Now if we think about what's happened over the last couple years, everyone I think remembers 2008 not just on a corporate but probably on a personal investment basis as well. The average corporate pension plan, top 100 in the U.S., negative 24% return. To a small degree for a defined-benefit plan, that was offset by an increase in the discount rate that might have made the funded position instead of declining 24%, decline only 23%, isn't that fun?

2009 saw a bit of a reversal of fortune. The average investment return for the top 100 plans was 18%, but that was offset by a 46 basis point decline in the discount rate, shaving that 18% down to a net 13%. And what we see as a result is a distribution of funded statuses on the bottom of this chart — end of 2008 vs. end of 2009 — and let's face it, people, the news here isn't pretty. Very, very, few plans fully funded. A number of plans what we'd consider in fairly distressing shape. This is stress on corporate cash flows waiting to happen and indeed, this is a problem that we're in wrestling with, how do we solve it? Risk management doesn't quite get us there.

Well, part of the solution has been in a diminution of the promise. What we've tracked is across broad corporate America, what's the value of benefits being earned by employees year on year. And here you can sort of get an idea of what the plan design changes we've seen across corporate America have actually meant, so the total retirement package, you know, the value as percent of payroll of all retirement benefits being handed out employees has declined by about 12% and, you know, there are places where it's not surprising that it's declined quite a bit, you know the total defined-benefit promise has gone down from about 3.8% to 2.3%, so a bit over a one-third reduction. Well, that's been sort of across all categories as well, whether that's through eliminating retiree medical plans or capping them, or whether it's been through suspension of 401(k) matches or reducing them.

So as a result, there's a shift here in responsibility. After all, consumption needs in retirement are reasonably fixed, so if we're reducing the employer commitment, the burden is going to the employees, and that's done principally in two ways. One is through cost reduction, we've just seen, and the other is through risk transfer, whether its defined-benefit to defined-contribution or personal responsibility for retiree medical inflation, you can see here the trends are quite clear. The great shift in the orange bar is people who've stopped providing defined-benefit as a benefit to new employees. The decrease in the light and dark green bars are people who've stopped providing retiree medical, either pre- or post-65. You're seeing a doubling of the DC-only deal and a reduction by one-third of those proving retiree medical. I would like to know who the 1% that doesn't have a defined-contribution plan is, but there's one in every crowd, I suspect. And here is indeed what people are handing out to newly hired salaried employees; you can see a clear trend here, a move away from pure DB and a trend toward two things: one is conversion to hybrid plans where the IRS has actually made our collective life a little bit easier, and the other of course the growth of DC only. So defined-contributions plans being the only benefit available to new workers in the workforce.

Now that, as I said, is really just a matter of risk transfer rather than risk elimination, and it's going to have some fairly interesting results. We've talked a little bit about what the shift in plan types has been. The bottom left-hand corner's rather hard to read but it's why people have made the shifts, and the overwhelming reasons are cost level and cost volatility. We just simply can't handle the volatility in defined benefits. A number of our panelists today are going to talk about what you can do about that, but the fact is that defined-contribution is no panacea. The top right-hand chart, which I think you probably can't see the line—cause I can't—shows, trust me, it swivels around a little bit and it shows the variance in what a DC plan will deliver to you if you've been a good person and saved a lot for your entire career, but just picked the wrong year to retire and annuitize your money. So the luck of the draw—be born lucky, don't be born good necessarily—comes into play. But the fact is, that's assuming you were a good person and saved like you were supposed to. What we actually see in behavior is the bottom right-hand corner, where this represents actual workforce data across hundreds and thousands of workers, 'How much have you actually saved,' for people between ages 50 and 59 as a multiple of their salary. Again, it's a little harder to read, it goes from one times to seven times pay, and these are from people getting ready to retire. Well, about 8% have no balance at all. Good for them, they'll do well. They're joined by about 35%, sorry 25%, who've saved less than half of their current salary; that's going to draw down pretty quickly, I think. Another 40% who've saved less than one times their current salary. I'd posit actually that this risk transfer has a bit of 'people on your payroll you don't want to be paying anymore, but they can't afford to leave' aspect to it that we still have to look forward to in years to come. So you have to ask, you know, what do we do about this?

Well, one aspect is, can we just handle risk and volatility? Are there things we can do better as institutional investors sponsoring pools of money? We would believe that the answer is definitely there. Of the liabilities that corporate pensions have built up, a lot of this is legacy; they're for people who have walked out the door, what you're really dealing with is with managing volatility.  ou can think about either low-risk investment portfolios or you can think about trying to lay off some of these liabilities and assets on third parties through the buyout market. And it's only a relatively small sliver for most companies that actually can be addressed through plan design. Now that doesn't mean that stopping the bleeding isn't part of the equation, but by no means is your work over yet.

In fact, what we have to look at is a bit of a remix of the system. We've got to actually find efficiencies where we can, not take risks where we're not rewarded, and recognize that this wholesale shift from collective responsibility to individual responsibility actually demands a bit of shift in the paradigm as well.

So, today what we've put together as a retirement and benefit industry has quite a lot of legacy components to it: collectivized healthcare, a Medicare system that's tottering around, but still kind of one-size-fits-all, and the shift from we'll invest it for you to you have to invest it for yourself.

We think looking forward, there's going to be a rearrangement of the pieces. Probably a bit more mix between what's future and what's current compensation. What are you going to save for retirement, looking at all sources of retirement, not just retirement income but retirement needs such as medical as well, and the industry, which thankfully is quite inventive and sometimes even in a positive sense will probably invent the vehicles to get you there.  So there is a support network out there but you can't ignore the changes going around.

So what we're about today is talking about changes and how companies have responded to them. So I'm delighted to have been invited here to once again hand out the Retirement & Benefit awards looking at the effect of positive change. So our Bronze Medal winner this year is Paychex, represented here by Jason Fox, who is information systems and portfolio manager within Paychex enterprise risk management. Now just to put a little pressure on Jason, I'm a Chartered Enterprise Risk Analyst, so I'm going to be listening raptly to your presentation. For the last seven years, Jason's developed the integrated predictive models into Paychex operations. He also leads a team responsible for key risk reporting, designing schemes to store critical data and IT systems automation. Jason's projects have been nationally recognized by Alexander Hamilton and RIMS, winning four quality and technical solution awards in the past several years. He began his career with Adecco Employment Services as a senior client rep, moving quickly into various analytic and IT roles to support major accounts. Prior to this, Jason received his bachelor's degree from SUNY Brockport and is continuing his education in mathematics, computer science and business at UNC Charlotte and SUNY Brockport. Thank you, Jason.

JASON FOX:  Great, thank you very much. I'm going to walk you through our project very quickly and just to kind of set the stage on what we did, as you mentioned, we're part of enterprise risk management, so it's kind of out of the realm to be looking at 401(k) and 401(k) marketing, but I also noticed the category we're under was expanded this year to include innovative solutions, I think that's where we're falling in this submission. So we wanted to basically take the concept of credit scoring and apply it to an issue that was brought up in our company, and you'll see was kind of one of those where a question was asked and I think it was kind of the seed that was planted and it grew from there.

Just to start out, to give you an overview of Paychex and the Paychex business: We've been in business since 1971, we're a leading provider of payroll and HR solutions. We have over 500,000 clients nationwide and we had over $2 billion service revenues in FY10. Since we supply payroll to our clients, we also provide HR solutions to our clients as well, so 401(k) falls into those solutions. We've been doing that for about 15 years, and we've become one of the highest volume record keepers in the industry, and we have over 46,000 clients using our retirement services plans.  And the seed that was planted one day was somebody said, 'We have 500,000 clients and 46,000 of those clients are using retirement services with us. How many of our clients are using it with somebody else?' So we were kind of challenged with that question to find that out.

The good news was we could figure it out because we were doing the tax deductions for our clients. The bad news was, we found out what the answer was. Fifty percent of our sales within our base, when they're buying a retirement services plan, they're buying with a competitor. Pretty disturbing. And when we dug even more into our data, we found that 75% of our clients are with a competitor, so there's a lot of revenue being left on the table for our sales reps to potentially be bringing into the company. And on top of that, we were using what I like to call a shotgun approach to the marketing campaigns, which meant randomly pulling clients out of the base and calling them up to see if they want to buy a retirement services plan from us. So we looked at this problem, heard about it and we've done a lot of the credit scoring, a lot of the modeling, predictive modeling, and decided to try to tackle this problem and apply that concept to our client base.

So what we did is we took a snapshot of clients. We pulled 365 predictive variables — variables we thought were going to be really robust and tell us about clients that are about to buy retirement services plans. We isolated who bought and who didn't, with a competitor or without a competitor, and ran that through our SAS software using logistic regression. We were very, very excited when we pushed the data through and saw the results, which you'll see in the next slide.

The score along the bottom shows basically a credit score.  600 is average. The higher the better, which means they're going to buy a plan and the bars represent the actual enrollment rate over the next 12 months. So you can see once you hit 600, we're way above average on the actual enrollment rates. So we were able to take our client base and isolate the clients that were ready to buy, market them intelligently, and give it over to the people that needed to have it to market those clients. The strategy that we implemented was two-pronged.

There is the fast track down right to the sales force to try to sell retirement services to the clients. On top of that, every month when we identify the new clients that are ready to buy, they go to the marketing team to have marketing materials sent to them. They let it kind of simmer for about a month and a half, and then they send it to the sales support team to call the client and try to get them to agree to a sales appointment to try to sell them the retirement services plans, and once they agree to that, it goes down to the sales force to go meet with them.     

So we're real excited about the model, we're really excited about the results of how it was coming out and, of course, we were very largely anticipating the results that were going to come out and see how much difference this was going to make to our marketing plans.

So before we had this model, it took our marketing or telemarking team 28 phone calls to schedule one sales appointment and after the model was implemented it took 18. So we had a 30% increase in productivity there. From those appointments we, before the model, were getting 11% of the sales out of those appointments and after the model is implemented, we increased that to 14%. So a 27% increase in the closing rate. So instead of taking the shotgun approach of just randomly pulling clients out, we're isolating the base down, giving more like 3,000 to 5,000 clients a month, as opposed to 10,000 to 40,000 clients, and increasing out closing rate on those sales. And the last line you can see, about 50% of our sales were going to competitors and we've improved that to about 43%. We're really excited to see these results come through.

Finally, over the last two years of the program, we've generated about 186,000 client leads, and I like to call them 'intelligent client leads.' So we're finding them when they're ready to buy, ready to purchase retirement services and not over-communicating with the client. We've generated over $5 million in annual revenue. Thank you very much.

HESS: Our Silver Medalist is Thomson Reuters, represented by Andrew Perrin. Andrew's vice president, treasury and global head of pensions and investment for Thomson Reuters, the world's largest source of intelligent information for business and professionals. In this role, Andrew oversees the company's more than 90 — 90 — defined-benefit and defined-contribution plans worldwide with over $6 billion in assets. He looks rested for all that.

As chair of the company's global retirement committee, he leads the company's key initiatives, focuses on investment strategy, asset allocation, funding, plan design and heads the governance process. Andrew's previously held a wide variety of positions across corporate finance during his 15 years with Thomson Reuters, including financial planning and analysis, mergers and acquisitions, treasury, and operationally as a division CFO.

Prior to joining Thomson Reuters in 1994, Andrew held positions in operations and finance in the U.S. and U.K. with Paramount, Simon & Schuster, BOC Group, and Turner and Newall. Andrew holds a master's from Oxford University and an M.B.A. in strategic management from Victoria University of Manchester Business School. Andrew, congratulations and welcome.

ANDREW PERRIN: Thank you very much. Ninety does seem like a lot, but some of them are very small, so we don't worry about those. I had a colleague once who had a very good rule about presentations, which he called the three Bs: Be brief, be good, and then be gone. And as the guidelines for the presentations were six or seven minutes, I will try and be brief. I will certainly be gone at some point. Whether I'm good is up to you. With that, I'll make my opening statement—sounds like a bit of a debate here.

Through a series of deliberate and sequenced actions over the last several years, Thomson Reuters' treasury has executed a liability-driven investment derisking strategy and asset allocation framework for the company's U.S. defined-benefit plan. We believe that this preserved over $400 million in pension asset value since 2005, measured from 2005 to 2009. This was during a time which we all know when markets were falling and gripped by extreme volatility. These activities also enabled Thomson Reuters to preserve free cash flow for strategic investments in the business, to grow the business and for returns to shareholders, by avoiding the necessity for contributions to the pension plan.

Just briefly, by way of background, we have the nice picture up from Reuters.  homson Reuters is the world's leading provider of what we call 'intelligent information for professionals and institutions' in the areas of finance and news, law, tax, accounting, science and healthcare. The company has revenues today of about $13 billion, is listed in Toronto and New York, and employs about 55,000 people worldwide.

We employ about 26,000 people here in the United States, and in 2006 about 14,000 of these were active members of our U.S. defined-benefit plan. We had a similar number, approximately 14,000 deferred members and about 7,500 retirees, for a total of about 35,000 members. The plan was closed to new entrants in 2006, as we've heard before, that's a common and increasing trend. But we continue to accrue benefits for future liabilities, so it's not frozen.

The plan's assets in 2006 were approximately $1.2 billion, with a funded ratio of over 100%. This is a traditional, final salary plan with a fairly lengthy duration of about 16 years. A largely returns-driven approach to investing had resulted in asset allocation that was 70% equities and 30% fixed income. And with that came —as you can imagine—year-to-year volatility and unpredictability for pension plan fund status and contributions. Moreover, it was felt that the asset allocation of the pension plan's assets was thought to be overly risky and not aligned to the underlying pension liability.

As a consequence of this, we had to make contributions to the pension plan in 2002 of $107 million and 2003 of $50 million. As you can imagine, this was a cause of much consternation to our CFO and the board of directors; we're a very free cash flow-focused company, so diverting free cash flow to fund pension plans was diverting it away from making acquisitions and returns to shareholders.

So with that, Thomson treasury embarked in 2006 on a thorough review and analysis of the pension plan: the investment strategy, the asset allocation, the shape and duration of expected future cash flows, mortality assumptions, salary increase assumptions and so forth, to see if a strategy could be devised and implemented to provide a more optimal balance between funded status volatility, cash contributions, and risk and return.

A series of solutions was examined, from continuing the current investment policies that we had at the time, to a liability-matching strategy, to full immunization. And we concluded early on that although ultimately we'd like to immunize the plan, it wasn't practical at this juncture due to the long duration and the desire of the company at the time to continue to accrue for future benefits. We in fact felt that we couldn't really achieve immunization until about 2020, so that was thought to be some way off.

Therefore we focused our attention on developing a risk management liability-focused investment strategy and asset allocation framework that would be optimal both 1) for balancing future cash contributions with reduced funded status volatility and, 2) achieving risk and return characteristics that more economically matched the underlying liability. We specifically said upfront the objective was not to maximize plan returns, but to optimize cash contributions.

I'm going to stay on this slide for just a second more because the primary diagnostic analytical tool that we used in the analysis was the use of a stochastic Monte Carlo simulation with multiple economic scenarios or future multiple economic outcomes to model the impacts of these on a spectrum of equity to fixed income ratio allocations. This was summarized graphically by representing the relative position of each equity to fixed income allocation alternative at different funded status levels in two dimensions, using as axes the present value of expected future cash contributions on average for all future economic scenarios, that's the Y axis here, plotted against the present value expected future cash flows for the worst 10% of scenarios on the X axis. As a result of this analysis, we determined that a 60% to 70% fixed income allocation was the optimal position to balance average expected contributions with worst-case contributions or if you like, average versus tail risk outcomes.

Thomson Reuters, we believe, has a robust and best-in-class governance structure that is responsible for the management and communication of all retirement plans and associated benefits. Paramount in the structure is what we call our global retirement committee, which I chair. This committee includes our CFO, our treasurer, David Shaw, who you heard from this morning, our general counsel, our head of HR and senior finance executives from the operations. The review of the situation and the problem, the analysis and conclusions, and proposed recommendations were presented to this committee in early 2007, and I've summarized those conclusions here. In essence, the recommendation was essentially to formulate a liability-focused, derisking investment strategy that sought to rebalance the plan's assets and optimize the allocation between equities and fixed income at a ratio inverse to the then 70/30 allocation that we had at the time. At the same time, we sought to diversify risk assets to improve alpha and obtain a better interest rate and duration hedge the liability and to do so though deliberately in a way to minimize transaction costs and insulate the plan from the vagaries of market movements.

So what did we do? As a result of the approval of these recommendations, the timetable was set out, triggers were set and the following actions were taken: In June 2006, while we still conducting the review but consistent with the emerging strategy we were developing to take equity risk off the table, as the Dow Jones Index exceeded 11,000 — remember those days? — 10-year Treasuries were at 5.1% and the plan's funded status remained above 100%, we sold equities and reallocated 10% of assets from equities to a long government credit strategy. This brought the plan's allocation at the end of 2006 to 60% equities, 40% fixed income.

In May 2007, the strategic review having been completed and the recommendations approved, the strategy and the dynamic framework we had developed enabled us to take advantage of market conditions to further dynamically derisk. The Dow Jones then exceeding 13,500, 10-year Treasuries at 4.9%, we reallocated a further 10% out of equities into long government credit. And towards the end of the year, we did another further 10% shift, with the Dow still over 13,000, 10-year Treasuries at 4%. So by the end of 2007, we were actually at our target allocation of 40% equities, 60% fixed income.

Two further actions followed in 2008. Having achieved the objective of a minimum 60% fixed income allocation, we then took a look at the risk asset portfolio and in March to May 2008, having completed an efficient frontier correlation analysis, implemented the next phase of our diversification, which was to sell out of U.S. equities and international equities and invest those proceeds, 10% in emerging markets, 5% in commodities. Finally in April 2008, within the fixed income portfolio we reallocated 10% of our assets from long gov credit to Citigroup Treasury Strips to help achieve the objective of lengthy duration of the assets.

It's our estimate that, measuring from the end of 2005 to the end of 2008, with the above actions I've described preserved $280 million of pension plan asset value compared to had we not done any of those things.

The final part of our derisking journey took place in late 2008 and early 2009. Recognizing the unique opportunity afforded by the all-time lows in government bond yields and the all-time highs in corporate bond spreads reached in early 2009, a one-time historic opportunity we felt, we took further action to build on the strategy. We formalized the fixed income allocation now at 70%, switched approximately $600 million in assets from long government to high-grade corporate bonds in early 2009.

This reallocation not only took advantage of market conditions but also resulted in a better hedge we felt to the liability, given the discount rate used to discount the liability. These actions we believe, which involved the liquidation reinvestment of over $600 million in plan assets, preserved a further $140 million in asset values.

So to summarize, this derisking strategy was completed over the period of 2006 to mid-2009, when the final step I just described was completed. Over this time, assets had been dynamically reallocated from 70% in equities to now 70% in fixed income, using physical bonds, not derivatives, and primarily investment-grade corporate bonds and we have 30% in risk assets diversified across domestic U.S., international, emerging market equities, and commodities. In total, we estimate that we have preserved over $400 million in plan asset value over this period. At the end of 2009, the funded status of the plan was at 97% and in fact we have not made a contribution to the plan since the aforementioned 2003, $50 million that I mentioned before. While our objective was not to maximize returns, it turns out the plan's returns have been in the top quartile for U.S. pension plans over $1 billion measured over 3-, 5-, and 10-year periods.

We do believe, in fact, that a key part of our success lies in our best-in-class governance structure, which through this period allowed us to be nimble, efficient and effective in influencing our strategy.

One final note that I would make is that we've had some success describing and employing this framework with trustees of pension funds outside the U.S., in the U.K and Switzerland particularly.

So at Thomson Reuters treasury, we're proud of our de-risking strategy, which preserved significant amounts of pension plan assets, maintained a strong funded status with no contributions despite a recession which we all know in retrospect was probably the worst since the Great Depression. And with that, hopefully I was brief and now I'm gone. Thank you very much.

HESS: So I would like to introduce our Gold Medal winner, Ford Motor Co., represented by Kathleen Gallagher. Kathleen is director, asset management, at Ford. She has investment strategy responsibility for approximately $54 billion in global defined-benefit assets and also has investment oversight for about $9 billion in U.S. defined-contribution assets. Her prior positions include director of corporate risk management, vice president, finance, Ford Australia, and controller at North American engine operations. She's been at Ford since 1985. Kathleen graduated from the University of Virginia with a B.A. in economics, Phi Beta Kappa, and received an M.B.A. from the Harvard Business School. Welcome and congratulations, Kathleen.

KATHLEEN GALLAGHER: Well, hello everyone, and thank you. After Andrew, I think this will sound like the same movie, but part two, I guess.

You've heard a lot about Ford and I think you will also still hear a bit more about Ford yet today and tomorrow. We have really large plan obligations. They're large in and of themselves, and they're also large relative to the size of the company, even with our market capitalization having been much improved over the last few years. I think all of you who are familiar with defined-benefit plans know that if you run out of assets, the sponsor has to contribute.

We've had long experience with pension funds at Ford. We're an old company, a big company. We don't have as many pension funds as Thomson Reuters, but we have about 50 of them and they're all over the world. And they're about 60 years old, the oldest of them. So they matter to us. They're a key piece of our benefit structure and we've long experience with them. For almost all that period without exception, our strategy looked very much like Andrew's. Very long-term investment horizon, very high allocations to equity, very tolerant of volatility.

What changed? What changed for us was in 2006–2007 period, new regulations in the U.S., the Pension Protection Act, which sped up required contributions and then Ford—I think [Ford CFO] Lewis [Booth] this morning took you all through the rollercoaster ride the last few years—just tremendous pressure on Ford, challenges in the market, financial challenges, operating challenges. These effects really prompted us to realize that something had to change with respect to the management of the pension funds. So we spent a long time looking at this. Many of the same tools that many defined-benefit plans use and we adopted an approach—we were fortunate we were fully funded at the time—where we would alter our investment objective from maximizing returns and instead focus on reducing the risk of funding shortfalls.

We took essentially as much risk as we could off the table. We rebalanced from equities to fixed income. We embarked on a multiyear set of steps to diversify out of equity risk into alternative investments and, last but absolutely not least, we hedged a significant portion of our interest-rate risk, the mismatch between the assets and the liabilities, using a derivative overlay strategy.

As I reflect back on what distinguishes our process and our outcomes during this time, it's really the scale that we did this on and the speed that we did it.

So just how big are we? At the end of 2009 we had $39 billion in assets in the U.S. and $45 billion in liabilities, a shortfall of $6 billion. At the end of last year, $56 billion in assets around the world and a shortfall of $12 billion. We paid benefits of nearly $4 billion last year just in the U.S. alone and $5.4 billion around the world. There is a lot of money moving out of the pension funds and at the bottom of the slide, you can see a lot of folks who are relying on us basically not to screw this up.

So 325,000 people in the U.S. participate in the plans. A number of them are deferred or retired, but a number of them are people like me who are still accruing service in the plans, and over half a million around the world. So it's a big group of people and it's a lot of money.

So as I said, key drivers: funding regulations, PPA in the U.S., and operating and financial challenges facing the sponsor. What I'd like to point out here and Andrew alluded to it also is, when you have plans around the world, you start to think about leveraging your scale and the way you think about what might work in the U.S. might also apply elsewhere and it's fair to say that though they're not identical, the regulations that govern when you fund and how you manage the plans, how you interact with your participants are quite similar in the U.K. and in Canada and elsewhere, and for us that's particularly important because about 90% of our assets and our liabilities reside in the U.S., the U.K. and Canada. Certainly Ford's situation, since the parent is the ultimate obligor for any funding requirements, the situation that Ford was facing in the last few years and the difficulty of making cash contributions during a time when we were very, very stretched was as applicable for the plans outside the U.S. as it was for the U.S. plan

What we've been able to do is adapt our strategy for the U.K. and the Canadian schemes working with trustee boards and doing what makes sense for them as well.

This is basically a thumbnail sketch and it's very much a textbook before and after of managing defined-benefit plans in these kinds of times. You used to maximize returns; now you worry about funding shortfalls. You used to think that you were a long-term investor, and long-term horizon and many of us still as private investors, as private citizens still are. But the game has really made -– you change. You really have to think about a shorter time horizon, a business cycle three to five years, your patience with big allocations to highly volatile strategies really has worn thin in the last few years.

We used to have an asset allocation, 70% equity, 30% long-duration bonds. Long-duration bonds have certainly helped us. They've been in place for a dozen years. Now we have fewer of them and we have much less in equities, 30% in equities, and we're on a path to be 25% allocated to alternative investments, which is primarily hedge funds and also allocations to private equity and to commercial real estate.

Lastly, interest-rate risk. Most of the liability matching that we've done -– in fact all of the liability matching that we've done until recently was only the other cash bond portfolio and during this period in 2007–08 period we were hedged up to about 75% of the duration mismatch between the assets and the liabilities, so that helped us hugely in the 2008 period when risk-free rates fell so dramatically.

So what happened? What was the outcome of all of this? Well if we hadn't done this, and these numbers are always so big because Ford is so big, but if we hadn't done this, we would have ended last year with a $13 billion shortfall in the U.S. Instead we ended the year with a $6 billion shortfall. So $7 billion -– I know Lewis talked about this this morning. It came at a time -– it couldn't have come at a better time at Ford, that pays -– well you saw what we pay in benefits around the world. We paid for more than a year's worth of benefits just out of an investment strategy. And about 14 points of funded status, I envy Thomson Reuters their funded status but at least we can take some comfort that we would have been a whole lot worse off had we not taken these actions.

So in sum -– Lewis showed you this slide this morning. Change in focus from managing assets and maximizing returns to lowering our risk of funding shortfalls. A lot less equity risk. A lot less tolerant of interest-rate risk. An ALM strategy, not an A strategy. More in alternatives. The ability to hedge our interest-rate risk, a tool that's very much still present in our tool kit and one where we've clearly leveraged the capability that exists throughout treasury at Ford because we're a big issuer and we understand interest-rate risk. And if we hadn't done it, we would have been $7 billion worse off a time when the company could have really, really been stressed in terms of making contributions, so we feel very good about having -– well, we feel good about having been lucky as opposed to good about being good. Because we were certainly, without a question, very fortunate in our timing but I think there was also a lot of skill and care and attention that went into the process that continues with no end in sight. So, thank you very much.

HESS:  So, I think we have a little time before the break and so maybe I could kick off with a question of our panel in turn. You've all kind of gone through some fairly dramatic process changes, really, whether it's trying to drive the business forward or really trying to make sure the ship doesn't sink, as it were. Anything that really, really surprised you along the way? That you weren't expecting, that you discovered as part of the process?

FOX:  I think the biggest surprise that I had in going through this project was really the number of clients that we felt just didn't know that we offered the product of retirement services, and I think that's really what the project brought to light, was just educating our clients that we have this offer to them and we kind of have our seat at the table in the decision-making process. We really thought that 50,000 was a pretty decent number. We found there's a lot more clients that were using those products and we weren't involved as we would like to be.

PERRIN:  I think for us the biggest surprise was probably reframing the problem in sort of economic terms was a way to very easily describe and get buy-in, particularly from our CFO, he's a very economically driven, focused sort of CFO, so for him it really framed the problem in terms that he understood: We have future cash obligations; we have a set of assets. How can we best match these assets and their cash flows with these liabilities and their cash flows? Take it a way out of the accounting realm and out of the actuarial realm and put it into a framework that he understood, and I think from that we got buy-in from the rest of our senior management community cause it was in a framework that they could readily understand.

GALLAGHER:  I think for us it was the ability to get very quick agreement from our senior decision-makers to make the changes that we did and to make them in the size and with the speed that we made them. I think sometimes when you think about a company like Ford on the outside, you think of a big old bureaucratic company with very slow decision-making processes and very slow implementation timelines. And instead we moved in a really big way, really quickly, and I think that's a testimony to the caliber of the decision-makers.

HESS:  We have time for one from the audience. Yes.

Q: One quick question for Kathleen, actually. In all of those big numbers, does that include the union membership of Ford or is that strictly the non-union piece of it?

GALLAGHER:  That's everyone. Union and salaried.

HESS:  Well, with that, thank you all for your attention. I think it's time for a quick break if I've got it right. So if we could just have a quick round of applause for our distinguished winners.