2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 334 PROXY SUMMARY For 2017, approximately 75 percent of Mr. King’s total target compensation was performance-based and at-risk. For the other Named Executive Officers (“NEOs”), approximately 67 percent of the average total target compensation for 2017 was performance-based and at-risk. In 2017, an additional approximately 15 percent of our CEO’s total target compensation and an additional approximately 15 percent of the average total target compensation for our other NEOs was variable and based on the performance of the Company’s stock. The charts below show the mix of pay elements included in total compensation opportunities for 2017 for our Chief Executive Officer and an average for our other NEOs: P E R F O R M A N C E B A S E D O R V A R I A B L E P A Y 9 0 % CEO PAY MIX BASED ON TARGET AWARD OPPORTUNITIES Performance Shares 45% Non-Qualified Stock Options 15% Restricted Stock 15% Base Salary 10% Annual Cash Incentive 15% CASH 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 OTHER NEO PAY MIX BASED ON TARGET AWARD OPPORTUNITIES (1) C A S H P E R F O R M A N C E B A S E D O R V A R I A B L E P A Y 8 2 % 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 Performance Shares 35% Non-Qualified Stock Options 13% Restricted Stock 15% Base Salary 18% Annual Cash Incentive 19% (1) Pay mix totals do not include the special restricted stock award with an approximate value of $1,500,000 to Mr. Huff upon his appointment as Chief Executive Officer of LabCorp Diagnostics. Advisory Vote to Approve Executive Compensation (page 58) We ask that our shareholders approve the advisory resolution on executive compensation. Beginning in 2011, the Compensation Committee has continued to evolve our compensation program to enhance the alignment of our program with the strategic goals of the Company and reflect the feedback we have received from our shareholders. The Compensation Committee continuously improves the compensation program by designing management incentives that create strong alignment between compensation, the performance of the Company and the interests of shareholders. In 2017, for instance, the Company for the first time since 2012 included in its mix of long-term equity awards non-qualified stock options, to further align long-term incentive compensation with our shareholders’ interest in stock price appreciation. We have also adopted many market-leading compensation practices to further align the interests of our executives with those of our shareholders: • Robust stock ownership guidelines (6x base salary for CEO); • Prohibition on pledging and hedging Company stock; • Fully performance-based annual incentive program; • Incentive plan directly linked to strategic and objective financial goals; • Cap on annual incentive opportunities; • No employment agreements; • Limited perquisites; • No tax gross-ups; • “Double trigger” change-in-control provisions; • Performance oriented mix of long-term incentives: performance shares (60 percent of targeted grant value), restricted stock units (20 percent of targeted grant value) and non-qualified stock options (20 percent of targeted grant value) with multi-year vesting; • If the Company were to declare dividends, dividends would only be paid to the extent performance shares are earned; • Three-year performance measurement period for performance shares; and • Clawback policy. CEO PAY MIX BASED ON TARGET AWARD OPPORTUNITIES OTHER NEO PAY MIX BASED ON TARGET AWARD OPPORTUNITIES (1) LABORATORY CORPORATION OF AMERICA HOLDINGS • 2018 Proxy Statement 3 LABORATORY CORPORATION OF AMERICA HOLDINGS