Note on Historical SBC and Why It Was Overstated (2) • Obviously, incremental $40 of SBC would not be viewed as a real economic expense if RSUs in question were share-settled. • The same exercise would be repeated in Year 3 for both RSUs granted in Year 1 and RSUs granted in Year 2. • The incremental “paper-only” SBC expense will keep accumulating over the years as long as the company performs well. • This is exactly what happened with CHUB’s SBC expense and this is exactly the reason why pre-spinoff SBC expense is grossly overstated. Caro-Kann Capital LLC 79