THIS REPORT CAN BE ACCESSED AT

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1 THIS REPORT CAN BE ACCESSED AT

2 Thousands The CEO Pay Ratio, comparing annual total compensation of a company s CEO and median employee, is a required disclosure for the first time in These Ratios will create headlines, despite the fact that differences in organizational structure, geographical workforce distribution, and business strategy are key elements in understanding differences in reported figures. Ascribing meaning to differences across companies and industries is difficult. 40 (n=120) (n=416) x $150 $100 (n=120) (n=416) $99 $ x 114x 301x 66x 166x 18x 38x 8 10 P 25 P 50 P 75 P 90 P $50 $0 $65 $50 $129 $37 $83 $57 $32 $43 10 P 25 P 50 P 75 P 90 P The median Ratio of the is more than two times the median Ratio of the Median employee compensation for companies is at least 1 higher than companies until the 90 th percentile 60 25th P = 38x Median = 8 The CEO Pay Ratio distribution is highly concentrated below 100:1, and tails off near 300: th P = 166x th P = 301x > 80

3 60 50 (n=120) (n=416) 534x x 205x 246x 298x 206x 224x 309x 10 71x Financials S&P n=26, Russell n= x 72x Utilities n=12, x 151x 159x x Industrials n=22, 70 Energy n=7, 17 Materials n=8, 31 Information Technology n=7, 32 Health Care n=15, x Staples n=6, x Discretionary n=9, x < $0.5B n = x $0.5-$1.5B n = x $1.5-$5B n = $5-$15B n = x > $15B n = x < $5B n = x 238x 249x $5-$10B n = 25 $10-$25B n = 35 $25-$50B n = x > $50B n = x < $40K n = x $40-$55K n = x $55-$70K n = 89 99x $70-$100K n = 74 64x > $100K n = x < $55K n = x $55-$70K n = x $70-$100K n = x $100-$150K n = 22 74x > $150K n = 8 Source: Seml er Brossy data and anal ysi s ; F undvotes, LLC; ISS Voti ng Anal yti cs. Russel l 3000 sampl e effecti ve as of June 26, * Excl udes compani es wi th no empl oyees, no CEO, or CEO s wi th no compensati on.

4 Five companies (3.9%) have failed Say on Pay in 2018: AECOM, Commercial Metals, Nuance Communications, Sanmina, and The Walt Disney Company % 2.6% 2.5% 2.4% 2.8% 1.7% 1.5% 3.9% 6% 6% 6% 6% 6% 6% 5% 5% 21% 19% 15% 17% 16% 17% 15% 13% 72% 73% 76% 76% 78% 78% PERCENT APPROVAL Below n = 2, , , , , , , While early in the proxy season, the current failure rate (3.9%) is the highest observed rate since voting began The 90.2% average vote result thus far in 2018 is 1.5% lower than the 2017 average Nearly one-third of the has had vote support below 7 at least once since 9% of and companies with vote results in each year since have failed Say on Pay at least once (n=22) 9% 9% Below 5 Support at Least Once (n=74) 32% 27% Below 7 Support at Least Once 59% 65% Below 9 Support at Least Once

5 10 9% Below 5 2.7% % 6.7% 1 5% 3% % 33% 13% 27% % 9 89% % 67% 53% Energy n = 3 Staples n = 11 Financials n = 10 Industrials n = 37 Utilities n = 5 Materials n = 10 Information Technology n = 26 Health Care n = 12 Discretionary n = 15 Vote results are 39% lower at companies that received an ISS Against recommendation Results for companies receiving For and Against will likely converge towards the historical average of 25-3 as more vote results are released This is an interesting initial data point worth watching as the season progresses and could be an early indication of lower average support across the board and increased alignment of institutional shareholder voting with ISS recommendations 10 5 ISS For (n = 113) % 57% ISS Against (n = 16) Fifteen companies (12.4%) received one For and one Against recommendation from ISS during the last two years Only 3% of companies received ISS Against recommendations in each of the last two years 2017 Rec. For Against For 84% of companies (n=102) 4% of companies (n=5) 2018 Rec. Against 8% of companies (n=10) 3% of companies (n=4) Source: Seml er Brossy data and anal ysi s ; F undvotes, LLC; ISS Voti ng Anal yti cs. Russel l 3000 sampl e effecti ve as of June 26, 2017.

6 2018 Failed Say on Pay Vote Results 1, n=5 Likely Causes of Votes Under 5 Number Pay and Problematic Rigor of Shareholder Non- Special Say on Pay Vote Results of Performance Pay Performance Outreach and Performance Awards/ Mega- Benchmarking Company 2018 q 2017 YOY Failures Relation Practices Goals Disclosure Based Equity Grants Practices AECOM 48% 52% -4% 1 X X X Commercial Metals Co. 44% 95% -51% 1 X X The Walt Disney Co. 44% 84% -4 1 X X Sanmina Corp. 31% 76% -45% 1 X X X Nuance Communications, Inc. 1 33% -24% 5 X X X Count (n=5) As of March 19, FOR MORE INF ORMAT ION, VISIT US AT SEML ERBRO SS Y. COM SEMLER BROSSY CONSULTING GROUP WILSHIRE BOULEVARD, 10TH FLOOR LOS ANGELES, CA INFO@SEMLERBROSSY.COM 2018 S E M L E R B R O S S Y C O N S U L T I N G G R O U P LLC

7 % 0.4% 0.6% 0.6% 0.1% 0.6% 0.6% 0. 13% 8% 9% 8% 6% 8% 7% 7% 52% 34% 43% 38% 37% 48% 52% 55% 3 31% 28% 65% 61% 65% 2 73% PERCENT APPROVAL Below n = n = n = n = n = n = n = n = 41 Avg Vote, ISS For Avg Vote, ISS Against % 89% 9 91% 92% 92% 92% 94% 77% 78% 78% 77% 74% n = n = n = n = n = n = n = n = 41 73% of equity proposals in 2018 have received vote support above 9, the highest rate over the past eight years No equity plan proposals have failed thus far in 2018 The difference in vote results for proposals receiving a For versus an Against ISS recommendation (2) is higher in 2018 than in the previous eight years Only 0.5% of the 5,348 votes since have received less than a majority vote