2018 Guide to Effective Proxies

2.17.4 Compensation mix | 345 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES COMPENSATION DISCUSSION AND ANALYSIS Our Pay Setting Process During the first quarter of the year, the Committee completes a review to ensure we are paying competitively, equitably, and in a way that encourages and rewards performance. The compensation data of our comparator group, disclosed primarily in proxy statements, is the primary market data we use when benchmarking the competitive pay of our NEOs. Aggregate market data obtained from recognized third-party executive compensation survey companies is used to supplement and validate comparator group market data. Although the Committee reviews relevant data as it determines compensation packages, other considerations are taken into account. Because market data alone does not reflect the strategic competitive value of various roles within our Company, internal pay equity is also considered when making pay decisions. Other considerations when making pay decisions for the NEOs include individual experience, sustained performance, historical pay, realized and realizable pay over three years, and tally sheets that include annual pay and benefit amounts, wealth accumulated over the past five years, and the total aggregate value of the NEOs’ equity awards and holdings. Multiple internal and external factors are considered when determining NEO compensation packages When setting pay, we determine a target pay mix (distribution of pay among base pay, annual incentives, long- term incentives, and other forms of compensation) for the NEOs. Consistent with our pay-for-performance philosophy, the actual amounts paid, excluding benefits, are determined based on Company and individual performance. Because performance is a factor, the target versus actual pay mix will vary, specifically as it relates to the annual cash incentives and long-term incentives. Three new NEOs joined Williams during 2017 and did not receive an annual equity award on February 21, 2017. For the NEOs other than the CEO, we utilized the target annual compensation for each NEO rather than their actual 2017 compensation to display the following target pay mix information. CEO 2017 Total Compensation at Target Pay Mix NEO (Excluding CEO) 2017 Total Compensation at Target Pay Mix At-risk 86% Performance- based RSUs 38% Time-based RSUs 17% Base pay 14% Short-term incentives 17% Stock options 14% Long-term incentives 69% At-risk 82% Performance- based RSUs 30% Time-based RSUs 24% Base pay 18% Short-term incentives 14% Stock options 14% Long-term incentives 68% The Williams Companies, Inc. – 2018 Proxy Statement 39 WILLIAMS COMPANIES, INC.