DECKERS OUTDOOR CORP

Our pay-for-performance philosophy demands that we offer performance-based compensation that is directly linked to factors that the Committee believes will lead to the creation of stockholder value. Specifically, we pay for performance by tying a significant portion of our executive compensation opportunity to the achievement of pre-established performance metrics that are reflective of our business and strategic objectives, as well as to increases in our stock price.

The Committee believes choosing the right performance metrics is critical to our ability to properly motivate our executives and advance our pay-for-performance philosophy. In particular, this requires that the performance metrics be reconsidered each year as our business and strategic objectives evolve to ensure they provide the appropriate barometer of our growth and success, and motivate the achievement of our objectives in line with our current strategic areas of focus and the trajectory of the business.

As a result of our strong commitment to our pay-for-performance philosophy, a substantial portion of our executives’ compensation opportunity is performance-based and not guaranteed. While we offer certain standard compensation elements that provide fixed payments or benefits, our executive compensation mix is heavily weighted toward compensation that is performance-based, variable or otherwise at risk, which we refer to as "performance-based." The Committee seeks to establish appropriate performance targets for the performance-based pay so as to ensure they align with our business and strategic objectives, are appropriately challenging to achieve, and mitigate our overall compensation-related risk.

As an example, for fiscal year 2024, fixed pay for our Chief Executive Officer represented only 11% of his target direct compensation opportunity for the year, while performance-based pay represented 89% of his target compensation. Thefixed pay reflects the value of base salary and limited employee benefits. The performance-based pay opportunities reflect a combination of the target value of the 2024 Annual Cash Incentive Awards and the value of the target number of 2024 LTIP PSUs, each of which are earned or vest only upon the achievement of pre-established Company performance metrics. In addition, the performance-based pay reflects the value of the 2024 Time-Based RSUs, which the Committee believes is appropriate to designate as such because our Chief Executive Officer is at risk of not receiving the full value of these awards since vesting is conditioned upon continued employment over an extended period of time, and the final value of the awards is subject to fluctuation based on our stock price.

The graphic below illustrates the amount of target performance-based pay opportunity versus fixed pay for our Chief Executive Officer for fiscal year 2024 and the breakdown of the various components of the compensation program on a percentage basis. "All Other Compensation" includes premiums for long-term disability insurance and life insurance, as well as Company matching contributions under our 401(k) plan.

We believe the significant focus on performance-based awards reflected in the graphic above, including the relative weighting of the various compensation elements, reflects our strong pay-for-performance alignment. In addition, while the graphic addresses the relative mix of compensation paid to our Chief Executive Officer, the compensation paid to each of our other NEOs reflects a similarly strong weighting of performance-based compensation to fixed compensation, further confirming pay-for-performance alignment across our executive leadership team.