SCHN 2017 Proxy Statement

Compensation Discussion and Analysis and cash flow but also as being critical to future Company performance and shareholder value. For fiscal 2017: • Target for Adjusted EPS at $0.84 was set significantly above the fiscal 2016 result of $0.53 • For the safety metrics, the performance targets reflected relative improvements in the safety metrics from their respective fiscal 2016 levels, except for safety metrics for which the fiscal 2016 achieved levels did not represent the best result during the prior five years, in which case the 0.25x payout target was set at the best achieved safety metric level within the five-year historical period, and the 0.00x payout target was set at the fiscal 2016 achieved levels. • In fiscal 2015 and 2016, the Company identified and announced $95 million of annual cost savings and productivity initiatives to be fully achieved by the end of fiscal 2017. The cost savings metric target for fiscal 2017 was set at $17.3 million, reflecting the amount that remained to be achieved. • The target for adjusted operating cash flow for fiscal 2017 was based on assumptions regarding improved operating margins and working capital, and debt reduction. • The non-income statement metrics (i.e., safety performance, cost savings, and operating cash flow) were capped at 0.5x in the event adjusted earnings per share were negative. Aligned with our strong performance, for fiscal 2017, the CEO’s achievement under the APBP was calculated at 2.35x. The following table shows the fiscal 2017 APBP goals and the results of each goal: Fiscal 2017 APBP Results Financial Performance Goal and Management Objectives Metric 0.0x 0.25x 1.00x 2.00x 3.00x Results Payout Multiple Weighting Total Adjusted EPS (1) $ — $0.27 $0.84 $ 1.38 $ 1.68 $ 1.65 2.90 50% Safety: AMR TCIR (2) 4.10 3.62 3.26 2.72 2.53 4.31 DART (2) 2.21 2.15 1.99 1.66 1.55 2.54 LTIR (2) 0.87 0.85 0.83 0.74 0.71 0.78 AMR Average Multiple 0.52 SMB TCIR (2) 3.98 3.88 3.58 2.99 2.79 8.32 DART (2) 2.98 2.91 2.68 2.24 2.09 4.28 LTIR (2) 1.75 1.56 1.40 1.17 1.09 3.28 SMB Average Multiple 0.00 Weighted Average Safety multiple (3) 0.41 10% Cost Savings (in millions) $ — $13.9 $17.3 $ 26.0 $ 31.5 $ 18.2 1.10 10% Adjusted Operating Cash Flow (in millions) (4) $ — $62.0 $90.0 $118.0 $150.0 $103.0 1.47 10% Strategic Objectives (5) 3.00 20% Weighted average payout multiple 2.35 (1) Adjusted EPS for fiscal 2017 was defined as the Company’s reported diluted earnings per share for fiscal 2017 before significant non-recurring and extraordinary items and the cumulative effects of changes in accounting principles, adjusted to eliminate the impact of the following items: charges in fiscal 2017 for the impairment of goodwill or other assets (“Impairments”); changes in environmental liabilities recorded in fiscal 2017 in connection with the Portland Harbor Superfund Site or certain other sites (the “Sites”) for investigation and remediation costs and natural resource damage claims (“Environmental Accruals”); the fines, penalties, fees, costs and expenses incurred in fiscal 2017 in connection with the Sites (net of any insurance or other reimbursements and excluding Environmental Accruals) (“Environmental Expenses”); restructuring charges and other exit-related expenses taken by the Company in fiscal 2017 (“Restructuring Charges”); any impacts on net income, including financing charges, in fiscal 2017 as a result of any business acquisitions or business combinations completed or reviewed (including incremental costs incurred solely as a result of the transaction, whether or not consummated) in fiscal 2017 44 | Notice of Annual Meeting of Shareholders and 2017 Proxy Statement