PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS

     This Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors of Compass Group Diversified Holdings LLC, which we refer to as the Company, a Delaware limited liability company, for the 2008 Annual Meeting of Shareholders of Compass Diversified Holdings, which we refer to as the Trust, to be held on May 23, 2008 at 10:00 a.m., Eastern Time, at the Doubletree Hotel, 789 Connecticut Avenue, Norwalk, Connecticut 06854 and for any adjournments or postponements of the 2008 Annual Meeting of Shareholders. We refer to the 2008 Annual Meeting of Shareholders as the Annual Meeting. The notice of annual meeting, proxy statement and proxy are first being mailed or given to shareholders on or about April 18, 2008.

PURPOSE OF MEETING

     As described in more detail in this proxy statement, the Annual Meeting is being held for the following purposes:

	•		to elect two directors to our board of directors, each to serve for a three-year term;
	•		to vote on a proposal to ratify the selection of Grant Thornton LLP to serve as the independent auditor for the Trust and the Company for the fiscal year ending December 31, 2008; and
	•		to transact such other business as may properly come before the meeting.

ATTENDING AND VOTING AT THE ANNUAL MEETING

     The Bank of New York has been selected as our inspector of election. As part of its responsibilities, The Bank of New York is required to independently verify that you are a shareholder of Compass Diversified Holdings eligible to attend the Annual Meeting, and to determine whether you may vote in person at the Annual Meeting. Therefore, it is very important that you follow the instructions below to gain entry to the Annual Meeting.

Check-in Procedure for Attending the Annual Meeting

     Shareholders of Record. The documents you will need to provide to be admitted to the Annual Meeting depend on whether you are a shareholder of record or you represent a shareholder of record.

	•		Individuals. If you are a shareholder of record holding shares in your own name, you must bring to the Annual Meeting a form of government-issued photo identification (e.g., a driver’s license or passport). Trustees who are individuals and named as shareholders of record are in this category.
	•		Individuals Representing a Shareholder of Record. If you attend on behalf of a shareholder of record, whether such shareholder is an individual, corporation, trust or partnership:

	•		you must bring to the Annual Meeting a form of government-issued photo identification (e.g., a driver’s license or passport); AND
	•		either:
	•		you must bring to the Annual Meeting a letter from that shareholder of record authorizing you to attend the Annual Meeting on their behalf; OR
	•		we must have received by 5:00 p.m., Eastern Time, on May 22, 2008 a duly executed proxy card from the shareholder of record appointing you as proxy.

APPOINTMENT OF PROXY

General

     Shareholders of Record. We encourage you to appoint a proxy to vote on your behalf by promptly submitting the enclosed proxy card, which is solicited by our Board and which, when properly completed, signed, dated and returned to us, will ensure that your shares are voted as you direct. We strongly encourage you to return your completed proxy to us regardless of whether you will attend the Annual Meeting to ensure that your vote is represented at the Annual Meeting.

     PLEASE RETURN YOUR PROXY CARD TO US IN THE ACCOMPANYING ENVELOPE NO LATER THAN 5:00 P.M., EASTERN TIME, ON MAY 22, 2008. IF WE DO NOT RECEIVE YOUR PROXY CARD BY THAT TIME, YOUR PROXY WILL NOT BE VALID. IN THIS CASE, UNLESS YOU ATTEND THE ANNUAL MEETING, YOUR VOTE WILL NOT BE REPRESENTED.

     The persons named in the proxy card have been designated as proxies by our Board. The designated proxies are officers of the Company. They will vote as directed by the completed proxy card.

     Shareholders of record may appoint another person to attend the Annual Meeting and vote on their behalf by crossing out the Board-designated proxies, inserting such other person’s name on the proxy card and returning the duly executed proxy card to us. When the person you appoint as proxy arrives at the Annual Meeting, the inspector of election will verify such person’s authorization to vote on your behalf by reference to your proxy card. If you would like to appoint a person as proxy other than those designated by our Board, you must do so by using the proxy card, as described above.

     If you wish to change your vote, you may do so by revoking your proxy before the Annual Meeting. Please see “APPOINTMENT OF PROXY — Revocation of Proxy” below for more information.

     Beneficial Owners. If you hold your shares in street name, these proxy materials are being forwarded to you by your bank, broker or their appointed agent. You should also have received a voter instruction card instead of a proxy card. Your bank or broker will vote your shares as you instruct on the voter instruction card. We strongly encourage you to promptly complete and return your voter instruction card to your bank or broker in accordance with their instructions so that your shares are voted. As described above, you may also request a legal proxy from your bank or broker to vote in person at the Annual Meeting.

Voting by the Designated Proxies

     The persons who are the designated proxies will vote as you direct in your proxy card or voter instruction card. Please note that proxy cards returned without voting directions, and without specifying a proxy to attend the Annual Meeting and vote on your behalf, will be voted by the proxies designated by our Board in accordance with the recommendations of our Board. Our Board recommends:

	•		a vote FOR each of the two nominees for director, each to serve for a three-year term (Proposal 1); and
	•		a vote FOR the proposal to ratify the selection of Grant Thornton LLP as the Trust’s and the Company’s independent auditor for the fiscal year ending December 31, 2008 (Proposal 2).

     If any other matter properly comes before the Annual Meeting, your proxies will vote on that matter in their discretion.

Revocation of Proxy

     You may revoke or change your proxy before the Annual Meeting by:

	•		sending us a duly executed written notice of revocation prior to the Annual Meeting;
	•		attending the Annual Meeting and voting in person; OR
	•		ensuring that we receive from you, prior to 5:00 p.m., Eastern Time, on May 22, 2008 a new proxy card with a later date.

     Any written notice of revocation must be sent to the attention of James J. Bottiglieri, Secretary, Compass Group Diversified Holdings LLC, Sixty One Wilton Road, Westport, Connecticut 06880 or by facsimile to (203) 221-8253.

APPROVAL OF PROPOSALS AND SOLICITATION

     Each shareholder who owned shares of Trust stock on April 10, 2008, the record date for the determination of shareholders entitled to vote at the Annual Meeting, is entitled to one vote for each share of Trust stock. On April 10, 2008, we had 31,525,000 shares of Trust stock issued and outstanding that were held by approximately 7000 beneficial holders.

Quorum

     Under the Amended and Restated Trust Agreement of the Trust, dated April 25, 2006, as amended, which we refer to as the Trust Agreement, the shareholders present in person or by proxy holding a majority of the outstanding shares of Trust stock entitled to vote shall constitute a quorum at a meeting of shareholders of Compass Diversified Holdings. Holders of shares of Trust stock are the only shareholders entitled to vote at the Annual Meeting. Shares represented by proxies that are marked “abstain” will be counted as shares present for purposes of determining the presence of a quorum. Shares of Trust stock that are represented by broker non-votes will be counted as shares present for purposes of determining the presence of a quorum. A broker non-vote occurs when the broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power to vote on that proposal without specific voting instructions from the beneficial owner. All of the proposals described in this proxy are discretionary items.

     If the persons present or represented by proxies at the Annual Meeting do not constitute a majority of the holders of outstanding Trust stock entitled to vote as of the record date, we will postpone the Annual Meeting to a later date.

Approval of Proposals

     For the election of directors (Proposal 1), the affirmative vote of at least a plurality of the votes cast on such proposal is required. For the approval of the proposal to ratify the selection of Grant Thornton LLP as the independent auditor for the Trust and the Company (Proposal 2), the affirmative vote of at least a majority of the outstanding shares present in person or represented by proxy at the annual meeting is required. An abstention will not be counted as a vote cast. With the exception of certain business combinations, as such term is defined in the Trust Agreement, any other proposal that properly comes before the Annual Meeting must be approved by the affirmative vote of at least a majority of the votes cast. A broker non-vote would also not be counted as a vote cast.

     Proposals 1 and 2 are both “discretionary” items. Nasdaq Global Select Market Exchange, which we refer to as Nasdaq, member brokers that do not receive instructions from beneficial owners may vote your shares in their discretion. We currently do not have any proposals that are “non-discretionary” items. In the case of non-discretionary items, member brokers may not vote on the proposal without specific voting instructions from beneficial owners, resulting in a broker non-vote.

     Under the terms of the Second Amended and Restated Operating Agreement of Compass Group Diversified Holdings LLC, dated as of January 9, 2007, which we refer to as the LLC Agreement, and the Trust Agreement, with respect to those matters subject to vote by the members of the Company, the Company will act at the direction of the Trust. The Trust Agreement requires Compass Diversified Holdings to vote 100% of the limited liability interests of the Company, or the LLC interests, of which it is the sole holder, in the same proportion as the vote of holders of the Trust stock. In this way the voting rights of members of the Company will effectively be exercised by the shareholders of the Trust by proxy. The LLC Agreement provides that the members are entitled, at the annual meeting of members of the Company, to vote for the election of all of the directors other than the director, appointed by our manager, Compass Group Management LLC, which we refer to as our Manager. At this meeting, Class II directors will be elected in accordance with the LLC Agreement. See “PROPOSAL 1: ELECTION OF DIRECTORS — Board Composition” for a description of Class II directors. The Trust will vote its LLC interests as directed at the Company’s annual members’ meeting promptly following the tabulation of votes cast at this Annual Meeting.

     All votes will be tabulated by Innisfree M&A Incorporated, which we refer to as Innisfree, the proxy tabulator and inspector of election appointed for the Annual Meeting. Innisfree will separately tabulate affirmative and negative votes, abstentions and broker non-votes.

Solicitation of Proxies

     We will bear the cost of the solicitation of proxies, including the preparation, printing and mailing of this proxy statement and the proxy card. We have also retained Innisfree to distribute copies of these proxy materials to banks, brokers, fiduciaries and custodians, or their agents, holding shares in their names on behalf of beneficial owners so that they may forward these proxy materials to our beneficial owners.

     We may supplement the original solicitation of proxies by mail with solicitation by telephone, telegram and other means by directors, officers and/or employees of our Manager. We will not pay any additional compensation to these individuals for any such services.

PROPOSAL 1:

ELECTION OF DIRECTORS

Board Composition

     Our board of directors, which we sometimes refer to as our Board, consists of seven directors, all of whom were initially appointed by our Manager, at the time of our initial public offering and four of whom are the Company’s independent directors. Our Board has the ability to decrease or increase the size of the board of directors to no less than five or up to thirteen directors, respectively. Six of our directors are elected by our shareholders and one director is appointed by our Manager. The Board is divided into three classes serving staggered three year terms. The terms of office of Classes I, II and III expire at different times in annual succession, with one class being elected at each annual meeting of shareholders. Messrs. Edwards and Lazarus are Class I members and will serve until the 2010 annual meeting. Mr. Bottiglieri is a member of Class II and is up for re-election at this year’s annual meeting and Messrs. Day and Ewing are members of Class III and will serve until the 2009 annual meeting. Mr. Waitman will not be standing for re-election as a Class II director at the Annual Meeting.

     Pursuant to the LLC Agreement, as holder of the allocation interests, our Manager has the right to appoint one director to the Company’s board of directors. Mr. Massoud, our Chief Executive Officer, was initially appointed as the Manager’s appointed director and is currently serving as the director appointed by our Manager. Any appointed director will not be required to stand for election by the shareholders.

Director Independence

     Pursuant to our governing documents, our Board will consist of at least a majority of independent directors at all times. Our Board has reviewed the materiality of any relationship that each of our directors has with the Trust or the Company, either directly or indirectly. Based on this review, the Board has determined that the following directors are “independent directors” as defined by the Nasdaq Global Select Market: Messrs. Edwards, Ewing and Lazarus. If elected as discussed below, Gordon Burns will be an independent director.

Election of Directors

     The Class II directors will be elected at the Annual Meeting and will serve a term that expires at our 2011 Annual Meeting. Mr. Bottiglieri has been nominated for re-election as a Class II director and Mr. Burns has been nominated for election as a Class II director. Each of Mr. Bottiglieri and Mr. Burns was nominated upon the recommendation of the nominating and corporate governance committee. We discuss the deliberations of the nominating and corporate governance committee concerning the nomination of Mr. Burns below under “BOARD OF DIRECTORS AND EXECUTIVE OFFICERS — Nominations of Directors.”

     The following paragraphs describe the business experience and education of Messrs. Bottiglieri and Burns.

     James J. Bottiglieri has served as a director of the Company since December 2005, as well as its chief financial officer since its inception on November 18, 2005. Mr. Bottiglieri has also been an executive vice president of our manager since 2005. Previously, Mr. Bottiglieri was the senior vice president/controller of WebMD Corporation. Prior to that, Mr. Bottiglieri was with Star Gas Corporation and a predecessor firm to KPMG LLP. Mr. Bottiglieri serves as a director for all of our subsidiary companies, except CBS Personnel Holdings, Inc. Mr. Bottiglieri is a graduate of Pace University.

     Gordon Burns has been a private investor since 1998. Most of his recent investments have been in the area of cyber security. Previously he was responsible for investment banking at UBS Securities and before that was a Managing Director at Salomon Brothers Inc. Mr. Burns was a director of Aztar Corp., formerly an NYSE company, from 1998 until 2007 when it was sold. Mr. Burns received a B.A. from Yale University and an M.B.A. from Harvard University.

     The following paragraphs describe the business experience and education of our Class I and III directors (not standing for re-election).

     Ted Waitman has served as a director of the Company since April 2006 and will not be standing for re-election as a Class II director at the Annual Meeting. Mr. Waitman is presently the chief executive officer of CPM-Roskamp Champion, or CPM. Since 1978, Mr. Waitman served in a variety of roles with CPM. Mr. Waitman is currently the president of the Process Equipment Manufacturers Association. Mr. Waitman is a graduate of the University of Evansville.

     Harold S. Edwards has served as a director of the Company since April 2006. Mr. Edwards has been the president and chief executive officer of Limoneira Company, an agricultural, real estate and community development company, since November 2004. Previously, Mr. Edwards was the president of Puritan Medical Products, a division of Airgas Inc. Prior to that, Mr. Edwards also worked with Fisher Scientific International, Inc., Cargill, Inc. and Agribrands International and the Ralston Purina Company. Mr. Edwards is a graduate of The American Graduate School of International Management (Thunderbird) and Lewis and Clark College.

     Mark H. Lazarus has served as a director of the Company since April 2006. Mr. Lazarus was the president of Turner Entertainment Group, overseeing TBS, Turner Network Television, Turner Classic Movies and Turner South, the Turner animation unit, from 2003 through 2008. Prior to that, Mr. Lazarus served in a variety of other roles for Turner Broadcasting and also worked for Backer, Spielvogel, Bates, Inc. and NBC Cable. Mr. Lazarus currently is a member of the boards of directors of High Museum of Art and is a national trustee for Boys and Girls Clubs of America. Mr. Lazarus is a graduate of Vanderbilt University.

     C. Sean Day has served as chairman of the board of directors of the Company since April 2006. Mr. Day is the president of Seagin International and was the chairman of our manager’s predecessor from 1999 to 2006. Previously, Mr. Day was with Navios Corporation and Citicorp Venture Capital. Mr. Day is currently the chairman of the boards of directors of Teekay Shipping Corporation; Teekay Offshore GP LLC, the general partner of Teekay Offshore Partners LP; Teekay GP L.L.C., the general partner of Teekay LNG Partners LP; Teekay Tankers Limited and a member of the board of directors of Kirby Corporation, all NYSE listed companies. Mr. Day is a graduate of the University of Capetown and Oxford University.

     I. Joseph Massoud has served as a director of the Company since December 2005, as well as its chief executive officer since its inception on November 18, 2005. Mr. Massoud has also been the managing partner of our manager and its predecessor since 1998. Previously, Mr. Massoud was with Petroleum Heat and Power, Inc. Colony Capital, Inc., and McKinsey & Co. Mr. Massoud currently serves as a director for all of our subsidiary companies, as well as for Teekay GP L.L.C., the general partner of Teekay LNG Partners LP, a NYSE company. Mr. Massoud is a graduate of Claremont McKenna College and the Harvard Business School.

     D. Eugene Ewing has served as a director of the Company since April 2006. Mr. Ewing has been the managing member of Deeper Water Consulting, LLC, a private wealth and business consulting company since March, 2004. Previously, Mr. Ewing was with the Fifth Third Bank. Prior to that, Mr. Ewing was a partner in Arthur Andersen LLP. Mr. Ewing is on advisory boards for the business schools at Northern Kentucky University and the University of Kentucky. Mr. Ewing is also the chairman of the board of directors of CBS Personnel Holdings, Inc. and a director of a private trust company located in Wyoming. Mr. Ewing is a graduate of the University of Kentucky.

Recommendation of the Board

     Our board of directors recommends that you vote FOR the election of Messrs. Bottiglieri and Burns to our Board as Class II directors for a term ending at our 2011 Annual Meeting.

PROPOSAL 2:

RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR

General

     Our Board has recommended and asks that you ratify the selection of Grant Thornton LLP as independent auditor for the Company and the Trust for the fiscal year ending December 31, 2008. You would be so acting based on the recommendation of our audit committee.

     Grant Thornton LLP was appointed by our audit committee to audit the annual financial statements for 2007 and 2006 fiscal years. Based on its past performance during these audits, the audit committee of the Board has selected Grant Thornton LLP as the independent auditor to perform the audit of our financial statements and internal control over financial reporting for 2008. Grant Thornton LLP is a registered public accounting firm. Information regarding Grant Thornton LLP can be found at: www.grantthornton.com.

     The affirmative vote of a majority of the outstanding shares present in person or represented by proxy at the annual meeting is required to ratify the appointment of Grant Thornton LLP. If you do not ratify the selection of Grant Thornton LLP, our Board will reconsider its selection of Grant Thornton LLP and may, in its sole discretion, make a new proposal for independent auditor.

     Representatives of Grant Thornton LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to questions.

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

Certain Information Regarding our Directors and Executive Officers

     The name and age of each director, nominee and executive officer and the positions held by each of them as of March 31, 2008 are as follows:

						Serving as Officer
Director		Age				or Director Since				Position
C. Sean Day			58				2006			Chairman/Director
Harold S. Edwards			42				2006			Director
D. Eugene Ewing			59				2006			Director
Mark H. Lazarus			44				2006			Director
Ted Waitman			58				2006			Director*
I. Joseph Massoud			40				2005			Director, Chief Executive Officer
James J. Bottiglieri			52				2005			Director, Chief Financial Officer and Secretary
Gordon Burns			57				—			Nominee

Board Meetings and Committees

     Our Board met 11 times in total in 2007. All independent directors attended at least 75% of the combined Board and committee meetings on which they served in 2007.

     The LLC Agreement gives our Board the authority to delegate its powers to committees appointed by the Board. All of our standing committees are composed solely of independent directors. Our committees are required to conduct meetings and take action in accordance with the directions of the Board, the provisions of our LLC Agreement and the terms of the respective committee charters. We have three standing committees: the audit committee, the compensation committee and the nominating and corporate governance committee. Copies of all committee charters are available on our website at www.compassdiversifiedholdings.com, and in print from us without charge upon request by writing to Investor Relations at our principal executive offices at Sixty One Wilton Road, Westport, Connecticut 06880. The information on our website is not, and shall not be deemed to be, incorporated by reference into this proxy statement or incorporated into any other filings that the Company or the Trust makes with the Securities Exchange Commission, which we refer to as the SEC.

     Audit Committee. The audit committee is comprised entirely of independent directors who meet the independence requirements of Nasdaq and Rule 10A-3 of the Exchange Act of 1934, which we refer to as the Exchange Act, and includes at least one “audit committee financial expert,” as required by applicable SEC regulations. The audit committee is responsible for, among other things:

	•		retaining and overseeing our independent accountants;
	•		assisting the Company’s board of directors in its oversight of the integrity of our financial statements, the qualifications, independence and performance of our independent auditors and our compliance with legal and regulatory requirements;
	•		reviewing and approving the plan and scope of the internal and external audit;
	•		pre-approving any audit and non-audit services provided by our independent auditors;
	•		approving the fees to be paid to our independent auditors;
	•		reviewing with our chief executive officer and chief financial officer and independent auditors the adequacy and effectiveness of our internal controls;
	•		preparing the audit committee report to be filed with the SEC; and
	•		reviewing and assessing annually the audit committee’s performance and the adequacy of its charter.

     Messrs. Edwards, Ewing and Waitman serve on our audit committee, and the Board has determined that Mr. Ewing qualifies as an audit committee financial expert as defined by the SEC. If elected, it is anticipated that Mr. Burns will be appointed to the audit committee to replace Mr. Waitman, who will not be standing for re-election as a Class II director at the Annual Meeting. The audit committee met eight times during 2007.

     Compensation Committee. The compensation committee is comprised entirely of independent directors who meet the independence requirements of Nasdaq. In accordance with the compensation committee charter, the members are “outside directors” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, and “non-employee directors” within the meaning of Section 16 of the Exchange Act. The responsibilities of the compensation committee include:

          Based upon the results of the nominating and corporate governance committee’s review of the foregoing factors, the nominating and corporate governance committee recommended to the Board that Mr. Burns be nominated for election to the Board at the Annual Meeting and the Board accepted such nomination.

Shareholder Nominations of Directors

     To make a director nomination, a shareholder must give written notice to our Secretary at our principal executive office at Sixty One Wilton Road, Westport, Connecticut 06880, Attention: Investor Relations. To be considered for inclusion in our proxy statement for the 2009 Annual Meeting of Shareholders, shareholder nominations must be received by the Company no later than January 23, 2009. In order for a notice to be timely, it must be delivered to our Secretary at the principal executive office described in the preceding sentence not less than 120 days nor more than 150 days prior to the first anniversary of the preceding year’s annual meeting. In the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by a shareholder must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting if first made by the Trust.

     When directors are to be elected at a special meeting, such notice must be given not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which a public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting.

     In addition to any other requirements, for a shareholder to properly bring a nomination for director before either an annual or special meeting, the shareholder must be a shareholder of record on both the date of the shareholder’s notice of nomination and the record date relating to the meeting.

     The shareholder submitting the recommendation must submit:

	•		the shareholder’s name and address as they appear on the share register of the Trust, as well as the name and address of the beneficial owner, if any, on whose behalf the nomination is made;
	•		the number of shares of Trust stock which are owned beneficially and of record by such shareholder and such beneficial owner, if any; and
	•		a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons pursuant to which the recommendation is being made by the shareholder.

     In addition, any such notice from a shareholder recommending a director nominee must include the following information:

	•		the candidate’s name, age, business address and residence address;
	•		the candidate’s principal occupation or employment;
	•		the number of shares of Trust stock that are beneficially owned by the candidate;
	•		a copy of the candidate’s resume;
	•		a written consent from the candidate to being named in the proxy statement as a nominee and to serving as director, if elected; and
	•		any other information relating to such candidate that would be required to be disclosed in solicitations of proxies for election of directors under the federal securities laws, including Regulation 14A of the Exchange Act.

     We may require any proposed nominee to furnish any additional information that we reasonably require to enable our nominating and corporate governance committee to determine the eligibility of the proposed nominee to serve as a director. Candidates are evaluated based on the standards, guidelines and criteria discussed above as well as other factors contained in the nominating and corporate governance committee’s charter, our corporate governance guidelines, other of our policies and guidelines and the current needs of the Board.

DIRECTOR COMPENSATION

     Our non-management directors each receive annual cash retainers of $40,000, or $60,000 if serving as the Company’s chairman, payable in equal quarterly installments, as well as cash compensation for attendance at committee meetings and an annual retainer for service as committee chairman, both as described below. Directors (including the chairman) are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the board of directors or committees and for any expenses reasonably incurred in their capacity as directors. The Company also reimburses directors for all reasonable and authorized business expenses related to service to the Company by the directors in accordance with the policies of the Company as in effect from time to time.

     Messrs. Edwards, Ewing, Lazarus and Waitman have been independent directors since the closing of our initial public offering in May 2006. If elected, Mr. Burns will be an independent director.

     Each member of the Company’s various standing committees also receives the following compensation related to service to these committees:

	•		for attending a committee meeting in person (if any): $2,000 for each meeting of the audit committee; $2,000 for each meeting of the nominating and corporate governance committee; and $2,000 for each meeting of the compensation committee; and
	•		for attending a telephonic committee meeting (if any): $1,000 for each meeting of the audit committee; $1,000 for each meeting of the nominating and corporate governance committee; and $1,000 for each meeting of the compensation committee.

     The chairperson of the audit committee, nominating and corporate governance committee and compensation committee also receive an annual cash retainer payable in equal quarterly installments of $10,000, $5,000 and $5,000, respectively.

     Non-management directors also receive on or around January 1 of each year $20,000, or $30,000 if serving as the Company’s chairman, of equity compensation. The non-management directors receive that number of shares of Trust stock that can be purchased with $20,000 or $30,000, as applicable, at the market price on the date of purchase.

     The following table provides compensation paid or accrued by us to our directors in 2007:

																		Change in
																		Pension Value
																		and Non-
																		Qualified
		Fees Earned												Non-Equity				Deferred
		or Paid in				Stock				Option				Incentive Plan				Compensation				All other
		Cash				Awards				Awards				Compensation				Earnings				Compensation
Name		($)				($)				($)				($)				($)				($)				Total
C. Sean Day		$	60,000			$	30,000	(1)		$	—			$	—			$	—			$	—			$	90,000
Harold S. Edwards			59,000				20,000	(1)			—				—				—				—				79,000
D. Eugene Ewing			63,000				20,000	(1)			—				—				—				—				83,000
Mark H. Lazarus			43,000				20,000	(1)			—				—				—				—				63,000
Ted Waitman			56,000				20,000	(1)			—				—				—				—				76,000
Totals		$	281,000			$	110,000			$		(2)		$		(2)		$		(2)		$	—			$	391,000

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

          We have entered into a management services agreement with our Manager, which we refer to as the Management Services Agreement. The Management Services Agreement defines our Manager’s duties and responsibilities and is subject to the oversight and supervision of our Board. Our Manager is responsible for the conduct of the Company’s day-to-day business and affairs and is entitled to receive a management fee for the provision of its services. The current executive officers, Messrs. Massoud and Bottiglieri, are employed by our Manager and are seconded to the Company, which means that they have been assigned by our Manager to work for the Company during the term of the Management Services Agreement between us and our Manager. The Company does not have any other executive officers. Our Manager determines and pays the compensation of these officers who we refer to as the “named executives,” subject to the reimbursement described below.

Overview of our Executive Compensation

     We do not pay any compensation to our executive officers seconded to us by our Manager. Our Manager is responsible for the payment of compensation to the executive officers seconded to us. We do not reimburse our Manager for the compensation paid to our Chief Executive Officer, I. Joseph Massoud. We do, however, pay our Manager a quarterly management fee and our Manager uses the proceeds from the management fee, in part, to pay compensation to Mr. Massoud. Mr. Massoud is the sole managing member of the Manager. The Company has the right to require the Manager to replace Mr. Massoud as the Chief Executive Officer.

Outstanding Equity Awards at Fiscal Year-End; Option Exercises and Stock Vested

     None of our named executives have ever held options to purchase interests in us or other awards with values based on the value of our interests.

Pension Benefits

     None of our named executives participate in or have account balances in qualified or non-qualified defined benefit plans sponsored by us.

Nonqualified Deferred Compensation

     None of our named executives participate in or have account balances in non-qualified defined contribution plans or other deferred compensation plans maintained by us.

Potential Payments upon Termination or Change in Control

     The following summarizes potential payments payable to our executive officers upon termination of employment or a change in control.

     Employment Agreement with James J. Bottiglieri. Pursuant to his employment agreement, if Mr. Bottiglieri terminates his employment for good reason or without good reason after the completion of two years of employment but prior to the completion of four years of employment or if the Manager terminates his employment other than for cause, Mr. Bottiglieri will be entitled to receive his accrued but unpaid base salary plus $300,000. The Company is accruing this obligation to Mr. Bottiglieri over a three year period and accrued $100,000 for this obligation during fiscal year 2007.

     Supplemental Put Agreement. Our Manager is also the owner of 100% of the allocation interests in the Company. Our Manager is owned and controlled by its managing member, our Chief Executive Officer, Mr. Massoud. Additionally, Mr. Bottiglieri indirectly shares in approximately 5% of the proceeds of the allocation interests. Concurrent with our initial public offering, we entered into a supplemental put agreement with our Manager, which we refer to as the Supplemental Put Agreement, pursuant to which our Manager shall have the right to cause the Company to purchase the allocation interests then owned by our Manager upon either (i) the termination of the Management Services Agreement (other than as a result of our Manager’s resignation), or (ii) our Manager resigns on any date that is at least three years after the closing of our initial public offering. Essentially, the put rights granted to our Manager require us to acquire our Manager’s initial allocation interests in the Company at a price based on the increase in fair value in the Company’s businesses over its basis in those businesses. If we terminate the Management Services Agreement, the payment to the Manager will be determined at two times the increase in fair value in the Company businesses over the Company’s initial basis in those businesses. Each fiscal quarter the fair value of our subsidiaries is estimated for the purpose of determining the Company’s potential liability associated with the Supplemental Put Agreement. Any change in the potential liability is accrued currently as a non-cash charge to earnings. For the year ended December 31, 2007, the Company accrued approximately $7.4 million for the potential liability associated with the Supplemental Put Agreement. The Company paid approximately $7.9 million for the Manager’s share of the profit allocation from the sale of Crosman Corporation in fiscal year 2007 which reduced this liability by the same amount. See the section “CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS — Contractual Arrangements with Related Parties — Supplemental Put Agreement” for additional information related to the Supplemental Put Agreement.

SHARE OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND
PRINCIPAL SHAREHOLDERS

     The following table sets forth information regarding the beneficial ownership of shares of Trust stock by each person who is known to us to be the beneficial owner of more than five percent of the outstanding shares of Trust stock, each of our directors and executive officers and our directors and executive officers as a group as of March 31, 2008, based on 31,525,000 shares issued and outstanding. All holders of shares of Trust stock are entitled to one vote per share on all matters submitted to a vote of holders of shares of Trust stock. The voting rights attached to shares of Trust stock held by our directors, executive officers or major shareholders do not differ from those that attach to shares of Trust stock held by any other holder. Under Rule 13d-3 of the Exchange Act, “beneficial ownership” includes shares for which the individual, directly or indirectly, has voting power, meaning the power to control voting decisions, or investment power, meaning the power to cause the sale of the shares, whether or not the shares are held for the individual’s benefit. The address for each Director, Executive Officer, and Pharos I, LLC is 61 Wilton Road, Westport, Connecticut, 06880. The address for CGI Diversified Holdings, LP, which we refer to as CGI, is Bayside House, Bayside Executive Park, West Bay Street & Blake Road, P.O. Box AP-59214, Nassau, Bahamas.

AUDIT COMMITTEE REPORT

     Our audit committee is composed of three independent directors, all of whom are financially literate. In addition, the Board has determined that Mr. Ewing, an independent director and the chairman of the audit committee, qualifies as an audit committee financial expert as defined by the SEC. The audit committee operates under a written charter, which reflects Nasdaq listing standards and Sarbanes-Oxley Act requirements regarding audit committees. A copy of the audit committee charter is available on the Company’s website at www.compassdiversifiedholdings.com.

     The audit committee’s primary role is to assist the Board in fulfilling its responsibility for oversight of (1) the quality and integrity of the consolidated financial statements and related disclosures, (2) compliance with legal and regulatory requirements, (3) the independent auditors’ qualifications, independence and performance and (4) the performance of our internal audit and control functions.

     The Company’s management is responsible for the preparation of the financial statements, the financial reporting process and the system of internal controls. The independent auditors are responsible for performing an audit of the financial statements in accordance with auditing standards generally accepted in the United States, and issuing an opinion as to the conformity of those audited financial statements to U.S. generally accepted accounting principles. The audit committee monitors and oversees these processes.

     The audit committee has adopted a policy designed to ensure proper oversight of our independent auditor. Under the policy, the audit committee is directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing any other audit review (including resolution of disagreements among management, the Manager, and the auditor regarding financial reporting), or attestation services. In addition, the audit committee is responsible for pre-approving any non-audit services provided by the Company’s independent auditors. The audit committee’s charter also ensures that the independent auditor discusses with the audit committee important issues such as internal controls, critical accounting policies, any instances of fraud and the consistency and appropriateness of our accounting policies and practices.

     The audit committee has reviewed and discussed with management and Grant Thornton LLP, the Company’s independent auditor, the audited financial statements as of and for the year ended December 31, 2007. The audit committee has also discussed with Grant Thornton LLP the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees). In addition, the audit committee has received from the independent auditor its written report required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed its independence from the Company and its management. The audit committee also considered whether the non-audit services provided by Grant Thornton LLP to us during 2007 were compatible with its independence as auditor.

     Based on these reviews and discussions, the audit committee has recommended to the Board, and the Board has approved, the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Members of the Audit Committee
D. Eugene Ewing, Chairman
Harold S. Edwards
Ted Waitman

     The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Exchange Act or the Securities Act of 1933, as amended, except to the extent that we specifically incorporate it by reference in such filing.

COMPENSATION COMMITTEE REPORT

     We have reviewed and discussed with management the Compensation Discussion and Analysis provisions to be included in the Company’s 2008 Proxy Statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934. Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the Compensation Discussion and Analysis referred to above be included in the Company’s proxy statement.

Members of the Compensation Committee
Harold S. Edwards
D. Eugene Ewing
Mark H. Lazarus

     The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Exchange Act or the Securities Act of 1933, as amended, except to the extent that we specifically incorporate it by reference in such filing.

CORPORATE GOVERNANCE

Corporate Governance Guidelines and Code of Ethics

     Our Board has adopted corporate governance guidelines that set forth our corporate governance objectives and policies and govern the functioning of the Board. Our corporate governance guidelines are available on our website at www.compassdiversifiedholdings.com and in print from us without charge upon request by writing to Investor Relations at Compass Group Diversified Holdings LLC, Sixty One Wilton Road, Westport, Connecticut 06880.

     We also have a code of ethics that sets forth our commitment to ethical business practices. Our code of ethics applies to our directors, officers and employees, including our Chief Executive Officer and Chief Financial Officer, and also applies to our Manager, its employees and any affiliates of our Manager that perform management services for us. Our code of ethics is available on our website and in print from us without charge upon request by writing to Investor Relations at Compass Group Diversified Holdings LLC, Sixty One Wilton Road, Westport, Connecticut 06880.

Communications with our Board

     Communications to our Board or to any director individually may be made by writing to the following address:

     Attention: [Board of Directors] [Board Member]

     c/o James J. Bottiglieri, Secretary

     Sixty One Wilton Road

     Westport, CT 06880

     Communications sent to the physical mailing address are forwarded to the relevant director, if addressed to an individual director or to the chairman of our Board if addressed to the Board.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Policy for Approval of Related Person Transactions

          Our independent directors, through the various committees of our board of directors, are responsible for reviewing and approving, prior to our entry into any such transaction, all transactions in which we are a participant and in which any of the following related parties have or will have a direct or indirect material interest:

	•		our Chief Executive Officer and/or Chief Financial Officer;
	•		our directors; and
	•		other members of the management team involved in the oversight of the day-to-day operations of the Company and its subsidiaries.

          Any transaction required to be disclosed pursuant to Item 404 of Regulation S-K (“related party transactions”) must be reviewed and approved for potential conflict of interest by our independent directors, through the various committees of our board of directors. The Company may not enter into or engage in any related party transaction with a related party without such approval. All related party transactions involving an acquisition from or sale to an affiliate of our Manager, including any entity managed by an affiliate of our Manager, must be submitted to the nominating and corporate governance committee for pre-approval. Details of related party transactions will be publicly disclosed as required by applicable law.

Relationships with Related Parties

Our Manager

     Our relationship with our Manager is governed principally by the following three agreements:

	•		the Management Services Agreement relating to the management services our Manager performs for us and the businesses we own and the management and transaction fees to be paid to our Manager in respect thereof;
	•		the Company’s LLC Agreement setting forth our Manager’s rights with respect to the allocation interests our Manager owns, including the right to receive profit allocations from the Company; and
	•		the Supplemental Put Agreement relating to our Manager’s right to cause the Company to purchase the allocation interests owned by our Manager.

          The Company will pay a profit allocation with respect to its businesses to our Manager, as holder of 100% of the allocation interests, upon the occurrence of certain events if the Company’s profits with respect to a business exceeding an annualized hurdle rate of 7%, which hurdle is tied to such business’ adjusted net assets (as defined in the LLC Agreement) relative to the sum of all of our subsidiaries’ adjusted net assets. The calculation of profit allocation with respect to a particular business will be based on:

	•		such business’ contribution-based profit, which generally will be equal to such business’ aggregate contribution to the Company’s profit during the period such business is owned by the Company; and
	•		the Company’s cumulative gains and losses to date.

          Generally, a profit allocation will be paid in the event that the amount of profit allocation exceeds the annualized hurdle rate of 7% in the following manner: (i) 100% of the amount of profit allocation in excess of the hurdle rate of 7% but that is less than the hurdle rate of 8.75%, which amount is intended to provide our Manager with an overall profit allocation of 20% once the hurdle rate of 7% has been surpassed; and (ii) 20% of the amount of profit allocation in excess of the hurdle rate of 8.75%. Our Manager has the right to cause the Company to purchase the allocation interests it owns, as described below under the heading “CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS — Supplemental Put Agreement.”

Supplemental Put Agreement

          As distinct from its role as our Manager, our Manager is also the owner of 100% of the allocation interests in the Company. Concurrent with our initial public offering, we entered into a Supplemental Put Agreement with our Manager pursuant to which our Manager shall have the right to cause the Company to purchase the allocation interests then owned by our Manager upon termination of the Management Services Agreement. Essentially, the put rights granted to our Manager require us to acquire our Manager’s allocation interests in the Company at a price based on the increase in fair value in the Company’s businesses over the Company’s basis in those businesses. If we terminate the Management Services Agreement, the payment to the Manager will be determined at two times the increase in fair value in the Company business over the Company’s initial basis in those two businesses. At any point in time, the supplemental put liability recorded on the Company’s balance sheet is our Manager’s estimate of what its allocation interests are worth based upon the increase in fair value of our businesses over our basis in those businesses. Because the supplemental put price would be calculated based upon an assumed profit allocation for the sale of all of our businesses, the growth of the supplemental put liability over time is indicative of our Manager’s estimate of the Company’s unrealized gains on its interests in our businesses. A decline in the supplemental put liability is indicative either of the realization of gains associated with the sale of a business and the corresponding payment of a profit allocation to our Manager (as with Crosman), or a decline in our Manager’s estimate of the Company’s unrealized gains on its interests in our businesses. We account for the change in the estimated value of the supplemental put liability on a quarterly basis in our income statement. The expected value of the supplemental put liability affects our results of operations but it does not affect our cash flows or our cash flow available for distribution. See the financial statements included in our annual report accompanying this proxy statement and footnotes B and O thereto for further information concerning the Supplemental Put Agreement.

CGI Diversified Holdings, L.P.

          In conjunction with the closing of our follow-on offering in May 2007, CGI purchased in a separate private placement transaction 1,875,000 shares at the follow-on offering price per share, having an aggregate purchase price of $30 million. In connection with CGI’s purchase of shares pursuant to the separate private placement transaction described above, we entered into a registration rights agreement with CGI for the registration of such shares under the Securities Act of 1933.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Exchange Act requires our directors and officers, and persons who beneficially own more than ten percent of our Trust stock, to file initial reports of ownership and reports of changes in ownership of our Trust stock and our other equity securities with the Securities and Exchange Commission. As a practical matter, we assist our directors and officers by monitoring transactions and completing and filing Section 16 reports on their behalf. Based upon this assistance, as well as upon our review of copies of reports filed pursuant to Section 16(a) of the Exchange Act, we believe that all filings required to be made were timely made in accordance with the requirements of the Exchange Act in 2007.

SHAREHOLDER PROPOSALS FOR THE 2009 ANNUAL MEETING OF SHAREHOLDERS

     To be considered for inclusion in our proxy statement for the 2009 Annual Meeting of Shareholders, shareholder proposals must be received by the Company no later than January 23, 2009 and no earlier than December 24, 2008. In order to be included in Company-sponsored proxy materials, shareholder proposals will need to comply with Rule 14a-8 promulgated under the Exchange Act. If you do not comply with Rule 14a-8, we will not be required to include the proposal in the proxy statement and the proxy card we will mail to shareholders. No other business (other than matters included in our proxy statement in accordance with Rule 14a-8) may be presented for action at the annual meeting unless a shareholder gives timely notice of the proposal in writing to the Secretary. To be timely, a shareholder’s notice is required to be delivered to the Secretary not less than 120 days no more than 150 days prior to the first anniversary of the preceding year’s annual meeting. Shareholder proposals should be sent to the Secretary at Compass Group Diversified Holdings LLC, 61 Wilton Road, Westport, Connecticut 06880, Attention: Investor Relations.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION REPORTS

     Copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as filed with the SEC, are available to shareholders free of charge on our website at www.compassdiversifiedholdings.com under the caption “Investor Relations — SEC Filings” or by writing to us at Sixty One Wilton Road, Westport, Connecticut 06880, Attention: Investor Relations.

OTHER MATTERS

     We know of no other business that will be brought before the Annual Meeting. If any other matter or any proposal should be properly presented and should properly come before the meeting for action, the persons named in the accompanying proxy will, at their discretion and in accordance with their best judgment, vote upon such proposal.