The Compensation/Nominating/Governance Committee (the "CNG Committee") of the Board of Directors has approved the following Charter of the Executive Compensation Subcommittee, which is intended to provide a framework for establishing, monitoring and approving certain compensation for executive employees.
I. Subcommittee Designation
There is a subcommittee of the CNG Committee called the Executive Compensation Subcommittee (the "Subcommittee").
II. Subcommittee Purpose
The purpose of the Subcommittee is to:
- Assist the CNG Committee and the Board of Directors in fulfilling their respective responsibilities relating to compensation of "executive officers" of the company, as such term is defined in Rule 3b-7 of the Securities Exchange Act of 1934, as amended (the "Executive Officers");
- Solely with respect to the Executive Officers, establish, administer and approve all compensation that is intended to qualify as "performance-based compensation" under Section 162(m) of the Internal Revenue Code, as amended, and the regulations promulgated thereunder ("Section 162(m) Compensation");
- Solely with respect to the Executive Officers and Section 162(m) Compensation, assist the CNG Committee in administering the company's long-term incentive plans in effect from time to time, and make all determinations required or provided for under such plans and under any award agreement entered into pursuant to such plans; and
- Together with the CNG Committee, prepare the disclosure required by Item 407 (e)(5) of Regulation S-K promulgated by the Securities and Exchange Commission.
III. Subcommittee Membership and Procedure
The Subcommittee consists of at least two members of the CNG Committee, each of whom, in addition to meeting the independence requirements set forth in the CNG Committee Charter, shall be an "outside director" as defined in the regulations promulgated under Section 162(m) of the Internal Revenue Code, as amended. The CNG Committee appoints the members of the Subcommittee annually. The members of the Subcommittee serve until their successors are appointed and qualify. The CNG Committee has the power at any time to change the membership of the Subcommittee and to fill vacancies in it, subject to such new member(s) satisfying the requirements described herein.
If a Subcommittee Chair is not designated by the CNG Committee or present, the members of the Subcommittee may designate a Chair by majority vote of the Subcommittee membership.
The Subcommittee holds regular meetings each year as often as the subcommittee deems appropriate. The Subcommittee Chair approves an agenda in advance of each meeting.
Except as expressly provided in this Charter, the by-laws of the company or the Corporate Governance Principles of the company, the Subcommittee may fix its own rules of procedure.
IV. Subcommittee Authority and Responsibilities
In performing its functions, the Subcommittee undertakes those tasks and responsibilities that, in its judgment, would most effectively contribute to and implement the purposes of the Subcommittee. The following functions are some of the common recurring activities of the Subcommittee in carrying out its duties:
- The Subcommittee reviews and approves corporate goals and objectives relevant to Section 162(m) Compensation for the CEO, evaluates the CEO's performance in light of those goals and objectives, and determines and approves the level of the CEO's Section 162(m) Compensation based on this evaluation.
- In determining the long-term incentive component of the CEO's Section 162(m) Compensation, the Subcommittee should, as it determines appropriate, consider the company's performance and relative stockholder return, the value of similar incentive awards to CEOs at comparable companies, and the awards given to the company's CEO in past years.
- The Subcommittee establishes the Section 162(m) Compensation structure for all other Executive Officers.
- Solely with respect to the Subcommittee's authority as set forth in paragraphs 1 through 3 above, the Subcommittee has, to the extent permitted by law and the applicable rules of the New York Stock Exchange, the authority to administer, establish, terminate or amend and to otherwise act for and on behalf of the Board of Directors with respect to executive compensation, incentive compensation, deferred compensation and stock option and restricted stock plans and programs of the company and its affiliated companies (hereinafter referred to as the "Executive Compensation Plans"), including other similar compensation plans the Subcommittee deems desirable to establish, terminate or amend from time to time, such authority hereby granted to the Subcommittee to include, without limitation, the power and authority to authorize the issuance of stock pursuant to such Executive Compensation Plans, in such manner as the Subcommittee will deem best for the interests of the company, in all cases in which specific directions have not been given by the Board.
- It is the responsibility of the Subcommittee to maintain minutes of its meetings and report, through its Chair, to the CNG Committee on significant results of each meeting.
- Subject to the terms of the Charter of the CNG Committee, (a) the Subcommittee may, in its sole discretion, retain (or terminate) or obtain the advice of any compensation consultant, independent legal counsel or other adviser and (b) the Subcommittee shall be directly responsible for the appointment, compensation and oversight of the work of any adviser retained by the Subcommittee. If the Subcommittee retains any compensation adviser (as defined in the Charter of the CNG Committee), it shall engage in the analysis in which the CNG Committee would be required to engage pursuant to the terms of its Charter (if the CNG Committee were hiring the compensation adviser). Nothing herein requires the Subcommittee to implement or act consistently with the advice or recommendations of any adviser or affects the ability or obligation of the Subcommittee to exercise its own judgment in fulfillment of its duties. Nothing herein requires any compensation adviser to be independent, only that the Subcommittee consider the independence factors described in the Charter of the CNG Committee before selecting or receiving advice from any compensation adviser. The Subcommittee may select or receive advice from any compensation adviser it prefers including ones that are not independent, after considering the independence factors described in the Charter of the CNG Committee. The company shall provide appropriate funding, as determined by the Subcommittee, for payment of reasonable compensation to any adviser retained by the Subcommittee.
- It is the responsibility of the Subcommittee to review and reassess the adequacy of this Charter at least annually and to recommend any proposed changes to the CNG Committee for approval. It is the responsibility of the Subcommittee to cause the Charter to be published in accordance with applicable NYSE regulations.
- It is the responsibility of the Subcommittee to annually review its own performance.
- In performing its duties, the Subcommittee is not providing any expert, professional or special assurances as to the matters addressed herein. Subcommittee members are not deemed to have accepted a duty of care greater than the duty of other directors. Nothing contained in this Charter is intended to alter the operation of the "business judgment rule" as interpreted under Delaware law.