Company: COST
Filing Date: 2025-12-04
Form Type: DEF 14A
Source: 0000909832-25-000159
Chunk: 22

Company: COSTCO WHOLESALE CORP /NEW
Filing Date: 2025-12-04
Form: DEF 14A
Chunk 22
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 the Company’s long-standing approach to executive compensation, which has made equity awards the most significant form of compensation. The Committee did not reevaluate for fiscal year 2025 whether there is an optimal mix of equity, salary, bonus and other compensation components for each executive officer. Rather, it relied upon the fact that the current structure has been utilized successfully in years past and gave more particular attention to the incremental changes in the components of the mix and the value of the total compensation packages.

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RSUs . RSU grants represent the largest component of compensation, based on their fair value at the time of grant. The Committee believes that emphasizing this form of compensation helps align the interests of employee-grantees with those of shareholders, both in the shorter term (with one-year performance conditions) and in the longer term (with share ownership requirements and time-based vesting of up to five years, subject to earlier vesting for long service, as described below). All named executive officers received performance-based RSU grants for fiscal 2025.

Base salary . Base salary is the second largest compensation component. It is consistent with the need for executive officers to have predictable cash compensation, which has been subject generally to modest annual increases.

Cash bonus. Cash bonuses are based on a variety of metrics. They address short-term incentives and are linked to performance during the fiscal year. Historically, at least some portion of the cash bonuses has been paid each year. For fiscal 2025, the Committee believes that maintaining cash bonuses at or near the current proportion is consistent with preferring long-term equity incentives as being in the greater interest of the Company and its shareholders. Approximately 8,000 employees were eligible for cash bonuses for fiscal 2025. To be eligible for the annual bonus, the individual must be employed by the Company at the time the bonuses are paid (historically in November).

Other elements . Consistent with its position as a low-overhead operator, the Company has modest “other compensation.” Significant components of this compensation include health care and helping executives fund their retirement needs (through the 401(k) and the deferred compensation plans); the Company provides no pensions.

These components of compensation mix incentives that are intended to reward shorter-term (twelve months) and longer-term performance (five years and beyond). Shorter-term incentives come primarily from the initial award of RSUs being subject to achievement of a one-year performance metric and, to a significantly lesser extent, cash bonuses that are subject to one-year performance metrics. Longer-term