70 Compensation Committee Report Franklin Covey 2000 Annual Report Mr. Whitman has agreed not to engage in any competitive activity with the Company. In addition, Mr. Whitman agrees not to attempt to solicit or hire key employees of the Company for a period of two years after termination of the agreement. The report was prepared by the Compensation Committee of the Board of Directors (the “Committee”), which is composed of independent directors who are not employees of the Company or its subsidiaries. The Committee has responsibility for all compensation matters for the Company’s Chairman and the Company’s President and Chief Executive Officer (the “Key Executives”). It also has the responsibility of administering the Incentive Plan. The Key Executives determine the amount of cash compensation for executive officers other than the Key Executives. The Committee determines the amount of cash compensation under the Incentive Plan for all executive officers, including the Key Executives. The current members of the Committee are Kay Stepp, who serves as Chairperson, Robert Daines, Dennis Heiner, Brian Krisak and Steven Wheelwright. The Committee met four times during fiscal year 2000.  Executive Compensation Philosophy. In 1997 and then revised in 2000, an executive compensation strategy and structure was created with assistance from the Board’s consultants, Schuster-Zingheim and Associates. The executive compensation program enables the Company to attract, motivate and retain senior management by providing a competitive total compensation opportunity. Variable performance-based cash incentive awards are an important element of the Company’s cash compensation philosophy. The Committee believes the executive compensation program strikes an appropriate balance between short- and long-term performance objectives. The overall executive compensation objective is pay for performance. The strategy is based on the following principles: (1) compensation is aligned with achieving the Company’s strategic business plan and is directly related to performance and value added; (2) compensa- tion promotes shared destiny and teamwork; (3) compen- sation attracts and retains qualified executives; (4) the greater the amount of direct influence on organizational performance, the greater the portion of pay at risk;  (5) stock ownership plans, such as executive stock loan programs or stock option issuance, aligns executive and shareholder interests in building Company value and  will be used as an incentive to executives for increasing Company value. Key Executive Compensation. Key Executive Compensa- tion consists of annual salaries and additional compensation in the form of cash performance-based bonuses, stock ownership plans, stock options and restricted stock awards as the Committee in its discretion awards to the Key Executives. The annual salaries of the Key Execu- tives are set at amounts that are deemed competitive for executives with comparable ability and experience, taking into account existing salaries with respect to executives in companies comparable in size and complexity to the Company. Performance-based bonuses were awarded to the Key Executives in 2000 reflecting the Company’s overall performance. Chairman, President and Chief Executive Officer’s Compensation. Mr. Whitman’s compensation for fiscal year 2000 was determined pursuant to the principles described above. The Committee concluded that the annual performance bonus for 2000 paid to Mr. Whitman fairly and adequately compensates him based on the overall performance of the Company.  Executive Stock Ownership Program. The Company believes it is essential for all executive officers to have a vested interest in the Company, thereby aligning the long-term interest of executives with those of stock- holders. Each executive officer is required (encouraged?) to accumulate and maintain ownership in the Company equal to 25 percent of their annual income, including performance-based bonuses. In this connection, the Company has facilitated personal loans to the executives through lending institutions to buy the stock on the open market. The stock acts as collateral for the full- recourse loans with the Company providing a guarantee to the lending institutions for the loans.  Incentive Stock Option Program. The Company believes it is essential for all executive officers to receive Incentive Stock Options (“ISOs”) under the Incentive Plan, thereby aligning the long-term interests of execu- tives with those of stockholders. The Company adopted the Incentive Plan in 1992, charging the Committee with responsibility for its administration. These ISOs gener- ally vest over a four-year period and expire ten (10) years from the date of grant. If an executive officer’s employ- ment terminates prior to applicable vesting dates, the officer generally forfeits all ISOs that have not yet vested. The Committee believes that the grant of these ISOs to executive officers is highly desirable because it motivates these officers to continue their employment with the Company and creates strong incentives to maximize the growth and profitability of the Company. As of August 31, 2000, executive officers held incentive stock options to purchase an aggregate of 381,300 shares of Common Stock granted under the direction of the Committee pursuant to the Incentive Plan since its inception in 1992. Of those options, 103,159 are currently exercisable. Compensation Committee Report