138/264 Executive Compensation Philosophy and Objectives We operate in the highly competitive and dynamic digital media industry as the world’s largest subscription music streaming service. This industry is characterized by rapidly changing market requirements and the emergence of new competitors. To succeed in this environment, we must continuously develop solutions that meet the needs of our rapidly growing User base in a rapidly changing environment, efficiently develop and refine new and existing products and services, and demonstrate a strong return on investment to our advertisers. To achieve these objectives, we need a highly talented and seasoned team of data scientists, engineers, product designers, product managers, and other business professionals. We recognize that our future success depends on our continuing ability to attract, develop, motivate, and retain highly qualified and skilled employees, which is driven by our compensation, culture and reputation, and the strength of our brand. We strive to create an environment that is responsive to the needs of our employees, is open towards employee communication and continual performance feedback, encourages teamwork, and rewards commitment and performance. The principles and objectives of our compensation and benefits programs for our executive leadership team and other employees are to: • Attract, engage, and retain the best executives to work for us, with experience and managerial talent enabling us to be an employer of choice in highly­competitive and dynamic industries; • Align compensation with our corporate strategies, business and financial objectives, and the long­term interests of our shareholders; • Motivate and reward executives whose knowledge, skills, and performance ensure our continued success; and • Ensure that our total compensation is fair, reasonable, and competitive. We compete with many other companies in seeking to attract and retain experienced and skilled executives. To meet this challenge, we have embraced a compensation philosophy that offers our executive leadership team competitive compensation and benefits packages including equity grants, which are focused on long­term value creation and that reward our executive leadership team for achieving our financial and strategic objectives. Roles of Our Board of Directors, Remuneration Committee, and Chief Executive Officer in Compensation Decisions The initial compensation arrangements with our executive leadership team, including the named executive officers, have been determined in arm’s­length negotiations with each individual executive. Typically, our CEO has been responsible for negotiating these arrangements, except with respect to his own compensation, with the oversight and final approval of the members of our board of directors or the remuneration committee. The compensation arrangements have been influenced by a variety of factors, including, but not limited to: • our financial condition and available resources; • our need for that particular position to be filled; • our board of directors’ evaluation of the competitive market based on the third­party data provided by Compensia, Inc. (“Compensia”), a national compensation consulting firm, competitive pay practices for comparable positions at companies of comparable scale and in relevant business segments, as further described below, and the experience of the members of the remuneration committee with other companies; • the length of service of an individual; and • the compensation levels of other members of the executive leadership team, each as of the time of the applicable compensation decision. 131