2018 Guide to Effective Proxies

2.17.5 Elements of pay tables | 367 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES COMPENSATION DISCUSSION AND ANALYSIS The following table summarizes the key elements of target direct compensation for our 2017 executive compensation program. Our incentives are designed to drive overall corporate performance, achieve strategic goals, and individual performance using measures that correlate to stockholder value. Summary of 2017 Executive Compensation Program Design CASH COMPENSATION EQUITY COMPENSATION Base Salary Annual Cash Incentive Awards Performance Based Long- Term Incentive Awards Retention Based Long- Term Incentive Awards Key Characteristics • Fixed compensation component payable in cash. • Reviewed annually and adjusted when appropriate. • At risk compensation component payable annually in cash. • Amount payable is based on actual performance against annually established goals. • Two-thirds of the value of annual equity awards is performance based. • One-half of the performance-based equity award vests annually based on achievement of corporate objectives. • One-half of the performance-based equity award vests over three years based on relative TSR performance compared to three indices. • One-third of the value of annual equity awards is retention-based. • Equity award that vests in annual installments over three years. Why We Pay This Element • Provide a base level of competitive cash compensation for executive talent. • Only component of compensation that is fixed. • Motivate and reward executives for performance based on the Company’s achievement of key financial measures and objective individual performance goals. • Motivate and reward executives for performance on key measures. • Align the interests of executives with long-term stockholder value. • Align the interests of executives with long- term stockholder value. • Retain executive talent. How We Determine Amount • Experience, job scope, market data, and individual performance. • Senior executive base salaries, including those of the named executive officers, are approved by the Compensation Committee. • Payments based on corporate performance related to: • Adjusted funds from operations • Return on invested capital • Formulaic determination with limited discretion and a limit on the maximum amount payable. • Target awards are based on job scope, market data, and individual performance. • Amount of the awards that ultimately vest is based on performance against corporate objectives and relative TSR measures. 36 HOST HOTELS & RESORTS, INC.