Annual Report 2011

Determination of remuneration principles and compensation

Adecco’s Remuneration Report reflects the requirements of section 5 of the Directive on Information Relating to Corporate Governance, issued by the SIX Swiss Exchange as amended on October 29, 2008. Adecco S.A.’s principles regarding remuneration take into account the recommendations set out in the Swiss Code of Best Practice for Corporate Governance as amended on September 6, 2007. In addition, the Remuneration Report comprises information as required under the Swiss Code of Obligations (Art. 663bbis and 663c para. 3), which is included in Note 7 to Adecco S.A. (Holding Company) financial statements. For further information regarding Adecco's Corporate Governance refer to the Corporate Governance Report.

Statements throughout this Remuneration Report using the term "the Company" refer to the Adecco Group, which comprises Adecco S.A., a Swiss corporation, its consolidated subsidiaries, as well as variable interest entities for which Adecco is considered the primary beneficiary.

1. Determination of remuneration principles and compensation

In order to maintain its competitive positioning as a global employer, the Company reviews market conditions on a continual basis. Compensation is dependent on outside influences including geographical location, industry, competition, and general business climate. Therefore, the Company’s country organisations conduct regular local salary surveys and review country-specific economic data to determine their merit increase guidelines. In general, compensation of the Board of Directors and of the members of the Executive Committee is reviewed annually to ensure that competitive pay is maintained and undesired fluctuations are minimised.

The Company‘s compensation programmes, which include equity based compensation elements, are approved by the Board of Directors (“Board”). The Board has entrusted its Nomination & Compensation Committee (”NCC”) with providing recommendations to the Board, taking into account proposals of the Chief Executive Officer (”CEO”) and the Chief Human Resources Officer, regarding the remuneration principles and general compensation philosophy of the Company, and with reviewing and approving the objectives relevant to the compensation of the Executive Committee and a further group of senior managers. The NCC is composed of independent Board members only (for further details on NCC composition, tasks, and activities refer to the Corporate Governance Report, section 3.5.3 ”Nomination & Compensation Committee”).

The remuneration of the Board is determined by the full Board, upon recommendation from the NCC. The compensation of the Executive Committee is authorised by the full Board, upon recommendation from the NCC. The members of the Executive Committee do not attend meetings of the NCC and of the Board when matters concerning their own compensation are being decided. The compensation of the other employees of the Company is authorised by the responsible members of management, based on the remuneration principles and general compensation philosophy of the Company. The findings and decisions of the NCC are reported to the Board by the Chairman of the NCC.

In order to ensure that compensation is in line with market standards, the NCC commissioned international independent external consultants (Towers Watson AG, Zurich, Switzerland) to provide a compensation benchmark analysis for 2011. Members of the Executive Committee with global responsibility (CEO, Chief Financial Officer (”CFO”), Chief Sales Officer, and Chief Human Resources Officer) were benchmarked against comparable functions in terms of revenue and number of employees under scope in a selected reference group of 23 Swiss companies of different industries. Companies in the financial service industry were included in the assessment for the CFO and for the Chief Human Resources Officer only.

The compensation packages of members of the Executive Committee with geographical responsibility were benchmarked against the packages of comparable functions in terms of revenue and number of employees in the respective countries of residency. More than 250 companies worldwide active in different industries, and which can be considered potential employers of the individuals in question were included in the benchmark. Out of these companies, for each region, a specific peer group was determined. In the course of 2011 changes in geographical responsibilities occurred, resulting in modifications of the compensation for the new Regional Heads of France and Northern Europe. Towers Watson has been commissioned in 2011 with additional Human Resources related survey work of minor scope and with a mandate related to the North American operations.

The compensation model applied for 2011 remained unchanged compared to the one applied for 2010. Minor modifications were introduced regarding the short-term incentive plan bonus base and the long-term incentive plan target bonus base amount for the Executive Committee and for a further group of senior managers (as further explained in section 2.3 ”Elements of the Executive Committee’s compensation”). Compensation levels of the members of the Executive Committee slightly decreased compared to 2010, mainly due to lower achievements under the short-term incentive plan.