Analysis of Hypothetical Historical Payouts between Relative TSR, Stock Options, and Restricted Shares

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Relative TSR awards generally provide a higher payout potential (with less variance in payout), a better alignment of pay-for-performance, and an improved efficiency of Topic 718 compensation expense. The chart below summarizes the hypothetical payouts in a recent Radford study of the Standard & Poors 100. Read the extended explanation of the study in our white paper Relative Total Shareholder Return Plans: The Low-Hanging Fruit of Optimal Performance-Based Equity Design.

	Compensation Delivered			Expense Efficiency Ratio
	Median Result	Standard Deviation	Average Ranking Among Vehicles at Each Company - 1 (best) to 3 (worst)	Median Result	Standard Deviation	Average Ranking Among Vehicles at Each Company - 1 (best) to 3 (worst)
Stock Options	$43,484	$205,354	2.38	87%	411%	2.17
RS/RSUs	$61,189	$71,125	2.33	115%	46%	2.22
Relative TSR Units	$89,979	$103,590	1.29	137%	61%	1.61

Shaded cells represent best result in each category of assessment.

Let Radford illustrate how a Relative TSR plan would have performed versus stock options and restricted stock over periods of your companies actual stock price history. We will look at various metrics for yourself compared against your identified peers and summarize:

• Compensation Delivery (employee perspective) - calculates the amount of value delivered to the award recipient
• Expense Efficiency (company perspective) - calculates the ratio of compensation delivered to the employee versus Topic 718 accounting cost. A ratio below 100% represents less value delivered to employees than the cost to the company. A ratio above 100% represents more value delivered than costs accrued to the company.

Radford will provide a report and give an opportunity to dynamically design a Relative TSR plan that meets the incentive and risk profile of your organization. To learn more about how Radford can assist in the design of your equity incentive program, contact one of your Radford consultants.

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