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The Glass Lewis Approach

The Glass Lewis Approach. Examines plan exhaustively Probes economic costs relative to financial performance Converts everything to a common “currency” so comparisons are valid Considers grant and cancel rates, not just absolute program size to determine annual cost

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The Glass Lewis Approach

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  1. The Glass Lewis Approach • Examines plan exhaustively • Probes economic costs relative to financial performance • Converts everything to a common “currency” so comparisons are valid • Considers grant and cancel rates, not just absolute program size to determine annual cost • Measures the program cost compared to the value of the business being operated • Ensures continual involvement of shareholders • Rebukes excessive past granting patterns

  2. Program Size Analyses Program Features Analyses Methodology Overview Program Cost Analyses Numerical Score Pass/Fail

  3. Program Cost Estimated Total Annual Cost Annual expected options grant Cost per option Estimated option cost X = (weighted average of 3-year historical grant data) (Merton) Estimated other equity award cost Annual expected grant of other equity awards Cost per share X = (Market) (weighted average of 3-year historical grant data) Estimated other equity award cost Estimated option cost + = Estimated Total Annual Cost

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