2018 Guide to Effective Proxies

2.6 Timelines | 111 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES CITRIX SYSTEMS, INC. EBAY EXXON MOBIL CORPORATION GENERAL DYNAMICS CORPORATION ThefollowingtimelinesummarizesourbusinesstransformationandCEOtransitionduring2017: GoToBusiness and LogMeIn TransactionCompleted • Citrix shareholders received LogMeIn shares valuedat approximately$2.9billion in a tax-efficientdistribution Announced2016 Performance • Annual revenueup4% year over year • • Recordannualcash flow from operationsof$1.12billion 68% increase innet income of$536million,or$3.41per diluted share ConfirmedCommitment to AccelerateTransformation to a Subscription-BasedBusiness • Announced2020businessgoals ContinuedOutperformance in2017 (from continuing operations) • Q4 revenueup6% yearover year • Deferred revenueof$1.9billion, increased11% yearover year • Subscription revenueaccelerated for4 th straightquarter Leadership toAccelerate Transition • AppointedDavidHenshallas PresidentandCEO • Targetdirectcompensation belowmedianofpeergroup • Successful internalpromotion • Annual revenueup3% yearover year ContinuingCapitalReturn to Shareholders • Reiteratedplan to return$2billion ofcapital to shareholdersby the endof2018 • Announcedanoteoffering to fund $750millionaccelerated share repurchase ContinuingCapitalReturn to Shareholders • Announcedadditional $750millionaccelerated share repurchase • KirillTatarinovand theBoard agreed tomutually separate • Mr.Tatarinov received compensationperhisexisting EmploymentAgreement; PRSUswerenotaccelerated January 2017 January 2017 July 2017 October 2017 July 2017 February 2018 January 2018 2017: Continuing Our Transformation November 2017 2017 Business Highlights Ourtransformationaleffortsledtothefollowingperformancein2017(fromcontinuingoperations): ‰ 3% increase in annual revenue to $2.82 billion compared to 2016, including arecord number ofdealsover one milliondollars ‰ Softwareasaservicerevenueincreased31%comparedto2016 ‰ Mixofsubscriptionbookingsasapercentoftotalproductbookingsgrewto27%,comparedto14%in2016 ‰ $1.86billionindeferredrevenue,an11%increasefromtheprioryear ‰ Increasedcashflowto$964million The charts below show our revenue, earnings per share and operating cash flow for each of the last three fiscal years, calculatedinaccordancewithgenerallyacceptedaccountingprinciplesintheUnitedStates,orGAAP. $2,646 $2,736 $2,825 2015 $1.34 2016 $2.99 2017 (1) 2015 2016 2017 $0.14 Revenue (fromcontinuingoperations inmillions) (fromcontinuingoperations) Earnings Per Share 2015 $832 2016 $947 2017 $964 Operating Cash Flow (fromcontinuingoperations inmillions) (1) Decreaseinearningspersharewasprimarilyduetoanincreaseintaxexpenseasaresultof$429million(or$2.76per dilutedshare)inchargesrelatedtotheestimatedimpactfromtheenactmentoftheU.S.TaxCutsandJobsActthatwas signedonDecember22,2017.TheimpactsoftheU.S.TaxCutsandJobsActmaydifferfromthisestimate,andtheestimated chargesmayaccordinglybeadjustedoverthecourseof2018. 2018 Proxy Statement 5 Total of 02 pages in section CompensationDiscussionandAnalysis| ElementsofOurExecutiveCompensationProgram IftheCompany’sactualperformanceexceedsorfallsshortofthetargetperformancegoals,theactual numberofsharessubjecttothePBRSUawardwillbeincreasedordecreasedformulaically. UnderthePBRSUprogram,100%ofanyPBRSUawardsgrantedtoourCEOandCFOwillvest,ifatall,14 monthsfollowingtheendoftheapplicabletwo-yearperformanceperiod.Thisprovisionsubjects100%of theCEOandCFOPBRSUawardstoafullthreeyearsofstockpricevolatilitybeforethesharesvest.Forall executiveofficersotherthantheCEOandCFO,one-halfofthePBRSUsvestinMarchfollowingtheendof theapplicableperformanceperiod,andtheotherhalfoftheawardvestsinMarchofthefollowingyear,more thanonefullyearfollowingthecompletionoftheperformanceperiod.TheCompensationCommittee believesthatthepost-performanceperiodvestingfeatureofthePBRSUsprovidesanimportantmechanism thathelpstoretainexecutiveofficersandaligntheirinterestswithlong-termstockholdervalue. PBRSU TIMELINE 2016-2017PerformancePeriod 2016 2017 2018 2019 2021 2020 50%vesting forallNEOs exceptCEOandCFO March 15 50%vesting forallNEOs exceptCEOandCFO March 15 March 15 100%vesting forCEOandCFO; 50%vesting forallotherNEOs March 15 100%vesting forCEOandCFO; 50%vesting forallotherNEOs 2017-2018PerformancePeriod 2016 2017 2018 2019 2021 2020 PerformanceMeasuresandRationale. Asdiscussedabove,thenumberofsharessubjecttoatargetPBRSU awardareadjustedbasedonwhethertheCompany’sactualperformanceexceedsorfallsshortofthetarget performancegoalsfortheapplicableperformanceperiod. 52 Compensation Discussion and Analysis 2017 E VALUATION AND C OMPENSATION P ROCESS T IMELINE November 2016 • BusinessunitspresentplanstotheCEO • TheCEO,inconsultationwiththechieffinancialofficerandexecutivevicepresidents,establishescompanyoperatinggoals February 2017 • BusinessunitspresentoperatingplanstotheBoardofDirectors • The board reviews, adjusts where appropriate, and approves business group operating goals and adopts the company operatingplan • Thecompanyoperatingplanservesasthefinancialgoalsfortheannualincentiveandlong-termincentive January – February 2018 • Based on achievement against the operating plan, the CEO calculates and assigns a score for each NEO other than herself andtheCompensationCommitteecalculatesandassignsascorefortheCEO • Theassignedscoreisbasedstrictlyonperformanceagainstthecompany’soperatingplan,thedifficultyoftheoperatingplan andtheindividual’scontributionstothesuccessoftheoperatingplan • Thescoreisconvertedintoanannualincentiverecommendationwhichis,togetherwithbasesalaryandlong-termincentive recommendations,presentedtotheCommitteeonascorecard • Committeeensuresbasesalaryrecommendationsdonotexceedthemarket50thpercentile March 2018 • The Committee reviews NEO scorecards and pay recommendations and approves base salary, annual incentive and long- termincentiveamounts • Basedonthecalculatedscore,theCommitteereviews,refinesandapprovescompensationfortheCEOinexecutivesession GeneralDynamics2018ProxyStatement 31 Examples of Why Long Restriction Periods Align with ExxonMobil’s Business Model Example1 ResourceDevelopment atPapuaNewGuinea (PNG) LNG • Investment lead times in theoilandgas industryareoften10 yearsor longer ExxonMobilacquired interest inHides field Effort todevelopHides field to supplya future LNGdevelopment;1997Asian financial crisis anddemanduncertainties led to theproject being suspended Beganeffort todevelopHides fieldgas for supplybypipeline toAustralia;project suspended in2007 PNGLNG full fundingdecisionmade, 16 yearsafter initial investment PNGLNG start-up 1993 Mid-1990s 2004 2009 2014 Example2 TheCommodityPriceCycle • ExxonMobil’s longer restrictionperiodsensure thatexecutivesare required tohold shares through the commodityprice cycle • Analternate, formula-basedprogramwith short-term target settingand three- year vestingwouldenableexecutives tomonetizeperformance sharesatamuch fasterpace • In thisexample, sharesaregranted toanexecutiveeach yearover themost recent 10-yearperiod (2008-2017). In2013,on theeveofagreater-than-50-percent decline in crudeprice,only 8percent ofawardsgranted in theExxonMobilprogram had vested. In thealternateprogramwith three-year vesting, 58percent ofawards grantedwouldhave vested– 7 timesmore than theExxonMobilprogram • ExxonMobilexecutives, through thisdesign featureof longer restrictionperiods, areencouraged to takea long-term view inbusinessdecision-making ExxonMobil 8% Alternate 58% 7x more VestedSharesAvailable toSell ImmediatelyPrior to2013 CrudeOilPriceCollapse (2) Example1ResourceDevelopmentatPapuaNewGuinea(PNG)LNGInvestmentleadtimesintheoilandgasindustryareoften10yearsorlonger1993ExxonMobilacquiredinterestinHidesfieldMid-1990sEfforttodevelopHidesfieldtosupplyafutureLNGdevelopment;1997Asianfinancialcrisisanddemanduncertaintiesledtotheprojectbeingsuspended2004BeganefforttodevelopHidesfieldgasforsupplybypipelinetoAustralia;projectsuspendedin20072009PNGLNGfullfundingdecisionmade,16yearsafterinitialinvestment2014PNGLNGstart-upExample2TheCommodityPriceCycleExxonMobil’slongerrestrictionperiodsensurethatexecutivesarerequiredtoholdsharesthroughthecommoditypricecycleAnalternate,formula-basedprogramwithshort-termtargetsettingandthree-yearvestingwouldenableexecutivestomonetizeperformancesharesatamuchfasterpaceInthisexample,sharesaregrantedtoanexecutiveeachyearoverthemostrecent10-yearperiod(2008-2017).In2013,ontheeveofagreater-than-50-percentdeclineincrudeprice,only8percentofawardsgrantedintheExxonMobilprogramhadvested.Inthealternate programwiththree-yearvesting,58percentofawardsgrantedwouldhavevested–7timesmorethantheExxonMobilprogramExxonMobilexecutives,throughthisdesignfeatureoflongerrestrictionperiods,areencouragedtotakealong-termviewinbusinessdecision-makingVestedSharesAvailabletoSellImmediatelyPriorto2013CrudeOilPriceCollapse(2) 2018ProxyStatement 31