This presentation answers questions asked during the live event July 23, 2010. It also provides additional evidence regarding Pay and Performance in the United Kingdom.

1. SUPPLEMENTAL SLIDES
Responses to ques6ons posed during July 23 presenta6on and
supplemental informa6on on UK Pay and Index Performance Informa6on
The Real Impact of Say on Pay and a Brief
Updated from the Dodd‐Frank Wall Street
Reform and Consumer Protec@on Act
Hosted by:
New York‐New Jersey Chapter of the NASPP
July 23, 2010

2. Supplemental Informa@on
• Responses to Ques@ons Posed
• UK Pay and Index Performance Informa@on

3. RESPONSES TO QUESTIONS POSED
Answers provided by:
Ed Hauder, Exequity and
Dan Walter, Performensa@on

4. Q & A
• Q: Any concern if we hold our annual mee6ng just prior to the six month
anniversary of the signing of the Act so as not to be subject to say on
pay?
• A:
– From a technical perspec@ve, there shouldn’t be any issue as the Act indicates
mandatory SOP will apply to proxies for the first shareholder mee@ng held
aYer the end of the 6‐month period aYer enactment of the Act
– From a prac@cal perspec@ve, if a company has not voluntarily adopted SOP
prior to the effec@ve date of mandatory SOP under the Act, it is unlikely that
shareholders will express outrage over the company wai@ng un@l required to
include a mandatory SOP vote at its annual shareholder mee@ng the following
year.
– There is also the possibility of nega@ve media coverage associated with what
may be seen as an avoidance of accountability as related to execu@ve
compensa@on

5. Q & A
• Q: Do you know if controlled companies are exempt from the
requirement of holding a say on pay vote?
• A: As wri]en, the Dodd‐Frank Act does not include a specific exemp@on
for controlled companies. However, the Act does give the SEC the
authority to “exempt an issuer or class of issuers from the requirement…
take[ing] into account, among other considera@ons, whether the
requirements…dispropor@onately burdens [sic.] small issuers.”
– It seems possible that the SEC would exempt controlled companies from this
requirement for reasons similar to those used in exemp@ng controlled companies from
certain aspects of the corporate governance rules of the na@onal stock exchanges and
associa@ons. But, we’ll have to wait to see what the SEC comes out with.
– Ac@on Item: If you are a controlled company or control a company, you may wish to
submit comments to the SEC as soon as possible on this issue in order to ensure the SEC
has such comments before it begins draYing exemp@ons for SOP.

6. Q & A
• Q: Will ins6tu6onal shareholders generally con6nue to vote for (i.e., in
alignment with) their porTolio companies on Say on Pay proposals in
order to protect their actual and/or poten6al 401K or other business
from the porTolio companies?
• A: While business reali@es may s@ll creep into ins@tu@onal shareholders’
vo@ng on SOP, it is important to realize that the SEC and Congress are
probably looking for a clear separa@on between votes and business
interests. Consequently, while the prac@ce could s@ll con@nue with SOP,
we expect it will be somewhat muted, and, if not, that the poli@cians may
eventually takes steps to address.

7. Q & A
• Q: The new requirement to report rela6ve pay levels of the CEO against “all
employees” – how likely do you believe this will pass and what do you
believe will be included in the total compensa6on?
• A: This requirement is included in the Dodd‐Frank Act as signed into law by
President Obama on July 21, 2010. See slide 45 in the original Presenta@on
for more informa@on about what is required. Keep in mind that “total
compensa@on” will be as defined for purposes of the Summary Compensa@on
Table in the proxy. This alone will impose a heavy burden on companies with a
large number of employees and/or mul@‐na@onal opera@ons to gather and
determine the total compensa@on for each employee. Companies will need to
determine the “total compensa@on” for each employee other than the CEO so
that they can then determine the median amount of total compensa@on for all
employees.
• A: Addi@onal concerns with this provision include:
– the a]en@on this ra@o may receive from the press and the push for explana@ons that may
result
– Possible issues for companies who provide “total rewards” informa@on to their employees,
since these calcula@ons are sure to differ

8. Source: Say on Pay, Six Years On, Lessons from the UK Experience, a
report by Railpen Investments and PIRC Limited (September 2009)
UK PAY AND INDEX PERFORMANCE

10. Source: Say on Pay, Six Years On, Lessons from the UK Experience, a report by Railpen Investments and PIRC Limited (September 2009)