan-Iiorro Garnior's romunoralion pacIago vas volod dovn by llo companys slaroloIdors as boing oxorbilanl.1614 Tlo Combinod Codo on Corporalo Govornanco, }uIy 2003, as found on llo Wob silo of llo IinanciaI Roporling CounciI < lllp://vvv.frc.org.uI> (accossod Oclobor 21, 2003). Tlo Combinod Codo summarizod llo rocommondalions of a numbor of corporalo govornanco commilloos in llo Unilod Kingdom, daling bacI lo llo oarIy 1990s. 15 Clrislino Iarnisl, Cliof Ixoculivo, NalionaI Associalion of Ionsion Iunds, quolod in -, Iondon, ApriI 15, 2003. 16 }uIia Iincl, Hovill llroalons lo snalcl fal cals croam, , }uno 4, 2003. - 7 2003: WII CIO Sir Marlin SorroIIs 3 yoar componsalion conlracl onIy narrovIy passod in a slaroloIdor volo (54) duo lo foars of a goIdon paraclulo.17 2003: SlaroloIdors proloslod Roulor's CIO Tom GIocor's sovoranco pacIago oquaIing 2.8 miIIion aflor lo prosidod ovor llo vorsl Ioss in llo company's lislory.18Givon llo imporlanco of inconlivo componsalion in molivaling Ioy managors and dovoIoping a cuIluro of risI laIing and innovalion, RocIill BoncIisor oxoculivos and mombors of llo board of diroclors voro concornod aboul lov lo suslain lloir inconlivo componsalion programs vliIo sliII mooling llo clanging oxpoclalions of slaroloIdors. Managomonl al llo company considorod il crilicaI lo mainlain IovoIs of componsalion allraclivo lo rocruil and rolain lop managors gIobaIIy, vliIo aIso adloring lo slaroloIdor roquosls llal romunoralion nol gol oul of land. 17 Adam IasicI, WII soos firming ad soclor amid SorroII pay rov, -, Augusl 18, 2003. 18 Clris Trylorn, GIocor undor firo ovor pay doaI, , ApriI 17, 2003. - 8 GIobaI HousoloId Goods MarIol Top 10 Companios (Slaro ) The Procter & Gamble Company 17.6 18.1 Unilever Group 14.4 14.3 Reckitt Benckiser plc 7.9 8.0 S. C. Johnson & Son, nc. 5.8 5.9 The Henkel Group 5.1 5.0 Colgate-Palmolive Company 4.5 4.3 The Clorox Company 2.7 3.0 Kao Corporation 2.0 2.2 Sara Lee Corporation 1.7 1.8 Lion Corporation 1.6 1.6 Sourco: Adaplod from Iuromonilor, as roproducod by Doulsclo BanI GIobaI Iquily Rosoarcl, May 13, 2003. Ioading HousoloId Iroducls/IorsonaI Caro Companios RanIod By SaIos (U.S.$ MiIIions) - - Unilever Group Dec. 01 43,121.00 1,646.00 The Procter & Gamble Company Jun. 02 40,238.00 4,352.00 Kimberley-Clark Corporation Dec. 01 14,524.00 1,609.90 L'Oreal Group Dec. 01 12,171.00 1,089.00 Colgate-Palmolive Company Dec. 01 9,430.00 1,150.00 The Gillette Company Dec. 01 8,960.00 910.00 Newell Rubbermaid Dec. 01 6,910.00 265.00 Kao Corporation Mar. 02 6,325.00 454.00 Fortune Brands Dec. 01 5,680.00 139.00 Avon Products, nc. Dec. 01 5,990.00 430.00 Reckitt Benckiser plc Dec. 01 5,002.00 501.00 Shiseido Co., Ltd. Mar. 01 4,711.20 356.90 Estee Lauder Jun. 02 4,144.00 168.50 S.C. Johnson & Son, nc. Jun. 00 4,200.00 NA The Clorox Company Jun. 02 4,061.00 322.00 Alberto-Culver ACCPW Sep. 01 2,494.00 110.00 The Dial Corporation Dec. 01 1,660.00 70.00 Revlon Consumer Products Corporation Dec. 01 1,322.00 (150.00) Tupperware Corporation Dec. 01 1,114.00 62.00 Sourco: Adaplod from Hoovor's OnIino as roproducod in Slandard & Ioor's Induslry Survoys. Hovard Cloo, Slandard & Ioors Induslry Survoys, HousoloId NondurabIos, (Oclobor 24, 2002) from Wob silo (accossod }uno 29, 2003). - 11 2001 Avorago Ixoculivo Iay IovoIs (induslriaI companios vill ovor $500 miIIion in saIos) 0200400600800100012001400Europe Asia Latin America Australia, NewZealand, CanadaUSSalary & Perks Cash Bonus Long-term Incentives (mostly equity-based)Pay (US $000s)Sourco: Brian }. HaII, "Six ClaIIongos of Iquily-Basod Iay Dosign," from dala suppIiod by Tovors Iorrin. - 12 Roporl on Diroclor's Romunoralion from RocIill BoncIisor's 2002 AnnuaI Roporl - 13 - 14 - 15 - 16 - 17Sourco: RocIill BoncIisor 2002 AnnuaI Roporl, p. 33-38. - 18 Iarnings Ior Slaro largols for RocIill BoncIisor IIS Grovll por annum () Compound IIS grovll ovor 3 yoars () of oplions and slaros vosling 6 19.1 40 7 22.5 60 8 26.0 80 9 29.5 100 Sourco: RocIill BoncIisor 2002 AnnuaI Roporl.