VALUE OF S&P 500 CEO OUTSTANDING EQUITY AWARDS SURGE +35.8% IN 2012

Disparity Highlights the Leveraged Nature of Stock Option Awards

Value of S&P 500 CEO Outstanding Awards Study – Key Findings

• Aggregate value of S&P 500 CEO’s outstanding equity awards increased +35.8% in 2012, far outpacing the +12.1% increase in market capitalizations observed

• The disparity between the increase in value of outstanding awards and market capitalizations was driven by option values– Appreciation in full value awards more closely tracked the market capitalization increase

• The large increase in stock option values altered the value mix of CEO outstanding equity portfolios– Option values made up more than half the portfolio value on December 31, 2012, but reflected

less than half the value in December 2011

• The number of underwater options held by S&P 500 CEOs decreased significantly in 2012

• There were more ‘winners’ than ‘losers’ among the S&P 500 CEOs; 77% have paper gains of an average of $16.5 million

- 2 - April 10, 2023

Change in Aggregate CEO Outstanding Equity Awards vs. Market Capitalization

• Aggregate value of S&P 500 CEO’s outstanding equity awards increased +35.8% in 2012

• Aggregate market capitalization for these companies increased +12.1% during the same period

- 3 - April 10, 2023

Dec-1

1

Jan-

12

Feb-1

2

Mar

-12

Apr-1

2

May

-12

Jun-

12

Jul-1

2

Aug-1

2

Sep-1

2

Oct-1

2

Nov-1

2

Dec-1

20%

20%

40%

+28.2%

+13.7%

+31.7%

+28.4%

+35.8%

+11.7%

+3.9%

+14.0%

+11.4%

+12.1%

S&P 500 CEO Outstanding Awards - Aggregate Value S&P 500 Market Capitalization - Aggregate Value

- 4 - April 10, 2023

• The disparity between the increase in value of outstanding awards and market capitalizations was driven by option values – Leveraged nature of stock options can result in significant gains if long-term

stock price increases are attained; if stock price falls below exercise price, options lose all their value

– Total option values increased +58.2%– Full Value awards increased +15.2%

¨ Unvested service- and performance-based awards

Options vs. Full Value Awards

Dec-1

1

Jan-

12

Feb-

12

Mar

-12

Apr-1

2

May

-12

Jun-

12

Jul-1

2

Aug-1

2

Sep-1

2

Oct-12

Nov-1

2

Dec-1

2

0%

15%

30%

45%

60%+58.2%

+15.2%

Change in Aggregate Value of CEO Stock Options & Restricted Stock Awards

Stock Options Restricted Stock

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Change in Value Mix

• The large increase in unexercised stock option values altered the mix in value of CEO outstanding equity awards– Majority of outstanding equity value now held in stock options

¨ 56% in unexercised stock options vs. 44% in full value awards¨ In December 2011, the majority of outstanding equity value was held in full value

awards

Options48%

Full Value52%

Dec-11

Options56%

Full Value44%

Dec-12

- 6 - April 10, 2023

• Total option values increased +58.2%– Vested options +50.7%– Unvested options +79.8%

Total Options Vested Options Unvested Options$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000+58.2%

+50.7%

+79.8%

Dec-11 Dec-12

($ 0

00s)

Option Value Increases

- 7 - April 10, 2023

• The number of underwater options held by S&P 500 CEOs reduced significantly– 47% of CEOs had at least one underwater option grant outstanding on

December 31, 2012 ¨ 65% had at least one underwater grant at the end of 2011

– 25% of all options held by CEOs were underwater at the end of December 2012¨ 37% of all options were underwater at the end of 2011

– Underwater options are those in which the exercise price exceeds the current stock price

Underwater Stock Options

S&P 500 CEOs with Underwaters S&P 500 Options Underwater0%

10%

20%

30%

40%

50%

60%

70%

65%

37%

47%

25%

Dec-11 Dec-12

- 8 - April 10, 2023

Winners Versus Losers

• There were more ‘winners’ than ‘losers’ among the S&P 500 CEOs. Of the 497 CEOs analyzed in the study: – 77% gained an average of $16.5 million– 20% lost an average of -$3.8 million– These are all ‘paper’ gains/loses

¨ Actual gains/loses are not realized until options are exercised or full value awards vest

# ofCEOs

AverageChange ($MMs)

MedianChange ($MMs)

AggregateChange ($MMs)

Value Increased 383 +$16.5 +$6.6 +$6,324.2

Value Decreased 100 ($3.8) ($2.6) ($384.0)

No Change in Value 14 - -

-

Total Sample 497 +$12.0 * +$3.9 * +$5,940.2

* Numbers are not additive.

• Analyzed equity held by CEOs as disclosed in proxy statements filed in 2012 for companies listed in the S&P 500 on December 31, 2012 – Excludes three companies (two that went public during the year and one without

sufficient information disclosed)

• Equity Valuation– Stock Options calculated as the difference between month-end stock prices and

the option exercise price multiplied by the number of options held– Full value awards valued by multiplying stock price by the number of shares held

• For additional details regarding the study, please contact Steven Hall Jr. – 212-488-5400 – sehall@shallpartners.com

- 9 - April 10, 2023

About the Study

About Steven Hall & Partners

Steven Hall & Partners is an independent executive compensation consulting firm serving as outside counsel to Boards, Compensation Committees and management. The firm focuses solely on executive compensation, Director remuneration and related corporate governance matters.

For more information

Web: www.shallpartners.com

Email: shp@shallpartners.com

Phone: 212.488.5400

Twitter: @SHallPartners

- 10 - April 10, 2023