2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 376 EXECUTIVE SUMMARY OF COMPENSATION DISCUSSION AND ANALYSIS The following table summarizes the principal components of our standard executive compensation program in Fiscal 2018. COMPENSATION ELEMENT PRINCIPLE OBJECTIVE AND LINK TO BUSINESS STRATEGY PERFORMANCE METRICS KEY FEATURES MORE DETAILS FIXED Base Salary To attract and retain key executive talent Not applicable No automatic or guaranteed increases Reviewed annually P. 26 FIXED WITH AT RISK COMPONENT Restricted Stock Awards To attract and retain key executive talent Align executives’ interests with those of stockholders Service-based vesting over four-year period subject to achievement of revenue target 25% of shares vest after first year; remainder vest ratably on a quarterly basis over subsequent three years P. 30 ALL AT RISK Annual Cash Bonus To encourage and reward performance that contributes to creating stockholder value To focus executives on growing key metrics that contribute to overall profitability and ability to grow our business Revenue, non-GAAP operating margin, non-GAAP operating cash flow and individual performance goals over one-year performance period Payout based on absolute performance against financial targets and achievement of individual goals with payout capped at 200% of target P. 26 Operating PSUs To encourage and reward financial performance that contributes to creating long-term stockholder value Align executives’ interests with those of stockholders Revenue and operating income growth relative to peer group over three-year performance period 2 payouts based on performance relative to peer group, capped at 200% of target, after two and three years P. 29 TSR PSUs To encourage and reward financial performance that contributes to creating long-term stockholder value Align executives’ interests with those of stockholders Growth in stock price plus dividends relative to peer group over three-year performance period Single payout based on performance relative to peer group, capped at 200% of target SEVERANCE Change in Control (“CIC”) To focus management on acting in the best interests of our stockholders in a CIC context Not applicable Double trigger-benefits paid only upon occurrence of CIC and termination without good cause or with good reason P. 41 Non-Change in Control To attract and retain key executive talent Not applicable Paid upon termination without good cause or with good reason Requires execution of non-compete/non-solicit BENEFITS Benefits To provide competitive benefits package to attract and retain talent Not applicable Same benefits as are provided to all of Company’s full-time employees • 401(k) Plan with company match • Medical, dental and vision plan • Life insurance benefit • Company charitable match 21 RED HAT, INC.