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Total Reward Policy

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Total Reward Policy

PURPOSE

This policy describes the standards and guidelines followed when remunerating Vodafone Romania employees.

DEFINITIONS

Base Pay: Fixed monthly base salary of the employee

GSTIP: Global Short Term Incentive Plan (the annual bonus opportunity)

TTC: Total Target Cash, which means base pay plus target bonus level

PRINCIPLES AND OBJECTIVES

Pay for Performance. Vodafone Romania is an Employer of choice on the labour market. Our Reward Policy
supports the principles of the strategy "Pay for Performance" by rewarding every employee equitably against
their proven performance.

According to the company strategy, Vodafone offers a market aligned compensation and benefits program. The
Principles of Total Reward Policy are:
Align the Reward Strategy with the Business and Talent Strategy;
Offer an aligned package comprised of the proper mix of: base pay, short term incentive, long term
incentive and benefits;
Correlate reward with the jobs impact in business, keeping the internal equity & with the relevant
market by having benchmarks on a continuous basis;
Reward & retain high performers and high potentials;
Roles with a high component of sales have a relevant split between fixed and variable pay in order to
drive high performance;
The Total Cash of a person is correlated with the seniority on the job.

Benchmarking. To deliver effective and efficient management, once a year we undertake salary surveys,
comparing ourselves to the Romanian market. As a rule, we use a peer group of approximately 25 companies of
similar size and complexity, with a bias towards telecoms, hi-tech and fast moving consumer goods companies
(typically excluding financial services companies).

Pay Positioning. Is standardised across Vodafone, and is applied in Romania according to the local market data.
Generally, Vodafone Romanias TTC positioning is at the median of the market, in alignment with Group Policy.

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REWARD PACKAGE

The reward package of Vodafone Romania employees includes the following elements:

1. Base pay
2. Short term incentives (Variable pay)
3. Long term incentives
4. Benefits package

1. BASE PAY

The base salary represents the monthly wage received by every Vodafone employee and is determined based
on:
The complexity of the position within the company;
Job related experience and individual performance;
The balance between demand and supply on the labour market.

The base salary is established in gross RON. The salary payment takes place on a monthly basis on the dates
communicated by the payroll team on the Intranet.

1.1 Base salary changes


A. Salary increase

Employees salary can be increased in the following situations:


Salary increase due to merit increase
Salary increase due to a change of position
Salary increase due to change of employment status

NOTE: Any other reason for increasing an employees salary is considered an exception and must be approved
by the reward team.

A.1. Salary increase due to merit increase

The Merit Increase process takes place once a year after the Performance Dialogue process. Based on companys
performance and budget, a salary increase may be granted to employees based on specific criteria (please check
the Performance Dialogue Policy and Procedure). The salary increases, as a result of the Merit Increase program,
are applied to the monthly base salary and will be mentioned on the increase letter (the payment is made
according to the payroll schedule visible on Intranet).

ELIGIBILITY: In order for an employee to be eligible for this review they must be employed by Vodafone
Romania on the first working day in January of the review year and also must not have received a salary increase
after 1 January in the review year.
NOTE: Pay reviews have to follow the merit matrix approach which takes into consideration employees
performance and pay level.

A.2. Salary increase due to a change of position

When it comes to a salary increase due to a change of position, there are a few factors that should be considered:

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Type of the change: promotion (staff to manager; staff to staff with a change of grade) or lateral change
without changing the grade
Current salary
CompaRatio on the new position
Internal equity in the new team

NOTE: If the current TTC is already at an appropriate level it is possible that no increase in the base pay is given.
The new TTC has to be approved by the reward team.

A.3. Salary increase due to a change of employment status

In some departments and for some roles, the work schedule may vary (8h/6h/4h). In such cases the employees
are entitled to a salary calculated proportionally to the work schedule and worked period in the month.

B. Salary decrease

The decrease of an employees salary can be made only in accordance to the labour legislation and with his / her
written agreement.

A salary decrease is possible as a result of:


Temporary demotion due to a disciplinary action. As a result of a disciplinary action decision, the
employee can be moved to a lower graded position, but no longer than 60 days (according to the law);
Salary decrease due to a change of position. It can happen only with the agreement of the employee.

2. SHORT TERM INCENTIVES (Variable pay)

A. Global Short Term Incentive Plan (GSTIP)

Purpose. The GSTIP is a global bonus plan designed to incentivise and drive exceptional performance in
alignment with business, strategic and operational goals as well as with individual performance targets. The
bonus opportunity may increase with band.

The annual performance bonus represents the recognition of the performances of every employee during the
previous fiscal year (1st of April- 31st of March).

The performance bonus is awarded once a year, after the Performance Dialogue process ends and the business
results of the company are announced. The bonus is paid together with Junes salary, on the 1st of July (according
to the payroll schedule) and it is directly linked to the companys achievements in the previous fiscal year.

Eligibility. To be eligible for the bonus payment, the employee must have joined Vodafone Romania on or
before the 1st of March of the relevant financial year and be an employee of Vodafone Romania at the 1st of July
(the date of the bonus payment).

Calculation Method. The annual performance bonus is influenced by companys financial results and by the
employees individual performance.

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Each performance rating has allocated a performance range (see below):


Rating Poor Performance: 0%
Rating Inconsistent Performance: 25% - 85%
Rating Good Performance: 85 - 115%
Rating Exceed Performance: 115 - 135%
Rating Exceptional Performance: 135 - 150%

Annual Base
st
Salary at 31
of March

The GSTIP payout is influenced by:


Number of worked hours in the financial year;
Medical leave days or the period of LOA (leave of absence) will not be taken into account when
calculating the annual bonus;
Employment status during the financial year (full time, part time).

In the calculation of GSTIP, the following elements are not taken into account:
Overtime hours
Commissions
Other bonuses
Other additional payments (e.g. maternity, medical allowance)

Special situations:
Retirement: For the employees that retire, the annual bonus will be calculated taking into account
the worked period between 1st of April (the beginning of financial year) and retirement date. For this
period the employee needs to receive a performance rating.
Too early to assess rated employees: For the employees that joined Vodafone on or before 1st of
March and they havent received a rating in the performance dialogue process the bonus will be
calculated at Good performance rating.
Promotions and demotions: Where promotion involves moving to a band with a higher target
bonus, the higher level will be applied from the promotion date. Where a person has moved to a new
role or has been re-graded and the new / resized role is a band with a lower target bonus level, the
employee should remain on the old level for a period of 12 months after which time target bonus
level from the new grade will become effective.
Moves: If a person moves to a part of our business thats subject to different performance measures,
these will be applied from the day of the move.

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NOTE:
The annual bonus does not represent a contractual entitlement. Any of the conditions mentioned above
can be changed according with Vodafone Group guidelines, companys strategy or market practice.
The bonus can only be calculated and paid if the employee has a performance rating for current year and
has a bank account opened in RON currency, in Romania.
An employee who left the company before collecting the bonus for the period he/she worked for the
company and then re-joins Vodafone Romania is not eligible to collect the bonus for the period he/she
worked before termination.

B. COMMISIONS

Sales commissions and other incentive plans are established and operated for compensating commercial
roles. The level of the variable pay is established taking into consideration the type of commercial role by
the reward team with business input.
NOTE: No employee can participate in more than one incentive plan (i.e. participation in both GSTIP and
commission scheme is not allowed).

C. LONG TERM INCENTIVES

GLOBAL LONG TERM RETENTION PLAN (GLTR)

Purpose. The purpose of long term incentives is to recognise and retain high potential talent and to drive
alignment with shareholder interests. The plans are operated on a consistent basis throughout Vodafone,
managed centrally by the Group Reward team. No local long term incentive plans are allowed.

Plan design. Award terms may be subject to change at each grant cycle. Typically the following design features
exist:

a) Type of plan: All long term incentives are delivered in the form of shares. Awards are normally in the form of
either performance shares or restricted shares.

b) Grant date: Awards are normally granted on a yearly basis in late June or early July.

c) Eligibility and award levels: The eligibility basis and target maximum award levels are determined by band /
grade and / or an overall budget will be allocated. All grants are subject to Group approvals.

Special situations:

Demotions: As with the GSTIP, where a person has moved to a new role or has been re-graded and the
new / resized role is a band with a lower award level, the employee should remain on the old level for a
period of 12 months after which time the award level from the new grade will become effective.

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3. BENEFITS PACKAGE

Vodafone Romania awards its employees a benefits package aligned to market. You can find more details on
Vodafone Romanias benefits package by accessing the Benefits Policy.

EXCEPTIONS
Any exception to the Total Reward Policy must be approved by the HRD.

SUPPORTING DOCUMENTS
Benefits Policy

CHANGES/REVISIONS
The current policy may be revised depending on the company strategy and Group guidelines. Any change will be
communicated in dues time to the relevant group.

Document review and approval

Document history
Version Date Reason Reviewer
V01 May 2004 Document created Human Resources Team
V02 June 2006 Document reviewed Human Resources Team
V03 February 2007 Document reviewed Comp & Ben Team
V04 June 2009 Document review and aligned to new practice Comp & Ben Team
V05 July 2010 Document reviewed Reward Team
V06 October 2010 Document reviewed Reward Team
V07 August 2012 Document reviewed Reward Team
V08 January 2015 Document reviewed Reward Team
V09 January 2016 Document reviewed Reward Team

This document is owned and has been created by


Owner Author Date created
Vicky Cookson Zoe Dumitru June 2009

Distribution list
Recipient Date distributed
Human Resources Team
Vodafone Romania Directors & Managers
Vodafone Romania Staff

This document has been approved by


Version Name Signature Date reviewed
V06 Vicky Cookson October 2012
V07 Vicky Cookson
V08 Arun Krishnamurthy January 2015
V09 Arun Krishnamurthy January 2016

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