IV. DUTIES AND RESPONSIBILITIES
A. Activities of the Committee
The following functions shall be the duties and responsibilities of the Committee. The Committee may assume additional duties and responsibilities as required or appropriate due to business, legislative, regulatory, legal or other conditions or changes, or as directed by the Board.
- Setting Compensation for Executive Officers and Directors
- 1.1. Review and discuss the overall compensation philosophy of the Company.
All Executive Officers
- 1.2. In connection with executive compensation programs (including cash, equity, benefits and perquisites):
- review and approve, or recommend to the Board, new executive compensation programs;
- periodically review the effectiveness of executive compensation programs to determine whether they support their intended purpose(s); and
- establish and periodically review policies for the administration of executive compensation programs.
- 1.3. Discuss the results of the shareholder advisory vote on “say-when-on-pay” and “say-on-pay,” if any, with regard to the named executive officers.
- 1.4. Review and approve, or recommend to the Board, any employment contracts or other transactions with current or former named executive officers, and all other Section 16 officers of the Company (the “Executive Officers”), including severance or termination arrangements.
- 1.5. Review compliance with share ownership requirements for the Company’s Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and other Section 16 officers under the Company’s Officer and Director Share Ownership Guidelines, annually measure progress against the guidelines and consider this progress in determining future equity grants.
Chief Executive Officer
- 1.6. Review and approve corporate goals and objectives relevant to the compensation of the CEO, including annual performance objectives, if any, either as a committee or together with the other independent directors if directed by the Board.
- 1.7. Evaluate the performance of the CEO in light of such goals and objectives and, either as a committee or together with the other independent directors if directed by the Board, review and approve the CEO’s (i) annual base salary, (ii) incentive bonus, (iii) equity-based incentive and other benefits, direct and indirect (iv) any employment agreements, severance agreement, transition or consulting agreement, retirement agreement or change of control protections and (v) any other material benefits, compensation or similar arrangements (excluding broad based programs), if any (including, without limitation, perquisites and any other form of compensation such as signing bonus or payment of relocation costs), including any changes to or terminations of any of the foregoing.
- 1.8. With respect to any actions taken by the independent directors pursuant to paragraphs 1.6 and 1.7 of this Section IV(A), the approval of a majority of the independent directors of the Board, adjusted as described below, shall be required to approve the following compensation, plans and equity grants:
- With respect to any element of the CEO’s compensation that is intended to qualify as performance-based compensation under Section 162(m), only those independent directors who qualify as “outside directors” (within the meaning of Section 162(m)) shall be entitled to approve and administer such compensation; and the approval of a majority of those independent directors shall be required.
- With respect to any element of the CEO’s compensation involving a grant of the Company’s securities, only those independent directors who qualify as “non-employee directors” (as defined in Rule 16b-3) shall be entitled to approve such grant and the approval of a majority of those independent directors shall be required.
Executive Officers (excluding the CEO)
- 1.9. Review and approve corporate goals and objectives relevant to executive officer compensation, including annual performance objectives, if any.
- 1.10. With advice from the CEO, review and approve, or make recommendations to the Board, with respect to the (i) annual base salary, (ii) incentive bonus, (iii) equity-based incentive and other benefits, direct and indirect, (iv) any employment agreements, severance agreement, transition or consulting agreement, retirement agreement or change of control protections; and (v) any other material benefits, compensation or similar arrangements (excluding broad based arrangements), if any (including, without limitation, perquisites and any other form of compensation such as signing bonus or payment of relocation costs), of the Executive Officers, including any changes to or terminations of any of the foregoing.
- 1.11. Review and recommend to the Board the compensation for non-employee directors.
- Administration of Incentive and Equity-Based Compensation Plans
- 2.1. Oversee the design and administration of the Company’s compensation policies, practices and benefit programs for employees generally (including Executive Officers), including the activities of the individuals responsible for administering such programs, with regard to material business risk associated with the operation of these programs and determine periodically whether risks arising from any of such policies, practices or programs are reasonably likely to have a material adverse effect on the Company.
- 2.2. Review and approve, or recommend to the Board, the Company’s incentive compensation plans, equity-based plans, and equity-based awards for Executive Officers.
- 2.3. Serve as the plan committee or administrator designated in material short-term and long-term cash incentive plans of the Company or appoint and oversee an employee or group of employees to serve as the plan committee or administrator of general employee compensation programs, as appropriate.
- 2.4. Review and make recommendations to the Board with respect to shareholder proposals related to compensation matters.
B. Selecting and Retaining Advisors
The Committee is empowered to study or investigate any matter within the Committee’s oversight role, or as it deems appropriate. The Committee may, in its sole discretion, retain, obtain advice from, terminate, determine terms of service of, and approve the fees of, any advisors to the Committee, including legal counsel and consultants (each of whom is hereafter referred to as an “Advisor”) to assist the Committee in evaluating director, CEO or executive officer compensation, or other matters as the Committee may direct. The Committee shall be directly responsible for the oversight of the work of any such Advisor. The Company will provide for funding for payment of any such Advisor.
The Committee must consider the following factors and any additional factors required by NASDAQ before selecting or receiving advice from an Advisor (other than in house legal counsel):
- the provision of other services to the Company by the person that employs the Advisor;
- the amount of fees received from the Company by the person that employs the Advisor, as a percentage of the total revenue of the person that employs such Advisor;
- the policies and procedures of the person that employs the Advisor that are designed to prevent conflicts of interest;
- any business or personal relationship of the Advisor with a member of the Committee;
- any shares of the Company owned by the Advisor; and
- any business or personal relationship of the Advisor or the person employing the Advisor with an executive officer of the Company.
The Committee may select, or receive advice from, any Advisor, including an Advisor that is not found to be independent, so long as the Committee has first considered the foregoing factors in its selection process for all Advisors other than in-house legal counsel.
On at least an annual basis, the Committee shall consider whether any Advisor has a conflict of interest as defined by the rules of the SEC, including consideration of the six factors affecting independence listed above.
The Committee shall also establish policies and procedures for the pre-approval of compensation-related or other services to be provided by any Advisor retained by the Committee, and approve in advance any compensation or non-compensation engagement or relationship between the Company and such Advisor.
- Prepare or review the compensation committee report on executive officer compensation as required by the SEC to be included in the Company’s annual proxy statement or annual report on Form 10-K filed with the SEC.
- Review and discuss the “Compensation Discussion and Analysis” (“CD&A”)” to be included in the Company’s annual proxy statement and annual report on Form 10-K, in accordance with the rules of the SEC and, based on such review, determine whether or not to recommend to the Board that the CD&A be included in the Company’s annual proxy statement and annual report on Form 10-K, as applicable.
- Report regularly to the Board including:
- following all meetings of the Committee; and
- with respect to such other matters as are relevant to the Committee’s (or its delegate’s) discharge of its responsibilities.
The Committee shall provide such recommendations to the Board as the Committee may deem appropriate. The report to the Board may take the form of an oral report by the Chairperson or any other member of the Committee designated by the Committee to make such report.
- Maintain minutes or other records of meetings and activities of the Committee.