Summary of Key Terms of Non-Employee Director Compensation
Arrangements


Directors who are also employees of Digimarc receive
no additional compensation for their services as directors. Directors who are
not employees of Digimarc receive cash compensation and equity compensation as
described below. All directors are also reimbursed for reasonable and necessary
travel, communications, and other out-of-pocket business expenses incurred in
connection with their attendance at meetings, while on corporate business or
for continuing education related to their board service.


	
  Annual Cash Retainer

  	
   

  	
  $30,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Additional Annual Cash
  Retainers for:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lead Director

  	
   

  	
  $30,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Audit Committee Chair

  	
   

  	
  $20,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Audit Committee
  Member

  	
   

  	
  $10,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Compensation
  Committee Chair

  	
   

  	
  $10,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Compensation
  Committee Member

  	
   

  	
  $5,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Other Standing
  Committee Chair

  	
   

  	
  $7,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Other Standing
  Committee Member

  	
   

  	
  $3,750

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Additional fee for
  excess meetings *

  	
   

  	
  $1,000 for in-person attendance/

  $500 for teleconference

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Initial Option Grant

  	
   

  	
  20,000
  shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Annual Option Grant
  (Continuing Director)

  	
   

  	
  6,000
  shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Annual restricted Stock
  Grant (Continuing Director)

  	
   

  	
  3,000
  shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Annual Standing Committee Member Option Grant **

  	
   

  	
  3,000 shares

  	
   

  



 






*    In excess of eight meetings per year.


**  In 2006 the Board elected not to grant these
awards.


All
options are granted with an exercise price equal to the fair market value of
our stock on the grant date. Initial option grants vest and become exercisable
in 36 equal installments on each monthly anniversary of the grant date, such
that the stock option will be fully exercisable three years after the grant
date.  Annual option grants to continuing
directors, including annual option grants to standing committee members, are
made immediately following each annual meeting of shareholders and vest and
become exercisable in twelve equal installments on each monthly anniversary of
the grant date, such that the stock option will be fully exercisable one year
after the grant date.


The
restricted stock awards are subject to a forfeiture restriction that lapses as
to 100% of the shares subject to the award one year after the grant date.











 


The Board of Directors has discretion to elect not to
make the annual option and restricted stock grants to continuing directors and
standing committee members.  In 2006, the
Board elected not to make the annual 3,000 share grant to directors for service
on one or more committees.