Management Incentive Alignment

## Management Incentive Alignment Checker

**Stock**: {COMPANY} ({TICKER})
**Source**: Proxy Statement (DEF 14A), latest annual report

---

**PART 1 — EQUITY OWNERSHIP ANALYSIS**
| Person             | Shares Owned | % of Outstanding | Value ($M) |
|---|---|---|---|
| CEO                |              |                  |            |
| CFO                |              |                  |            |
| Other Named Execs  |              |                  |            |
| Board (aggregate)  |              |                  |            |

- CEO ownership vs. annual salary multiple: ___x (>5x = strong alignment)
- Are insiders net buyers or sellers over the past 12 months? Buyers / Sellers / Neutral
- Open market purchases (not options exercises)? Yes / No

---

**PART 2 — COMPENSATION STRUCTURE**
- Fixed salary as % of total comp: ___% (lower = more at-risk pay)
- Short-term bonus metrics: ___
  - Are they tied to earnings or revenue (easy to manipulate)? Yes / No
  - Are they tied to ROIC or FCF? Yes / No
- Long-term incentive (LTI) metrics: ___
  - Vesting period: ___ years (> 3 years = better)
  - Performance conditions: Relative TSR / Absolute EPS / ROIC / Other: ___
  - Do performance conditions include a minimum ROIC hurdle? Yes / No

---

**PART 3 — RED FLAGS**
[ ] Executive pay increased while shareholder returns declined
[ ] Frequent repricing of underwater options
[ ] Large accelerated vesting on change of control (golden parachute)
[ ] CEO pay ratio vs. median employee is extremely high (>300x)
[ ] Performance metrics changed mid-cycle to make bonuses easier to hit
[ ] Stock-based compensation > 3% of revenue or > 15% of FCF

Red flags found: ___ / 6

---

**PART 4 — ALIGNMENT SCORE (0–5)**
[ ] Meaningful insider ownership (CEO > 5x salary) → 1 pt
[ ] LTI tied to capital efficiency (ROIC/FCF) → 1 pt
[ ] Vesting period > 3 years → 1 pt
[ ] No recent option repricing or metric changes → 1 pt
[ ] Net insider buying in open market (12M) → 1 pt

**Alignment Score**: ___ / 5
**Assessment**: Strongly Aligned / Aligned / Neutral / Misaligned / Deeply Misaligned