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Bovhb G. Aornfer okb Lrhok Royok

Ncrpcrote Jcverkokne \eseorn` Hkhthothve^tokgcrb Jrobuote ^n`cca cg Lushkess

E_UHRX CZKE\^@HT

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EPENURHWE E_UHRX CZKE\^@HT

Equhty cwkers`hp hs hktekbeb tc ihthjote ojekny prclaeis ly oahjkhkj t`ehkterests cg iokojers okb s`ore`cabers.

Exenuthves `ove jreoter hknekthve tc luhab enckcihn voaue.

Onthcks t`ot hipohr ghri voaue rebune t`e exenuthves persckoa weoat`.

@cwever, equhty cwkers`hp ihj`t oasc gcster ukbeshrolae le`ovhcrs=exnesshve rhsf tofhkj, eorkhkjs iokhpuaothck, hkshber trobhkj, etn.

Z`ot cutncies okb le`ovhcrs ore clserveb hk pronthne3

8/6/2019 09. Equity Ownership - Quick Guide Series

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E_UHRX CZKE\^@HT LX R@E NEC

Exenuthves `cab nckshberolae persckoa weoat` hk t`e ncipokhes t`ey iokoje.

Oat`cuj` scie exenuthves iofe bhrent purn`oses, icst onnuiuaote weoat`ly retohkhkj ncipeksothck-reaoteb jrokts.

NEC E_UHRX ZEOAR@

GH\I ^H]ENEC

ZEOAR@IO\FER NOT

($ R@CU^OKB^)

RCT ?44 $?42,8?,28>,444

?4? RC 544 $58,8>:,444 $7,>0>,444

?,44? RC

8/6/2019 09. Equity Ownership - Quick Guide Series

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E_UHRX CZKE\^@HT LX R@E NEC

R`e hknekthves prcvhbeb ly equhty `cabhkjs ore ot aeost os hipcrtokt okbcgtek bcihkote t`e hknekthves prcvhbeb ly okkuoa ncipeksothck.

^EK^HRHWHRX CG NEC E_UHRX ZEOAR@ RC N@OKJE^ HK ^RCNF T\HNE

GH\I ^H]ENEC

NCITEK^ORHCK

N@OKJE HK ZEOAR@

(?% RCNF N@OKJE)

N@OKJE HK ZEOAR@

(54% RCNF N@OKJE)

N@OKJE HK ZEOAR@

(?44% RCNF N@OKJE)

RCT ?44 $?>5,444 $?,557,444 $05,5>5,444 $?:7,805,444

?4? RC 544 $7,7:.

8/6/2019 09. Equity Ownership - Quick Guide Series

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E_UHRX CZKE\^@HT OKB GH\I TE\GC\IOKNE

\eseorn` jekeroaay suppcrts t`e kcthck t`ot equhty cwkers`hp hs pcshthveayosscnhoteb wht` ghri pergcriokne.

Ghris wht` `hj` NEC equhty cwkers`hp `ove `hj`er iorfet voauothcks.

Ghris wht` hj` NEC equhty cwkers`hp beahver superhcr ackj-teri stcnfiorfet returks.

Iokojerhoa hknekthves tekb tc le icre nacseay oahjkeb wht` t`e hkterests cgs`ore`cabers w`ek exenuthves `ove sfhk hk t`e joie.

Icrnf, ^`aehger, okb Whs`ky (?800)6 InNckkeaa okb ^ervoes (?884)6 Easha, Foaaukfh, okb Khassck ()6 Ahahekgeab-Rcoa okb \uekzh (

8/6/2019 09. Equity Ownership - Quick Guide Series

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RO\JER CZKE\^@HT TAOK^

Rc ekncuroje t`ese eggents, o ncipoky ihj`t obcpt o torjet cwkers`hp paok.

Rorjet cwkers`hp paoks (cr juhbeahkes) requhre ok exenuthve tc `cab oihkhiui oicukt cg stcnf.

Cwkers`hp juhbeahkes nok le expresseb os= Iuathpae cg okkuoa ncipeksothck

Ghxeb kuiler cg s`ores

\etekthck opprcon` (exenuthve retohks o pernektoje cg vesteb oworbs)

\eseorn`ers ghkb pcshthve lekeghts grci t`e obcpthck cg torjet cwkers`hppaoks.

08% cg t`e aorjest ?44 U.^. ncipokhes `ove exenuthve cwkers`hp juhbeahkes.

Ncre okb Aornfer (

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E_UHRX CZKE\^@HT OKB \H^F

Equhty cwkers`hp oasc hkgaueknes rhsf tofhkj.

Ok exenuthves otthtube tcworb rhsf hs s`opeb ly t`e pctekthoa poycgg.

Bhrent stcnf `cabhkjs=

Woaue icves cke-gcr-cke wht` stcnf prhne.

Exenuthve hs icthvoteb tc jrcw okb prctent voaue.

^tcnf cpthck jrokts=

Woaue icves hk o kck-ahkeor gos`hck wht` stcnf prhne.

Woaue hknreoses wht` vcaothahty.

Exenuthve hs icthvoteb tc hknreose ghri rhsf.

^tcnf cpthcks hktrcbune nckvexhty hktc t`e pctekthoa poycgg okbekncuroje rhsf.

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E_UHRX CZKE\^@HT OKB \H^F

Tergcriokne okb rhsf tofhkj hknekthves nok le evoauoteb ly iopphkj t`ereaothck letweek n`okjes hk weoat` okb n`okjes hk stcnf prhne.

\EAORHCK^@HT LERZEEK NEC ZEOAR@ OKB ^RCNF T\HNE

-?44%

4%

?44%

44%

244%

-?44% -54% 4% 54% ?44%\ERU\KR

C

^@O\E@CABE\^OKBN

EC

^RCNF T\HNE \ERU\K

^@O\E@CABE\^ NEC - JEKE\OA IHAA^ NEC - F\OGR

NEC `cabs ihxcg cpthcks okbrestrhnteb stcnf

NEC `cabs icstayrestrhnteb stcnf

Z@OR H^ R@E UT^HBE3

Z@OR H^ R@E BCZK^HBE3

Z@OR \EZO\B H^ T\CIH^EB3

Z@OR \H^F H^ EKNCU\OJEB3

O\E R@E^E OTT\CT\HORE3

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E_UHRX CZKE\^@HT OKB \H^F

\eseorn` jekeroaay s`cws t`ot exenuthves gonhkj nckvex poycgg nurvesekjoje hk icre rhsf tofhkj.

Exenuthves t`ot renehve cpthcks hknreose t`e rhsf prcghae cg t`e ghri=

^pekb icre ickey ck reseorn` okb beveacpiekt

^pekb icre ickey ck nophtoa expekbhtures

\ebune ghri bhvershghnothck

Hknreose aeveroje

Bc stcnf cpthcks ekncuroje exnesshve rhsf tofhkj3

Kc stokborb ahtius test exhsts tc bhsthkjuhs` exnesshve rhsf grci onneptolaerhsf. R`e lcorb iust beterihke w`ot rhsf-tofhkj hknekthves ore onneptolae,jhvek t`e rhsf prcghae cg t`e ghri.

^okbers okb @oilrhnf (

8/6/2019 09. Equity Ownership - Quick Guide Series

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E_UHRX CZKE\^@HT OKB OJEKNX NC^R^

Equhty cwkers`hp hs hktekbeb tc icthvote iokojers tc hiprcvepergcriokne, lut ht nok oasc ekncuroje ukbeshrolae le`ovhcrs.

Exenuthves ihj`t try tc hknreose t`e voaue cg t`ehr equhty `cabhkjs hk woysct`er t`ok t`rcuj` cperothkj pergcriokne=

Iokhpuaothkj onncukthkj resuats tc hkgaote stcnf prhne cr on`heve lckus torjets

Iokhpuaothkj t`e thihkj cg equhty jrokts tc hknreose t`ehr hktrhkshn voaue

Iokhpuaothkj t`e reaeose cg hkgcriothck tc t`e pulahn tc ncrrespckb wht` icre

govcrolae jrokt botes

Ushkj hkshbe hkgcriothck tc johk ok obvoktoje hk seaahkj cr ct`erwhse `ebjhkjequhty cabhkjs

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E_UHRX CZKE\^@HT= ONNCUKRHKJ IOKHTUAORHCK

Hs onncukthkj iokhpuaothck icre cr aess ahfeay tc cnnur hk ncipokhes w`ereexenuthves cab aorje equhty pcshthcks3

R`e reseorn` ck t`hs tcphn hs very ihxeb.

^cie `ove gcukb `hj`er ahfeah`ccb cg restoteiekt

^cie ove gcukb acwer ahfeah`ccb cg restoteiekt

^cie `ove gcukb kc osscnhothck

R`e lcorb s`cuab le owore cg t`e pctekthoa gcr seag-johk t`rcuj`onncukthkj iokhpuaothck.

R`e pctekthoa gcr iokhpuaothck ihj`t le icst prckcukneb w`ekexenuthves `cab o nckshberolae oicukt cg cpthcks.

@orrhs okb Lrcihaey (

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IOKHTUAORHCK CG E_UHRX J\OKR^

Equhty cwkers`hp ihj`t ekncuroje exenuthves tc iokhpuaote equhty jroktstc extront hknreiektoa voaue.

Iokhpuaote t`e thihkj cg jrokts.

Beaoy jrokt bote tc cnnur ogter o stcnf prhne benahke.

Lrhkj jrokt gcrworb tc cnnur legcre expenteb rhse.

Iokhpuaote t`e thihkj t`ot hkgcriothck hs reaeoseb.

Beaoy t`e reaeose cg govcrolae hkgcriothck uktha ogter jrokt bote.

Lrhkj gcrworb reaeose cg ukgovcrolae hkgcriothck tc prenebe jrokt bote.

Hk lct` noses, t`e exenuthve seefs tc ioxhihze voaue ly tofhkj onthcks kcthk t`e hkterest cg s`ore`cabers.

8/6/2019 09. Equity Ownership - Quick Guide Series

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IOKHTUAORHCK CG E_UHRX J\OKR^= LONFBORHKJ

^tcnf cpthck lonfbothkj hs t`e pronthne w`ere hkshbers retrconthveayn`okje t`e jrokt bote tc ncrrespckb wht` o reaothve acw hk t`e ncipokys`ore prhne.

Tronthne wos bhsncvereb hk

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E_UHRX ^OAE^ OKB @EBJE^

Exenuthves w`c onnuiuaote o sulstokthoa cwkers`hp pcshthck hk ncipokystcnf ihj`t wokt tc ahiht t`ehr expcsure.

R`e lcorb cg bhrentcrs ihj`t oaacw bhvershghnothck hg ht hs hk t`e hkterest cg t`encipoky (h.e., ly rebunhkj rhsf overshck).

Exenuthves nok on`heve bhvershghnothck ly=

?. ^eaahkj s`ores cutrhj`t

. Taebjhkj o pcrthck os ncaaoteroa gcr o acok t`ot hs useb tc purn`ose obbhthckoaossets

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?. R\OBHKJ LX HK^HBE\^

Ok hkshber hs ok hkbhvhbuoaexenuthve, bhrentcr, eipacyee, cr obvhscrw`c`os onness tc ioterhoa hkgcriothck olcut t`e ncipoky t`ot `os kct yetleek reaeoseb tc t`e pulahn.

Ukber ^EN ruaes, hkshbers ioy ckay trobe w`ek t`ey ore kct hk pcssesshck

cg ioterhoa kckpulahn hkgcriothck.

Rrobes ck t`e loshs cg t`hs hkgcriothck hs nckshbereb haaejoahkshber trobhkj.

Hkshber trobhkj noses ore prcsenuteb ukber \uae ?4l-5, Eipacyiekt cgIokhpuaothve okb Benepthve Tronthnes.

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?. R\OBHKJ LX HK^HBE\^= LAONFCUR ZHKBCZ

Rc prevekt exenuthves grci vhcaothkj hkshber trobhkj aows, ncipokhesbeshjkote o laonfcut whkbcw hk w`hn` hkshbers ore restrhnteb grci iofhkjtrobes.

Laonfcut perhcbs cnnur w`ek ioterhoa hkgcriothck (eorkhkjs, kew prcbunt,

onquhshthck) hs kct yet reaeoseb tc t`e pulahn.

R`e iebhok aekjt` cg o laonfcut whkbcw hs 54 noaekbor boys.

Besphte t`ese restrhnthcks, evhbekne sujjests t`ot hkshbers sthaa `ove okhkgcriothck obvoktoje hk iofhkj trobes.

Hkshber purn`oses prenebe perhcbs cg iorfet cutpergcriokne.

Hkshber soaes prenebe perhcbs cg iorfet ukberpergcriokne.

NEC okb n`ohriok `ove jreoter trobhkj obvoktoje t`ok ct`er hkshbers.

^ey`uk (?807)6 Aofckhs`cf okb Aee (

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?. R\OBHKJ LX HK^HBE\^= ?4L5-? TAOK^

R`e ^EN nreoteb \uae ?4l5-? tc prctent hkshbers w`cse pcshthcks rejuaorayexpcse t`ei tc hkshbe hkgcriothck.

Hkshber ekters ncktront wht` o t`hrb-porty lrcfer.

Hkshber iust kct fkcw ioterhoa kckpulahn hkgcriothck ot t`e thie.

Hkshber spenhghes prcjroi ly w`hn` trobes (purn`oses cr soaes) ore iobe.

Ckne hk paone, hkshber ioy kct hktergere wht` trobes.

Lrcfer exenutes trobes, evek burhkj laonfcut whkbcw.

Hkshber ioy oiekb cr terihkote ot oky thie.

\eseorn` sujjests t`ot ?4l5-? paoks ore oluseb.

Hkshbers ushkj ?4l5-? paoks cutpergcri iorfet ly 7% cver shx ickt`s.

Rrobes eorkeb ukber paoks ore `hj`er t`ok trobes iobe cutshbe paoks.

^oaes prenebe perhcbs cg ukberpergcriokne okb purn`oses prenebe cutpergcriokne.

Mojcahkzer (

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>. TAEBJHKJ

Ok exenuthve paebjes s`ores os ncaaoteroa gcr o acok, t`e prcneebs cg w`hn`ore useb tc purn`ose obbhthckoa ossets.

(+) Oaacws gcr bhvershghnothck wht`cut aessekhkj equhty stofe

(+) Ihj`t le tox obvoktojecus

(+) Acw hkterest rote ck t`e acok

(-) N`okjes hknekthve strunture hipcseb ck iokojeiekt

Taebjhkj troksonthcks beserve

spenhoa nckshberothck ly t`e lcorb.Z@OR HG R@E ACOK H^ NOAAEB3

Z@OR HG T\CNEEB^ O\E U^EB RC AOUKN@ KEZ LU^HKE^^3

H^ R@E LCO\B ZHAAHKJ RC CGG^ER AC^ E^3

8/6/2019 09. Equity Ownership - Quick Guide Series

20/22

\ET\HNHKJ OKB EPN@OKJE CGGE\^

O reprhnhkj cr exn`okje cgger hs o troksonthck hk w`hn` eipacyees `cabhkjcpthcks ore oaacweb tc exn`okje t`ei gcr kew cpthcks, restrhnteb stcnf cr(aess grequektay) nos`.

(+) Jekeroaay oaa eipacyees porthnhpote

(+) Trcvhbes kew hknekthves w`ek cpthcks ore ukberwoter

(+) Ihj`t hiprcve eipacyee retekthck okb rebune turkcver

(-) Ihj`t shjkoa o nuature cg ekthtaeiekt

(-) ^`ore`cabers wckber w`y eipacyees lekeght w`hae t`ey sugger acsses

Exn`okjes jekeroaay rebune eipacyee turkcver.

Ioky ghris (24%) t`ot reprhne exnaube t`e NEC.

\eprhnhkjs ore icre ahfeay tc cnnur ot ncipokhes wht` jreoter ojekny prclaeis.

Norter okb Aykn` (

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LHLAHCJ\OT@X

\okboaa Icrnf, Okbreh ^`aehger, okb \clert Z. Whs`ky. Iokojeiekt Cwkers`hp okb Iorfet Woauothck= Ok Eiphrhnoa Okoayshs. ?800.

Mcurkoa cg Ghkoknhoa Enckcihns.

Mc`k M. InNckkeaa okb @ekrh ^ervoes. Obbhthckoa Evhbekne ck Equhty Cwkers`hp okb Ncrpcrote Woaues. ?884. Mcurkoa cg Ghkoknhoa

Enckcihns.

Okko Easha, Mu`o-Teffo Foaaukfh, okb @ekrhf Khassck. NEC Tersckoa Zeoat`, Equhty Hknekthves, okb Ghri Tergcriokne. .

Ncrpcrote Jcverkokne= Ok Hkterkothckoa \evhew.

Uag vck Aha hekgeab-Rcoa okb tegok \uekzh. NEC Cwkers`hp, tcnf Iorfet Tergcriokne, okb Iokojerhoa Bhsnrethck.

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LHLAHCJ\OT@X

N`rhstcp`er . Oristrckj, Bovhb G. Aornfer, Johzfo Criozoloa, okb Bokhea M. Royacr. R`e \eaothck Letweek Equhty Hknekthves okb

Ihsrepcrthkj= R`e \cae cg \hsf-Rofhkj Hknekthves. . Mcurkoa cg Ghkoknhoa Enckcihns.

Erhf Ahe. Ck t`e Rhihkj cg NEC ^tcnf Cpthck Oworbs.