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WORLDWIDE SURVEY OF INTERNATIONALASSIGNMENT POLICIES AND PRACTICES (WIAPP)HIGHLIGHTS AND TRENDS – LATIN AMERICA

Miami, 2015

Ana Velázquez DuchanoyC&B COE Leader for LATAM

MERCER 1April 24, 2015

Introduction

• The Worldwide Survey of International Assignment Policies andPractices (WIAPP) is the industry’s largest and most comprehensivesurvey database on global mobility policies and practices.

• 2012 WIAPP was conducted from March 29 to July 13, 2012, gatheringresponses from 752 companies worldwide.

• It covers trends in mobility program management, as well as a widerange of policies and practices for typical long-term assignments.

• It also captures compensation and allowances/benefits practices forseven assignment scenarios, covering types of assignment differentfrom just the typical long-term assignments.

• The survey database is evergreen: www.imercer.com/wiappsurveylogin.

MERCER

1%3%

4%4%

6%6%

7%7%

9%11%

19%23%

Education + R&DHospitality & Entertainment

TransportationPharmaceutical & Healthcare

Chemicals and allied products manufacturing…Other

TechnologyConsumer Goods

Engineering & ConstructionEnergy

Financial & Professional ServicesManufacturing

WIAPP SurveyRegional and Industry Demographics

2April-24-15

APAC16%

EMEA32%

LATAM4%

NorthAmerica

48%

MERCER

WIAPP Survey (2012)Consumer Goods Participants

• ADM

• AMOREPACIFIC Corporation

• Amway

• Anadolu Efes

• Arcor

• Arla Foods amba

• Asia Pacific Breweries Limited

• Bacardi-Martini B.V.

• BARILLA G. E R. FRATELLI

• Bonduelle

• British American Tobacco

• Brown-Forman Corporation

• Campbell Soup Company

• Cervecería y Maltería Quilmes

• Coca-Cola Enterprises

• Coca-Cola Ìçecek

• Corn Products International (Ingredion), Inc.

• Energizer Holdings

• FEMSA Servicios S.A. de C.V.

• Ferrero

• Fonterra Co-operative Group

• FrieslandCampina

• General Mills

• Godrej Consumer Products Ltd

• Grupo Leche Pascual

• Gruppo Campari

• Herbalife International of America, Inc.

• Hormel Foods Corporation

• JT International S.A.

• Kellogg's

• Keystone Foods

• Kraft Foods Inc.

• L'Oréal

• Luigi Lavazza S.p.A.

• Marfrig Group

• Marico

• Mars, Incorporated

• McCain Foods Limited

• Molinos Rio de la Plata

• Nestlé Perú S.A.

• OSI Group, LLC

• PepsiCo

• Puratos Group N.V.

• PZ Cussons International Ltd

• Reckitt Benckiser

• Rich Products Corporation

• SABMiller plc

• SC Johnson & Son, Inc.

• Servicios Nutresa S.A.S

• TATA Global Beverages

• The Hershey Company

• The Procter & Gamble Company

• Unilever Vietnam International Co., Ltd.

• Watanmal Group

• Yves Rocher Group

• ZESPRI International Limited

3April-24-15

MERCER

WIAPP SurveyData Collected

• Current trends in program demographics(numbers, length, type, main home/hostlocations, gender, nationality, age)

• Assignment drivers and barriers

• Policy management (segmentation, trends)

• Program management, administration andstaffing (FTEs, centralization, outsourcing,tools, approval processes, exceptions, ROI,cost projections)

• Remuneration approaches, pay delivery

• Tax and social security approach

• Cost-of-living/Goods & services allowances

• Mobility incentives

• Hardship & danger pay

• Security and emergency evacuation

• Rest & recreation leave

• Housing and utilities

• Education

• Transportation

• Travel policy and home leave

• Spouse and family support

• Relocation assistance

• Repatriation

• Localization

• Compliance

4April-24-15


Key findings

• The home balance sheet approach remains by far the prevalentcompensation approach for typical long-term assignees worldwide exceptLatin America.

• Mobility premiums are more commonly provided by European and LatinAmerican companies than by North American and Asia-Pacific companies.

• Worldwide, among surveyed employers of globally mobile employees:– 89% have trouble finding suitable expatriate candidates– 69% think that current conditions are too expensive– 67% worry about expats’ performance level– 42% are using local or local plus assignments, and another 14%

are considering using them

• Latin American companies are looking in the mirror – with 94% reportingthey have either recently reviewed, are currently reviewing or are planningto review their international assignment policy.

TRENDS


Demographics (Latin America)Trends and expected increases in assignments

2010–2011 Trends 2012–2013 Projections

48% typical long-term assignments

45% permanent transfers

38% short-term assignments

32% locally hired foreigners

29% developmental assignments

52% typical long-term assignments

48% short-term assignments

47% developmental assignments

38% locally hired foreigners

35% permanent transfers


Demographics (Latin America)Where do you expect the highest increase in the number of assignees?

45% 42%34%

25%21% 21%

17% 17%13% 10%

UnitedStates

Brazil Mexico China Peru India Panama Australia Spain CostaRica


International assignment policyDo you have one policy covering all assignments or different policies?

43% 41%

65%

36%53%

57% 59%

35%

64%47%

WORLDWIDE (N=668) N. AMERICA (N=316) LAT AMERICA (N=34) EUROPE (N=202) ASIA-PAC(N=101)

Separate policies for different assignment types

One policy for all assignments


International assignment policy (Latin America)What type of assignments are handled with specific policies?

42%33%

25% 25%17% 17% 17%

8%

92%

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Segmenting assignees: Four-box modelCurrent assignees by category (Latin America; median values):

Emerging/High-Potential TalentInt’l learning/ development to grow

next generation of leaders

Strategic Business LeadersFill mission-critical roles and deliverspecific, strategic business results

N=21 15% N=23 60%

39% have a specific policy for this category 48% have a specific policy for this category

Career-Building VolunteersInt’l experience to fulfill personal objectives

(opportunistic, employee-driven moves)

Seasoned Technical ExpertsProviding specialist skill/expertise to fill local

gap or to complete a specific project/task

N=8 10% N=25 35%

19% have a specific policy for this category 50% have a specific policy for this category

DEV

ELO

PMEN

TAL

VALU

E

BUSINESS VALUE


53% Benefits (housing, education, company car, home leave)

47% Global international assignment policy

44% Compensation approach

41% Vendor management

41% Expatriate allowances and premiums

41% Tax policy

39% Short-term assignment policy

35% Intra-regional transfer policy

International assignment policy (Latin America)Currently Under Review

POLICIES AND PRACTICESTYPICAL LONG-TERM ASSIGNMENTS


Remuneration approach (Latin America)Which approach do you typically use for long-term assignments?

Latin America (N=34)

Home-basedbalance-sheetapproach, 38%

Hybridapproach, 26%

Host-basedapproach, 18%

Other, 18%65%

71%

63%

36%

64%

29%

35% 37%

WORLDWIDE(N=703)

NORTH AMERICA(N=333)

EUROPE (N=210) ASIA PACIFIC(N=110)

Home-based balance-sheet approach Other


34%6%3%3%3%

51% Pay entirely in home-country currency

Pay entirely in host-country currency

Pay in reference currency (USD, EUR)

Split pay between two or more currencies

Handle case by case

Other

Remuneration approach (Latin America)How do you typically deliver assignee remuneration?

27% 27%

36%

9%

Assignee’s choice Corporate policy Consultants’ recommendationsOther considerations(statutory, legal)

Split Pay


Remuneration approach (Worldwide)Trends

Use of Home-based balance-sheet approach73% 74%

69%65%

2006 2008 2010 2012

Pay in home-country currency

31%32%30%

27%

2006 2008 2010 2012

Split pay between 2 or morecurrencies

41%

42%

31%

48%

2006 2008 2010 2012


Localization (Worldwide)Are employers using local & ‘local plus’ assignment packages?

35%

19%

16%

7%

14%

9%Yes, this is a general trend

Yes, for certain assignment types

Yes, but only for intra-regional assignments

No, but seriously thinking about this option

No

Other


TaxesPolicy on company-source income tax liability incurred on assignment

73%

4% 4% 4% 10% 5%

43%

0%20%

0%

31%

6%

Tax EQ Tax protection Laissez-faire Tax-free Assignee pays alltaxes as a local

employee

Other

WORLDWIDE LATIN AMERICA

Use of Tax Equalization

81% 80%76%

73%

2006 2008 2010 2012

WORLDWIDE


Cost-of-Living (G&S) allowanceCOL index pricing level used for typical long-term assignments

14% 15% 13% 13%

59%69%

50%48% 51%

12%5%

25%23% 13%

15% 12%21% 16% 23%

WORLDWIDE(N=561)

N. AMERICA(N=287)

LAT AMERICA(N=24)

EUROPE (N=173) ASIA-PAC (N=69)

OtherLeast expensiveModerateExpensive

• Expensive: ORC Worldwide Expatriate, Mercer Convenience

• Moderate: ORC Worldwide EPI, Mercer Efficient

• Least expensive/Reversible: ORC Worldwide International, Mercer Mean-to-Mean

• Other: combination, other or do not use one primary pricing methodology


Cost-of-Living (G&S) AllowanceDo you cap the amount paid for goods and services differentials/COLA?

73%

17%

4% 6%

88%

0% 4% 8%

No Yes, for salaries abovethreshold

Yes, based on flat amount Yes, other



Incentive premiumDo you pay an incentive premium to LTAs?

28% 25%

50%32%

20%

21% 18%

8%27%

23%

52% 57%42% 41%

58%

WORLDWIDE(N=538)

N. AMERICA (N=292) LAT AMERICA (N=26) EUROPE (N=147) ASIA-PAC (N=66)

NoYes, in certain casesYes, in all cases


62% 55%43%

71% 78%

31% 39%50%

21%19%

6% 6% 7% 8% 4%

WORLDWIDE(N=255)

N. AMERICA(N=125)

LAT AMERICA(N=14)

EUROPE (N=85) ASIA-PAC (N=27)

OtherA lump-sum incentive premiumAn ongoing incentive premium

Incentive premiumWhat incentive premium do you provide?


Housing assistance: Homeowners and renters

For homeowners: Do you provide home sale assistance?

For renters: Do you help employees cancel their leases before an assignment?

WORLDWIDE

No, 78%

Yes, 22%

LATIN AMERICA

Yes, 3%

No, 97%

WORLDWIDE

No, 57%

Yes, payall fees,

29%

Yes,other,15%

LATIN AMERICA

Yes,other, 3%

Yes, payall fees,

11%

No, 86%


Housing (Worldwide)Trends

Provide Home Sale Assistance

22%29%

34%36%

2006 2008 2010 2012

WORLDWIDE

Provide Free Host Housing

43%39%33%42%

2006 2008 2010 2012

WORLDWIDE


EducationPolicy regarding children stay in the home country or go to a boardingschool in another country.

34%30% 28%

12%

5% 3%

56%

25%

9%3%

6%3%

No assistanceprovided

Case by case Provideadditional home

trips

Pay boardingschool in the

home location

Other Provideadditional cash

allowance


MERCER

WIAPP SurveyWhat’s In It For You

• Participants receive:– A complimentary “All Participants Report” that includes results from all

organizations that completed the survey– Preferential pricing:

- Region Report based on the HQ regions of participants: USD 500/EUR 420- North America, Europe, Latin America, Asia Pacific

- Global Report: USD 950/EUR 790- Includes executive summary, results from the “All Participants Report” and

all four Region Reports.- Customized benchmarking reports and consulting expertise

– An invitation to “Private” Regional and Industry Webcasts (selected industriesonly, including Consumer Goods)

– Option to purchase custom data cuts not available to non-participants

26April-24-15

27April-24-15

APENDIX


Company profileHeadquarters country

Asia Pacific – exAus/NZ, 11%

North America(USA/Canada),

49%

Western Europe,29%

Eastern Europe,0.3%

Middle East, 0.4% Africa, 0.5%

Other, 1.6%Australia/NewZealand, 3.2%

Central & S.America (incl.Mexico), 4.5%


International assignment program administrationCentralization

45% 50%27%

41% 46%

48% 45%61%

55% 44%

12% 10%

WORLDWIDE (N=713) N. AMERICA (N=344) LATIN AMERICA (N=33) EUROPE (N=211) ASIA-PACIFIC (N=110)

Centralized Partly centralized Fully decentralized

CentralizedTotally managed by theglobal mobility admin

team within a corporatecenter

Partly centralizedAdmin responsibilities

split between globalmobility admin team and

the regional/localoffices, business units

Fully decentralizedManaged completely byhome and host offices

without involving globalmobility admin team


Taxes


Home leave benefit (Latin America)How often can your assignees return home for leave?

31%

22%

31%

50%54%

19%

7%15%

70%

Single Married, accompanied Married, non-accompanied

Twice a year Once a year Other


Miscellaneous Relocation Allowances (MRA)Policy

39%

6% 6%

29%

19%

39%

10%13%

23%

16%

Do not pay Flat amount % of base pay One month's basesalary

Other

Upon Expat Upon Repat


Localization (Latin America)Elements transferred to local structure

Transferred tolocal structure

immediately

Phased to localstructure over

timeNo Change

Compensation and benefits elements 74% 13% 3%

Base salary 77% 6% 6%

Variable bonus 74% 6% 6%

Health and welfare 77% 10% 3%

Retirement plan 61% 3% 19%

* Other responses include: Transfer to other structure and Not provided


Localization (Latin America)Elements eliminated

Eliminatedimmediately

Eliminatedover time No change

Housing allowance 47% 13% 13%

COLA 57% 10% 7%

Mobility/foreign service premium 53% 7% 10%

Hardship 53% 10% 7%

Home Leave 43% 17% 13%

Tax equalization 43% 20% 7%

Education assistance 53% 7% 10%

* Other responses include: Partially Eliminated / Reduced, Ongoing allowance replaced by lump sum, and Not provided.


Compliance

14%

24%

5% 22%

42%

4%52%

27%

WORLDWIDE (N=656)

LATIN AMERICA (N=33)

1 year 2 years 3 years As long as necessary Do not track Other

After an assignment, how long do you track and pay host-country tax fortrailing liabilities (deferred comp/bonuses, stock grants/options)?


HousingPolicy for LTAs

4%

42% 31%

28%

17%

9%

20%

5%

6%

6%

6%

6% 20%


Other

Case by case

Varies by position level

Varies: renter vs. homeowner

Housing norm deduction

Free housing

Do not provide

Mercer (Canada) Limited

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