MEMORANDUM

TO FROM DATE RE

All US Associates, Managing Associates and Senior Associates Siobhan Handley, Tom Coleman and Laura Saklad January 13, 2014 2013 US Partner-Track Associate Bonuses

We are pleased to inform you that we have completed our 2013 bonus process for all US Associates, Managing Associates and Senior Associates. Bonus Criteria & Process Our bonus program allows for our highest-performing associates to earn more in total compensation than at competitor firms. Consistent with a merit-based system, individual bonuses vary based on each associates contributions using the bonus criteria as follows: work quality; productivity, which includes hours and efficiency; contribution to the practice group; and contribution to the Firm. In consultation with the PDC, each practice group determined merit bonuses for their associates based upon these criteria. We do not have a strict hours requirement, however associates had the best chance of receiving a merit bonus if they had 1,900 client representation hours (billable, pro bono, and Orrick as a client) plus a PDC rating of VG or E. Bonus Outcome We are pleased to share that 74% of all US bonus eligible associates1 received a bonus. For reference, the chart below shows the market scales2 and Orricks maximum merit bonus potential by role and number of years in role.
All associates, other than first year associates who started at the firm after June 30, 2013, were bonus eligible. For NY, SF, SV, DC, LA, and OC, we used the 2013 NY market scale; for PO, SE, and SC, we used an adjusted scale consistent with the differential in our base salary scale.
1 2

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NY/SF/SV/DC/LA/OC Position Class Year Market Scale Orricks maximum merit bonus for role/level $70,000 $60,000 $50,000 $44,000 $37,000 $25,000 $16,500 $12,500

PO/SE/SC Market Scale Orricks maximum merit bonus for role/level $64,000 $55,000 $46,000 $40,600 $34,300 $23,000 $15,100 $11,500

Senior Associate Managing Associate Associate

Year 2+ Year 1 Year 3 Year 2 Year 1 Year 3 Year 2 Year 1

$60,000 $50,000 $40,000 $34,000 $27,000 $20,000 $14,000 $10,000

$54,000 $45,000 $36,000 $30,600 $24,300 $18,000 $12,600 $9,000

Of those associates receiving a bonus, 37% are receiving a merit bonus that exceeds the market scale, broken down as follows: 26% of Associates received an over-market bonus: o 19% received bonuses that exceeded the market by up to $2,500; and o 7% received bonuses that exceeded the market by $2,501-$5,000. 42% of Managing Associates received an over-market bonus: o 30% received bonuses that exceeded the market by up to $5,000; and o 12% received bonuses that exceeded the market by $5,001-$10,000. 46% of Senior Associates received an over-market bonus: o 37% received bonuses that exceeded the market by up to $5,000; and o 9% received bonuses that exceeded the market by $5,001-$10,000.

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Time lag incentive program As you know, our Firm policy is that each attorney should enter and release time on a daily basis. As part of our bonus process this year, associates who are receiving a merit bonus might have their bonus amounts increased or decreased depending upon their time entry performance. We added a $2,500 incentive award to the merit bonus of associates who met the firms expectation and released time on a daily basis (meaning the associates had an annual average time lag of 1.09 or less). We added a $1,000 incentive award to the merit bonus of associates who entered and released time generally every other day (meaning the associates had an annual average time lag of 1.1 2.49). Associates with an average time lag of 3.5 to 9.9 days received a 5% merit bonus reduction (to a maximum of $2,500). Associates with an average time lag of 10 days or more received a 7.5% merit bonus reduction (to a maximum of $2,500). Of those associates receiving a merit bonus, 80% received a time lag award and 13% had a time lag reduction. Bonus Timeline Today, Fall 2013 reviews were distributed to PDC partners for delivery over the next two weeks. During your performance evaluation meeting, your 2014 base salary and your 2013 bonus will be communicated to you as well as any promotion message. Each associate receiving a bonus will receive payment on Friday, February 7th, net of all taxes, in the same form as the associates usual paycheck, either direct deposit or payroll check. Associates who are eligible to participate in the 401(k) plan are invited to make a deferral election through Schwab. Instructions on how to make a deferral are included in the email that accompanied this memo. Please do not hesitate to contact your groups Talent Model Partner or any of us if you have any questions. We thank you for your contribution to the success of the firm. S.H. T.C. L.S.

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