DFS Proxy Statement

Proposal 4 recognized by a participant, except to the extent the limit of Section 162(m) of the Code applies. A participant will recognize compensation taxable as ordinary income when amounts equal to dividend equivalents and any other distributions attributable to stock units are paid, and the Company or one of its subsidiaries generally will be entitled to a corresponding deduction, except to the extent limited by Section 162(m) of the Code. Cash Bonus Awards . A participant will not recognize any income upon the grant of a bonus award payable in cash, and neither the Company nor its subsidiaries will be entitled to a tax deduction at such time. At the time such award is paid, the participant will recognize compensation taxable as ordinary income in an amount equal to any cash paid by the Company, and the Company or one of its subsidiaries generally will be entitled to a corresponding deduction, except to the extent limited by Section 162(m) of the Code. Section 162(m) of the Internal Revenue Code . In general, Section 162(m) denies a publicly held corporation a federal income tax deduction for compensation in excess of $1 million per year per person paid to its “covered employees,” subject to certain exceptions. “Performance-based” compensation is not subject to the $1 million deduction limit. To qualify as performance-based compensation: (i) the compensation must be subject to achievement of performance goals established by a committee consisting solely of two or more “outside directors,” (ii) the material terms under which the compensation is to be paid, including the performance goals, are approved by a majority of the corporation’s shareholders and (iii) the Plan Committee certifies that the applicable performance goals were satisfied before payment of any performance-based compensation is made. The Company reserves the right to pay compensation that is not deductible. Section 409A . Awards made under the Amended 2016 PIP that are considered to include deferred compensation for purposes of Section 409A of the Code will be interpreted, administered and construed to comply with the requirements of Section 409A to avoid adverse tax consequences to recipients. The Company intends to structure any awards under the Amended 2016 PIP so that the requirements under Section 409A are either satisfied or are not applicable. The affirmative vote of the holders of a majority of the shares of the Company’s common stock present in person or by proxy at the 2017 Annual Meeting and entitled to vote on the proposal is required to approve the Amended 2016 PIP. The Board of Directors unanimously recommends a vote FOR this proposal New Plan Benefits Table The table below reflects awards granted by the Compensation Committee on March 2, 2017. Because the Amended 2016 PIP is substantially similar to the 2016 PIP, for purposes of this table, the Company has assumed that the same awards would have been made under the Amended 2016 PIP if it had been in place. Name and Position Dollar Value ($) (1) Number of Units Daniel N. Leib, Chief Executive Officer 3,299,166 193,800 Thomas F. Juhase, Chief Operating Officer 898,686 52,800 David A. Gardella, Chief Financial Officer 898,686 52,800 Jennifer B. Reiners, General Counsel 480,096 28,200 Kami S. Turner, Controller and Chief Accounting Officer 209,295 12,300 Executive Group 5,785,929 339,900 Non-Executive Director Group 0 0 Non-Executive Officer Employee Group 3,869,987 211,200 (1) The amounts shown in the this column constitute the aggregate grant date fair value of shares of performance restricted stock, restricted stock units, performance restricted stock units and options granted on March 2, 2017. The amounts are valued in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation. See Note 15 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 for a discussion of the relevant assumptions used in calculating the fair value pursuant to ASC Topic 718. 8