Report on Total Compensation Presentation to the City

Report on Total Compensation Presentation to the City of Greenville and Greenville Utilities Commission January 11, 2011 Presented by: THE WATERS CONSULTING GROUP, INC. Dallas Seattle Austin Cleveland 800. 899. 1669 www. watersconsulting. com

Today’s Discussion Classification and Compensation Study Status Definition of Total Compensation Analysis of Public and Private Sector Data Methodologies Summary of Total Compensation Comparison Proposed Compensation Philosophy Retiree Benefits Review © 2011 The Waters Consulting Group, Inc. 2

Focus on Total Compensation Simply Defined: An Organization’s commitment to how it values its employees Goal of the Philosophy: Attract, Retain, and Motivate Qualified Employees © 2011 The Waters Consulting Group, Inc. 3

Standard Components of Total Compensation Direct Pay Benefits Wages/Salaries Medical/Life Insurance Retirement Workers Comp Paid Leave © 2011 The Waters Consulting Group, Inc. Rewards Merit Pay Bonuses 4

Project Update Job Evaluation Job Analysis Salary, Benefits, and Pay Practices Survey Salary Structure System Administration Goals & Objectives Compensation Philosophy COMMUNICATION © 2011 The Waters Consulting Group, Inc. 5

Review of Total Compensation Components Greenville Compensation Components Salaries Benefits − Paid Time Off (Holidays, Vacation and Sick) − Health, Dental and Vision Benefits − Disability and Life/AD&D Insurance − Retirement, Social Security, Medicare, Deferred Comp. − Longevity Pay* *discontinued for all Commission/City employees hired after June 30, 1993 © 2011 The Waters Consulting Group, Inc. 6

Public Sector Methodology: Salaries Selected comparable organizations Collected salary data on 150 similar positions Analyzed the salary data: -Applied geographical adjustment -Applied “aging” factor (to July 1, 2011) – 2. 5% -Average salary for each position surveyed Determined average salary for selected positions included in Total Compensation Analysis © 2011 The Waters Consulting Group, Inc. 7

Public Sector Benchmark Organizations: Salary and/or Benefits Study • • • • Asheville, NC Cary, NC Clarksville, TN Concord, NC Denton, TX* Durham, NC Fayetteville, NC Flower Mound, TX* Garland, TX* Gastonia, NC Greenwood, SC Greenwood CPW Greer CPW, SC *EMS Providers © 2011 The Waters Consulting Group, Inc. • • • • Guilford County, NC* High Point, NC Jacksonville, NC Kissimmee, FL* Kissimmee Utility Authority, FL Lafayette, LA Ocala, FL Pitt County, NC Rocky Mount, NC Smithfield, NC Springfield, IL* Wilmington, NC Wilson, NC 8

Public Sector Benchmark Organizations Contacted but Unable/Declined to Participate • • Albany, Georgia Albany Water, Gas, and Light Commission Alexandria, VA Duluth, MN Fayetteville Public Works Florence, AL Florence Utilities (Gas, Water, Wastewater, Electric) City of Greer, SC • • Hamilton, OH City of Independence, MO / Independence Power & Light Johnson City, TN Johnson City Power Board Naperville, IL Orange County Water & Sewer Authority Terrebonne Parish, LA © 2011 The Waters Consulting Group, Inc. 9

Public Sector Benchmark Organizations for Total Compensation Study • • • • • Asheville, NC Cary, NC Date of Data Collection: Clarksville, TN June-October 2010 Denton, TX* Durham, NC Flower Mound, TX* Garland, TX* Key Factors in Greenwood, SC Participant Review Greer CPW, SC ÜCommonality of Positions Guilford County, NC* ÜCompetition for Jobs High Point, NC Ü Location/Proximity Kissimmee, FL* Ü Services Provided Kissimmee Utility Authority, FL Ü Comparable in Size and Budget Lafayette, LA Ü Benchmark would work for City and Commission Pitt County, NC Springfield, IL* Wilmington, NC Wilson, NC © 2011 The Waters Consulting Group, Inc. *EMS Providers 10

Private Sector Methodology: Salaries Included: Published Private Sector Salary Data − Direct match to Commission and City positions based on duties and requirements (Mercer, Watson/Wyatt, and Capital Associated Industries data utilized in WCG Market Analysis) − Data is available for clerical, technical, skilled, maintenance, professional and management positions − Determined average salary for employee groups included in Total Compensation Analysis Rejected: Bureau of Labor Statistics Report “Employer Costs for Employee Compensation–June 2010, ” issued September 8, 2010 − Unable to identify appropriate matches − Includes many jobs that are not comparable to City and Commission jobs – e. g. , jobs in sales and manufacturing − Caution by BLS regarding comparisons to public sector © 2011 The Waters Consulting Group, Inc. 11

Public Sector Methodology: Benefits Collected data on costs of benefits Utilized appropriate calculation method to arrive at cost per employee per year for each benefit Calculated average employee cost per year for all benefits © 2011 The Waters Consulting Group, Inc. 12

Private Sector Methodology: Benefits Included: Bureau of Labor Statistics Report for benefits analysis Differentiate Based on Comparable Size : Table 8 of BLS Report, Employers with more than 500 Workers Convert value of benefits to a “% of base salary” - Reported as “Cost per Hour Worked” - Convert to “% of Base Salary” Example: Health Benefits BLS Value = $3. 42/hour worked BLS Salary = $26. 35/hour worked Health benefits = 13% of base salary © 2011 The Waters Consulting Group, Inc. 13

Comparison to Public and Private Sectors Public Sector -Average salary for clerical, technical, skilled, maintenance, professional and management positions (from salary survey conducted by WCG for the Market Analysis) -Value of benefits calculated by WCG for public sector based on data reported by public sector organizations Private Sector -Average salary for clerical, technical, skilled, maintenance, professional and management positions (from published surveys utilized by WCG in Market Analysis) -Value of benefits for private sector based on applying “Benefit as a % of Base Salary” to the average private sector salary © 2011 The Waters Consulting Group, Inc. 14

Comparison of Average Total Compensation Organization Benefits as % of Base Salary Public Sector 48% Base Salary as % of Total Comp Benefits as % of Total Comp 67. 6% 32. 4% Private Sector 43. 0% 69. 9% 30. 1% City and Commission © 2011 The Waters Consulting Group, Inc. 47. 4% 67. 8% 32. 2% 15

Gr To w r C n o om f F m low iss e io r M n of ou Ci Pu nd, ty o blic TX f A W Ci she ork ty s v Ci of ille D , N ty o en C f Gu Cla ton , Pi ilfo rksv TX tt rd i Co C lle, un ou TN ty nty G ov EM er S Pu nm C e CO ity blic nt G of Se an G a cto d Ci GU rlan r ty o C C d, T f W o m X i Ci ty lmin bine o f K gto d Ci issi n, N ty m o m C f D ee , u Ci ty rha FL o m f , To Wil NC so w n Ki of n, N ss C C im m Pri ary ee va , N U te C Ci tili Se ty ty c t o La f H Aut or fa h ye Cit igh o tte y o P rity o , L f A Spr int, Co N i ns ngfi C el ol d id at , IL ed G ov. ee Comparison of Benefits as % of Base Salary Exempt and Non-Exempt Positions By Organization 70. 0% 60. 0% 50. 0% 40. 0% 30. 0% 20. 0% 10. 0% © 2011 The Waters Consulting Group, Inc. 16

Gr n of F m low iss e io r M n of oun Ci Pub d, T ty o lic X f A W o Ci she rks ty vil le Ci of ty De , N C o n f t Gu Cla on, T r Pi ilfor ksvi X tt l Co d Co le, un un TN ty G ty E M ov S er n Pu me C CO ity blic nt G of Se an Ga cto d GU rlan r Ci ty d, o C C f W om TX il b Ci ty min ine o g to d f K n, i s s Ci ty imm NC o f D ee , F u Ci ty rha L o m f , To Wils NC w n on, Ki of ss C NC im ar y m Pri va , N ee C t U e Ci tilit Sec ty o y Au tor La f H th fa or ye Cit igh tte y o Po ity f in , L t, A Spr Co in NC ns gfi e ol id ld, at I ed L G ov. om To w r C ee Comparison of Benefits as % of Total Compensation Exempt and Non-Exempt Positions By Organization 40. 0% 35. 0% 30. 0% 25. 0% 20. 0% 15. 0% 10. 0% 5. 0% 0. 0% © 2011 The Waters Consulting Group, Inc. 17

ss Sp at ed lid rin Go o v g im f H ig fie. m ee h P ld, oi IL U n til ity t, N A C Pr uth i o v To a rit y w te Se n of C c t ity C ar or o y f C ity Wi , N C l s o C ity f D on, of urh NC C ity Kis am s , N C O of W im m C G an ilm ee , i d G ngt FL on U C C ity C , N of om C b G ar ine Pi d l a tt Pu nd C ou bl , T n i X G ty c S G ui ec lfo ov t er or C rd n ity C m of oun en t C G la ty E re r C M k er ity sv S C om Cit of D ille, T e m yo is f A nto N s To io sh n, n w of evi TX n of Pu lle, Fl ow blic NC er W o M ou rks nd , T X Ki ity C of so C on ity C A , L tte ye La fa Comparison of Salary as a % of Total Compensation Non-Exempt and Exempt Positions By Organization 76. 0% 74. 0% 72. 0% 70. 0% 68. 0% 66. 0% 64. 0% 62. 0% 60. 0% 58. 0% 56. 0% © 2011 The Waters Consulting Group, Inc. 18

Policy Maker Direction Needed A compensation philosophy that directs: Prioritization of dollars between direct pay, benefits, and rewards Relationship of pay structures to market © 2011 The Waters Consulting Group, Inc. 19

Proposed Total Compensation Philosophy GUC/COG will: Provide a competitive base salary- not an aggressive one but a salary comparable to what an employee could get in its defined market Provide affordable benefits that meet the general needs of employees while focusing on options to control costs Continue benefits options for retirees that allow continued access while focusing on cost sharing and cost control measures Consider additional options to encourage high levels of job performance Focus on employee growth, motivation, and performance through professional development and training © 2011 The Waters Consulting Group, Inc. 20

Pay Policy Options Above Market Strategy Range midpoints above market average pay At Market Strategy (recommended) Range midpoints at market average pay Below Market Strategy Range midpoints below market average pay © 2011 The Waters Consulting Group, Inc. 21

Benefits of Recommended Approach Balances employer cost with compensation needs Continues ability to compete in the market, attracting quality employees Maximizes retention in key positions Minimizes impact on current employees Provides flexibility to respond to market changes Clearly communicates values to all employees Offers employees the opportunity to grow and develop Continues the focus on employee recognition and pay for performance © 2011 The Waters Consulting Group, Inc. 22

Pay Policy Options Above Market Strategy Range midpoints above market average pay At Market Strategy (recommended) Range midpoints at market average pay Below Market Strategy Range midpoints below market average pay © 2011 The Waters Consulting Group, Inc. 23

Next Steps Decision Regarding Pay Policy Development of Pay Ranges Based on Pay Policy Decision Reviews by Leadership Team Options and Costing for Implementation Adoption of Plan Final Report Development and Presentation Communication and Training © 2011 The Waters Consulting Group, Inc. 24

Retiree Health Benefits © 2011 The Waters Consulting Group, Inc.

Retiree Benefits: Methodology Public Sector: Gathered public sector data on retiree benefit offerings and cost Private Sector Retiree Benefit Offerings: Available in Capital Associated Industries Survey Retiree Costs: Cost data not included in Bureau of Labor Statistics Report © 2011 The Waters Consulting Group, Inc. 26

Comparison of Retiree Medical Benefits to Private Sector Employer Private Sector – CAI Survey – “Over 500 Employees” PPO Greenville City/Commission © 2011 The Waters Consulting Group, Inc. Medical Benefits Under 65 – Medical Benefits Over 65 – Average % of Premium Paid Average % of Premium by Employer Paid by Employer – “Retiree Only” 34% provide health benefits to retirees. Cost Share is 67% Cost Share is 95% 27

Comparison of Retiree Medical Benefits to Public Sector Medical Benefits Under 65 – Average % of Premium Paid by Employer - Medical Benefits Over 65 – Average % of Premium Paid by Employer – “Retiree Only” Public Sector Benchmarks who pay a % of premium 69% provide health benefits 44% provide health benefits Cost Share is 80% Cost Share is 81% Greenville City/Commission Cost Share is 95% Employer © 2011 The Waters Consulting Group, Inc. Annual Cost of Health Benefit/Retiree/ Year $8, 801 $4, 975 28

Cost Containment Measures Question: Are you considering taking any steps to reduce the cost of retiree benefits? Responses: 6 of 14: No changes at this time. 4 of 14: Increasing amount retirees pay for health benefits 2 of 14: Within last two years, retirees hired after a certain date will not receive health benefits 1 of 14: Must be 62 when retiring to be eligible to receive health benefits and organization only pays for three (3) years – until retiree eligible for Medicare 1 of 14: Evaluating establishing a health clinic for employees and retirees © 2011 The Waters Consulting Group, Inc. 29

Summary Of Retiree Benefits Analysis Wide variety of: - Health benefit offerings for retirees - Cost-sharing with retirees - Eligibility requirements for health benefits No definitive conclusion can be drawn Philosophy of each organization should guide retiree benefit decisions © 2011 The Waters Consulting Group, Inc. 30