TheRealImpactofSayonPayandaBriefUpdatedfromtheDodd‐FrankWallStreetReformandConsumerProtec@onAct

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NewYork‐NewJerseyChapteroftheNASPPJuly23,2010

SUPPLEMENTALSLIDESResponsestoques6onsposedduringJuly23presenta6onand

supplementalinforma6ononUKPayandIndexPerformanceInforma6on

SupplementalInforma@on

•  ResponsestoQues@onsPosed•  UKPayandIndexPerformanceInforma@on

RESPONSESTOQUESTIONSPOSED

Answersprovidedby:

EdHauder,Exequityand

DanWalter,Performensa@on

Q&A

•  Q:Anyconcernifweholdourannualmee6ngjustpriortothesixmonthanniversaryofthesigningoftheActsoasnottobesubjecttosayonpay?

•  A:–  Fromatechnicalperspec@ve,thereshouldn’tbeanyissueastheActindicates

mandatorySOPwillapplytoproxiesforthefirstshareholdermee@ngheldaYertheendofthe6‐monthperiodaYerenactmentoftheAct

–  Fromaprac@calperspec@ve,ifacompanyhasnotvoluntarilyadoptedSOPpriortotheeffec@vedateofmandatorySOPundertheAct,itisunlikelythatshareholderswillexpressoutrageoverthecompanywai@ngun@lrequiredtoincludeamandatorySOPvoteatitsannualshareholdermee@ngthefollowingyear.

–  Thereisalsothepossibilityofnega@vemediacoverageassociatedwithwhatmaybeseenasanavoidanceofaccountabilityasrelatedtoexecu@vecompensa@on

Q&A

•  Q:Doyouknowifcontrolledcompaniesareexemptfromtherequirementofholdingasayonpayvote?

•  A:Aswri]en,theDodd‐FrankActdoesnotincludeaspecificexemp@onforcontrolledcompanies.However,theActdoesgivetheSECtheauthorityto“exemptanissuerorclassofissuersfromtherequirement…take[ing]intoaccount,amongotherconsidera@ons,whethertherequirements…dispropor@onatelyburdens[sic.]smallissuers.”–  ItseemspossiblethattheSECwouldexemptcontrolledcompaniesfromthis

requirementforreasonssimilartothoseusedinexemp@ngcontrolledcompaniesfromcertainaspectsofthecorporategovernancerulesofthena@onalstockexchangesandassocia@ons.But,we’llhavetowaittoseewhattheSECcomesoutwith.

–  Ac@onItem:Ifyouareacontrolledcompanyorcontrolacompany,youmaywishtosubmitcommentstotheSECassoonaspossibleonthisissueinordertoensuretheSEChassuchcommentsbeforeitbeginsdraYingexemp@onsforSOP.

Q&A

•  Q:Willins6tu6onalshareholdersgenerallycon6nuetovotefor(i.e.,inalignmentwith)theirporToliocompaniesonSayonPayproposalsinordertoprotecttheiractualand/orpoten6al401KorotherbusinessfromtheporToliocompanies?

•  A:Whilebusinessreali@esmays@llcreepintoins@tu@onalshareholders’vo@ngonSOP,itisimportanttorealizethattheSECandCongressareprobablylookingforaclearsepara@onbetweenvotesandbusinessinterests.Consequently,whiletheprac@cecoulds@llcon@nuewithSOP,weexpectitwillbesomewhatmuted,and,ifnot,thatthepoli@ciansmayeventuallytakesstepstoaddress.

Q&A

•  Q:Thenewrequirementtoreportrela6vepaylevelsoftheCEOagainst“allemployees”–howlikelydoyoubelievethiswillpassandwhatdoyoubelievewillbeincludedinthetotalcompensa6on?

•  A:ThisrequirementisincludedintheDodd‐FrankActassignedintolawbyPresidentObamaonJuly21,2010.Seeslide45intheoriginalPresenta@onformoreinforma@onaboutwhatisrequired.Keepinmindthat“totalcompensa@on”willbeasdefinedforpurposesoftheSummaryCompensa@onTableintheproxy.Thisalonewillimposeaheavyburdenoncompanieswithalargenumberofemployeesand/ormul@‐na@onalopera@onstogatheranddeterminethetotalcompensa@onforeachemployee.Companieswillneedtodeterminethe“totalcompensa@on”foreachemployeeotherthantheCEOsothattheycanthendeterminethemedianamountoftotalcompensa@onforallemployees.

•  A:Addi@onalconcernswiththisprovisioninclude:–  thea]en@onthisra@omayreceivefromthepressandthepushforexplana@onsthatmay

result–  Possibleissuesforcompanieswhoprovide“totalrewards”informa@ontotheiremployees,

sincethesecalcula@onsaresuretodiffer

UKPAYANDINDEXPERFORMANCE

Source:SayonPay,SixYearsOn,LessonsfromtheUKExperience,areportbyRailpenInvestmentsandPIRCLimited(September2009)

Source:SayonPay,SixYearsOn,LessonsfromtheUKExperience,areportbyRailpenInvestmentsandPIRCLimited(September2009)