STEVEN HALL & PARTNERS. NEW YORK 650 Fifth Avenue 33rd Floor New York NY Phone: shp@shallpartners.com

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1 STEVEN HALL & PARTNERS E X E C U T I V E C O M P E N S AT I O N C O N S U LTA N T S NEW YORK 650 Fifth Avenue 33rd Floor New York NY Phone: shp@shallpartners.com

2 ABOUT US Steven Hall & Partners is a totally independent compensation consulting firm, specializing exclusively in the areas of executive compensation, board remuneration and related corporate governance issues. By focusing solely on this critical and complex segment of the human resources arena, we are able to provide our clients with the highest quality expertise and best counsel available on a practical basis. EXPERIENCE Our senior partners average over 20 years in serving as independent advisors to Boards of Directors, Compensation Committees and senior management. We bring a unique level of in-depth practical experience and proven judgment to each of our client engagements. Each of our engagements is managed by one of these senior partners, who is actively engaged in data review, analysis and the development of recommendations. Each engagement team is supported by a staff of consultants and analysts, all of whom are experienced and capable practitioners. Our seasoned professional staff also includes accountants and attorneys, allowing us to provide our clients with specific technical expertise on accounting, tax, legal and regulatory issues as they arise. NATIONALLY RECOGNIZED We are nationally recognized with offices in New York City. We serve clients throughout the United States and around the world. Our principals are frequently quoted in notable publications such as The Wall Street Journal, The New York Times, The Washington Post, Fortune, and BusinessWeek and have been interviewed on Good Morning America, ABC News, CNBC, Fox Business, and National Public Radio. We have been asked to author articles for various trade publications, including Directorship, Corporate Board Membe, Corporate Secretary, The Corporate Board, Corporate Governance and Directors & Boards. Additionally, Steven Hall is the co-author of the book Executive Compensation Best Practices, and Nora McCord co-authored a chapter on director compensation practices for The Compensation Handbook. Steven Hall is annually named to the NACD Directorship 100, a prestigious list of the most influential people in corporate governance and the boardroom. 2

3 ABOUT US BACKGROUND Our firm is distinguished by a long history of working together. Steven Hall & Partners was formed in September 2005 when our founders, Pearl Meyer, Steven Hall and Steven Root, left Pearl Meyer & Partners, a firm they founded in At the time, Pearl Meyer & Partners was a division of Clark Consulting and the firm s offerings included employee compensation, sales compensation, benefits, deferred compensation and surveys. The formation of Steven Hall & Partners was grounded in a desire to return to our roots, focusing solely on matters of executive compensation, board remuneration and corporate governance. It also allowed us to be totally independent, a matter of particular importance given today s ever more stringent governance standards. 3

4 ABOUT US PHILOSOPHY PHILOSOPHY We believe that in the current pay-for-performance environment, the foundation for all compensation programs should be the company s business and its strategic plan and the compensation philosophy established by the Compensation Committee in conjunction with management. Compensation is one of the clearest ways to communicate a company s priorities and values, and that properly designed compensation programs are vital to reinforce the strategy and motivate achievement of the organization s business objectives. Conversely, when compensation programs are inconsistent with the organization s mission, the result can be costly. When it comes to executive compensation design, too often companies seek competitive parity rather than competitive advantage. While a thorough understanding of marketplace compensation levels and practices is an important input into the compensation design process, it is the role of the Compensation Committee, in conjunction with management, to assess that information in the context of the specific strategy and objectives of the company. We counsel our clients that one size does not fit all, and encourage thoughtful examination of all relevant issues. A creative combination of various compensation and benefit vehicles can be designed to deliver competitive, strategically focused compensation while maximizing effectiveness, tax and accounting efficiencies. Additionally, we believe that balanced programs consisting of multiple cash and equity compensation vehicles utilizing different but complimentary performance metrics and targets drive responsible growth and mitigate risk. While accounting, legal, tax and shareholder considerations should never be the sole reason for the selection of a particular plan, a nuanced examination of their impact on both the company and its executives should be included in any analysis. Knowledge and awareness of the view of the institutional investor and public are also an important consideration when determining executive compensation strategy, design and opportunities available. But this does not mean that such considerations should receive undo weighting in the decision process. The role of the Compensation Committee is to adopt a program that will create shareholder and corporate value. Based on our experiences with clients over the years, we continue to believe that carefully designed compensation programs tightly aligning pay with the long-term performance of the corporation are in the best interests of shareholders, and that diligent education campaigns and governance road shows can go a long way towards influencing key stockholders and advisory services. 4

5 ABOUT US CONSULTANTS STEVEN HALL Steven Hall is a founding Partner and Managing Director of our firm. He has over 30 years of experience advising senior management and Board Compensation Committees in the planning and implementation of senior executive compensation programs and incentives. Mr. Hall has served as both an expert witness and as a consultant on litigation and bankruptcy matters involving executive compensation. Prior to forming SH&P, Mr. Hall served as President and co-founder at Pearl Meyer & Partners for over 15 years. Mr. Hall holds an M.B.A. in Accounting and a B.A. in Economics. STEVEN C. ROOT sroot@shallpartners.com Steven C. Root is a founding Partner and Managing Director of our firm. He brings to our consulting practice over 28 years of experience as a securities and corporate lawyer in the area of executive compensation. He leads the Firm s technical consulting services with respect to the legal, accounting and tax aspects of Board and executive compensation programs including disclosure and tax compliance under Section 162(m) and 409A matters. Prior to forming SH&P, Mr. Root served as Vice President and Managing Director at Pearl Meyer & Partners for 10 years. Mr. Root received his J.D. cum laude from the Georgetown University Law Center, was an editor of the Georgetown Law Journal and holds an A.B. in English from Brown University. JOSEPH SORRENTINO jsorrentino@shallpartners.com Joseph Sorrentino, Managing Director, has over 15 years of experience advising public and privately held companies on executive compensation matters. His expertise includes annual and long term incentive plan design. On behalf of our clients, Mr. Sorrentino also serves as the firm s liaison to proxy advisory companies related to executive compensation and governance policies and analyses. Prior to joining SH&P Mr. Sorrentino served as Managing Director and Senior Consultant at Pearl Meyer & Partners for over nine years. Mr. Sorrentino holds an M.B.A. from the Leonard N. Stern Graduate School of Business. SANDRA PACE space@shallpartners.com Sandra Pace, Managing Director, has over 18 years of experience advising both publicly and privately held companies and non-profit organizations. Ms. Pace leads the firm s market pricing practice, developing market pricing models and assisting clients in compensation benchmarking. Prior to joining SH&P Ms. Pace served as Vice President and Consultant at Pearl Meyer & Partners for over 13 years. Ms. Pace holds a degree in Industrial/ Organizational Psychology from City University of New York. 5

6 ABOUT US CONSULTANTS NORA McCORD Nora McCord, Managing Director, has over 10 years of experience in researching and consulting on executive compensation matters. Ms. McCord advises clients on a variety of matters, including benchmarking compensation levels and practices and proxy disclosure, in addition to supporting the firm s litigation and expert witness practice. Prior to joining SH&P, Ms. McCord served as Senior Manager in charge of research operations with Equilar, Inc. Ms. McCord holds a Masters degree from the Georgetown Public Policy Institute and a B.S. from Georgetown University s Walsh School of Foreign Service. MICHAEL SHERRY msherry@shallpartners.com Michael Sherry, Consultant, has over 10 years of experience advising public and privately held companies. Mr. Sherry supports our firm s research and modeling activities, focusing on the development of market pricing models and analysis in support of the firm s litigation and expert witness practice. Prior to joining SH&P, Mr. Sherry served as a Consultant at Pearl Meyer & Partners for over five years. Mr. Sherry holds a B.S. in Finance from the Leonard N. Stern School of Business. STEVEN HALL JR. sehall@shallpartners.com Steven Hall Jr., Consultant, has over six years of experience advising companies on executive and director compensation matters. Mr. Hall leads our firm s client outreach efforts and serves as the firm s liaison to members of the press and industry professional organizations. Additionally, Mr. Hall supports our firm s market pricing activities of both executive compensation and Board remuneration programs. Mr. Hall holds a B.S. in Business Administration from Boston University s School of Management. 6

7 ABOUT US HOW WE WORK HOW WE WORK We create dedicated engagement teams for each of our clients. Team members are chosen based on the industry and project needs of each client. We believe that this team approach offers our clients the best expertise of our entire firm, rather than simply the best of one particular individual. ENGAGEMENT TEAMS Each of our teams is managed by one of our senior partners. These individuals are recognized and seasoned experts in the field who bring their in-depth experience and proven judgment to each client assignment. Our lead consultants do not merely parachute in to deliver reports or attend Board meetings, but rather are actively involved in all aspects of the engagement. They provide strategic and conceptual guidance for all projects completed on behalf of the client, analyze data and develop recommendations, and serve as the primary author of all client deliverables. The lead consultant also serves as the primary point of contact for all client interactions. For many engagements, lead consultants are assisted by a second senior consultant who serves as project leader and coordinates the data collection and analysis required to support the lead consultant s recommendations. This project leader is also fully briefed on all client matters and prepared to assist clients in the event that the lead consultant is temporarily unavailable. These team leaders are supported by a cadre of consultants and analysts, all of whom are experienced and capable practitioners. As needed, our engagement teams also rely upon in-house experts with specialized knowledge and expertise in areas such as ISS policies (both governance and new share requests) and negotiations with ISS staff, survey market pricing, 280G calculations, accounting and tax matters, CD&A drafting and responses to SEC comment letters, and technical design and drafting of incentive plans compliant with 162(m), 409A and ISS guidelines. CUSTOMIZED SOLUTIONS We tailor each of our recommendations to Board and / or Committee policy direction, as well as the business strategy, goals and specific needs of each client and its executive group. We do not provide clients with off the shelf solutions. In compensation, one size does not fit all. 7

8 ABOUT US WHO WE SERVE WHO WE SERVE We serve clients of varying size, from startups to companies in the Fortune 50, in a wide variety of industries at all stages of the business cycle. Additionally, we work with privately owned and notfor-profit organizations with varied structures and focus. We believe the diversity of our experience serves as a strong foundation for our advice. 8

9 ABOUT US OUR INDEPENDENCE OUR INDEPENDENCE Our independence is critical to our reputation and our livelihood, and we guard it vigilantly. Our founding partners have long held the belief that regardless of whether we are retained by the Compensation Committee or management, our advice and viewpoint should always be driven by what is in the best interests of shareholders. This recognition that our positions, views and recommendations are driven by our commitment to shareholders assures that we will always act in a manner that is independent and unbiased. We carefully follow the actions of the SEC as they draft guidance regarding the Dodd-Frank requirement that the Compensation Committee consider independence factors when selecting independent advisors. We have reviewed the five factors proposed on March 30, 2011 by the SEC and expect to have no difficulties in complying with these standards. We will continue to monitor this issue throughout the SEC comment period and through implementation by the listing exchanges to ensure that we remain in compliance. 9

10 SERVICES EXECUTIVE COMPENSATION Executive Compensation is one of the clearest ways to communicate a company s priorities and values. Our Executive Compensation services range from strategy development to program review and benchmarking. Executive Compensation Strategy Development and review of executive compensation philosophy Review of executive compensation program objectives Current trends and best practices Current Compensation Program Review Base salary and annual cash bonus opportunities Long and short-term incentives Executive benefits, severance and perquisites Equity programs, including the mix equity vehicles Stock ownership guidelines Perquisites Employment, change-in-control, severance agreements Calculations of estimated 280G payments Pay vs. performance assessment Assessment of link between compensation programs and stated pay philosophy Development of tally sheets Competitive Benchmarking Peer group assessment Competitive marketplace compensation and performance evaluations Proxy disclosure and compensation survey analysis Incentive Strategy Plan design Share allocation and utilization Modeling for additional share reserves, either internally or using the ISS Compass Model Analysis of performance metrics, target performance levels and measurement systems Business unit incentives and equity participation programs Co-investment and carried interest plans Special situation incentives for IPOs, LBOs, LLCs, partnerships, bankruptcies, M&As and startups 10

11 SERVICES Contract Design and Negotiation Employment, severance, and change-in-control agreements Retention and transaction incentives Supplementary Retirement Income and Other Executive Benefits Deferred compensation and capital accumulation programs Severance plan design and drafting Implementation Drafting of plan documents and grant letters Communications Liaison to proxy advisory companies Shareholder approval strategies Expert Witness Testimony, Opinions and Litigation Support Compensation reasonableness Option backdating Processes and procedures 11

12 SERVICES DIRECTOR REMUNERATION Attracting and retaining quality directors has never been more important. Since the passage of Sarbanes-Oxley in 2002, Directors have been required to spend more time on board matters and limited in the number of boards they can serve on. We provide the following services related to Director remuneration: Peer group evaluation and selection Marketplace compensation evaluation Vehicles and the appropriate balance of cash and equity compensation Stock ownership guidelines Current trends and best practices 12

13 SERVICES CORPORATE GOVERNANCE Quality compensation programs are the direct result of good corporate governance practices. We strive to ensure our clients follow the proper process in developing and reviewing their compensation programs and are kept abreast of current governance trends and widely regarded best practices. We provide the following services related to corporate governance: - Compensation Committee Charter, calendar and meeting materials - Drafting and/or review of Compensation Discussion and Analysis, related proxy tables and disclosure - Providing updates on latest regulatory requirements, current trends and best practices - Advice regarding shareholder outreach in connection with Say-on-Pay votes - Regulatory and listing compliance - Performance evaluations for the Board, Committees and senior management - Attendance at Committee meetings 13

14 FAQS ARE YOU INDEPENDENT? Yes. We only provide consulting services related to executive compensation, Director remuneration and related corporate governance matters. WHAT DISTINGUISHES YOU FROM YOUR COMPETITORS? We believe our competitive advantage stems from the following tenets. Each of these items contributes to our ability to provide our clients with the best possible counsel. Focus Our practice focuses solely on the compensation issues related to senior level executives and the Board. Experience Each of our senior Partners has been engaged in consulting in this area for over 30 years. Work Style Senior consultants fully engaged in data review, analysis and development of recommendations. Expertise Strong technical background in areas of accounting, tax and SEC regulations. Creativity Based on experience and a deep understanding of current issues, rules and trends. Independence Our revenues are generated from only three areas of consulting related to senior executives and Board members. We provide no other products or services. Reputation Our Firm is active in the organizations that are addressing today s issues and our principals have served on Blue Ribbon commissions dealing with compensation topics for executives and Directors. Responsiveness Through our team approach, our Firm is able to respond immediately to unanticipated client needs that may arise. 14

15 FAQS WHY DO COMPANIES CHOOSE YOUR FIRM? We believe that our clients choose us for four significant reasons: First, our consulting practice is conducted solely in the area of executive compensation and related governance matters. By focusing totally on this critical and complex segment of the human resources arena, we are able to provide our clients with the highest-quality expertise and best counsel available on a practical basis; Second, all of our assignments are staffed by partners, recognized senior professionals and seasoned consultants who bring their in-depth experience and proven judgment to each client assignment we undertake; these experts are backed by a staff of experienced analysts and researchers; Third, each recommendation is individually tailored to Board and Committee policy direction, the business strategy, goals and specific needs of each organization and its executive group; and Fourth, we serve a select number of valued clients with whom we establish longterm relationships. Our goal is well-considered counsel, quality execution and successful completion of assignments, serving our client s best interests on a timely basis. DO YOU SPECIALIZE IN ONE SPECIFIC SET OF INDUSTRIES? We serve clients of varying size in a wide variety of industries. While we recognize that competitive practices are different among industries, we also believe that one size does not fit all, and that welldesigned compensation programs should be tailored to the specifics of each client situation, rather than just follow industry trends. We are leery of industry generalizations that might serve to pigeon hole companies by industry into programs that are not best suited to their individual facts and circumstances. Rather, we believe that companies should design compensation programs that best attract, retain and motivate executives to execute the company s business plan, taking into account the personalities of the executives involved and the corporate culture of the organization. This may involve searching for the best ideas of other industries to gain a competitive advantage in attracting/ retaining and motivating executives. 15