Chenega Corporation’s Compensation System Users’ Manual Revised January 6, 2010 Chenega’s Compensation System and this Users’ Manual are Proprietary and Confidential 4

Section I: Introduction 5

Section II: Compensation System Overview 6 Summary 6 Job Families 6 Compensation Structure 7

Section III: Procedures for Using Our Compensation System 9 Pricing Labor in Proposals 9 Classifying a New Job in the Compensation System or Reclassifying an Existing Job 14 Recruitments 16 Using the Compensation System Web Application17

Section IV: Compensation Management 21 Total Compensation Overview 21 Total Compensation Objective 22 Scope 22 Pay Range Definitions 22 Candidate Offers 23 Performance-based Pay Adjustments 24 Managing Annual Compensation Budgets 25

Section V: Appendices 31

Page 2 of 44 Appendix A: U.S. Department of Labor FLSA Tests 31 Appendix B: Additional Chenega Grade Category Information 36 Appendix C: Additional Salary Compensation Surveys Information 36 Appendix D: Definitions 40 Appendix E: Chenega Corporation Security Clearance Differential Guidelines 43 Appendix F: Confidentiality Agreement 44

CHENEGA CORPORATION COMPENSATION SYSTEM 45

CONFIDENTIALITY AGREEMENT 45 Appendix G: Corporate HR User Guidance 46

Page 3 of 44 Chenega’s Compensation System and this Users’ Manual are Proprietary and Confidential

Chenega created the Chenega Corporation Compensation System and this Users’ Manual for the exclusive use of Chenega Corporation. Any other use or reproduction for commercial or other purposes is prohibited without the express written permission of Chenega Corporation. The information contained within the Chenega Corporation Compensation System and this Users’ Manual is proprietary and highly confidential. Use or disclosure of the information by Chenega Corporation employees for other than the stated purpose is prohibited and may result in disciplinary action, up to and including termination.

Page 4 of 44 Section I: Introduction

Purpose Our Compensation System helps Chenega Corporation companies: → Describe jobs’ functions, values, and other characteristics consistently and accurately across the corporation → Make job-related information available to Chenega Corporation employees who need it → Manage individuals’ pay within Salary Ranges that reflect market and internal value → Price labor in proposals and bids → Comply with FLSA, EEO, and other regulations

Using this Manual This manual describes the Chenega Compensation System and provides guidance on its use and administration. The manual is divided into sections: → Introduction → Compensation System Overview → Procedures for Subsidiary Human Resources and Proposal Pricing Users → Appendices with supplemental information

Note: This manual assumes users have access to Chenega Corporation’s web-based Compensation System Web Application, your link to job and employee specific information.

Page 5 of 44 Section II: Compensation System Overview

Summary Understanding Chenega’s Compensation System will help you use it to analyze and classify jobs, support recruiting, and price labor in proposals. Job-related data in the system falls into three broad functional categories: . “Job Family” information that groups jobs based on a job’s function: IT, Fiscal, etc. . “Compensation Structure” information about how Chenega values a job: Salary Grade, Differentials (by employee type and geographic location), and Salary Ranges . “Compliance” information about a job that helps us demonstrate compliance with statutes and regulations for EEO, FLSA, and workers’ compensation

Job Families We group jobs into Job Families based on the job’s function to help managers and employees access information about a job or related jobs. An example of a job family and its components:

Fiscal Job Family . Job Family – Groups jobs into fields of work.

Contract ▪ Job Subfamily – Divides families by function. Accounting Procurement Administration Job Subfamilies ▪ Chenega Job Titles – The job title used across Contract Manager Job Chenega to identify standard job types. Note: Titles Companies may choose one or more alternate and Job “company” job titles for each Chenega Job Title to Contract Levels fit their company’s needs. Administrator I

Contract Administrator II

Page 6 of 44 Compensation Structure Our Compensation Structure includes: ▪ Salary Grades –The Salary Grade identifies a jobs’ value relative to other jobs, regardless of geographical location. Combining the Salary Grade with the Differential returns the job’s Salary Range. ▪ Salary Range – Consists of the minimum (the least we would pay, typically for someone who just meets the minimum qualifications), midpoint (or “target”, tied to the market median), and maximum. ▪ Differentials – We use Differentials to adjust Salary Ranges to geographically diverse labor markets, and to identify SCA and union jobs that for which there is no Chenega Salary Range. 90% of national average to adjust for area wages

D I F F 0 D For areas with wages equivalent to the national average. I F F 1 D 110% of national average to adjust for area wages I F F 2 D 120% of national average to adjust for area wages

Page 7 of 44 I F F 3 D Chenega Salary Ranges for employees working overseas. I F F 6 D Chenega Salary Ranges for employees working in job represented by a union – typically set at I $0. F F 7 D Chenega Salary Ranges for employees working within SCA classifications – typically set at $0. I F F 8 COMPLIANCE . FLSA Classification1 - Division of jobs into “Exempt” (exempt from overtime and minimum wage – typically salaried) and “Non-Exempt” (typically hourly) based on DOL regulations. This classification is determined by subsidiary HR personnel. . EEO Classification – A grouping of jobs based upon the EEOC2 division of labor into nine skill types, such as “officials and managers”, “craft”, “service workers”, etc. The definitions of each category are provided by the U.S. Dept. of Labor. This classification is determined by corporate HR personnel. 1 FLSA – Fair Labor Standards Act, administered by the U.S. Department of Labor, Employment Standards Administration Wage and Hour Division 2 EEOC – Equal Employment Opportunity Commission, a federal agency chartered in 1965 to enforce Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990 and other federal legislation on pay practices and discrimination.

Page 8 of 44 . Workers’ Compensation Classification – Codes determined by the U.S. government and assigned to jobs for workers’ compensation administration and reporting. This classification is determined by corporate HR personnel.

Page 9 of 44 Section III: Procedures for Using Our Compensation System Pricing Labor in Proposals Our system provides proposal pricing personnel with a library of jobs from which to choose when competing for work, as well as guidance on how to draft and price new jobs in the event there is not a good match in our library. Search the Chenega Job Library Use the Web-based Access Tool to find jobs that are good matches for those in your proposal. 1. If you know the specific job title, select it in the “Chenega Job Title” filter or use the “Job Keyword Search”. 2. Otherwise, use the “Family” filter to narrow down your search to the job’s functional area. If desired, you may filter to an even more specific function using the “Subfamily” filter. For more specific guidance on how to use the Compensation System Web Application, review the guidance at the end of this section. 3. Once you have found the right Chenega Job Title, select the right “Differential” for the employee type and geographic location. You may do this either by selecting the desired value in the Differential filter to limit the data displayed, or by clicking on the Chenega Job Title in the data table with the desired Differential (each Differential for a Chenega Job Title will show as a separate line). To see the Differentials that apply for various combinations of employee types and geographic locations, access the “Employee Type and Location Salary Range Differentials” table under the “Reference Tables” tab in the Compensation System Web Application. 4. Once you have found the best Chenega job match and applicable Differential, select the applicable Salary Range in the search results screen. To see statistical pay data for incumbents, click on “actuals”. Employees with HR access will also see actual pay for any their subsidiary’s employees in the selected job. If you cannot find a good job match in the Chenega Job Library, proceed to the “Draft a New Job” procedures below. Draft a New Job (Skip if you found a match in the Chenega Job Library) Because there was not a good match in Chenega’s library of jobs, you will be identifying the appropriate Chenega Salary Grade and Salary Range to provide values to price your proposal. Once Chenega wins the proposal and is ready to staff, your subsidiary’s HR personnel will complete the job creation process you are starting. These guidelines are intended to be used in conjunction with the “Labor Pricing and new Job Classification Worksheet”, available on in the Compensation System Web Application.

Page 10 of 44 1. Step 1: Draft a Short “Chenega” Job Description: Create a two to three sentence summary of the job’s basic function in the “Step 1” section of the Labor Pricing and New Job Classification Worksheet. If pricing from a contract or RFP, there may be a description in the contract you may use as a basis. Step 2: Determine Salary Grade & Grade Category: At this critical step you are “pricing” the job by placing it in the correct Salary Grade. Our objective at this step is to price the job competitively, both to support building a quality workforce and to maintain a competitive cost structure. To do so, we assess “Market Value” and “Internal Value”, and then tie those values to a Salary Grade in the Chenega Compensation System. Where the job is located will determine the Differential, which together with the Salary Grade returns the range of salaries, the Salary Range, we would be willing to pay an employee in that job. a. Market Value: We use market salary surveys to assess what other companies are paying for jobs similar to ours. We use this market information to help determine a job’s appropriate Salary Grade. i. Understand the internal job (or potential job) for which you would like to match against the market. Value factors you will need to be familiar with to “match” a Chenega job to a title in a market salary survey: 1. Nature and complexity of work 2. Experience, education, and knowledge required to perform the work 3. Level and scope of supervisory responsibilities 4. Need for supervision 5. Level and scope of interaction with external and internal parties ii. Identify the survey or surveys from which you will pull market data. Surveys are available through the Compensation System Web Application, which also provides a short description of each survey to help you identify those likely to have good matches for your job. The Chenega Corporation Compensation System only uses reputable, paid, published surveys; and we strongly encourage users to make use of these surveys before considering other sources. iii. Find a job match in the survey. Be careful, similar titles do not always mean a similar job. Compare Chenega’s Summary Chenega Job Description (from Step 1) against the survey’s and the

Page 11 of 44 value factors listed in (i) above. If you cannot find an exact match, match to a similar job. If you cannot find a similar job, skip to the “Internal Value” section below. iv. Determine the market value of the job indicated in the survey data: 1. Determine data “cut” (which subset of data you will use): a. Industry: If the job is very industry specific and the survey data shows significant variance (more than 10%) by industry, take the industry cut first. In some surveys, you will have the option of choosing progressively more refined industry cuts. b. Geography: Using the “national” data cut usually provides the most data points and will allow you to match the data to the equivalent Salary Grade and associated Salary Range for Diff1. If you use data specific to a geographic area, be sure to match it up the correct Salary Grade and Range for the Differential (for example, if using HRA, a DC survey, match your data to the Salary Ranges associated with Salary Grades for Diff2. c. Company Size: The next cut should be by company size –revenue often will be the best measure. For some jobs, such as human resources, employee count may be more appropriate. 2. Assess sample size: Strive to have at least 25 incumbents and five companies in your data set. Smaller sets may not represent the market accurately. If you find yourself with too small a sample, go to the next cut up until you get to a sample size with which you are comfortable. For example, you may choose to use the “all non-manufacturing” industry sector instead of the more specific “services”; or eliminate company size as a cut. Which cut is best to adjust will vary by job – assess whether a factor is likely to affect a job’s value when deciding. For example, pay for an accountant typically will not vary much based on company size, but can vary significantly based on industry because some industries have more complex and demanding accounting standards. In contrast, pay for a management position with responsibility for a key function usually will vary significantly based on company size, as well as industry. 3. Select a statistical value measure: For most purposes, the median is the most appropriate measure. It’s consistent with our objective of paying competitively with the market, and it

Page 12 of 44 reduces the affect of outliers that could skew the mean. If the median is not available or you have a valid statistical rationale, the mean is acceptable. 4. Aging data: We update our Salary Ranges each year, usually October, to account for changes in the labor market. Because of this and the fact we typically use the most current survey data available, aging survey data usually will not be beneficial because the effect would be too small to affect Salary Grade selection. 5. Source documentation: Capture an image of the survey data, save it as a PDF file, and include it when you submit the Job Classification Worksheet. This will allow users to access the source data through the web application once the job has been added to the Compensation System, and provide a valuable resource for audit responses. 6. If using more than one survey: Be careful to weight data based on quality and quantity. A better job match justifies giving one survey’s data more weight than another. Likewise, if the jobs are equally matched, a survey results with more incumbent data should be given more weight. Factors affecting the quality of a job match include how well the job descriptions in the survey data and your source document compare, how refined the data cuts were (e.g. matched to industry and company size is more refined than a match to the uncut data set) Because there are numerous factors that could affect weighting and good judgment is essential to evaluating how to consider those factors, we do not provide a “formula’ for weighting data. We believe the value of using quality data from multiple sources to effectively price jobs outweighs the complexity and judgment inherent with this approach. Be aware, however, that you may be asked to defend your rationale. To that end, if your weighting of data from multiple data sources affects your Salary Grade selection, we recommend you document your rationale in the comments section of the Labor Pricing and New Job Classification Worksheet. b. Internal Value: Use the Compensation System Web Application and our value factors below to compare the level of the work in the job you are classifying with the level of work performed in similar jobs. You can find similar jobs by filtering by Family in the Compensation System Web Application. Note the matches and the associated Chenega Salary Grade(s).

Page 13 of 44 1. Nature and complexity of work 2. Experience, education, and knowledge required to perform the work 3. Level and scope of supervisory responsibilities 4. Need for supervision 5. Level and scope of interaction with external and internal parties c. Tie to a Chenega Salary Range and Grade: i. Review the results you obtained in the Market Value (a) section and the Internal Value (b) section above. ii. Open the “Chenega Salary Grades and Ranges” table under the “Reference Tables” tab in the Compensation System Web Application. Scroll to the Differential that matches the geographic cut of the survey data you used (reference the “Determine data cut” section above). iii. Find the Salary Range with the midpoint closet to the Market Value (survey data median) you determined and note the associated Salary Grade. iv. Compare this Salary Grade with the Salary Grade you identified in the Internal Value (b) section above. If it’s the same or you only have Internal Value, enter the Salary Grade in the Step 3 column of the Job Classification Worksheet. If they differ (if off more than on Salary Grade reassess your matches in the market and internal analyses), analyze why, choose the appropriate Salary Grade - Salary Range, and select it in the Step 2 column. Document the survey and internal matches you used in the neighboring column. d. Determine the labor value to use in the proposal: i. Be sure to use the range from the Differential for the geographic area in which the job will be. The Salary Grade is the same throughout the Differentials (e.g., if SA, it would be SA in Diff1, Diff2, Diff3, etc.), only the Salary Ranges change. ii. The actual value used should be within the Salary Range for the job. Values at the lower end would be appropriate for entry level hires, midpoint for experienced “been there, done that” employees, and the high end of the range for proven “superstars”.

Page 14 of 44 e. Review results with your Human Resources department: i. The process for doing so varies from subsidiary to subsidiary – some involve the HR personnel throughout the pricing process. ii. Whatever your process, be sure to provide Human Resources a copy of the Labor Pricing and New Job Classification Worksheet used for the proposal. When we win the proposal, they will be completing the job classification process and will have responsibility for staffing using the job pricing you drafted.

Classifying a New Job in the Compensation System or Reclassifying an Existing Job The procedures below ask you to document the job information you develop throughout this process on the “Job Classification Worksheet”. Take these steps when you need to post a new job (see the Employment Procedures for documentation on the posting process) as a result of a won contract proposal, or adding a new job to a contract, G&A, or overhead. If this job is the result of a successful contract proposal, a partially completed worksheet should already exist. Otherwise, the form is available in the Compensation System Web Application. Corporate Human Resources will use the completed Worksheet to set up your new job in Costpoint. Steps 1-2: Price the Job 1. If the job you are creating is the result of a successful contract proposal, your proposal pricing personnel already should have documented draft pricing in the Step1 and Step 2 columns of the Labor Pricing and new Job Classification Worksheet. 2. If the job being created has not been priced, follow Steps 1-3 in the “Draft a New Job” procedures above. Step 3: Place in Job Family Review the summary job description (Step 1) and Chenega Job Family and Subfamily categories, and then select the most appropriate Family and Subfamily and enter in the “Step 3” column of the worksheet. Step 4: Recommend the “Chenega” Job Title The “Chenega” Job Title is the standard job title that will be used across Chenega’s companies to support proposal pricing and human resources functions. With this in mind, the Chenega title should be descriptive, but not so specific to limit its use to a specific position at a specific subsidiary. For example, an appropriate Chenega Job Title

Page 15 of 44 might be “Analyst III, Intelligence”, rather than “Sr. Counterintelligence Analyst, Middle East.” Enter your recommended Chenega Job Title in the “Step 4” column of the worksheet. Step 5: Select a “Company” Job Title The “Company” Job Title is the title the subsidiary company chooses for a job for use at that company. You have the option of setting the Company Job Title to be the same as the Chenega Job Title, or to select a different Company Job Title appropriate for your company. Enter your choice in the ‘Step 5” column on the worksheet. Step 6: Determine FLSA Status (EEO and WC status are set by Corporate HR) This is an important step: your company may suffer negative financial and legal consequences if you classify a job as exempt that should be non-exempt. The test for exemption from FLSA rules is contained in DOL regulations, which we have summarized for you in Appendix A. 1. Review the exemption tests to determine whether the job passes any of the three most common exempt tests: Executive; Administrative; and Professional. Note: The most common successful FLSA complaints filed with the DOL involve employers who misclassify a skilled but non-exempt technical support job (which are non-exempt) as a “Professional” job; and mistakenly classifying complex clerical (e.g., bookkeeper) or administrative (e.g. secretary) jobs as “Administrative” exempt. If at all in doubt, contact Corporate Human Resources for guidance. If a job is close, it’s safer from a compliance perspective to classify the job as non-exempt. 2. If the job does not pass any of the exempt texts, mark “Non-exempt” in the “Step 6” section of the Worksheet. 3. If the job passes an exemption test, mark “Exempt” and document the test passed in the “Step 6” section of the Worksheet. Step 7: Submit to Corporate Human Resources A Corporate Human Resources compensation professional will review the completed worksheet and enter the job into the Costpoint Human Resources Information System. Shortly thereafter, the information about the job will be available to you through the Web-based Compensation System Web Application; and Costpoint will be ready to accept incumbents into the job. Note: Why you do not need to select a “Differential” as part of this process. Our Human Resources Information System sets the Differential based on the employee’s Labor Code (regular, SCA, union) and

Page 16 of 44 Labor Location (e.g., MA Cambridge), and combines this data with the Salary Grade to determine the Salary Range. This only occurs once an employee is hired into a job, because both the Labor Location and Labor Code are associated with the employee record. Recruitments Our Compensation System must be closely integrated with the recruiting process to be effective. Please note, this procedure is not a comprehensive recruiting procedure, but rather describes the touch points with our Compensation System. 1. If you are preparing to recruit for a job that is new to Chenega Corporation, follow the procedures for “Classifying a New Job in the Compensation System or Reclassifying and Exiting Job” above. Before you start, look for jobs in the Chenega library that may be new to your company, but are not new to Chenega Corporation. How do you know? Use the web-based Compensation System Web Application to look for jobs across the family of Chenega companies in the Family with closest functional focus to the job you need (e.g., look in the “IT” family if you are looking for a Database Administrator job). 2. Once you have confirmed the job has been classified in the Compensation System, access information about the job for recruiting using the Compensation System Web Application, where you will find FLSA status, Salary Range, and more. 3. Once you have found a successful candidate and are ready to complete the New Hire Employee Action Request (HEAR), be sure to use the same Chenega and Company Job Titles on that form as those in the Compensation System (as added from the requisition [ mapped jobs] or the Job Classification Worksheet [new jobs])

Page 17 of 44 Using the Compensation System Web Application Overview Our Web-based Compensation System Web Application provides access to Compensation System information through the web. Because it runs from our Costpoint database, you will be viewing the same job-related information used in Human Resources, Contract Administration, and Finance. Access Levels

Subsidiary Human Resources Access to job information (salary ranges, FLSA status, etc.) across all companies. User Access to statistical (average pay, median pay, variance, etc.) employee information across all companies. Access to individual employee information for only the user’s subsidiary company. Subsidiary Proposal Pricing Access to job information (salary ranges, FLSA status, etc.) across all companies. User Access to statistical (average pay, median pay, variance, etc.) employee information across all companies. Corporate Human Resources Access to job information (salary ranges, FLSA status, etc.) across all companies. User Access to statistical (average pay, median pay, variance, etc.) employee information across all companies. Access to individual employee information for all subsidiary companies and corporate headquarters. Because the information accessed through this Tool provides users access to sensitive information about Chenega Corporation’s business strategy and practices, and individuals’ pay data, all users are required to execute a Confidentiality Agreement (Appendix F) before gaining access to the application. Basic Functions

Page 18 of 44 The Compensation System Web Application is designed to help users find the right Chenega Job Title and to access information about the job and incumbents using the search functionality under the “Query” tab. It also is the source of other information used for operating the Chenega Compensation System, to include Reference Tables, Salary Survey links, and the Users’ Manual and Forms. 1. Job Search: a. Selecting Filters: Use the Job Search under the “Job” link to find a specific job within Chenega’s hundreds of jobs. Select values in one or more of the Family, Sub Family, Job Title, Salary Grade, and Differentials filters, then click “Get ‘Em” to find the job or jobs you want.

b. Filter Results: In the example below, the data was filtered be selecting the “Logistics” Family and “Operations” Sub Family. Note that the Job Search filters remain once the query results are returned. You can select additional filter values until you get down to the data you want.

Page 19 of 44 c. Click icon to view survey data used to price Chenega Job.

d. Summary Job Descriptions: Click on the magnifying glass next to a Chenega Title to display the Summary Job Description for that job.

Page 20 of 44

e. Viewing Statistical Pay Data: Note that there “4 Actual(s)” is shown for this job under the “Actuals” field above. Because there are more than three employees working under this Chenega Job Title (to protect sensitive pay information, actual pay statistics are available only if there are three or more data points), all users will be able to view statistical pay data for this job. HR users also will see individual rates for any employees in their respective subsidiary working under this title. To access statistical data, click on the link in the Actuals field and you will be taken to the Statistics screen below.

Page 21 of 44 2. Employee Search: HR Users have access to an “Employees” link that provides similar search capabilities to find employee-specific information. Use the same techniques described in the “Job Search” section above to get to the data you want.

3. Other Functionality:

a. Printing: You may print the data on the screen by selecting the icon.

b. Export to Excel: You may export the data in the data table on the screen by clicking the icon. c. Reference Tables Link: Stored under this tab are the “Employee Type and Salary Ranges”, “Chenega Salary Grades and Ranges”, and “Chenega Job Families” reference tables. d. Surveys Links: Salary survey access, to include descriptions, links, and login information. e. Compensation System Users’ Manual Link: A link to this manual.

Page 22 of 44 f. Job Classification Worksheet Link: A link to the worksheet used to document drafting and creation of new Chenega Jobs. Section IV: Compensation Management Note: This section provides recommendations and guidance to subsidiary personnel for using the Compensation System to manage compensation. The subsidiary’s executive management is responsible for determining whether and how to apply to their respective companies. Total Compensation Overview Base Pay and Incentive Compensation Plan Summary Scope BASE PAY Chenega targets Base Pay (combined with Annual Incentive Compensation All employees for some jobs) to be competitive with like jobs in our industry. The Company’s compensation strategy, employee performance, and Company performance will influence actual pay. ANNUAL Many employees accountable for attaining strategic objectives have part of Management INCENTIVE their Total Cash Compensation “at risk” in the form of Annual Incentive and other COMPENSATION Compensation. Company performance funds Annual Incentive designated Compensation, and individuals’ attainment of objectives will determine employees actual Incentive Compensation earned. Benefits Compensation Our rich benefits, combined with our competitive cash compensation, provide one of the most robust total compensation packages in our industry. Reference your company’s “Your Benefits” summary (available from Corporate HR) for a more complete description of your company’s benefits. SECURITY Retirement - Our 401(k) plan allows participants to save pre-tax up to All Employees BENEFITS federal limits, direct investments to meet their objectives, and defer taxes on any earnings. All contributions receive a 100% match up to 5% of eligible pay and are 100% vested. Other Security Benefits - Life; Accidental Death and Dismemberment; and Short and Long-term Disability benefits. HEALTH Chenega provides rich health & welfare benefits at attractive rates. All Employees

Page 23 of 44 BENEFITS Employees can offset many out-of-pocket costs for health and dependent care by participating in Chenega’s pre-tax Flexible Spending Accounts. DEVELOPMENT Vary by subsidiary. All Employees BENEFITS Total Compensation Objective Attract and retain the best workforce in our industry by providing competitive total compensation to employees who meet performance expectations and contribute to the Company’s success; and paying top performers more to recognize and motivate excellence.

Scope The practices described in this document are appropriate for non-represented employees at adopting Chenega companies.

Pay Range Definitions

■ Entry pay is appropriate for employees who just meet a job’s minimum qualifications. ■ Target pay approximates pay received by solid, experienced performers in the labor market. ■ Maximum pay is not tied to market compensation, but rather is an internal control. While top performers frequently will exceed target base pay, the maximum is rarely reached and should not be mistaken as “target” compensation. Instead, top performers are more likely to be promoted or receive additional compensation in incentive pay.

Candidate Offers Objective: Offer base pay that land high quality candidates, and pays them for anticipated productivity based on qualifications, experience, and other relevant information from the selection process.

Page 24 of 44 How Much: For active employees, we use performance as the primary factor for determining appropriate pay within a range. For candidates, experience, education, interview performance, and references substitute as our primary indicators of an employee’s future performance and thus we rely on these factors to help develop the appropriate pay to offer within the job’s pay range.

External factors also figure in this decision, to include competing employers, urgency, initial labor pricing within a contract, and contract requirements. When weighing these factors, remember to look down the road at internal equity and labor expenses.

Refer to the “Base Pay Range Definitions” section above to make your decision in the context of our pay ranges. We never want to pay below entry, and likewise offered pay should not exceed the maximum for the range. We employ wide ranges to provide you flexibility for the numerous external and internal factors that affect pay.

Generally, a candidate who just meets entry qualifications should be offered pay at or slightly above entry. Candidates who have demonstrated that they have “been there, done that” typically would be paid around target. Bona fide superstars can warrant pay above target. Obviously, most cases will fall within these examples, and arriving at the “right” offer usually will involve weighing several of the internal and external factors described above.

Approvals Any offers are subject to the approval by designated management personnel in addition to the direct supervisor.

Performance-based Pay Adjustments

Objective: Ensure employees’ base pay, in the context of total compensation, is consistent with performance and competitive with the market. Frequency: Pay adjustment frequency will vary based on the company’s resources and compensation strategy. Typically, companies will evaluate employees once annually. Eligibility

Page 25 of 44 Employees must meet eligibility requirements to receive a base pay adjustment, but meeting them does not guarantee an adjustment. To be eligible for a base pay adjustment, companies usually require that the employee: ■ Is actively employed when the company makes annual adjustments. ■ Has been in the current job for at least six months. This requirement may be waived with appropriate management approval. ■ Has overall performed at target performance levels or better. ■ Is currently paid below the maximum for the job’s pay range. Exceptions may be made with appropriate management approval. How Much The company regularly adjusts our strategy for meeting our compensation objectives to account for changes in the labor market and our company, but individual performance, company performance, and an employee’s base pay’s position in pay range always will be significant factors in assessing any changes to base pay.

The table below illustrates how compensation resources might be allocated among employees at various levels of pay and performance. In practice, this table is populated with guidelines adjustment ranges for each cell (e.g., 3- 6%). The supervisor would use these guidelines to recommend an appropriate adjustment. Total based pay adjustments must fall within the overall budget set by the company and allocated to the supervisor, a process described in the following “Developing and Managing a Pay Budget” section.

Generic Pay Adjustment Guidelines Table – FOR ILLUSTRATION ONLY. Number of “+” indicates relative level of adjustment range.

Position in Pay Range Performance Tier Lower Third Middle Third Upper Third Top Performers +++ ++ + On-target Performers ++ + 0% Below-target Performers 0% 0% 0%

Approvals: Any adjustments to pay are subject to the approval by designated management personnel in addition to the direct supervisor.

Page 26 of 44 Managing Annual Compensation Budgets Objective: To balance the company’s financial and compensation objectives.

Step 1: Develop a Budget Evaluate Four Factors:

1. Where your company’s pay falls overall relative to the market. Because the target of our pay ranges approximates the market median, you may use a ratio of the sum of actual base pay to the sum of pay range target to develop a “compa-ratio” by department and for the company overall.

For example: Employee Base Pay Range Target (Middle) Compa-ratio Peter $50,000 $55,000 Paul $75,000 $72,000 Mary $100,000 $100,000 Totals $225,000 $227,000 99%

2. The overall quality of your workforce. If the compa-ratio falls below 100%, it does not necessarily mean that employees are paid below market. External and internal factors such as experience, education, and performance all affect base pay. For example, if your recruitment strategy has been to hire relatively inexperienced candidates out of college for many jobs, you would expect your average actual pay to be closer to entry for these jobs, which would drive your compa-ratio down.

3. Your company’s compensation strategy. Not all companies have a strategy to pay “at market”. Some may decide to pay below market and use other factors to differentiate themselves from other competitors for labor, and some may choose to pay above market to achieve a competitive advantage.

Most Chenega companies strive to be right in there with base compensation, and use benefits, career development, workplace quality, and mission quality as differentiators.

Page 27 of 44 If the gap between where you want to be with compensation and where you are is large, it often makes sense to get there in steps rather than all at once.

4. Your company’s financial resources.

5. How the market is moving. Companies disclose their forecasted total pay budgets through participation in salary budget surveys. Total pay budgets include ALL pay increases, to include those commonly described as “cost of living” and “merit”. These budgets give a good indication of how the labor market is moving. These budgets are a snapshot of individual companies’ pay strategies, most of which take a similar approach to developing a pay budget as described here. In other words, other companies pay budgets should be a factor, not a determinant, of the pay budget you develop for your company. World at Work and Watson Wyatt conduct reputable salary budget surveys. If you do not have access to these survey results, contact Corporate Compensation for assistance.

Putting It All Together

Weighing these factors to develop a pay budget for your company is as much art as science. A few examples:

Example 1: Compa-ratio: 95% ($2.00 million total base pay/$2.1 million total targets) Workforce quality: Solid Compensation strategy: Pay at market (approximately 100% compa-ratio) Financial resources: Adequate Peer companies’ average pay budget: 4.2%

A 5% pay budget would bring this company’s compa-ratio to about 100% at a cost of $100,000 (does not take into account other factors loaded into labor expense. For a more precise cost factor, check with your company’s finance department). Any budget between 4% and 5% probably would be sufficient to maintain competitive pay.

Example 2: Compa-ratio: 81% ($2.00 million total base pay/$2.35 million total targets) Workforce quality: Relatively inexperienced

Page 28 of 44 Compensation strategy: Hire inexperienced, develop in house (85% compa-ratio target) Financial resources: Conservative Peer companies’ average pay budget: 4.2%

A 4% pay budget would bring the Company’s compa-ratio to there target level at a cost of $80,000. Any budget between 3-4% probably would be sufficient to maintain competitive pay given the company’s compensation strategy.

Example 3: Compa-ratio 105% ($2.00 million total base pay/$1.90 million total targets) Workforce quality: Solid Compensation strategy: Pay at market (100% compa-ratio target) Financial resources: Limited Peer companies’ average pay budget: 4.2%

A 2% pay budget would put the brakes on compensation that has risen above market while providing sufficient funds to increase compensation for on target and top performers low in their ranges. The cost to the company would be $40,000.

Step 2: Allocate Pay Budgets and Guidance to Managers

1. Allocate Departmental Pay Budgets: Provide a pool of money managers can use to make adjustments to their employees’ base pay. Use each department’s compa-ratio to determine their “slice” of the company’s pay budget you developed in Step 1.

For Example: This example assumes even distribution of top, on target, and below target performers among departments. The method illustrated allocation of the pay budget ($80,000) based on relative compa-ratio. Note that the allocation is not strictly proportional to allow for a limited pay budget in groups with a high compa- ratio, recognizing that there are likely individuals within that group that should be considered for adjustments consistent with the “Adjusting Base Pay for Performance” guidance in the preceding section. Department Compa-ratio Total Base Pay Budget Allocation

Page 29 of 44 Finance 85% $500,000 $35,000 Business Development 110% $500,000 $5,000 Operations 90% $500,000 $25,000 Administration 95% $500,000 $15,000 Total 95% $2,000,000 $80,000

2. Populate the generic table provided in the “Adjusting Employees’ Base Pay for Performance” section above to provide adjustment guidance that will tie to your available budget based on anticipated employee performance distribution (e.g. 20% top performers, 70% on target performers, and 10% below target performers) and positions within range. Again, this is as much art as science. For a 4% budget like we used in the example above, the table might look something like this:

Page 30 of 44 Populated Pay Adjustment Guidelines Table – EXAMPLE ONLY Position in Pay Range Performance Tier Lower Third Middle Third Upper Third Top Performers 4-12% 3-7% 0-5% On-target Performers 3-8% 2-5% 0% Below-target Performers 0% 0% 0%

3. Train supervisors on how to use “Pay Adjustment Guidelines Table” in conjunction with their allocated pay budget. The idea is put the responsibility in the manager’s court for allocated limited resources to align pay with performance. The ranges in the Pay Adjustment Guidelines give them a lot of leeway on a case-by-case basis, but at the end of the day their total adjustments must fall within their budget.

4. You may find it helpful to develop a spreadsheet that enforces the adjustment guidelines and compares proposed adjustments to budget to help your supervisors run different scenarios, and to consolidate proposed adjustments to prepare for Steps 3 & 4 below. If you wish help developing such a worksheet, please contact Corporate Compensation.

Step 3: Review and Approve Proposed Adjustments

1. Compile proposed pay adjustments into a spreadsheet or other appropriate medium. 2. Compare proposed pay adjustments against allocated budgets and resolve any discrepancies with supervisors. 3. Obtain appropriate executive approval for proposed pay adjustments.

Step 4: Execute Adjustments and Communicate

1. Generate Employee Action Requests from the approved adjustment worksheet. You may accomplish this through a mail merge. If you require assistance executing a mail merge, please contact Corporate Compensation. 2. We recommend you also provide written notices to employees of the amount and timing of their adjustments. This is also a good opportunity to reinforce your company’s compensation and performance philosophies and practices. These notices also can be generated from the approved adjustment worksheet through a mail merge.

Page 31 of 44 3. Provide the approved EAR’s to the appropriate Payroll department for processing.

Section V: Appendices

Appendix A: U.S. Department of Labor FLSA Tests

The Department of Labor (DOL) is charged with enforcing the Fair Labor Standards Act (FLSA), which among other things regulates overtime. Classifying an employee a job as exempt or non-exempt is a critical step that must be Employeeperformed Data Hidden in full compliance with DOL regulations. Access the most current regulations and associated DOL guidance to employers on their site:

http://www.dol.gov/elaws/flsa.htm

If in doubt, you’ll always be in compliance classifying a job as non-exempt. Contact Corporate Human Resources if you desire assistance.

Page 32 of 44 Appendix B: No Content

Appendix C: Additional Salary Compensation Surveys Information The following surveys are available to you either in paper form or through the internet. Each has its own strengths and weaknesses, its own technology for collecting and reporting pay information, and a defined scope of participants from which data was collected. Therefore, understanding the basic approach of the survey is helpful in using the data it presents.

The HRA Survey: Human Resource Capital Area Background: The HRA survey has been conducted in the Northern Virginia area for 27 years. It is currently prepared under contract by the Human Resource Association of the National Capital Area, a SHRM (Society for Human Resource Management) affiliate to AKRON, a professional survey company. Recommendation for Use: The survey is considered well conducted and credible for pay information in the broad Washington metropolitan area. ▪ Geographic Scope: Washington, D.C. metropolitan area, including Northern Virginia, Eastern Maryland and the District of Columbia ▪ Job Coverage: 300+ jobs representing approximately 350 companies and 285,000 +/- employees → No. of Job Families: 25 → No. of Jobs: 320, covering 313,000 workers ▪ Reported Metrics: Base pay, salary ranges, new hire rates, FLSA status, security clearance pay ▪ Data Views: By industry type, size of company, profit-nonprofit, government contractor, government agency, local area ▪ Format: Paper publication in two Volumes, Excel electronic copy, web query (limited) ▪ Supplemental Data: Security clearance practices, survey of pay practices and policies

The SIRS Survey:

Page 33 of 44 The SIRS (formerly Salary Information Retrieval System) Survey has been conducted for over 30 years by the Los Angeles based Organization Resource Counselors (ORC). It was designed originally for government contractors, primarily in the aerospace and high technology industries, and has expanded to cover a much broader range of companies and jobs. The data collection process is rigorous, the participants are consistent from year to year, and the data is easily accessed, making this a highly credible survey. The more limited scope of geographic and industry coverage makes this less useful to establish pay differences across all sites. a. Geographic Scope: Clients build survey from nationally diverse companies to choose from b. Job Coverage: → No. of Job Families: 30 major groups, 188 subgroups (high-tech industry segment) → No. of Jobs: 775 jobs typically found in high-tech companies – three to six levels each c. Reported Metrics: Base pay, incentive comp, total cash comp, ranges d. Data Views: Can tailor database to company needs by competitor companies - 675 participating companies to choose from. e. Format: On-line access for query (two users only); CD of Excel raw data; hard copy f. Supplemental Data: Special cuts and reports available

The ERI Survey: The ERI survey is produced by the Economic Research Institute in Redmond, Washington. Data is collected from a variety of sources (including government reports, individual companies, other survey sources, and public records). ERI claims to report pay for approximately 60 million workers in total using highly sophisticated survey methodologies. The data is credible and used widely by government agencies and large companies. The data is not traceable to any specific source, however, and therefore the information is a ‘general guideline’ for individual jobs. The strongest value is the wide coverage of jobs and the extensive geographic coverage, making this an excellent survey for determining geographic pay differences. a. Geographic Scope: National coverage. Approximately 300 geographic areas by national, state, metropolitan area and city. b. Job Coverage: → No. of Job Families: ~1,500 → No. of Jobs: ~5,000 c. Reported Metrics: Base pay, total cash comp

Page 34 of 44 d. Data Views: by industry type, size of company, location, job level e. Supplemental Data: Data cut by any combination of six filters f. Format: Computer-based CD (ERI Platform Library) supported by web-based link

Watson Wyatt Data Services Salary Survey The Watson Wyatt Salary Survey is conducted by Watson Wyatt Data Services, a subsidiary of Watson Wyatt Worldwide. The survey is conducted on-line and open to any participating organization (each site considered a ‘participant’). The database is, like that of the ERI survey, large, but the quality of data is subject to the knowledge of the individual inputting the data, overlap in data coverage, and the randomness of who decides to participate. The credibility of the data is less than for other surveys described here, but the inclusion of this survey is often requested as a resource by government customers. The strength of this survey is, like other large surveys, its ability to compare pay practices across multiple geographic regions, and to be a backup/cross check to other survey sources. a. Geographic Scope: National coverage. Approx 160 Metropolitan areas b. Job Coverage: a. Multiple views of data → Nine surveys by job group and level; → Seven ‘special job family’ surveys; → Seven ‘special industry’ surveys b. No. of Job Families: Approx. 50 c. No. of Jobs +/- 1,500 jobs (reported to cover +/- 1.2 million people) c. Reported Metrics: Base Pay, Incentive Compensation, Total Cash Comp d. Data Views: By industry type, size of company, profit-nonprofit, government contractor, government agency e. Supplemental Data: Industry or job family cuts f. Format: Electronic web access, CD, or paper copy

BLS Survey: The U.S. Department of Labor, Bureau of Labor Statistics has been conducting area wage surveys since 1948, expanding the program periodically to meet government requirements. A wide range of jobs are covered, and specialty surveys, such as those supporting the Service Contract Act of 1965 are conducted annually via direct 1-2-

Page 35 of 44 1 meetings. The survey is highly credible for consistency across regions, since trained surveyors conduct the exact survey in each area. Thus, the biggest strength of the survey is its ability to predict area wage differentials. Actual rates cover such a broad universe of industry, however, and are adjusted to reflect companies not actually surveyed, so the reported value is less credible for use in any one industry. a. Geographic Scope: United States by Nation, Region, State, Metropolitan Area, City - Covers 300+/- geographic locations nation-wide b. Job Coverage: → No. of Job Families: 23 major job groups → No. of Jobs: 250 job titles (over 800 available from various sources) c. Reported Metrics: Base pay, benefits d. Data Views: Location, industry, individual jobs or job families e. Format: Web based reports queries, reports and downloads f. Supplemental Data: Geographic Pay Differentials report, pay trends, industry headcount by job, and anticipated demand for skills by job, multiple other resources

Page 36 of 44 Appendix D: Definitions

CRAFT WORKER A skilled occupation requiring a thorough knowledge of processes involved in the work, often gained through formal apprenticeship, the exercise of considerable independent judgment, usually a high degree of manual dexterity, and in some instances, extensive responsibility for valuable products or equipment. DAVIS-BACON ACT OF 1931 (PREVAILING WAGE LAW) The Davis-Bacon Act applies to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair, including painting, of public buildings or public works. The Act requires that contractors and subcontractors pay their laborers and mechanics not less than the wage rates and benefits determined by the Secretary of Labor to be prevailing in the area for corresponding classes of laborers and mechanics employed on projects of a similar nature. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION (EEOC) An independent agency enforcing a variety of Federal laws barring discrimination in the public and private sectors, among them, Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act of 1990 (ADA). The EEOC receives and investigates charges of discrimination, conciliates, and, if necessary, litigates. It seeks relief for victims of discrimination and remedies designed to correct the discrimination and to prevent its recurrence. EXEMPT/NONEXEMPT EMPLOYEES Exempt employees are not subject to the provisions of the Fair Labor Standards Act (e.g., executive, administrative, and professional employees; employees of Federal, State and local governments, etc.). Nonexempt employees are covered by the provisions of the Fair Labor Standards Act (e.g., employees engaged in, or producing goods and services for, interstate commerce; employees of certain hotels, restaurants, or motels; etc.). FAIR LABOR STANDARDS ACT OF 1938 (FLSA; WAGEHOUR LAW) Federal law which prohibits oppressive child labor and establishes a minimum hourly wage and premium overtime pay for hours in excess of a specific level (now time and one-half after 40 hours per week) for all workers engaged in, or producing goods for, interstate commerce. The minimum wage and the coverage of the Act have been modified several times since enactment.

Page 37 of 44 JOB ANALYSIS Systematic study of a job to discover its specifications, its mental, physical, and skill requirements, its relation to other jobs in the establishment, etc., usually for wage setting or job simplification purposes. (See Job Description.) JOB CLASSIFICATION Arrangement of tasks in an establishment or industry into a limited series of jobs or occupations, rated in terms of skill, responsibility, experience, training, and similar considerations, usually for wage setting purposes. This term, or job class, refers to a single cluster of jobs of approximately equal “worth.” JOB DESCRIPTION A written statement listing the elements of a particular job or occupation, e.g., purpose, duties, equipment used, qualifications, training, physical and mental demands, working conditions, etc. JOB TITLE A label for a job or occupation, which distinguishes it from other jobs or occupations. For example, Cost Accountant Level III or Emissions Mechanic-Trainee. JOURNEY LEVEL A fully qualified skilled trade or crafts worker, generally having mastered a trade by completing a formal apprenticeship program. Also used to designate fully-qualified workers in other jobs. SALARY GRADES One of a series of rate steps (single rate or a range of rates) in the wage structure of an establishment’s occupations. Labor grades are typically the outcome of some form of job evaluation, or of wage rate negotiations, by which different occupations are grouped, so that occupations of approximately equal “value” or “worth” fall into the same grade and, thus, command the same rate of pay. (See Job Classification and Job Evaluation.) PRODUCTION WORKERS Usually, employees directly involved in manufacturing or operational processes, as distinguished from supervisory, sales, executive, and office employees. The term “production and related workers” as used in Federal Government statistics is commonly defined specifically for survey purposes. SALARY RANGE The lower and upper limits of wage rates paid to workers in an occupation. For example, the rate range for a parts delivery driver job might be $10.00 to $14.00 per hour.

Page 38 of 44 SALARY (SALARY RATE) For workers hired on a weekly, monthly, or annual basis (e.g., clerical, technical, managerial employees), the rate of pay normally expressed in terms of dollars per week, month, or year, as opposed to payment for an hour of work. SERVICE CONTRACT ACT (SCA) The McNamara-O’Hara Service Contract Act covers contracts entered into by Federal and District of Columbia agencies where the purpose of the contract is to furnish services (laundry and dry cleaning, janitorial, food, security, etc.) through the use of service employees. The Act requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various work classes no less than the wage rates and benefits found prevailing in the locality. For contracts equal to or less than $2,500, contractors are required to pay the Federal minimum wage. SERVICE WORKER Worker in a protective service, food service, health service (health and dental aides), cleaning and building service, or personal service occupation. SINGLE RATE JOB A job where the rate of pay is the same for all workers in the same job or job classification, without any longevity pay rates or pay steps. An example of single rate jobs may be certain Service Contract Act jobs. UNION RATE (SCALE) Minimum rate (hourly or weekly) paid to qualified workers in a specific occupation or trade under the terms of a union agreement. WAGE DIFFERENTIALS Differences in wages among occupations, plants, areas, industries, type of worker, etc. Chenega salary structures are based upon wage differentials based on pay practices in various parts of the country for similar jobs.

Page 39 of 44 Appendix E: Chenega Corporation Security Clearance Differential Guidelines Purpose The purpose is to provide guidance to human resources and hiring personnel for setting base compensation for workers with active, government-issued security clearances. These guidelines support Chenega’s commitment to hire and retain highly qualified and competent employees and to continue our track record of high performance on government and other contracts.

Background Many jobs at Chenega Corporation and its subsidiaries require special clearances. These positions can be difficult to staff because of high demand in the labor market and a limited supply of workers with the required clearances. A candidate with an active security clearance is of significant value to an employer who may be required to staff a contract with actively cleared employees within a short suspense. Market surveys indicate that security clearances are a significant factor in setting pay for workers with security clearances, with 40% of government contractors participating in the 2006 Human Resources Association survey reporting that they use some kind of structured differential.

Guidelines for Applying Security Clearance Differentials In light of these market conditions, Chenega Corporation authorizes the application of security clearance differentials to base pay within the guidelines published here. Security clearance differentials should be applied only as needed, and the amount of the differential determined on a case-by-case basis.

Subsidiary companies may develop supplemental policies, procedures, or guidelines regarding the use of differentials, provided that any variation from these Chenega Corporation Guidelines are documented and substantiated.

Security Clearance Maximum Differential Level Secret, Top Secret, or 15% other variation

Page 40 of 44 Appendix F: Confidentiality Agreement

Page 41 of 44 CHENEGA CORPORATION COMPENSATION SYSTEM CONFIDENTIALITY AGREEMENT

I understand and agree that:

1 1. As a result of my employment by Chenega Corporation and use of the Chenega Corporation Compensation System, I may be the recipient of information which, in itself or by implication, is confidential or sensitive. These confidentiality provisions encompass but are not limited to information contained in the Compensation System. 2 1 2. I will be responsible for treating all information described in paragraph 1 as confidential and for not disclosing such information by any means except in accordance with Chenega Corporation policy. I am responsible for the safekeeping of such information, documents, and material in the manner approved by Chenega Corporation and for the handling of such information, material, and documents so as to prevent their disclosure to unauthorized persons. Unauthorized persons include any person outside Chenega Corporation management or within Chenega Corporation management who cannot demonstrate a “need to know” the information.

1 3. I have personal and individual responsibility for the protection of all such information, documents, and material in my possession no matter how acquired.

1 4. I am not to disclose to anyone after termination of my employment any confidential or sensitive information, documents or material of any kind obtained by me as a result of my employment by Chenega Corporation and use of the Compensation System without the authorization of Chenega Corporation General Counsel or Vice President Human Resources.

1 5. If a breach of provision of this agreement occurs, it may result in disciplinary action, up to and including termination, by Chenega Corporation.

I am aware that the signing of this Confidentiality Agreement is a condition of my employment with Chenega Corporation.

Print Name Employee’s Signature Date

Page 42 of 44

Corporate Human Resources Representative Date

Appendix G: Corporate HR User Guidance

Adding New Jobs 1) Upon receiving a Labor Pricing and New Job Classification Worksheet, review for completeness and reasonableness. Review requested job data for compliance with federal and state regulations and Chenega policy. 2) Verify any questionable pricing recommendations against survey matches and associated data and resolve with site. 3) Verify there is no existing job(s) in the Chenega Job Library that matches the requested job addition. If there is, contact site and resolve. 4) Setup new Chenega jobs in Costpoint by adding the job to the Functional Job Table and populating the values from the Labor Pricing and New Job Classification Worksheet in the corresponding Costpoint fields and mapping the requested Company Job Title to the Chenega Job Title in the Detail Job Table. 5) Confirm setup with the submitter of the Labor Pricing and New Job Classification Worksheet. Changing Job Information 1) Requests to change job information must be made by supervising or human resources personnel in writing or by email, and must include approval from the company’s human resources or appropriate operations management. Changes also may be directed by the Corporate Compensation and Benefits Manager or Corporate VP, Human Resources. 2) Corporate HR Administrator reviews requested changes for reasonableness, accuracy, and compliance with federal and state regulations and Chenega policy. 3) Corporate HR Administrator assesses impact to other companies that share the job, if any, notifies their human resources management of the proposed changes, and resolves any concerns before proceeding. 4) Corporate HR Administrator updates appropriate fields in Costpoint.

Page 43 of 44 5) Corporate HR Administrator confirms changes made with the request submitter and affected company(ies) human resources management. Maintaining Salary Grades 1) Corporate Compensation evaluates a body of benchmark jobs to verify associated Salary Grades and to assess labor market movement. Typically analysis would be completed annually in May in preparation for adjusting the Salary Ranges in June. This schedule may be changed at the direction of Corporate Senior Management. 2) Corporate Compensation evaluates credible survey information, such as World at Work or other reputable published survey sources, to analyze market trends for salary structure movement in the current year. 3) Corporate Compensation prepares a recommendation to management for adjusting Salary Grades that includes: a. Results of benchmark job analysis. b. Market trends for salary structure movement. c. Recommendation for Salary Grade adjustments based on these factors. d. Any recommendations for reclassifying jobs into different Salary Grades based on results of benchmark job analysis. 4) Senior Corporate Management reviews recommendations and authorizes updates to the Compensation System. 5) Corporate Compensation executes changes, tests actual changes against authorized changes, and communicates updates to subsidiary company pricing and human resources users.

Page 44 of 44