January 3, 2014 Mr. John Doe Director, Compensation Company ABC, Inc. 1234 Main Street New York, NY 10108 Re: Performance Award Certification FY2011 Performance Share Units Dear John, This letter certifies the final performance and payout results under the Performance Share Units ( PSUs ) granted by Company ABC, Inc. ( Company ABC ) on January 25, 2011. Background Information In 2011, Company ABC has issued PSUs in which the number of units to vest is determined based on the Totall Shareholderr Return ( TSR ) of Company ABC s common stock as compared to the TSRs of a custom peer group. The vesting schedule, as seen below, can produce vesting percentages ranging from 0% to 200% of target. TSR will be measured over the performance period, beginning on January 1, 2011 and concluding on December 31, 2013. Relative TSR Performancee 90 th Percentilee and Above 75 th Percentile 50 th Percentile 25 th Percentile Below 25 th Percentile Performance Shares Earned 200% 150% 100% 50% 0% Furthermore, if Company ABC s TSR is negative over thee performancee period, the payout percentage will be capped at 100% of target. Lastly, the TSR calculation will be based upon the average prices over December 2010 and December 2013, and will assume all dividends issued over the performance period are reinvested as of the ex-dividend date.. Calculation of TSR for Company ABC The TSR calculation is based on the return of the 1-calendar-month average prices between the beginning and end of performance period, using the formula below. The average prices are based upon daily asset values, which represent adjusted stock prices for dividends reinvested throughout the period. TSR Average Price Ending - Average Price Beginning Average Price Beginning The actual calculation is shown below 1. $85.54 $44.50 TSR $44.50 92.23% 1 Please note these prices represent rounded values. The actual, underlying calculationn of TSR may differ slightly from the calculation shown.
Company ABC, Inc. January 3, 2014 Page 2 Average Beginning Stock Price $44.50 Based upon the 1-calendar-month average closing stock prices of Company ABC s common stock, assumingg all dividends are reinvested as of the ex-dividend date, over December 2010. Average Ending Stock Price $85.54 Based upon thee 1-calendar-month average closing stock prices of Company ABC s common stock, assumingg all dividends are reinvested as of the ex-dividend date, over December 2013. Dividends $1.91 Company ABC paid out $1.91 in dividends during the Performance Period. A detailed illustration of this calculation can be found in Appendix A. Summary of Relative TSR Results Relative to the components of the peer group during the same performance period, Company ABC s TSR of 92.23% ranks #7 out of 32, or the 81 st Percentile. Therefore, based on performance at the 81 st Percentile as of December 31, 2013, the final number of shares earned equals 169% of target. In summary of the Peer Group, thee TSR at the payout thresholds are as follows: Relative Performance Ranking 90 th percentile 75 th percentile 50 th percentile 25 th percentile TSR 111.64% 80.87% 55.55% 39.45% For an illustration of the performance of the peer companies, please see Appendix B. For information the peer companies removed over the coursee of the performance period, see Appendix C. Please don t hesitate in contacting me at (215) 255-1874 if you have any questions. Sincerely, Daniel A. Kapinos, CEP Director Radford, an Aon Hewitt Company cc: Terry Adamson (Radford / Aon Hewitt) Jon Burg (Radford / Aon Hewitt)
Company ABC, Inc. FY 2011 Performance Sharee Unit Results PeerTracker Results Certification Radford, an Aon Hewitt Company, has been retained by Company ABC, Inc. ( Company ABC ) to provide tracking and summary services for the Performance Share Units granted in 2011. All calculations are based on financial information and upon the specific plan provisions of Company ABC. Company ABC has taken the responsibility for ensuring that the information provided is accurate and complete. We believe that the information is sufficiently complete and reliable, and that it is appropriate for the purposes intended. In our opinion, each data used in this final valuation is reasonable, taking into account the experience of the plan. The methods employed in this valuation are consistent with generally accepted actuarial principles and practices. We believe that this report t adheres to the requirements stipulated by the FASB, the SEC, and the IRS for valuation of stock-based compensation programs. Terry Adamson Partner Daniel A. Kapinos, CEP Director Jan-14
Appendix A Illustration of Company ABC s TSR Calculation Illustrative Detail of TSR Calculation as of December 31, 2013 Total Shareholder Return Ending Average Asset Value (12/2/2013 to 12/31/2013) Beginning Average Asset Value (12/1/2010 to 12/31/2010) Total Dividends Issued 92.23% $85.54 $44.50 $1.91 Ending Average Period Dividends Issued During Period Beginning Average Period Trading Date Closing Price Dividends Accumulated Shares Asset Value 12/31/2013 $83.89 $0.00 1.03555 $86.87 12/30/2013 $83.25 $0.00 1.03555 $86.21 12/27/2013 $83.41 $0.00 1.03555 $86.38 12/26/2013 $83.47 $0.00 1.03555 $86.44 12/24/2013 $83.62 $0.00 1.03555 $86.59 12/23/2013 $82.68 $0.00 1.03555 $85.62 12/20/2013 $82.94 $0.00 1.03555 $85.89 12/19/2013 $83.09 $0.00 1.03555 $86.04 12/18/2013 $83.93 $0.00 1.03555 $86.91 12/17/2013 $81.82 $0.00 1.03555 $84.73 12/16/2013 $81.85 $0.00 1.03555 $84.76 12/13/2013 $81.61 $0.00 1.03555 $84.51 12/12/2013 $81.90 $0.00 1.03555 $84.81 12/11/2013 $81.75 $0.00 1.03555 $84.66 12/10/2013 $83.07 $0.00 1.03555 $86.02 12/9/2013 $82.90 $0.00 1.03555 $85.85 12/6/2013 $82.75 $0.00 1.03555 $85.69 12/5/2013 $81.46 $0.00 1.03555 $84.36 12/4/2013 $81.47 $0.00 1.03555 $84.37 12/3/2013 $81.88 $0.00 1.03555 $84.79 12/2/2013 $81.86 $0.00 1.03555 $84.77 10/30/2013 $80.24 $0.18 1.03555 $83.09 7/30/2013 $67.42 $0.18 1.03330 $69.66 4/29/2013 $59.67 $0.18 1.03062 $61.50 1/30/2013 $57.72 $0.16 1.02761 $59.31 10/31/2012 $53.95 $0.16 1.02481 $55.29 7/30/2012 $49.81 $0.16 1.02183 $50.90 4/27/2012 $51.62 $0.16 1.01861 $52.58 1/30/2012 $47.97 $0.15 1.01551 $48.71 10/28/2011 $47.99 $0.15 1.01234 $48.58 7/28/2011 $49.39 $0.15 1.00919 $49.84 4/28/2011 $53.28 $0.15 1.00613 $53.61 1/28/2011 $45.32 $0.15 1.00331 $45.47 12/31/2010 $46.01 $0.00 1.00000 $46.01 12/30/2010 $46.05 $0.00 1.00000 $46.05 12/29/2010 $45.92 $0.00 1.00000 $45.92 12/28/2010 $45.71 $0.00 1.00000 $45.71 12/27/2010 $45.88 $0.00 1.00000 $45.88 12/23/2010 $45.87 $0.00 1.00000 $45.87 12/22/2010 $45.95 $0.00 1.00000 $45.95 12/21/2010 $45.73 $0.00 1.00000 $45.73 12/20/2010 $45.33 $0.00 1.00000 $45.33 12/17/2010 $45.10 $0.00 1.00000 $45.10 12/16/2010 $44.49 $0.00 1.00000 $44.49 12/15/2010 $44.33 $0.00 1.00000 $44.33 12/14/2010 $44.62 $0.00 1.00000 $44.62 12/13/2010 $44.13 $0.00 1.00000 $44.13 12/10/2010 $43.68 $0.00 1.00000 $43.68 12/9/2010 $43.47 $0.00 1.00000 $43.47 12/8/2010 $43.34 $0.00 1.00000 $43.34 12/7/2010 $43.69 $0.00 1.00000 $43.69 12/6/2010 $43.28 $0.00 1.00000 $43.28 12/3/2010 $42.78 $0.00 1.00000 $42.78 12/2/2010 $42.26 $0.00 1.00000 $42.26 12/1/2010 $41.31 $0.00 1.00000 $41.31
Company Ticker Appendix B Peer Company Performance Average Asset Value for December 2010 Average Asset Value for December 2013 Total Dividends TSR Rank Percentile Rank MasterCard Incorporated MA $236.91 $797.86 $3.75 236.78% 1 100% The Boeing Company BA $64.98 $144.41 $5.38 122.23% 2 97% Amazon.com Inc. AMZN $178.84 $391.50 $0.00 118.91% 3 94% CVS Caremark Corporation CVS $33.89 $71.77 $2.05 111.76% 4 90% UnitedHealth Group Incorporated UNH $36.41 $76.66 $2.59 110.56% 5 87% Pfizer Inc. PFE $17.15 $34.44 $2.64 100.86% 6 84% Company ABC, Inc. ABC $44.50 $85.54 $1.91 92.23% 7 81% Google Inc. GOOGL $591.56 $1,084.35 $0.00 83.30% 8 77% Fresenius Finance B.V. AAPL $321.49 $578.86 $17.10 80.06% 9 74% General Electric Company GE $17.62 $30.08 $2.24 70.74% 10 71% 3M Company MMM $86.08 $142.17 $7.10 65.16% 11 68% Johnson & Johnson JNJ $62.26 $102.54 $7.24 64.71% 12 65% Verizon Communications Inc. VZ $34.34 $56.40 $6.05 64.23% 13 61% Wells Fargo & Company WFC $30.03 $47.78 $2.51 59.14% 14 58% Wal-Mart Stores Inc. WMT $54.43 $85.40 $5.23 56.89% 15 55% QUALCOMM Incorporated QCOM $49.25 $77.00 $3.10 56.35% 16 52% Merck & Co. Inc. MRK $36.23 $56.07 $5.36 54.74% 17 45% United Parcel Service, Inc. UPS $72.53 $112.23 $6.84 54.74% 18 45% Chevron Corporation CVX $88.17 $134.94 $10.50 53.05% 19 42% Microsoft Corporation MSFT $27.55 $40.74 $2.48 47.89% 20 39% Exxon Mobil Corporation XOM $72.31 $104.94 $6.49 45.12% 21 35% Berkshire Hathaway Inc. BRK-A $120,239.82 $174,140.06 $0.00 44.83% 22 32% The Procter & Gamble Company PG $63.72 $90.83 $6.63 42.54% 23 29% AT&T, Inc. T $28.96 $40.57 $5.28 40.06% 24 26% Pepsico, Inc. PEP $65.81 $90.56 $6.87 37.60% 25 23% McDonald's Corp. MCD $77.64 $105.30 $8.52 35.63% 26 19% The Coca-Cola Company KO $64.99 $87.24 $4.53 34.24% 27 16% International Business Machines Corporation IBM $145.25 $188.82 $9.90 30.00% 28 13% Intel Corporation INTC $21.34 $27.63 $2.55 29.49% 29 10% Bank of America Corporation BAC $12.57 $15.73 $0.13 25.11% 30 6% Oracle Corporation ORCL $30.36 $36.66 $0.89 20.77% 31 3% Citigroup Inc. C $4.65 $5.19 $0.11 11.54% 32 0%
Appendix C Summary of Removed Peers Company Ticker Reason for Removal Goodrich Corp. GR Acquired by United Technologies Corp. (UTX) in July 2012 Motorola Mobility Holdings Inc. MMI Acquired by Google Inc (GOOG) in May 2012