DFS Proxy Statement

Compensation Discussion and Analysis Treatment of RRD Equity and Cash Awards in Connection with the Spin In connection with the Spin, outstanding RRD equity and cash awards were treated as follows: Grant Year Award Type Vesting Period Treatment in the Spin 2007-2008 Stock Options Fully vested Remained as RRD stock options 2009-2012 Converted to stock options in all 3 spin companies at agreed upon exchange rate 2013 Cash LTI 25% per year Award will pay at vesting from company where employee lands (future employer approach) Cash Retention March 2, 2017 Amended award agreements to allow unvested award to be paid in full upon termination without cause; award will pay at vesting using future employer approach RSUs 25% per year Any tranches left to vest will vest in stock of all 3 companies (basket approach), at agreed upon exchange rate 2014 Cash LTI 25% per year Award will pay at vesting using future employer approach Cash Retention January 1, 2017 Award agreements amended to allow unvested award to be paid in full upon termination without cause; award will pay at vesting using future employer approach RSUs 25% per year Any tranches left to vest will vest using the basket approach, at agreed upon exchange rate PSUs Q1 2017 Truncate and measure performance as of the Spin Date; post-Spin will time vest using basket approach at agreed upon exchange rate 2015 Cash LTI March 2, 2018 Award will pay using future employer approach RSUs March 2, 2018 Vests using future employer approach PSUs Q1 2018 Truncated and measured performance as of the Spin Date; post-Spin will time vest using future employer approach 2016 Cash LTI March 2, 2019 Award will pay using future employer approach RSUs March 2, 2019 Vests using future employer approach The exercise price and number of shares subject to each option were adjusted pursuant to the formula proscribed by the Separation and Distribution Agreement in order to preserve the aggregate intrinsic value (that is, the difference between the exercise price of the option and the market price of the shares for which the option may be exercised) of the converted options immediately after the Spin to be the same as the intrinsic value of the RRD options immediately prior to the Spin. All PSU and RSU awards were converted into RSU awards of LSC, RRD and Donnelley Financial common stock, as applicable, pursuant to a formula provided by the Separation and Distribution Agreement in order to preserve the aggregate intrinsic value of the original award, as measured immediately before and immediately after the Spin. All equity and cash awards remain subject to the same terms and conditions (including with respect to vesting) immediately following the Spin Date as applicable to the corresponding RRD award immediately prior to the Spin Date, except that awards that were originally RRD PSU awards remained subject to only time-based vesting for the remainder of the applicable performance period following the Spin Date. Following the Spin Date, the RRD HR Committee determined the achievement level of the performance conditions on the PSUs. The achievement level for PSU awards granted in 2014 was 96% of the performance target, which equated to a 90% payout level. The achievement level for PSU awards granted in 2015 was 82.1% of the performance target and, with an organic revenue growth modifier applied, equated to a 54.1% payout level. 2017 Proxy Statement 27