SCHN 2017 Proxy Statement

Compensation Discussion and Analysis Summary Feedback from Shareholder Outreach Concern in 2015: Need for greater clarity regarding the Company’s compensation plans, specifically: • How the compensation plans fit into the Company’s long-term strategy; • How and why the performance metrics and targets were established; and • How the compensation peer group was selected. Action Taken in 2016 and 2017: ✓ We revamped the proxy statement to provide greater clarity regarding our compensation philosophy, the link between short-term and long-term pay and value creation, and how the compensation plans fit within the Company’s long-term strategy. We also revised our compensation peer group to better reflect companies with similar quantitative and qualitative characteristics. Concern in 2015: Connection among compensation, financial performance and shareholder returns was not clear and did not appear to be aligned with the experience of shareholders. Action Taken in 2016 and 2017: ✓ The Committee restructured the Company’s long-term performance share plan for fiscal 2016 and 2017 to use metrics which we believe provide better alignment with the experience of shareholders: • Relative Total Shareholder Return (“TSR”) compared to a peer group of companies with similar financial and operational characteristics; and • Cash Flow Return on Investment (“CFROI”) compared to specific targets over the performance period. Concern in 2015: Two-year performance period for the recent performance share awards was viewed as short for a long-term incentive program. Action Taken in 2016 and 2017: ✓ The Committee increased the performance period for performance share awards to three years for fiscal 2016 and 2017 awards. Concern in 2015: The link between payouts in the short-term incentive plan resulting from achievement of specific management objectives and overall compensation was not explained sufficiently to enable an understanding of the connection with longer-term shareholder returns. Action Taken in 2016 and 2017: ✓ The Committee believes the management objectives related to productivity improvement and cost reduction initiatives are expected to provide significant long-term benefits as markets improve and has revised the proxy descriptions to provide a better understanding of the link between these objectives and long-term value creation. ✓ The Committee capped non-income statement metrics in the fiscal 2017 annual incentive plan at 0.5x if adjusted earnings per share are negative. How Executive Pay is Linked to Company Performance Our executive compensation program is aligned with our business strategy and with creating long-term shareholder value by paying for performance consistent with what our Compensation Committee views as an acceptable risk profile. The foundation of our compensation philosophy is to: • Promote creation of long-term shareholder value; • Recruit and retain qualified, high performing executive officers; • Motivate high levels of performance; and • Be competitive in the market for talent. Our executive compensation program emphasizes delivering compensation at a competitive market level which will allow executive officers who demonstrate consistent on-target performance over a multi-year period to earn compensation that is competitive and consistent with targeted performance levels of total compensation. When performance is above target over the long term, we believe the program will reward executives above the competitive median. Conversely, the program will provide less than the annual target compensation when performance does not meet expectations. Individual executive compensation may be above or below the annual target level, based on the Company’s performance; economic and market conditions; the individual’s performance, contribution to the organization, experience, expertise, and skills; and other relevant factors. 32 | Notice of Annual Meeting of Shareholders and 2017 Proxy Statement