Message from Mark Burgess (Audio) – US/Canada Payroll Update

Transcript

(Mark Burgess, President and CEO of Mauser Packaging Solutions): As you know, I recently visited the Atlanta corporate office and spent time with the payroll, IT, and other administrative groups to understand why we are struggling to efficiently process payroll to some of our US and Canadian employees. During that visit, and in the subsequent weeks following, we’ve identified several root causes impacting payroll. I wanted to take this opportunity to share certain data and information with you concerning this matter.

1. First of all, Mauser employs roughly 11,000 employees globally with more than 7,000 in the US and Canada.
2. In the last three weeks, an average of 45 employees, per week, have not been paid accurately.
3. Third, the vast majority of those impacted employees have been paid their base salary or base hours, but overtime or payroll deductions may not have been processed correctly.
4. Fourth, unfortunately some impacted employees have not been paid, which, as we all know, is clearly unacceptable.
5. The reasons for employees not being paid correctly are complex and include the following:
   • First of all, direct deposit information has not been set up correctly in some cases.
   • Also, new hire paperwork has not been filled out properly thus impacting the employee’s ability to get paid.
   • Also, several HR department new hires in certain plants may have been unaware of one-time payments due to employees and as a result, payments were not set up correctly.
   • And finally, lack of process documentation or checklists to prevent errors in certain one-off payments has existed.

In addition to the root causes identified, we’ve also determined that poor controls and inconsistent payment practices applied locally in plants and other locations has resulted in complexity making it difficult to process things properly.

These inconsistent practices also hinder our ability to accelerate resolutions. So, in order to improve payroll and this whole process, we’ve taken the following actions during the last three weeks.

1. First, we’ve created a ticket system to accurately track payroll inaccuracies. All identified payroll issues are being entered into a ticketing system by the HR person responsible for the facility of the impacted employee. To date we’ve resolved the majority of issues but we need to do so faster in the future.
2. Second, we’ve created a payment swat team to rapidly address pay issues through off-cycle payments, wire transfers and sending checks overnight.
3. Third, we’ve hired additional payroll people, with more starting over the next two weeks, and also we have reallocated accounting and IT resources to help with process improvements to make things better.
4. We’ve also re-assigned workload like direct debit set up to HRIS and hired additional support in HR to ensure that new hire paperwork is entered properly into our systems.
5. We’ve also engaged outside payroll experts to accelerate process redesign efforts.
6. And finally, we’ve set up a steering committee comprised of our two North American presidents, our head of HR, our global CFO, and our global corporate controller to decided changes to our payroll practices that are creating complexity and problems.

Thanks again for your patience as we resolve this problem and thanks for your ongoing support of the company. You have my word we will fix this and are doing everything we can to do so on an expeditious basis.