At TerraCycle, in 2012, we allocated $250,000 for raises on a total payroll of $5 million. In the hope of creating a coherent policy, we formed a compensation committee, consisting of five senior employees, to help figure out how to divide up the money we allocated. The group decided to give about half of the money to cover the rising cost of living, basically to adjust for inflation. As a guideline, we turned to the Bureau of Labor Statistics, which releases (typically in September) annual inflation numbers to calculate each year's cost-of-living adjustment. In 2012, it was 3.6 percent, and this year it is projected to be around 1.5 percent. The committee decided to give everyone who had been with TerraCycle for more than 12 months a 5 percent raise, which is of course greater than the cost of living adjustment. The rest of the money was used for "adjustment raises," for those whose jobs had grown beyond the roles originally envisioned.