2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 62 SHUTTERFLY SILICON LABS SONOCO PRODUCTS COMPANY SPROUTS FARMERS MARKET PROXY STATEMENT TABLE OF CONTENTS 2 QUESTIONSANDANSWERSABOUTTHEANNUALMEETING 7 PROPOSALNO.1 ELECTIONOFDIRECTORS 8 BoardofDirectors 13 ExecutiveOfficers 16 CORPORATEGOVERNANCE 21 SECURITYOWNERSHIPOFCERTAINBENEFICIAL OWNERSANDMANAGEMENT 23 SECTION16(A)BENEFICIALOWNERSHIP REPORTINGCOMPLIANCE 24 PROPOSALNO.2 ADVISORYVOTETOAPPROVE THECOMPANY’SEXECUTIVECOMPENSATION 25 COMPENSATIONDISCUSSIONANDANALYSIS 38 REPORTOFTHECOMPENSATIONANDLEADERSHIP DEVELOPMENTCOMMITTEEOFTHEBOARDOFDIRECTORS 39 COMPENSATIONTABLES 39 SummaryCompensationTable 40 GrantsofPlan-BasedAwards 41 OutstandingEquityAwardsatYear-End 42 OptionExercisesandStockVested 42 CEOPayRatio 42 PotentialPaymentsuponTerminationorChangeofControl 48 DIRECTORCOMPENSATION 50 PROPOSALNO.3 AMENDMENTOF2015EQUITY INCENTIVEPLAN 59 PROPOSALNO.4 RATIFICATIONOFSELECTIONOF INDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM 59 PrincipalAccountantFeesandServices 59 AuditFees 59 AuditRelatedFees 59 TaxFees 59 AllOtherFees 60 Pre-ApprovalPoliciesandProcedures 61 REPORTOFTHEAUDITCOMMITTEEOFTHEBOARD OFDIRECTORS 62 CERTAINTRANSACTIONS 62 OTHERMATTERS 63 ANNUALREPORTONFORM10-K A-1 APPENDIXASHUTTERFLY,INC.2015EQUITYINCENTIVEPLAN 2018 PROXY STATEMENT Table of Contents ProxyStatement ........................................................................ 1 MattersToBeConsideredatAnnualMeeting ......................................................... 3 ProposalOne:ElectionofDirectors ............................................................... 3 General ..................................................................................... 3 OtherDirectors .............................................................................. 5 BoardLeadership/Independence ............................................................... 7 CommitteesandMeetings ..................................................................... 7 DirectorNomination .......................................................................... 8 AttendanceatAnnualMeetings ................................................................. 9 StockholderCommunicationswiththeBoardofDirectors ........................................... 9 CodeofEthics ............................................................................... 9 RiskManagement ............................................................................ 9 DirectorCompensationandIndemnificationArrangements .......................................... 9 RecommendationoftheBoardofDirectors ....................................................... 10 ProposalTwo:RatificationofAppointmentofIndependentRegisteredPublicAccountingFirm ............ 11 RecommendationoftheBoardofDirectors ....................................................... 12 ProposalThree:AdvisoryVoteonExecutiveCompensation .......................................... 13 RecommendationoftheBoardofDirectors ....................................................... 13 OtherMatters .................................................................................. 14 OwnershipofSecurities ......................................................................... 15 CertainRelationshipsandRelatedTransactions,andDirectorIndependence .............................. 17 CertainRelationshipsandRelatedTransactions ................................................... 17 PoliciesandProcedureswithRespecttoRelatedPartyTransactions.................................. 17 DirectorIndependence ........................................................................ 17 AuditCommitteeReport ........................................................................... 18 ExecutiveOfficers ................................................................................ 19 CompensationDiscussionandAnalysis .............................................................. 21 2017BusinessResults ........................................................................ 21 2017BusinessHighlights ...................................................................... 21 SignificantExecutiveCompensationActions ...................................................... 22 SignificantCorporateGovernanceStandards ..................................................... 22 CompensationPhilosophy ..................................................................... 23 Compensation-SettingProcess ................................................................. 23 CompensationElements....................................................................... 25 Post-EmploymentCompensation ............................................................... 31 Welfare,Retirement,andOtherBenefits.......................................................... 31 IncomeTaxandAccountingConsiderations ...................................................... 32 CompensationCommitteeReportonExecutiveCompensation ...................................... 32 SummaryCompensation ...................................................................... 33 GrantsofPlan-BasedAwards .................................................................. 34 OutstandingEquityAwardsatFiscalYear-End .................................................... 35 OptionsExercisesandStockVestedTable ....................................................... 36 PotentialPaymentsUponTerminationorChangeinControl ......................................... 36 CompensationCommitteeInterlocksandInsiderParticipation ....................................... 37 EquityCompensationPlanInformation ........................................................... 38 i Amoreconnectedworldishere. Total of 02 pages in section TABLE OF CONTENTS Proxy Statement Summary .............. 1 Business Summary ..................... 2 General Information ................... 3 Corporate Governance ................. 8 Our Board ......................... 8 Board Diversity ...................... 12 Board Structure ...................... 12 Board Leadership Structure ............. 13 The Board’s Role in Risk Oversight ....... 13 Board Participation ................... 14 Board Committees ................... 14 Board Evaluations .................... 16 Identifying and Evaluating Director Candidates ....................... 16 Sustainability and Social Responsibility ... 17 Availability of Corporate Governance Information ....................... 17 Communications with our Board of Directors ......................... 17 Proxy Access ....................... 17 Proposal 1: Election of Directors .......... 18 Director Compensation ................ 19 Executive Officers ..................... 21 Executive Compensation ................ 23 Compensation Discussion and Analysis ... 23 Section One–Overview and Executive Summary ....................... 23 Section Two–Elements of our Compensation Program............ 27 Section Three – How Executive Pay is Established ..................... 30 Section Four–2017 Named Executive Officer Pay Actions ............... 33 Section Five–Executive Compensation Governance .................... 35 Compensation Committee Report ...... 37 Compensation Committee Interlocks and Insider Participation............... 37 Summary Compensation Table ....... 38 Grant of Plan-Based Awards ......... 39 Outstanding Equity Awards at Fiscal Year-End ...................... 40 Option Exercises .................. 41 Employment Agreements ............ 41 Potential Payments Upon Termination or Change in Control ............... 42 Pension Benefits and Nonqualified Deferred Compensation ........... 45 Team Member Benefit and Stock Plans ......................... 45 CEO Pay Ratio ................... 46 Equity Compensation Plan Information .... 47 Report of the Audit Committee ........... 48 Proposal 2: Advisory Vote on Executive Compensation (“Say-on-Pay”) ......... 50 Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm .................... 52 Section 16(a) Beneficial Ownership Reporting Compliance ............... 53 Security Ownership of Certain Beneficial Owners and Management ............ 54 Certain Relationships and Related Party Transactions ....................... 56 Deadline for Receipt of Stockholder Proposals ......................... 56 Director Nominations for Inclusion in our 2019 Proxy Materials (Proxy Access) ... 57 Other Matters ........................ 57 Appendix A ......................... A-1 Page Noticeof 2018Annual MeetingofShareholders 3 ProxyStatement 4 InformationConcerning theSolicitation 4 Proposal 1:ElectionofDirectors 7 InformationConcerningDirectors WhoseTermsContinue 9 CorporateGovernance 13 CorporateGovernanceGuidelines andCodeofBusinessConductandEthics 13 Director IndependencePolicies 13 MajorityWithheld –DirectorResignationPolicy 14 Board LeadershipStructure,Executive Sessions ofNon-managementDirectors andLeadDirector 14 Declassification of theBoard ofDirectors DirectorNominationProcess 14 ShareholderProxyAccess 15 Communicationswith theBoard ofDirectors 16 BoardMeetings andCommitteesof theBoard 16 AnnualPerformanceEvaluation of theBoard 18 TheBoard’sRole in theRiskManagement Process 18 CompensationCommittee Interlocks and InsiderParticipation 19 RelatedPartyTransactions 20 Section 16(a)BeneficialOwnership ReportingCompliance 21 SecurityOwnershipofCertain BeneficialOwners 21 SecurityOwnershipofManagement 22 Table of Contents Page ExecutiveCompensation 24 CompensationDiscussion andAnalysis 24 CompensationCommitteeReport 44 CompensationRiskReview 44 SummaryCompensationTable 45 2017Grants ofPlan-basedAwards 48 OutstandingEquityAwards at 2017FiscalYear-end 49 2017OptionExercises andStockVested 51 2017PensionBenefits 52 2017NonqualifiedDeferredCompensation 55 PotentialBenefitsPayable Immediately UponCertainSeparationEvents 58 PayRatio 59 DirectorCompensation 60 2017DirectorCompensationTable 61 Non-employeeDirectors’Outstanding EquityAwardsat2017FiscalYear-end 63 AuditCommitteeReport 64 IndependentRegistered PublicAccountingFirm 64 Proposal2:Ratificationof Independent RegisteredPublicAccountingFirm 65 Proposal3:AdvisoryResolution to ApproveExecutiveCompensation 66 IncorporationbyReference 66 ShareholderProposals forNextAnnualMeeting 67 DeliveryofDocuments to ShareholdersSharing anAddress 67 ElectronicAccess to AnnualMeetingMaterials 68 OtherMatters 68 Sono co Produc ts Compa ny 1 North Second Str eet Hartsvil le, South Caroli na 29550 US