August 2009 Executive Compensation Strategic Overview Pacific Northwest Group at Morgan Stanley Smith Barney a corporate client group of Morgan Stanley Smith Barney Eric Flaten Paul Jackson
Executive Compensation Changing Landscape Today s environment demands the most of those chosen to lead your company to new heights. The executive benefits & compensation arena is under the watchful eye of the media, shareholders, government, boards of directors, and most of all, your employees. The following are questions your peer-group is asking themselves today:» Do we have a comprehensive compensation plan consistent with our strategic initiatives and mission?» Are we offering the appropriate opportunities and benefits our executives desire?» Does our compensation plan appropriately align our management team s personal interests with shareholder s?» Does our delivery and participant education method clearly define the benefits, promote utilization, and help towards achieving personal financial goals?» Is our HR team burdened with translating the various options & benefits to help participants make personal financial decisions?» Have we reviewed the plan expenses for benefit plans within the last five years?» Are the professional advisors & consultants working together, and are we executing well? 2
Recruit, Retain, Reward, Retire We believe a comprehensive executive benefit and compensation plan should be structured to maximize the following objectives: recruit, retain, and reward your best talent while providing those participants the opportunity to achieve their retirement goals and objectives. RECRUIT World-class compensation and benefits platform designed to attract top talent. RETAIN Fully utilized programs key employees view as vital to their personal financial success while providing disincentive to look at alternative opportunities. REWARD Comprehensive plan coordination designed to appropriately reward key employees. RETIRE Effective education and delivery of benefits to ensure employees achieve their financial goals and objectives. 3
Pacific Northwest Group Our Role and Value Proposition Our Role: The key to designing an exceptional benefit is bringing together all key stakeholders: CFO, Treasurer, HR, Legal, stock plan administration, & the compensation committee. These stakeholders, accompanied with the proper outside professional & technical resources, can elevate your executive compensation to a new level by implementing innovative solutions to effectively coordinate a comprehensive executive compensation plan.» We assist companies in the creation and execution of strategic, comprehensive, and well coordinated compensation plans which align executives with the company s mission, while providing a strong mechanism to achieve their personal financial goals and objectives. Our Value Proposition:» We review all plan benefits to suggest updates to benefits, additional pay-for-performance features, and other options to motivate participants to meet corporative objectives.» We review employer funding vehicles to evaluate cost and taxefficiency.» We review plan documents to identify the impact of Section 409(A) on the plan and illustrate ways to restore benefit flexibility.» We are synergistic with your existing executive compensation plan and design consultants. 4
Pacific Northwest Group Services and Capabilities We deliver an integrated approach to executive compensation in the following areas:» Advisory & Execution Services Integrative Approach to Compensation & Equity Benefits Pay-for-Performance Plan Designs Deferred Compensation Tax Deferred Acquisition of Company Stock Equity Type Recordkeeping Executive Survivor Plans Cost and Tax Efficient Funding Concepts Retiree Welfare Benefit Funding Existing Plan Evaluation & Review» Administration and Recordkeeping Web based tools and information Online enrollment Performance reporting on both current and historical data Real time review of participant account values Asset allocation capabilities» Global Services Offshore planning Custom tailored investment solutions Multiple language and currency capabilities 5
About the Pacific Northwest Group Pacific Northwest Group at Morgan Stanley Smith Barney is a strategically focused executive benefit consulting group that specializes in the design, implementation and ongoing administrative support for qualified and non-qualified benefit plans. Our customer focus ranges from highly successful professional firms to public companies. In addition to strategically developing benefit plans and programs for our clients, we also integrate our own Benefits Coaching for corporate executive leadership. This ensures the highest success in each qualified and non-qualified deferred executive compensation or key executive benefit program we implement. PNW Group has created a team of professionals from around the United States that can provide a seamless team in a highly complex sector of executive benefit plans.» Over 30 years of industry experience» Each member is carefully screened and trained» Dedicated resources to entrepreneurs and the corporate client» Morgan Stanley Smith Barney is the only national company with a dedicated team based in Seattle, WA 6
Corporate Client Team Profile Pacific Northwest Group Eric Flaten First Vice President Wealth Management Morgan Stanley Smith Barney LLC Paul Jackson Senior Vice President Wealth Management Morgan Stanley Smith Barney LLC Eric is a First Vice President Wealth Management and Corporate Client Group Director with Smith Barney. Eric has over 20 years of financial services experience. Prior to joining Smith Barney, he served as a Vice President & Wealth Management Advisor at both Wells Fargo & Merrill Lynch. Eric s practice focuses primarily on developing strategies for entrepreneurs and executives; the alignment of benefits, compensation & equity with their wealth & financial management strategies. Eric earned a Bachelor of Arts in Business Administration specializing in both Accounting and Finance from Washington State University. Eric has been active in the community for the past 15 years. He is currently serving as a board member of Sammamish Family YMCA, Issaquah Swim Team Board Committee Member, an active member of the National Association of Corporate Directors and the Puget Sound Chapter of the Financial Planning Association. Paul is a Senior Vice President Wealth Management and Corporate Client Group Director with Smith Barney. Paul has over 15 years of financial services experience and prior to joining Smith Barney, served as a Naval Officer in the Royal Canadian Navy. Paul works with current and retired senior executives, business owners and entrepreneurs throughout the U.S. and overseas. He has been invited to speak on financial matters to employees at Fortune 500 companies. Paul earned a Bachelor of Arts from the Royal Military College of Canada and spent seven years on a missile Frigate traveling around the world and speaking with foreign government officials acquisitions of Canadian military technology. Paul resides in Sammamish, with his wife and two children. Eric resides in Sammamish, with his wife and two children. 7
Contact Information & Important Disclosures Eric M. Flaten First Vice President Wealth Management Paul W. Jackson Senior Vice President Wealth Management 601 Union Street, Suite 5200 411 108 th Avenue NE, Suite 1600 Seattle, WA 98101 Bellevue, WA 98004 (206) 628-4887 (425) 453-5746 eric.m.flaten@smithbarney.com paul.w.jackson@smthbarney.com 1) 2009 Morgan Stanley Smith Barney LLC. Member SIPC. Accounts carried by Citigroup Global Markets Inc. Member SIPC. All Rights Reserved. 2 Morgan Stanley Smith Barney LLC and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. 3) These materials are considered as proprietary and confidential information and property of Morgan Stanley Smith Barney. 8 INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE Date of first use: June 10, 2009