1© 2010 The Corporate Library

2010 Mega-Grants Surveyby Greg Ruel and Michelle Lamb, Research AssociatesJuly 15, 2010

Introduc�on

In June 2009, The Corporate Library released a report �tled “Inves�ng in Corporate Governance: Return of the Mega-Grant.” For purposes of this report, the term mega-grant refers to any single grant of at least 500,000 stock op�ons. The Corporate Library is releasing this updated mega-grant alert one year a�er “Return of the Mega-Grant,” with stock op�on grants to CEOs at companies like Sirius XM Radio Inc., Oracle Corpora�on, and Ford Motor Company all greatly exceeding op�on grants featured in last June’s report. In this alert, we explore the reasons for these extraordinary op�on grants, the prevalence of such grants over �me, and their current and poten�al no�onal profits.

Mega-Grants on the Rise

Over the past three years, the prac�ce of gran�ng large amounts of stock has been on the rise. The percentage of companies gran�ng op�ons in general dipped from nearly 55 percent to 32 percent from 2007 to 2008, yet rebounded to over 50 percent the following year. This represents a real decline in stock op�on grants in that middle year, possibly due to wide recogni�on of the market vola�lity and a preference for awarding full value stock during that �me. In fiscal 2009, however, depressed stock prices provided a ripe opportunity for a return to stock op�ons. In 2009 we also see that both the percentage of companies gran�ng mega-grants and the por�on of op�on grants that are “mega” increased (see Table 1). The number of op�ons being given through such mega-grants has also been on the rise over the three year period, with 2009’s average nearly double that of 2008, and again with 2008 having shown a dip in this metric compared to fiscal 2007.

Table 1: Mega-Grant Trends Over Time (Source: The Corporate Library)

# of companies gran�ng op�ons

# of op�on grants

# of mega-grants

% of op�on grants

that were “mega”

% of companies gran�ng op�ons

% of companies gran�ng

mega-grants*

Median # op�ons in mega-

grant

Average # op�ons in

mega-grant

2009 1,478 1,861 176 9.46% 50.48% 10.62% 802,000 1,847,780

2008 1,106 2,308 181 7.84% 32.01% 7.87% 750,000 983,905

2007 1,559 1,991 116 5.83% 54.86% 6.93% 750,000 1,060,860

*This is calculated as the number of companies gran�ng mega-grants divided by the number of companies gran�ng op�ons.

The Corporate Library’s

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These metrics seem to reflect choices made in reac�on to the economic downturn – that companies are responding to lower stock prices by gran�ng more op�ons in order to maintain a target payout to their CEOs. We will see, however, in our analysis below that the companies that awarded the top ten mega-grants in 2009 gave many reasons for doing so. We will explore some of the issues illustrated in those examples as well as highlight some of the be�er alterna�ves compensa�on commi�ees should consider.

Depressed Prices at Grant Reap Huge Rewards

Table 2 below gives the details of the top ten stock op�on grants in 2009. The “grant date value” is a company-provided figure drawn from the SEC-required “Grants of Plan-Based Awards Table” that is a mandated part of each company’s proxy statement. We collected stock price details as of May 24, 2010, and calculated the amount of profit CEOs had already made. The depressed stock prices at which these op�ons were granted have resulted in an average paper profit of almost $23 million for these ten CEOs.

Table 2: Mega-Grants Immediate Gain on 5/24/10 (Source: The Corporate Library)

CEO

Number of op�ons awarded

Exercise Price

Date of Grant

Grant Date Value

Close on

5/24/10Profit/gains on 5/24/10

Sirius XM Radio Inc. Mel Karmazin 120,000,000 $0.43 6/30/09 $35,209,440 $1.01 $69,600,000*

MoneyGram Interna�onal, Inc. Anthony Ryan 8,000,000 $1.74 5/6/09 $9,039,800 $2.66 $7,360,000

Oracle Corpora�on Lawrence J. Ellison 7,000,000 $20.73 7/3/08 $78,421,000 $22.28 $10,850,000

Tenet Healthcare Corpora�on Trevor Fe�er 5,500,000 $1.14 2/26/09 $3,905,000 $5.54 $24,200,000*

Ford Motor Company Alan Mulally 5,000,000 $1.96 3/11/09 $5,050,000 $11.01 $45,250,000*

Standard Pacific Corp. Kenneth Campbell 3,000,000 $4.10 6/2/09 $4,890,000 $4.68 $1,740,000

Nabors Industries Ltd. Eugene M. Isenberg 3,000,000 $9.87 2/25/09 $8,831,700 $17.08 $21,630,000*

Move, Inc. Steven H. Berkowitz 3,000,000 $1.52 1/21/09 $3,237,600 $1.88 $1,080,000

Sprint Nextel Corpora�on Daniel R. Hesse 2,951,389 $3.59 2/25/09 $9,769,097 $4.79 $3,541,667

Starbucks Corpora�on Howard Schultz 2,714,947 $8.64 11/17/08 $12,391,522 $25.07 $44,606,579*

Average $22,985,825

Total $229,858,246 * These profits are greater than the disclosed es�mated grant date value.

3-year Chart of the S&P 500 Index

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The no�onal profits of five of these ten mega-grants already exceed the es�mated grant date values that were disclosed at the �me of grant. Of the larger sample of all mega-grants reported for the 2009 fiscal year, approximately 53 percent of grants already have no�onal profits in excess of their es�mated grant date values.

While significant paper profits have been seen already, they are much smaller than the profits that could be made if stock prices rebounded to the high for the 12 months ending May 24, 2010. In this scenario, the average poten�al profit is more than $36 million.

Table 3: Mega-Grants Poten�al Gains based on 12-Month High (Source: The Corporate Library)

CEO

Number of op�ons awarded

Exercise Price

Date of Grant

Grant Date Value

12-month high at

5/24/10

Poten�al profit if stock price reaches

12- month high

Sirius XM Radio Inc. Mel Karmazin 120,000,000 $0.43 6/30/09 $35,209,440 $1.23 $96,000,000

MoneyGram Interna�onal, Inc. Anthony Ryan 8,000,000 $1.74 5/6/09 $9,039,800 $3.79 $16,400,000

Oracle Corpora�on Lawrence J. Ellison 7,000,000 $20.73 7/3/08 $78,421,000 $26.35 $39,340,000*

Tenet Healthcare Corpora�on Trevor Fe�er 5,500,000 $1.14 2/26/09 $3,905,000 $6.30 $28,380,000

Ford Motor Company Alan Mulally 5,000,000 $1.96 3/11/09 $5,050,000 $14.46 $62,500,000

Standard Pacific Corp. Kenneth Campbell 3,000,000 $4.10 6/2/09 $4,890,000 $6.58 $7,440,000

Nabors Industries Ltd. Eugene M. Isenberg 3,000,000 $9.87 2/25/09 $8,831,700 $26.87 $51,000,000

Move, Inc. Steven H. Berkowitz 3,000,000 $1.52 1/21/09 $3,237,600 $3.12 $4,800,000

Sprint Nextel Corpora�on Daniel R. Hesse 2,951,389 $3.59 2/25/09 $9,769,097 $5.44 $5,460,070*

Starbucks Corpora�on Howard Schultz 2,714,947 $8.64 11/17/08 $12,391,522 $27.85 $52,154,132

Average $36,347,420

Total $363,474,202

* These two are the only companies where the grant date value exceeds the no�onal profit if the stock rebounded to a 12-month high.

In each case, the grant date exercise price of the stock op�ons is well below the stock price 12-month high. In most cases, the exercise price on the mega-grants is but a frac�on of the 12-month high, meaning the execu�ve need only to return the company to its highest value point in the last year in order to be rewarded with mul�ple millions.

If the price did rebound to the 12-month high, all but Oracle and Sprint would see their no�onal profits rise above the es�mated grant date values – in the most extreme case up to a level more than seven �mes the es�mate (at Tenet Healthcare). Notably, Oracle’s grant date value, at over $78 million, was the highest of all 2009 op�on grants for proxy statements we processed by May 24, 2010. In the sec�ons below, each company in the top ten is categorized according to the reasons given for the mega-grant.

4© 2010 The Corporate Library

Five Common Reasons for Mega-Grants1) En�cement to Extend Current Employment Agreement

On June 30, 2009, Mel Karmazin received a grant of 120 million stock op�ons, his first equity grant since joining Sirius Satellite Radio in 2004. The op�on grant is 15 �mes the next highest number of op�ons granted in the last year for any company in our coverage universe. The copious award came with a bargain basement exercise price of just $0.43 cents per stock op�on. Mr. Karmazin forfeited 30 million non-qualified op�ons in May 2009, which were largely vested but underwater with an exercise price of $4.72 a share. The expira�on of Mr. Karmazin’s original employment agreement provided sufficient grounds for the compensa�on commi�ee to perform what ul�mately amounts to a stock op�on exchange. Thirty million op�ons with an exercise price of $4.72 and li�le chance of profitability were swapped for 120 million op�ons with an exercise price of just $0.43. While the compensa�on commi�ee considers this a “nego�a�on,” any nego�a�ng that took place seems one-sided. According to Sirius XM’s 2010 proxy statement:

The terms of Mr. Karmazin’s employment were established by nego�a�ons between Mr. Karmazin and the Compensa�on Commi�ee. The Compensa�on Commi�ee did not retain an independent compensa�on consultant specifically to advise them in the nego�a�on of Mr. Karmazin’s compensa�on arrangements or to assess the reasonableness of the compensa�on arrangements.

The grant of 120 million op�ons has no performance restric�ons a�ached to their ves�ng. Instead, 30 million op�ons a year will vest over the next four years as long as Mr. Karmazin remains CEO of Sirius XM Radio. Actually, if he is terminated he will receive them even faster, as the ves�ng of these op�ons will accelerate for any reason other than a termina�on with cause. The grant date value of Mr. Karmazin’s op�ons was about $35.2 million. With a closing price of $1.01 as of May 24, 2010, he has already made a paper profit of $69.6 million on these op�ons less than one year a�er they were granted. Taking the stock at its 12-month high of $1.23, the op�on grant would have a value of about $96 million.

Allowing the CEO a “do-over” on equity when the exercise price proves too difficult to achieve and improve upon sends the wrong message to management and, therefore, does li�le to benefit shareholders looking for long-term growth in the company stock price. Indeed, Mr. Karmazin is likely to reap huge gains from this op�on grant as long as he is able to keep the company afloat in any capacity, as he will benefit greatly from even the most modest gains in company share price.

2) The Golden Hello

The hiring of Anthony Ryan as CEO of MoneyGram Interna�onal, Inc. in January 2009 was an internal promo�on of the exis�ng chief opera�ng officer. Judging by the stock grant he received in his first year, one might think this was a superstar CEO from another company being lured with all the bells and whistles of an old-fashioned golden hello when, in fact, Mr. Ryan had never previously served as a chief execu�ve. Before the start of 2009, Mr. Ryan had 116,575 outstanding stock op�ons with exercise prices ranging from $15.62 to $29.26. In May 2009, with the company languishing a�er a disastrous 2008 performance, he received a grant of eight million op�ons with an exercise price of only $1.74. The grant date value of the award was more than $9 million and the stock price had risen 87 percent by March 24, 2010. What’s more, Mr. Ryan resigned from the board and

5© 2010 The Corporate Library

from his roles as president and CEO less than four months a�er this op�on grant, nega�ng the en�re purpose of a long-term reten�on award. According to the company’s 2010 proxy statement:

In January 2009, the Board deemed it advisable and in the best interests of the Company to separate the roles of Chairman and CEO and appointed Pamela H. Patsley as Execu�ve Chairman of the Company on a part-�me basis and Mr. Ryan as President and CEO of the Company.

However, just nine months later when Mr. Ryan resigned, the board had a change of heart. Pamela H. Patsley was appointed chairman and CEO of MoneyGram and received an addi�onal 6.3 million stock op�ons in addi�on to two previous mega-grants in January and May 2009. She received 12 million stock op�ons total in 2009 with a grant date value of more than $16.6 million in her first par�al year as CEO. In connec�on with Mr. Ryan’s separa�on with the company, he forfeited the unvested por�on of his stock grant, more than 7.4 million stock op�ons in all.

Another example of a golden hello can be seen at Move, Inc. When Steven H. Berkowitz became CEO of the company in January 2009, he was granted three million stock op�ons pursuant to his new employment agreement. These op�ons were granted at a rather depressed exercise price of only $1.52, among the lowest points for the stock price in the previous five years. Seven hundred fi�y thousand of these op�ons were immediately vested and exercisable, and the remainder of the grant vests monthly beginning in January 2010. This op�on grant combines with 1.8 million restricted shares Mr. Berkowitz also received as part of his ini�al employment agreement. In the event of termina�on without cause, Mr. Berkowitz will receive accelerated ves�ng of these awards with a three-year window to exercise stock op�ons. Mega-grants have been a component of costly golden hello packages for years. When combined with �me-based restricted stock, these op�ons (which typically have no performance condi�ons a�ached) are a form of pay-for-pulse rather than pay-for-performance. These inducement op�ons will prove profitable with even the most moderate market correc�ons and generally vest whether the CEO remains as part of the management team or not.

3) Make Whole on Equity Granted by Former Employer

A�er the resigna�on of CEO Jeffrey V. Peterson, whose tenure lasted less than a year, Standard Pacific Corp. selected a partner, Kenneth L. Campbell, at an affiliate of its largest investor to be its new CEO and president. Mr. Campbell’s employment agreement includes such favorable terms as reloca�on expenses, cash bonus, termina�on payments of three �mes salary, as well as three separate mega-grants totaling six million stock op�ons. However, Standard Pacific’s 2008 equity incen�ve plan dictates that no more than three million stock op�ons can be granted to any one execu�ve in a calendar year.

The compensa�on commi�ee explained its efforts to double the maximum equity grant allowable under the plan by sta�ng that they wanted to make Mr. Campbell whole on a similar equity holding at the company he was depar�ng. This stock grant was ul�mately brought before shareholders and passed with over 70 percent support. Despite the enormity of the grant, the compensa�on commi�ee was able to align shareholder and management interests by premium pricing 83 percent of the op�on award.

The first million op�ons have an exercise price of $2.71, which was the fair market value at the �me of the op�on grant. But the second installment of this tranche grant is at a 34 cent premium over the first grant, at an exercise price of $3.05, and would theore�cally remain underwater un�l Standard Pacific’s stock price sees

6© 2010 The Corporate Library

posi�ve growth. The third tranche of the grant is three million op�ons at an exercise price of $4.10, meaning the stock price would have to rise more than 50 percent over the grant date stock price in order for this op�on grant to realize any value. While six million stock op�ons at such prices may be too much to grant any one execu�ve under any circumstances, the compensa�on commi�ee can at least boast some alignment with the interests of shareholders for a great majority of the op�ons granted. However, the premium pricing here is really not sufficient given the current climate. With a stock price of more than $20.00 only two years prior to the grant, se�ng targets at just $3.00 and $4.00 is not a challenging long-term goal for a top execu�ve.

4) Stock Op�on Grants as a Form of Bonus Payment

Nabors Industries Ltd. and CEO Eugene M. Isenberg were featured prominently in The Corporate Library’s 2009 CEO Pay Survey. Mr. Isenberg, who has been CEO of Nabors Industries for the past 23 years, received more than $79 million in total realized compensa�on last year including a bonus of almost $59 million. In fact, his bonus formula, which awards him a percentage of company cash flow, had resulted in about $625 million in aggregate bonuses over his tenure, according to the company’s 2009 proxy statement. In 2009, Mr. Isenberg received a por�on of his nearly $20 million bonus in the form of three million fortuitously-�med stock op�ons.

In the last five years, Nabors Industries’ stock price has closed below ten dollars only twice at the end of a month (in February and March of 2009) and in each case closed only just under that amount. Typically, Nabors Industries’ shares trade much closer to the exercise prices of his 13 million outstanding op�ons, which range from $13.53 to $35.81. The three million op�ons Mr. Isenberg received in 2009 were granted in February at an exercise price of just $9.87. What’s more, this op�on grant did not follow the typical ves�ng pa�ern of previously granted stock op�ons. While op�ons typically vest on a four year schedule, half of Mr. Isenberg’s 2009 op�on grant vested immediately, with the remaining 1.5 million op�ons ves�ng in equal installments over the next two years. The low exercise price of these stock op�ons coupled with the accelerated ves�ng schedule must have made it very simple for Mr. Isenberg to choose to receive a por�on of his bonus in op�ons. Nabors’ stock price had already risen to $17.08 by May 24, 2010, meaning the vested por�on of his op�on award was already worth almost $11 million, and paper profits on the total op�on grant amounted to more than $21.6 million. At the 12-month high stock price of $26.87, the poten�al profit on the stock op�on grant would be an even $51 million. Indeed, accep�ng a por�on of his $19.9 million bonus in op�ons with basement level exercise prices and accelerated ves�ng was certainly in the best interest of the CEO, though difficult to ra�onalize as being in the interest of shareholders.

5) Annual Op�on Grants or Business-as-Usual

For some companies, mega-grants are as commonplace as annual mee�ngs or 10-K filings. For example, Oracle Corpora�on’s most recent proxy statement disclosed a grant to CEO Larry Ellison of seven million stock op�ons with a grant date value of more than $78 million. The year before, he received seven million op�ons worth $71.4 million, and in the year prior to that he received seven million op�ons with a grant date value of over $50 million. Regardless of the current stock price, Mr. Ellison is ge�ng his seven million op�ons a year and there is nary a performance metric ever a�ached to these grants. The profit from these op�ons for just the last three years alone is a staggering $849,724,728. At Tenet Healthcare Corpora�on, seven-year CEO Trevor

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Fe�er received a mega-grant of 5.5 million �me-ves�ng stock op�ons in 2009. Though the op�ons are �me-ves�ng, the compensa�on commi�ee did make an adjustment that would not be seen at Oracle. Because the exercise price of Mr. Fe�er’s op�ons was only $1.14, down from customary exercise prices of between $5.00 and $28.00, Tenet decided to reduce the grant value of the grant. From its 2010 proxy:

The Commi�ee elected to reduce the grant value of Mr. Fe�er’s long-term incen�ve compensa�on rela�ve to the prior year by 34% in order to take into account the company’s stock price performance in 2008 and other factors discussed under “Special Factors Considered in Response to Depressed Economic and Market Condi�ons” beginning on page 32.

While Tenet Healthcare should at least get some credit for making a logical downward adjustment, this adjustment was not adequate; it s�ll resulted in 5.5 million op�ons being granted at the $1.14 price. With a share price of more than $6.00 only five months before the grant, this was s�ll se�ng the stage for a big payday. As of May 24, 2010, when the stock price was $5.54, Fe�er had already seen over $24 million in profits, well above the grant date value.

At Ford Motor Company, CEO Alan Mulally received a grant of five million op�ons with an exercise price of only $1.96. His more than nine million outstanding op�ons are generally priced between $6.14 and $8.28, repea�ng a trend we are seeing among these mega-grants where strike prices are far below historical op�on grants without a reflec�ve drop in the number of op�ons granted. It is difficult to believe the claim in Ford’s 2010 proxy statement that the grant will “align execu�ve interests with shareholder interests.” A�er all, shareholders would be much be�er off if Mr. Mulally made money on the op�ons with a strike price between $6.14 and $8.28 than if he made more than $5 million simply by raising the stock price to $3.00. With a closing stock price of just more than $11.00 on May 24, 2010, Mr. Mulally’s op�on grant had already realized a paper profit of more than $45 million.

At Sprint Nextel Corpora�on and Starbucks Corpora�on, both CEOs received nearly three million �me-vested stock op�ons. At Sprint Nextel, the exercise price of $3.59 on CEO Daniel R. Hesse’s op�on grant is far below his current outstanding op�ons, which have strike prices ranging from $6.52 to nearly $19.47. Two of the three tranches of op�on grants are premium priced, however, with a requirement that the stock prices reach 120 percent and 140 percent, respec�vely, in order for the op�ons to vest. At Starbucks Corpora�on, the $12.4 million grant date value of CEO Howard Schultz’s latest op�on grant exceeds the grant date value of grants received in the two years prior ($7.8 million and $10.6 million, respec�vely). What’s more, the op�ons have a strike price of just $8.64 while the prices of his outstanding equity approach $37.00. The paper profit on Mr. Schultz’s op�on grant was $44.6 million as of the May 24, 2010, close date.

Clearly business-as-usual is not appropriate when stock prices are depressed, and a�empts at premium pricing are not sufficient to counteract the impact of the overall market rebound.

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Conclusion

As the details of these op�on grants show, the reasons companies give for gran�ng these mega-grants can vary and so can the terms of the op�ons. What should be constant is a proper alignment of the grants with the interests of shareholders. Replacing outstanding underwater op�ons with grants of stock at basement-level strike prices is only in the interest of the execu�ve. This is compounded by the fact that most o�en the execu�ve will get to keep this award if he is terminated for anything other than cause. In many cases, he can also keep it when he decides to re�re, leaving him with valuable op�ons at cheap strike prices on which he can profit while someone else runs the company.

Some�mes, given circumstances of a CEO’s pay structure and past grants, there is simply no ra�onale for addi�onal grants. If a CEO is already a large shareholder, the purpose of another op�on grant (to �e management interests to shareholders’) is made moot. However, if this is not the case, there are be�er ways to structure a stock op�on grant so that it remains an effec�ve incen�ve, even in a depressed market.

While we do see some examples of such best prac�ces even amidst the highest of these op�on grants, they are rare and insufficient. One example was the reduc�on of historic grant date values. Lowering the grant date value of the awards makes sense when the share price has taken a big hit, since giving a CEO more op�ons to meet a previously established grant date value only rewards him for a job not well done, or simply an overall market rebound. Another op�on is premium pricing. Premium pricing the op�ons in order for them to vest in tranches at increasingly challenging targets is a simple and effec�ve means of marrying execu�ve and shareholder interests – the rise in stock price needed to profit from the op�ons benefits both the CEO and company shareholders. However, it must be done to a degree that it has a true mo�va�ng impact. Premiums of 120 percent or 140 percent are not adequate when the stock is at a five-year low. As we saw at Sprint/Nextel, such premiums s�ll result in an undeservedly large payday due to a gain in stock price that overshadows the premium-priced targets.

Another op�on for compensa�on commi�ees is to set the exercise price at the company’s 12-month trailing stock price, or even the 12-month average stock price, when it is clear that the company’s stock price is currently depressed due to overall market condi�ons. And finally, as a last resort, the number of op�ons granted should at least be held to the level of the prior year, when the stock had some value.

In general, throughout the analysis of the terms of and disclosed ra�onales for these stock op�on grants, there seemed to be a lack of true nego�a�ng occurring between CEOs and compensa�on commi�ees. While it is in an incoming CEO’s interest to nego�ate on behalf of himself and his family, it is the board’s job to nego�ate on behalf of the shareholders. In most of these nego�a�ons, it is difficult to see where the compensa�on commi�ee is resis�ng at all. Rewarding individuals for “performance” while failing to consider the factors involved results in wasted company assets and a breakdown of the systems of corporate accountability. The CEOs in these examples received op�ons that effec�vely have no performance requirements at all and some�mes have perverse incen�ves to leave the company in order to see profits more quickly. This is a disservice to management and certainly a disservice to shareholders.

9© 2010 The Corporate Library

Appendix A

Table 4 illustrates the compensa�on commi�ees at the ten companies discussed in this report. In addi�on to member names and tenure, the table also provides a look at the percentage of votes withheld the last �me the director was up for board elec�on. The median percentage of withhold votes for directors in 2009 was 3.24 percent. The Corporate Library considers a withhold vote higher than 10 percent to be significant.

The average withhold vote for these compensa�on commi�ee members is 12.36 percent. Exactly 20 of the 33 ac�ve directors with votes available are seeing over 10 percent withhold votes, ranging as high as 48 percent. This gives a clear signal that compensa�on prac�ces at these firms may warrant a�en�on.

Table 4

Director NameCommi�ee

Posi�onCommi�ee

StatusRe�red

Date

Votes Withheld

(%) Proxy

Board Tenure (years)

Sirius XM Radio Inc. Lawrence F. Gilber� Chairman Ac�ve 20.84 2010 17

James P. Holden Member Ac�ve 20.71 2010 9

Jack A. Shaw Member Ac�ve 20.67 2010 2

Warren N. Lieberfarb Member Re�red 12/18/08 1.52 2007

Jeffrey D. Zients Member Re�red 7/28/08 8.21 2009

Leon D . Black Member Re�red 12/18/08 51.84 2010

MoneyGram Interna�onal, Inc. Seth W. Lawry Chairman Ac�ve 2

Sco� L. Jaeckel Member Ac�ve 2

Jess T. Hay Member Re�red 5/26/10 2.94 2009

Judith K. Hofer Member Re�red 3/25/08 1.84 2005

Linda Johnson Rice Chairman Re�red 3/25/08 0.54 2007

Robert C. Krueger Member Re�red 3/25/08 1.53 2005

Timothy R. Wallace Member Re�red 3/25/08 0.23 2007

Oracle Corpora�on Jeffrey S. Berg Chairman Ac�ve 28.55 2009 13

Hector Garcia-Molina Member Ac�ve 22.06 2009 9

Naomi O. Seligman Member Ac�ve 23.99 2009 5

Tenet Healthcare Corpora�on Edward A. Kangas Chairman Ac�ve 5.5 2010 7

Brenda J. Gaines Member Ac�ve 8.49 2010 5

Richard R. Pe�ngill Member Ac�ve 4.54 2010 6

J. McDonald Williams Member Re�red 5/5/10 13.28 2009

Ford Motor Company Richard A. Manoogian Chairman Ac�ve 12.12 2010 9

Ellen R. Marram Member Ac�ve 9.23 2010 22

John L. Thornton Member Ac�ve 9.28 2010 14

Anthony F. Earley Member Ac�ve 13.28 2010 1

John R. H. Bond Member Re�red 5/10/07 13.64 2008

Standard Pacific Corp. Bruce A. Choate Chairman Ac�ve 17.82 2010 3

James L. Do� Member Ac�ve 15.39 2010 15

F. Pa� Schiewitz Member Ac�ve 14.79 2010 3

Larry D. McNabb Chairman Re�red 5/13/09 24.2 2008

10© 2010 The Corporate Library

Director NameCommi�ee

Posi�onCommi�ee

StatusRe�red

Date

Votes Withheld

(%) Proxy

Board Tenure (years)

Standard Pacific Corp. (cont.) J. Wayne Merck Member Re�red 5/13/09 2.26 2007

Frank E. O’Bryan Member Re�red 5/9/07 4.51 2004

Jeffery V. Peterson Member Re�red 5/9/07 0.58 2006

Nabors Industries Ltd. Mar�n J. Whitman Member Ac�ve 7.18 2008 19

Myron M. Sheinfeld Member Ac�ve 6.93 2008 22

James L. Payne Member Ac�ve 47.7 2010 11

John V. Lombardi Chairman Ac�ve 48.05 2010 1

William T. Comfort Member Ac�ve 40.43 2009 2

Hans W. Schmidt Member Re�red 6/30/09 9.58 2007

Alexander M. Knaster Member Re�red 10/14/08 9.46 2007

Move, Inc. Bruce G. Willison Chairman Ac�ve 35.47 2010 8

Joe F. Hanauer Member Ac�ve 35.47 2010 14

Fred D. Anderson Member Ac�ve 5

Sprint Nextel Corpora�on Gordon M. Bethune Chairman Ac�ve 11.33 2010 6

V. Janet Hill Member Ac�ve 10.61 2010 5

William R. Nu� Member Ac�ve 10.47 2010 2

Rodney O’ Neal Member Ac�ve 10.48 2010 3

William H. Swanson Chairman Re�red 5/13/08 7.45 2007

Ralph V.Whitworth Member Re�red 10/22/08 0.97 2008

Linda Koch Lorimer Member Re�red 5/13/08 3.51 2007

William E. Kennard Member Re�red 3/1/07 6.87 2006

Starbucks Corpora�on Barbara Bass Chairman Ac�ve 1.85 2010 14

Mellody L. Hobson Member Ac�ve 0.83 2010 5

Kevin R. Johnson Member Ac�ve 0.78 2010 1

James G. Shennan Member Ac�ve 1.76 2010 20

Javier G. Teruel Member Ac�ve 4.35 2010 5

Myron E. Ullman Member Ac�ve 0.93 2010 7

Olden Lee Member Re�red 3/24/10 1.34 2010

William W. Bradley Member Re�red 3/24/10 1.45 2010

Howard P. Behar Non-vo�ng Re�red 3/19/08 2.4 2007

Table 4 (cont.)

11© 2010 The Corporate Library

Appendix B

Company Name Compensa�on Consultant Consultant Text

Sirius XM Radio Inc. None The Compensa�on Commi�ee did not employ a compensa�on consultant in 2009, relying instead on its own significant experience in making execu�ve compensa�on-related decisions…. The Compensa�on Commi�ee did not retain an independent compensa�on consultant to advise them in the nego�a�on of Mr. Karmazin’s compensa�on arrangements or to assess the reasonableness of the compensa�on arrangements. The Compensa�on Commi�ee concluded that, in its business judgment, Mr. Karmazin’s profile, qualifica�ons and experience, par�cularly in radio, were uniquely suited to our needs, and that the compensa�on, including the base salary and stock op�on components of the compensa�on, was, taken as a whole, appropriate under the circumstances.

MoneyGram Interna�onal, Inc. Hewi� Associates, LLC The Human Resources and Nomina�ng Commi�ee currently u�lizes the services of Hewi� Associates, LLC (“Hewi�”) as its compensa�on consultant. In 2009, Hewi� assisted the Human Resources and Nomina�ng Commi�ee with an evalua�on of the Company’s peer group and execu�ve compensa�on ma�ers.

Oracle Corpora�on Compensia, Inc. The Compensa�on Commi�ee selected and directly engaged Compensia, Inc. as its outside advisor for fiscal 2009 to provide the Compensa�on Commi�ee with insights and market data on execu�ve and director compensa�on ma�ers, both generally and within our industry. Compensia also assisted the Compensa�on Commi�ee with a peer company execu�ve compensa�on comparison. Compensia did not determine or recommend any amounts or levels of our execu�ve compensa�on for fiscal 2009.

Tenet Healthcare Corpora�on Frederic W. Cook and Co. The Commi�ee retains an independent outside consultant, Frederic W. Cook and Co…. to assist it by researching market compensa�on and advising the Commi�ee on execu�ve compensa�on decisions and plan design. In 2009, the Independent Consultant provided the Commi�ee with peer company, industry and general public company compara�ve execu�ve compensa�on data to assist the Commi�ee in making decisions on execu�ve compensa�on. A representa�ve of the Independent Consultant generally a�ends all mee�ngs of the Compensa�on Commi�ee.

12© 2010 The Corporate Library

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Company Name Compensa�on Consultant Consultant Text

Ford Motor Company Semler Brossy Consul�ng Group, LLC In 2009, the Commi�ee engaged Semler Brossy Consul�ng Group, LLC, an independent compensa�on consul�ng firm, to advise the Commi�ee on execu�ve compensa�on and benefits ma�ers. Semler Brossy is retained directly by the Commi�ee and it has the sole authority to review and approve of the budget of the independent consultant. Semler Brossy does not advise our management and receives no other compensa�on from us. The same Semler Brossy principal a�ended all nine of the Commi�ee mee�ngs in 2009. In addi�on, the Commi�ee relied on survey data provided by the Towers Perrin Execu�ve Compensa�on Database…. Towers Perrin does not assist the Compensa�on Commi�ee in determining or recommending compensa�on of execu�ve officers. Towers Perrin is retained by Ford management, not the Commi�ee.

Standard Pacific Corp. Steven Hall & Partners In 2009, the Commi�ee engaged Steven Hall & Partners to assist the Commi�ee in its analysis of execu�ve compensa�on. The Commi�ee also reviewed peer group compensa�on data during 2009,& historical Company compensa�on data, and other compensa�on data determined to be relevant by the Commi�ee. This data was used to evaluate whether the execu�ve officer discre�onary bonus amounts being considered for 2009 and the execu�ve compensa�on program being considered by the Commi�ee for 2010 were reasonable in rela�on to our historical prac�ces and compe��ve with the compensa�on being paid to similarly situated peer execu�ves.

Appendix B (cont.)