DFS Proxy Statement

Compensation Discussion and Analysis STUB PERIOD INCENTIVE PLAN Awards to the NEOs were based on performance against the corporate financial targets (25% of payment) as well as achievement of transitional objectives (75% of payment) for the three-month period after the Spin (October 1, 2016 to December 31, 2016), or the Stub Period. Specific individual performance goals were not set for the NEOs for the Stub Period. The Stub Period AIP target as a percentage of base salary for each NEO was as set forth above. The corporate financial target for the Stub Period was non-GAAP adjusted EBITDA of $35.3 million, which is defined as net earnings adjusted for income taxes, interest expense, depreciation and amortization, restructurings and impairments, acquisition- related expenses, Spin-related expenses and certain other charges or credits. The Stub Period financial performance payout curve was structured as follows: • Payout starts at 80% of the corporate financial target, with a Stub Period AIP payout of 80%; and • Payouts scale upward from 80% to 100% of target reflecting actual EBITDA generated as a percentage of target, with the corporate financial target needing to be attained to fund at 100%. The transitional objectives for the Stub Period were: • Developing plans to build out company infrastructure; • Developing plans to transition off transition services agreements in place with RRD and LSC as part of the Spin process; • Developing plans to address commercial agreements with LSC and RRD; and • Determining key priorities for 2017. Payout for achievement of the transitional objectives was determined on a discretionary basis by the Compensation Committee based on progress achieved. The Compensation Committee reviewed Donnelley Financial’s post-Spin results and performance against the corporate financial target. As a result, and consistent with Donnelley Financial’s pay for performance philosophy, the Compensation Committee confirmed the corporate financial target for the Stub Period was not met and no payout with respect thereto was made. The Compensation Committee also reviewed Donnelley Financial’s progress toward achievement of the transitional objectives and determined a payout level of 100% of the transitional objectives was appropriate, resulting in a 75% payout level for the Stub Period. LONG-TERM INCENTIVE PROGRAM The Compensation Committee determined to grant “founder’s awards” to the NEOs and certain other executives to align the senior executives with new shareholder interests, provide immediate incentive for long-term retention and allow participants to share in post- Spin gains in Donnelley Financial value. These founder’s awards, in the form of restricted stock awards to the NEOs and RSU awards to other executives, were granted on the Spin Date. In order to maintain deductibility under Section 162(m), we established a performance target for the restricted stock awards for the NEOs of net sales of at least 75% of the net sales of Donnelley Financial for the period October 1, 2015 through September 30, 2016 in any one of the twelve month periods started on October 1, 2016 and ending on September 30, 2019 that must be met before any shares are vested. If the performance target is met, vesting will occur over the three year period beginning on the date of grant, with 0% vesting at the end of year one, 50% at the end of year two and 50% at the end of year three; however, if the performance target is not met until year three, 100% will vest at the end of year three. All shares are forfeited if the performance target is not met. Restricted stock awards accrue dividends which are payable only upon vesting. Donnelley Financial Post-Spin Benefit Programs Post-Spin Donnelley Financial benefit programs were established based upon an assessment of competitive market factors and a determination of what is needed to retain high-caliber executives. Donnelley Financial’s primary benefits for executives include participation in Donnelley Financial’s broad-based plans at the same benefit levels as other employees. These plans include: retirement plans, savings plans, Donnelley Financial’s health and dental plans and various insurance plans, including disability and life insurance. 2017 Proxy Statement 31