1. The Dbriefs Governance, Risk & Compliance series presents: 2015 proxy season highlights and other corporate governance developments Tom Ball, Senior Managing Director, Morrow & Co. LLC Maureen Bujno, Director, Deloitte LLP Robert Lamm, Senior Advisor to Deloitte LLP July 30, 2015

2. Copyright © 2015 Deloitte Development LLC. All rights reserved. Agenda 2015 proxy season highlights 2016 proxy season outlook Other topics impacting the governance landscape Board and management considerations Question and answer

3. Copyright © 2015 Deloitte Development LLC. All rights reserved. Increasing board efficiency and effectiveness Governance framework As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.www.deloitte.com/us/about

4. Copyright © 2015 Deloitte Development LLC. All rights reserved. Poll question #1 My company is classified as: Public Private Nonprofit Governmental Not applicable

5. Copyright © 2015 Deloitte Development LLC. All rights reserved. 2015 proxy season highlights Summary of shareholder proposal results by category Source: Institutional Shareholder Services (ISS) Note: Data is as of July 16, 2015 Corporate Governanace Executive Compensation Environmental & Social Voted on Passed Total proposals = 423 Voted on

6. Copyright © 2015 Deloitte Development LLC. All rights reserved. Summary of shareholder proposal results by category 2015 proxy season highlights Corporate GovernanceExecutive CompensationEnvironmental, Political, and Social Source: Institutional Shareholder Services (ISS) Note: Data is as of July 16, 2015

7. Copyright © 2015 Deloitte Development LLC. All rights reserved. 2015 proxy season highlights Proxy access Require independent board chairman Provide right to act by written consent Report on political spending/lobbying Most common shareholder proposals

8. Copyright © 2015 Deloitte Development LLC. All rights reserved. Poll question #2 Did your organization receive any shareholder proposals during the 2015 proxy season? Yes No No (my company is not public) Don’t know / Not applicable

9. Copyright © 2015 Deloitte Development LLC. All rights reserved. Corporate governance – shareholder proposals 2015 proxy season highlights Shareholder Proposal Number of proposals voted on in 2015 Number that passed Average Support Number of proposals voted on in 2014 Number that passed Average Support Proxy Access 844954.60%17533.80% Require Independent Board Chairman 62229.05%59331.14% Provide Right to Act by Written Consent 36239.41%28038.40% Amend Bylaws - Call Special Meetings 21442.39%13441.58% Reduce Supermajority Vote Requirement 11759.83%12867.27% Approve Recapitalization Plan for all Stock to Have One-vote per Share 11133.60%10025.82% Require a Majority Vote for the Election of Directors 11864.40%281658.21% Declassify the Board of Directors 11 78.05%171582.49% Amend Vote Requirement to Amend Bylaws 4368.90%000% Source: Institutional Shareholder Services (ISS) Note: Data is as of July 16, 2015

10. Copyright © 2015 Deloitte Development LLC. All rights reserved. Corporate governance – shareholder proposals 2015 proxy season highlights Proxy access What is it? Proposals put forth by management vs. investors −Most shareholder proposals were 3% / 3-year −Management proposals were split – 3% and 5% thresholds −Levels of support; outcome Proposal sponsors −New York City Comptroller Boardroom Accountability Project ◦Filed 75 resolutions based on three areas: climate change, board diversity and CEO pay −Pension funds, individuals, others

11. Copyright © 2015 Deloitte Development LLC. All rights reserved. Executive compensation – shareholder proposals 2015 proxy season highlights Source: Institutional Shareholder Services (ISS) Note: Data is as of July 16, 2015 Shareholder Proposal Number of proposals voted on in 2015 Number that passed Average Support Number of proposals voted on in 2014 Number that passed Average Support Pro-rata Vesting of Equity Awards 21032.31%23435.90% Clawback of Payments under Restatements 15028.42%3028.70% Stock Retention/Holding Period 11023.33%27022.22% Many executive compensation-related proposals were put forth by individuals Proposals related to CEO-median employee pay ratio appear to have been withdrawn; a few were deemed excludable by the SEC on the basis of Rule 14a- 8(i)(7) 1  Rule 14a-8(i)(7) provides that a proposal is excludable when the proposal deals with a matter relating to the company’s ordinary business operations 1 Source: Gibson, Dunn & Crutcher LLP

12. Copyright © 2015 Deloitte Development LLC. All rights reserved. Environmental, political & social – shareholder proposals 2015 proxy season highlights Source: Institutional Shareholder Services (ISS) Note: Data is as of July 16, 2015 Shareholder Proposal Number of proposals voted on in 2015 Number that passed Average Support Number of proposals voted on in 2014 Number that passed Average Support Report on Lobbying Payments and Policy 30025.40%38025.88% Report on Political Contributions 26033.33%45130.24% Report on Methane Emissions Management and Reduction Targets 23022.70%20024.57% Report on Sustainability19030.90%11029.97% Report on Financial Risks of Climate Change 11021.66%9022.07% Prohibit Political Spending/Shareholder Approval of Political Spending 8013.30%1407.75% Adopt Policy and Report on Board Diversity 4015.05%2025.10% Report on Human Rights Risk Assessment Process 409.25%8024.62%

13. Copyright © 2015 Deloitte Development LLC. All rights reserved. Environmental, political & social – shareholder proposals 2015 proxy season highlights Report on lobbying payments and policy and report on political contributions Many investors seek reports that include lobbying payments (federal and state), payments to trade associations used to lobby, political contributions, and payments to tax-exempt organizations that write and endorse model legislation Push for SEC to adopt rule requiring political expenditure disclosure by all public companies; petition has received record level support Environmental and sustainability reporting Increased Catholic investor activity −Pope Francis’s encyclical; a call to action on global warming −Catholic groups submitted 12 environmental related proposals at the largest 250 U.S. companies. Proposals called for reports on sustainability and climate-change risk, creation of targets for greenhouse-gas emissions, appointing directors with environmental expertise, etc.

14. Copyright © 2015 Deloitte Development LLC. All rights reserved. Poll question #3 Which of the following do you believe will be the most significant hot topic in the 2016 proxy season? Pay ratio disclosure Proxy access and rules for electing directors Environmental and sustainability reporting Leadership structure Board diversity policies Don’t know / Not applicable

15. Copyright © 2015 Deloitte Development LLC. All rights reserved. What could next year hold? 2016 proxy season outlook A continued focus on: Shareholder activism Proxy access −Board composition – consideration to tenure, board diversity, refreshment practices, and skills/expertise Proxy disclosure enhancements Environmental and social issues Majority voting

16. Copyright © 2015 Deloitte Development LLC. All rights reserved. Other topics that may impact the governance landscape Shareholder engagement and shareholder activism −Potential for increased focus on retail investors (case-by-case) Asset managers send letters to CEOs, shareholders Board diversity −Thirty Percent Coalition’s “Adopt a Company” campaign regarding companies with no female board directors; filed 25 board diversity resolutions for 2015 −Proponents seek corporate commitments to gender diversity and progress reports on board composition changes Bylaw and charter provisions – impact on shareholder rights

17. Copyright © 2015 Deloitte Development LLC. All rights reserved. SEC activity −Mary Jo White’s viewpoint on shareholder engagement −Concept release on audit committee disclosure requirements −Dodd-Frank implementation pending ◦Pay ratio ◦Pay-for-performance ◦Clawback policies ◦Hedging policies Other topics that may impact the governance landscape

18. Copyright © 2015 Deloitte Development LLC. All rights reserved. Board and management considerations Conduct a vulnerability assessment of company and board practices in light of shareholder interests and consider a response plan for shareholder proposals Understand mix of shareholder base and consider respective approach for outreach Review policies and criteria related to board selection, including diversity Assess current levels of disclosures and opportunities for enhancement Be aware of any voting policy changes put forth by proxy advisory firms Prepare for Dodd-Frank requirements effective 2016, 2017

19. Copyright © 2015 Deloitte Development LLC. All rights reserved. Poll question #4 Overall, what level of impact do you think engaging with shareholders has on mitigating proposals being submitted? High impact Moderate impact Low impact Don’t know / Not applicable

20. Question and answer

21. Join us August 27 at 2 PM ET as our Governance, Risk & Compliance series presents: When risk drives performance: Leveraging the extended enterprise for operational excellence

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23. Copyright © 2015 Deloitte Development LLC. All rights reserved. Tom Ball Senior Managing Director Morrow & Co. LLC tomball@morrowco.com Maureen Bujno Director Center for Corporate Governance Deloitte LLP mbujno@deloitte.com Robert B. Lamm Senior Advisor to Deloitte LLP Center for Corporate Governance rlamm@deloitte.com Contact info

24. Copyright © 2015 Deloitte Development LLC. All rights reserved. This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation.

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