GLOBAL MOBILITY SERVICES

6-8 October 2015

Rome, Italy

2015 Global Mobility Forum

Understanding the "Plus" in Local Plus Policies

Bill BarronPartner

Kathy SodermanManaging Director

3© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Agenda

Compensation Philosophies

Case Studies

Your Experience

Q&A

CompensationPhilosophies

5© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The Policy-Building Challenge

Competitive/Attractive

Hand-holding

Cost-Effective

Empowerment

Flexibility

HomeEquity

Host Equity

Control/Compliance

6© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Policy Development Considerations

Reflect corporate philosophy, culture and structure

Align HR strategy with company’s business strategy

Benchmark/reflect best practices

Minimize costs/maximize return on investment

Address both personal and professional needs of assignees

Minimize special deals and exceptions

Plan for future

7© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Compensation Philosophies

Compensation philosophies will differ from policy to policy within an organization…Prevailing are:

1. Home-based

2. Host-based

4. Headquarters

5. Better of Home or Host

3. Blended Home or Host

8© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

KPMG Survey 2015: Assignment Compensation

Which of the following statements best reflects the intention of your assignment policy’s compensation approach?

9© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

KPMG Survey 2015: Taxes

Which statement best describes your approach when addressing the assignment tax costs in relation to the assignee’s earnings?

10© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Local Definition

A Local Plus package is an approach where the company pays their employees transferring internationally based on the local pay structure which will typically include:■ Local Salary

■ Local Incentive Compensation

■ Local Benefits

■ Local Payroll

This approach will apply to:■ One way international transfers

■ Localized expatriates

■ International direct hires

■ Locally Qhired non-native individuals

11© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Local Plus Selection Drivers

There is paritybetween home

and host.

Host country has higher pay scale

that home country.

Difficulty accessinglocal housing market.

Developmental moves for more

junior employees with fewer at home

obligations.

12© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Local Plus Elements

Housing

Dependent Education

Relocation Assistance

Immigration Assistance

Tax orientation

Tax preparation

Home Leave

13© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Advantages & Disadvantages

Advantages

Pay and allowances may be delivered easilyMay promote more consistent administrationCould promote perceived equity amongst assignees at the host locationCompliance and managing data may be easierMay lower overall assignment costs

Disadvantages

x Impedes continued participation in home country programs (company-related, pension, social, etc)

xAny need for home country currency will require supplemental assistancexMay complicate moving assignees to new assignmentsxMay complicate repatriation

14© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Pitfalls

Employer Costs

Benefit Issues

Employee Experience

Forgetting to Phase Out

FX rates

Case Studies

16© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

2. Project lead1. Analyst 3. CEO 4. Director

Policy Selection

How would you structure a policy to meet the needs of both assignee and the business? Let’s explore a few scenarios.

Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely

Specialized expertise needed to roll out new initiative

CEO for foreign subsidiary, return home at end of assignment

Operations director permanent transfer to head department

HomeHost Duration

SingaporeUnited Kingdom24 months

PolandIndia6 months

USHong Kong36 months

AustraliaGermanyPermanent

17© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Scenario 1 - Analyst

2. Project lead1. Analyst 3. CEO 4. Director

Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely

Specialized expertise needed to roll out new initiative

CEO for foreign subsidiary, return home at end of assignment

Operations director permanent transfer to head department

HomeHost Duration

SingaporeUnited Kingdom24 months

PolandIndia6 months

USHong Kong36 months

AustraliaGermanyPermanent

Pol

icy Long Term

Host PayrollLocal SalaryTax Protection

Plu

s HousingRelocationTax Preparation

What if host location is India instead?

18© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Scenario 2 – Project Lead

2. Project lead1. Analyst 3. CEO 4. Director

Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely

Specialized expertise needed to roll out new initiative

CEO for foreign subsidiary, return home at end of assignment

Operations director permanent transfer to head department

HomeHost Duration

SingaporeUnited Kingdom24 months

PolandIndia6 months

USHong Kong36 months

AustraliaGermanyPermanent

Pol

icy Short Term

Home PayrollHome SalaryEqualized

Plu

s Per DiemTemp LivingExcess BaggageTax Preparation

What if duration is 18 months instead?

19© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Scenario 3 – CEO

2. Project lead1. Analyst 3. CEO 4. Director

Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely

Specialized expertise needed to roll out new initiative

CEO for foreign subsidiary, return home at end of assignment

Operations director permanent transfer to head department

HomeHost Duration

SingaporeUnited Kingdom24 months

PolandIndia6 months

USHong Kong36 months

AustraliaGermanyPermanent

Pol

icy Long Term

Home PayrollHome SalaryEqualized

Plu

s COLAHousingEducationRelocationTax Preparation

What if assignee localizes in Hong Kong?

20© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Scenario 4 – Director

2. Project lead1. Analyst 3. CEO 4. Director

Purpose Finance analyst sent abroad for global experience. Subsequent assignment likely

Specialized expertise needed to roll out new initiative

CEO for foreign subsidiary, return home at end of assignment

Operations director permanent transfer to head department

HomeHost Duration

SingaporeUnited Kingdom24 months

PolandIndia6 months

USHong Kong36 months

AustraliaGermanyPermanent

Pol

icy Permanent

Host PayrollLocal SalaryLaissez faire

Plu

s Temp LivingRelocationTax Preparation

What if assignee resides in France and could commute?

21© 2015 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm hasany authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Summary of Scenarios

1. Analyst 2. Project lead 3. CEO 4. DirectorScenario Singapore

United Kingdom24 months

PolandIndia6 months

USHong Kong36 months

AustraliaGermanyPermanent

Structure Cost Effective & Empowerment

Cost Effective & Hand Holding

Attractive & Hand Holding

Cost Effective & Empowerment

Philosophy LT Host ST Home LT Home LT Host

Tax Policy Protection Equalized Equalized Laissez Faire

Allowances • Home Leave (annual)• Relocation allowance• Tax preparation• Destination services• Temporary living• Auto Disposition• Host “peer” allowance• Actual tax withholding

• Per diem or COLA• Lease ER Paid-furnished• Small air shipment• Tax preparation• Unaccompanied• Home leave (1 every 3

months)• Home actual tax

withholding• Transportation

• Home Leave (annual)• Relocation Allowance• COLA• Relocation allowance• Housing &

Transportation(Allowance or ER Lease)

• Tax Preparation• Destination services• Dependent Education• Auto Disposition• Hypo tax withholding• Club membership

• Temporary living• Relocation allowance• Host-based salary• Tax prep in year of

transfer• Destination services• Tax Gross Up• Actual tax withholding

Your Experience

Q&A

Thank youPresentation by Bill Barron &Kathy Soderman

25

© 2015 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.