2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 326 Time- Based Awards 26% Performance- Based Awards 38% Base Salary 14% Annual Performance Bonus 22% CEO Other NEOs - Average Components of Total Direct Compensation at Target P E R F O R M A N C E B A S E D P A Y 6 0 % C A S H C A S H L O N G - T E R M I N C E N T I V E S T O C K A W A R D S L O N G - T E R M I N C E N T I V E S T O C K A W A R D S L O N G - T E R M I N C E N T I Time- Based Awards 22% Base Salary 23% Annual Performance Bonus 23% Performance- Based Awards 32% P E R F O R M A N C E - B A S E D P A Y 5 5 % 24 | 2018 Proxy Statement Compensation Mix The compensation program for each of our NEOs includes the following components, which together comprise “Total Direct Compensation”: (1) base salary, (2) an annual performance bonus, and (3) two types of LTI awards. The objective of each component and the form in which each is delivered if earned is outlined as follows: Core Component Purpose Percentage of Total Direct Compensation Form Base salary Provide base compensation that is competitive and reflects the scope of responsibility, level of authority, and overall duties of the position 14-24% Cash Annual incentive program Provide an annual bonus opportunity that is tied to predetermined Company performance goals and achievement of individual performance objectives ("Annual Performance Bonus Program") 22-24% Performance- based cash Long-term Provide performance-based equity awards tied to predetermined Company performance goals over a three-year period 31-38% Performance- based equity incentive program Provide time-based equity awards that vest ratably over a four-year period 21-26% Time-based equity Total Direct Compensation. The Committee targets Total Direct Compensation (the sum of all three core compensation components) for our NEOs to be between the 65 th and 75 th percentiles of our peer group’s total direct compensation. The following table shows how our NEOs’ compensation levels compare (on a percentile basis) to our blended peer group and industry survey data for Total Direct Compensation. NEO Base Salary Total Cash Compensation Total Direct Compensation Bret C. Griess Near the 50th Above the 75th Between the 50th and 75th Randy R. Wiese Near the 50th Above the 75th Between the 50th and 75th Kenneth M. Kennedy Near the 50th Above the 75th Near the 75th Brian A. Shepherd Near the 50th Above the 75th Near the 75th The charts below illustrate the percentage of compensation our CEO and other NEOs on average would generally receive, if paid at target level, for each core compensation component, based on 2017 target compensation: CSG SYSTEMS INTERNATIONAL, INC.