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Aon HewittTalent, Rewards & Performance

In spring 2016, Aon Hewitt conducted its annual Hot Topics in Executive Compensation survey of 224 organizations to fi nd out what concerns they have about long-term incentives. Nearly 85% of a CEO’s total pay can come from long-term incentives, so it’s no surprise that 38% of respondents are reviewing aspects of their LTI programs. This report highlights the top plan design elements under review as well as some LTI plan features in use today.

2016 Trends in Long-Term Incentives

Talent, Rewards & Performance

2016 Trends in

Eligibility Levels

Payout Opportunities

Vehicle use

Performance Measures

Performance Leverage

Top Areas of Review

*Statistics may exceed 100% due to multipleresponses.

Area Actions Considered

Vehicle Use92% to deliver more value through performance-based vehicles as opposed to pure time-based vehicles

Eligibility Levels

56% to limit eligibility, while 44% may look to expand it

PerformanceMeasures

65% may expand the number of performance measures used, while 25% may look to decrease the current number used

PayoutOpportunities

55% may increase target award opportunities.30% may increase maximum award opportunities.

PerformanceLeverageFactors

64% may review minimum performance levels used to trigger minimum payout opportunities.46% may review maximum performance levels used to trigger maximum payout opportunities.

33%

32%

26%

14%

0% 10% 20% 30% 40%

26%

2016 Trends in Long-Term Incentives 2

LTI Vehicle Usage

Performance-based plans are the most frequently used vehicle to deliver long-term incentives at the CEO level and their direct reports. Time-based restricted shares come into play more often for Level 3 executives. Higher-level jobs have greater ability to affect the performance measure.

Our survey found that 67% of companies currently grant long-term incentives globally. Most use the same guidelines for executives, no matter where they are located.

84% of surveyed organizations indicated that they grant CEOs and their direct reports performance-based shares.

74% of the companies surveyed use a uniform policy for granting long-term incentives globally.

30%

15%

33%

45%

External Market Data Specific % of salary, based on level / title

/ grade

Specific dollar value, based on level / title

/ grade

Fixed number of shares, based on

level / title / grade

Global

Globally Differentiated Policy

Globally Uniform Policy

Policy is globally uniform for executives at higher organization levels,and globally differentiated

for other executives

74%

0%

Factors in Grant Determination Determining the size of an overall annual long-term incentive award varies by executive level.

Global Grant Guideline Policy Prevalence

19%

7%

50% 100%

31%

CEO Level 2 Level 3

26% 30

% 32% 35

%

7%

8%8%

2016 Trends in Long-Term Incentives 3

Drivers of Long-Term Incentive Levels

A number of factors can impact the value delivered through long-term incentives. Company performance is typically the most common, but other elements, such as board discretion and economic conditions also play a role.

Drivers of LTI Levels

CEO Level 2 Level 3

Board Discretion

Company Performance Relative to Plan Goals

31%

17%

36%

34%

35%

31%

25%

45%

23%

Economic Conditions

Change in Stock Price over past year

21%

21%

23%

Pressure to Compete 15%

12%

12%

Share Availability 11%

10%

10%

Management Discretion 19%

27%

10%

Shareholder Concerns 5%

2%

5%

25%

Are you among the 38% who are reviewing LTI programs? Check out our Total Compensation Measurement® (TCM) survey data to benchmark all elements of pay. Contact us for more information.

About Aon Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit: http://aon.mediaroom.com.

© Aon plc 2016. All rights reserved.The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, 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.

This report was created using data from the 2016 Aon Hewitt Hot Topics in Executive Compensation Survey. For more information about Executive Compensation surveys, data solutions, and consulting services, please contact surveysupport@aonhewitt.com.