A New Day! Compensation Plan F.A.Q. (March 2015)

A New Day! Compensation Plan F.A.Q. (March 2015) 1. Do Leadership Points earned outside a Marketing Executives organization count for Status requirements? No. Only Leadership Points produced within the Marketing Executive s organization count toward what is required for each Status. 2. Will I earn Leadership Points if I enroll a Customer who was previously enrolled as a Preferred Customer? Leadership Points will not be awarded for the reenrollment of a Customer who was previously an active Preferred Customer at any time in the last 3 years. 3. Who receives the 10 Leadership Points awarded when a Marketing Executive advances to Director and above? The Marketing Executive in the Support Team who has earned the most Leadership Points in the advancing Marketing Executive s organization during the previous three months will receive the 10 Leadership Points. 4. When are the 10 Leadership Points awarded to the Qualifying Mentor for developing a new Director or above? Effective October 1, 2014, the 10 Leadership Points awarded to the Qualifying Mentor for developing a new Director or above will be awarded in the month the Director or above is developed. 5. What is the Home Conversion Commission? The Home Conversion Commission was previously called the Product Introduction Commission. The amount of the commission depends on what the new Preferred Customer purchases in the month of enrollment. o A $100 Home Conversion Commission is paid if the new Preferred Customer purchases a Home Conversion Pack. o A $50 Home Conversion Commission is paid if the new Preferred Customer purchases a Value Pack. o A $25 Home Conversion Commission is paid if the new Preferred Customer purchases 35 Product Points or more. o If the Enroller is not the Manager (the Support Team member directly above the new Customer) in the Customer s month of enrollment, the Manager will be paid 7% on the Product Points purchased by the new Preferred Customer up to a maximum of $3.00. 1

6. How does the Five-Month Retention Index affect my ability to advance? Effective October 1, 2014, when you meet all of the qualifications to advance but have a Five-Month Retention Index that is less than 50.0%, you will now be allowed to advance However, your Advancement or Pacesetter Bonus will be prorated as follows: Five-Month Retention Index % of Advancement & Pacesetter Bonus Paid 50.0% or higher 100.00% 45.0% - 49.9% 80.00% 40.0% - 44.9% 70.00% < 40.0% 50.00% 7. What is the Five-Month Retention Index and how is it calculated? The Five-Month Retention Index measures the percentage of Customers in your organization who remain Preferred Customers after five months. The example below demonstrates how this calculation would occur: Example: Your September Five-Month Retention Index Calculation Preferred Customer enrolled in March 50 Still Preferred after 5 Months (July 31) 29 Preferred Customers enrolled in April 65 Still Preferred after 5 Months (August 31) 37 Preferred Customers enrolled in May 57 Still Preferred after 5 Months (September 30) 28 172 94 94 still preferred after 5 months 172 Preferred Customer Enrollments = Five Month Retention Index of 54.7% 8. What if I achieved the required volume before the required leadership can I still advance? Yes! However, when you meet the requirements to advance but achieved the required volume before the required leadership, you must meet and maintain the requirements for three consecutive months before you will be paid your Advancement or Pacesetter Bonus, regardless of what your Five-Month Retention Index is. Once you ve held the new status for three consecutive months, your Five- Month Retention Index in that third month will determine the percentage of the Advancement or Pacesetter Bonus that will be paid. 2

9. If I improve my Five-Month Retention Index to 50.0% or higher, can I earn the portion of my Advancement or Pacesetter Bonus that was not previously paid? Yes! If your Advancement or Pacesetter Bonus was prorated, you can earn the unpaid portion of that bonus if you improve your Five-Month Retention Index to 50.0% or higher and you achieve a net increase in total Preferred Customers in your organization within the twelve months following the month of advancement. In other words, you must have grown the total number of Preferred Customers in your organization by at least 1 compared to the total number of Preferred Customers in your organization in the month of advancement within the twelve months following your advancement. You must also meet the requirements for status in order to receive payment. 10. How will a prorated Advancement or Pacesetter Bonus affect my Mentoring or Core Mentoring Bonus? If you qualify for the Mentoring or Core Mentoring Bonus on an advancement where the Advancement or Pacesetter Bonus is prorated, you will receive a Mentoring or Core Mentoring Bonus that is prorated at the same rate. 11. If my Mentoring or Core Mentoring Bonus is prorated, can I earn the portion that was not paid? Yes! If you qualified for the Mentoring or Core Mentoring Bonus in the month of the initial payment, you will receive the remaining unpaid portion of the Mentoring or Core Mentoring Bonus when the individual who advanced, and received a prorated Advancement or Pacesetter Bonus, qualifies to earn the unpaid portion of their bonus within the next twelve months. 12. When are Advancement and Pacesetter Bonuses paid? The Five-Month Retention Index in the month all advancement criteria is met determines the percent of the Advancement or Pacesetter Bonus the Marketing Executive receives in the month of advancement. Mentoring and Core Mentoring Bonuses are paid based on the same percentage as the Advancement or Pacesetter Bonus. Five-Month Retention Index % of Bonus Paid 50% or above 100% 45.0% - 49.9% 80% 40.0% - 44.9% 70% 3

In the 12 months following payment, any un-earned portion of the Advancement, Pacesetter, Mentoring or Core Mentoring Bonuses can be earned by increasing the advancing Marketing Executive s Five-Month Retention Index to 50% or above and growing the number of Preferred Customers in the advancing Marketing Executive s organization by a minimum of one since the month of advancement. Advancement and Pacesetter Bonuses are paid in the month of advancement with the exception of Advancing Marketing Executives who achieve the necessary volume before the required number of personally enrolled Directors, Senior Directors, or Executive Directors in the Marketing Executives organization.. 13. Did the qualifications for the Pacesetter Program change? The qualifications for the Pacesetter Program remain the same. Marketing Executives who purchase Value or Home Conversion Packs by the end of their first full month of membership with Melaleuca qualify for the Pacesetter Bonus if they advance within Pacesetter schedule. The timeline to advance on Pacesetter schedule and qualify for the Pacesetter Bonus are as follows: Status Months After Enrollment Status Months After Achieving Senior Director Director 2 Senior Director 2 1 Director 2 3 Senior Director 3 2 Director 3 4 Senior Director 4 3 Director 4 5 Senior Director 5 4 Director 5 6 Senior Director 6 5 Director 6 7 Senior Director 7 6 Director 7 8 Senior Director 8 8 Director 8 9 Senior Director 9 10 Director 9 10 Senior Director 12 14. How do I earn the Growth Bonus? Senior, Executive, National, and Corporate Directors with Preferred Customer growth of at least one over a two month period, who meet the minimum Leadership Point requirements, will receive a Growth Bonus. 4

15. What are the minimum Leadership Point requirements to participate in the Growth Bonus? Effective February 1, 2015, Senior Directors and above are required to produce a three-month average of 30 Leadership Points to participate in the Growth Bonus. Marketing Executives will be allowed to transition to these new requirements during February and March 2015. In February, Senior, Executive, National, and Corporate Directors can qualify for the Leadership Point requirement by producing 30 Leadership Points in the Month of February alone or with a three-month average of 30 Leadership Points. In March, Senior, Executive, National, and Corporate Directors can qualify for the Leadership Point requirement by producing a twomonth average of 30 Leadership Points or with a three-month average of 30 Leadership Points. Beginning in April 2015, the Leadership Point requirement to qualify for the monthly Growth Bonus will be based on a three-month average of 30 Leadership Points. 16. How are the qualifications for the Growth Bonus calculated? Qualification for the Growth Bonus is based on achieving Preferred Customer growth and meeting the Leadership Point requirements. For example, qualification for the Growth Bonus in June would be determined as follows: Preferred Customer Growth: This qualification is based on Preferred Customer growth over a two-month period. To determine the qualification in June, add Preferred Customer enrollments from May and June, then subtract Preferred Customer cancellations from May and June. If the result is greater than 1, the growth requirement is achieved. Leadership Points: This qualification is based on a three-month average. To determine the qualification, add all Leadership Points produced in April, May, and June, then divide by three to get the three-month Leadership Point average for June. If the result is 30 or greater, then the Leadership Point requirement is achieved. If both of the above requirements are achieved in June, then the Marketing Executive would qualify for the June Growth Bonus. 5

17. If I qualify for the Growth Bonus, how much will I be paid? Senior Directors and above who qualify for the Growth Bonus will earn the following: Effective February 1, 2015* Commission Rate 3-Month Average Leadership Points Growth Bonus Senior Directors Senior Director 9 30 $500 Executive Directors Executive Directors 9 30 $2,000 Masters Executive Directors Executives 9 30 $3,000 National Directors National Directors 9 30 $4,000 Corporate Directors and above 30 $4,000 * These enhancements will remain in effect until October 31, 2015 and will be evaluated again at that time to determine their long-term viability. 18. What is the Mentoring Bonus? The Mentoring Bonus rewards you when you help Personal Enrollees advance in Status. You will earn an amount equal to the Advancement or Pacesetter Bonus paid to your Enrollees who advance to Director through Senior Director Status. You will also be paid a Mentoring Bonus ranging from $2,200 to $5,000 each time one of your personal Senior Directors 2 through Executive Director advances to the next Status. 19. When is the Mentoring Bonus paid? The Mentoring Bonus is paid in the same month the advancing Personal Enrollee is paid. To receive payment, the Enroller must qualify for the Mentoring Bonus in the month of payment. 6

20. How do I qualify for the Mentoring Bonus? Marketing Executives qualify for the Mentoring Bonus with a three-month Leadership Point average as shown below. To receive the Mentoring Bonus the Marketing Executive must be at a Commission Rate equal to or higher than the advancing Personal Enrollee. Additionally, for the Enroller to receive the Mentoring Bonus, the advancing Personal Enrollee must advance within two months after achieving the required Organization Volume for that Status. 3-Month Average Leadership Point Commission Rate Production Director & Director 2 1 Director 3 - Director 5 5 Director 6 and Above 10 21. What is the Core Mentoring Bonus? Directors 3 and above can qualify to earn the Core Mentoring Bonus when others in your core organization, who are not your personals, advance from one Status to the next. You earn 50% of the Advancement Bonus on Directors through Senior Directors and 50% of the Mentoring Bonus on Senior Directors 2 through Executive Directors when they advance. 22. How do I qualify for the Core Mentoring Bonus? When you develop and retain a new personal Director 2 through Senior Director, you will qualify to participate in the Core Mentoring Bonus for that month and the following month. However, when you develop and retain a new personal Director 3, you will qualify to participate in the Core Mentoring Bonus for that month and the following five months. Director 2 Director 3 Director 4 - Senior Director 2 Months 6 Months 2 Months 7

23. What is my Core Organization? Your Core Organization is the number of generations for which you will be paid the Core Mentoring Bonus if you qualify. Qualified Marketing Executives receive payment of the Core Mentoring Bonus based on your Commission Rate and on advancements that occur in your Core Organization by Marketing Executives who are not Personal Enrollees. Status Directors Senior Directors Executive Directors National Directors Corporate Directors Definition of Core Organization 3 Generations 4 Generations 5 Generations 6 Generations 6 Generations 24. What happens if the Director 2 - Senior Director I developed to qualify for the Core Mentoring Bonus falls back in status? For you to qualify for the Core Mentoring Bonus, the Director 2 - Senior Director you developed to qualify must remain at Status or higher to maintain qualification. If your qualifying advancement falls back in Status, you would no longer qualify for the Core Mentoring Bonus. 25. Will Directors 2 - Senior Directors developed outside of the U.S. and Canada qualifies me for the Core Mentoring Bonus? Directors 2 - Senior Directors developed in the U.S., Canada and Mexico meet the qualifications for the Core Mentoring Bonus. 26. When is the Core Mentoring Bonus paid? The Core Mentoring Bonus is paid in the same month the advancing Marketing Executive is paid. To receive payment, the leader must qualify for the Core Mentoring Bonus in the month of payment. 8

27. How can I double my Core Mentoring Bonus? When you Develop and retain a second new personal Director 3 through Senior Director Advancement, you will double your Core Mentoring Bonus in that month and the following month. Both qualifying Personal Enrollee advancements must be Director 3 through Senior Director in order to double your Core Mentoring Bonus. In other words, to double your Core Mentoring Bonus, the qualifying Personal Enrollee advancements cannot include a Director 2. Status First Advancement Second Advancement Director 2 CORE Director 3 - Senior Director CORE DOUBLE CORE 28. If I help a Personal Enrollee advance more than one status in a month, how will that affect my qualifications for the Core Mentoring Bonus? As long as both qualifying advancements are to Director 3 through Senior Director, your Core Mentoring Bonus would be doubled for the current month and the following month. The first Director 3 through Senior Director advancement qualifies you for the Core Mentoring Bonus and the second Director 3 through Senior Director advancement qualifies you to double the Core Mentoring Bonus. If one of the two qualifying advancements is to Director 2, then only the Core Mentoring Bonus is available. 29. If I develop two Directors 2 through Senior Director in the same month, will that double the number of months that I qualify for the Core Mentoring Bonus? Developing more than one Director 2 through Senior Director in the month will not extend the number of months you qualify for the Core Mentoring Bonus. If you develop two Directors 3 through Senior Director in the same month, you would qualify for the Double Core Mentoring Bonus in that month and the following month 30. If I develop two Directors 4 in the same month, can I double my Core Mentoring Bonus for the current month plus three more months? Developing more than one Director 3 through Senior Director in the month will not extend the number of months you will be eligible to double the Core Mentoring Bonus. If you developed two Directors 4 in the same month, you would qualify to double the Core Mentoring Bonus in that month and the following month. 9

31. How do I get paid on Presentation Points? When a Marketing Executive with a Commission Rate of Director or above earns more than 10 Presentation Points in any given month, they will receive $5 for every Presentation Point after the first 10 that month. Effective April 1, 2015, Presentation Commissions will be paid only to Marketing Executives with a Commission Rate of Director 5 or higher. 32. Is there a maximum amount that I can earn on Presentation Commissions? There is no maximum on Presentation Commissions. 33. What is the Five-Month Presentation Retention Index and how is it calculated? The Five-Month Presentation Retention Index measures the percentage of Customers you did the presentation for who are still Preferred Customers after five months. The example below demonstrates how this calculation would occur: Your September 5-Month Presentation Retention Index Calculation: Preferred Customer Presentations in March 12 Still Preferred after 5 Months (July 31) 8 Preferred Customer Presentations in April 7 Still Preferred after 5 Months (August 31) 5 Preferred Customer Presentations in May 10 Still Preferred after 5 Months (September 30) 5 29 18 18 still preferred after 5 months 29 Preferred Customer Presentations = 5-Month Presentation Index of 62.06% 34. Will I be paid Presentation Commissions on Presentation Points that are earned outside my organization? Yes, qualified Marketing Executives will be paid $5 for every Presentation Point after the first 10 that month for Presentation Points earned inside and outside the organization. 35. What happens when a Customer in my organization cancels after the 25 th of the month? Effective April 1, 2015. When a customer requests to suspend their membership benefits after the 25 th of the month, the customer will continue to be considered active but not Preferred for purposes of maintaining a Marketing Executive s Status. No commissions are paid on the suspended customer and they will not receive a Backup Order. This allows the Marketing Executive to avoid surprises that would otherwise cause their 10

Commission Rate to fall to a lower status and gives them 30 days to replace the suspended customer. A suspended customer who remains active because their suspension was processed after the 25 th of the month will not count as an active personal enrollee for a Marketing Executive to advance to a new high status. 36. How do I earn additional first-generation positions? Marketing Executives earn an additional first-generation position (in addition to the original five) for each active personally enrolled Director. In other words, the total number of first-generation positions a Marketing Executive can have is 5, plus the number of active personal Directors. 37. How do I access my new first-generation position? When you want to access a new first-generation position, simply call Business Development at 1-208-522-0870 and they can make the position available. 38. What is True PEG? True PEG (Personal Enrollee Group Volume) is the combined total Organization Volume of a Marketing Executive s Personal Enrollees in any given month counting each Customer only once. 39. When is True PEG used? True PEG is only used to determine the Advancement Bonus for Marketing Executives advancing to Senior Director 2 through National Director 9. True PEG will only be used to calculate Advancement Bonuses for all Senior Director 2 through National Director 9 advancements that occur after June 1, 2014. 40. How do I know what my True PEG is? Both Traditional PEG and True PEG are shown on your monthly Business Report. 41. How is True PEG different from Traditional PEG? True PEG and Traditional PEG are calculated by adding the Organization Volume for each Personal Enrollee in any given month. The difference is that True PEG counts each Customer only once, whereas Traditional PEG may count individuals who are under several Personal Enrollees more than once. 11

42. Did PEG requirements for advancement change? PEG requirements for advancement did not change and Traditional PEG will continue to be used to determine if a Marketing Executive qualifies for advancement. However, beginning June 1, 2014, all Senior Director 2 and above Advancement Bonuses will be paid on True PEG. 43. What is a Personal Production Account? To qualify for commissions, a Marketing Executive is required to personally produce revenue of at least 29 Product Points per month. Your Personal Production Account is the account you designate to meet your required Product Point production. Most Marketing Executives use this account to purchase products for their own households; however, you can allow anyone to use this account to purchase their Melaleuca products. For you to qualify for commissions during any given month, the Customers using your Personal Production Account must purchase a total of at least 29 Product Points during that month. In order for a Marketing Executive to advance to the Status of Senior Director or above, the personal production requirement increases to 70 Product Points. Effective April 1, 2015. There can be only one designated Personal Production Account per household. 44. How are Advancement and Pacesetter Bonuses paid to Senior, Executive, National, and Corporate Directors when advancing multiple statuses in the same month? Effective April 1, 2015. The Organization Reorder Rate measures the percentage of Preferred Customers in a Marketing Executives organization who ordered last month and who ordered again this month. Senior Directors and above who have an Organization Reorder Rate of greater than 90% can advance an unlimited number of new statuses in any given month. Senior Directors and above who have an Organization Reorder Rate of 80% to 90% can be paid Advancement or Pacesetter Bonuses for up to two Status Advancements in a single month. Senior Directors and above who have an Organization Reorder Rate of below 80% shall be paid Advancement or Pacesetter Bonuses on a maximum of one Status Advancement per month. If the number of Status Advancements a Marketing Executive achieves in a single month exceeds the number that the Marketing 12

Executive is eligible to be paid on, the unpaid Advancement or Pacesetter Bonuses will be delayed and will be available for payment in subsequent months as long as the Marketing Executive continues to meet the requirements for Status and continues to grow in subsequent months. 45. What are the maximum organization Commissions a Marketing Executive can earn? The number of generations that commissions are paid on and the maximum organization commissions available depend on the Marketing Executives Commission Rate. The organization Commission maximums shown below are effective April 1, 2015. Status Generations eligible to be paid Maximum Organization Commission Available each month Product Advocate 2 $25 Product Advocate 2 3 $50 Product Advocate 3 4 $75 Director 7 $250 Director 2 7 $375 Director 3 7 $500 Director 4 7 $750 Director 5 7 $1,000 Director 6 7 $1,250 Director 7 7 $1,500 Director 8 7 $1,750 Director 9 7 $2,000 Senior Director 7 $3,000 Senior Director 2 7 $3,500 Senior Director 3 7 $4,000 Senior Director 4 7 $4,500 Senior Director 5 7 $5,000 Senior Director 6 7 $5,500 Senior Director 7 7 $6,000 Senior Director 8 7 $6,500 Senior Director 9 7 $7,000 Executive Director and Above 7 UNLIMITED 13