Trex Company, Inc.
Description of Management Compensatory Plans and Arrangements
Components of Executive Compensation
In accordance with the rules of the New York Stock Exchange, all components of compensation for the chief executive officer
and other executive officers of Trex Company (the “Company”) are determined by the compensation committee of the board of
directors, all of whom meet the independence requirements prescribed by such rules.
The Company’s executive compensation program includes a base salary, annual cash bonuses and long-term incentive
compensation in the form of stock appreciation right awards and restricted shares issued under the Trex Company, Inc. 2005
Stock Incentive Plan (the “Stock Incentive Plan”).
Base Salary. Base salaries are the only non-variable element of the Company’s total compensation. They reflect each executive
officer’s responsibilities, the impact of each executive officer’s position, and the contributions each executive officer delivers to
the Company. Salaries are determined by competitive levels in the market for executives with comparable responsibilities and job
scope based on the Company’s peer group and the results of executive compensation surveys, as well as the Company’s
internal equity considerations. Each year, at its February meeting, the compensation committee reviews and establishes the
base salaries of the Company’s executive officers. Salary increases, if any, are based on individual performance, market
conditions and Company performance. To gauge market conditions, the compensation committee evaluates the peer group and
market data compiled by its consultant. Base salaries are set upon review of the peer group and market data provided to the
compensation committee upon consideration of the executive officer’s experience, tenure, performance and potential.
Annual Cash Bonuses. The Company pays annual cash bonuses to its Chief Executive Officer, other executive officers, and
other key employees generally based upon the