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I. Purpose
The Compensation Committee (the “Committee”), appointed by and acting on behalf of the Board of Directors (the “Board”), shall be responsible for formulating, evaluating and approving compensation of the Company’s directors, executive officers and key employees, overseeing all compensation programs involving the use of the Company’s stock, and producing an annual report on executive compensation for inclusion in the Company’s proxy statement for its annual meeting of stockholders, in accordance with applicable rules and regulations.
II. Composition
The Committee shall be comprised of two or more directors as determined by the Board, each of whom shall be independent directors, and free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. Committee members shall qualify as independent directors under the listing standards of the Nasdaq Stock Market, as “non-employee” directors within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, and “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and shall satisfy any other necessary standards of independence under the federal securities and tax laws.
Committee members shall be elected by the Board on the recommendation of the Corporate Governance and Nominating Committee. The members shall serve until their resignation, retirement, removal by the Board or until their successors shall be appointed and qualified. No member of the Committee shall be removed except by a majority vote of the independent directors then in office. Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership.
III. Meetings
The Committee shall meet in person or telephonically at least twice a year and at such other times as it deems necessary to carry out its responsibilities. The Chair of the Committee and/or the Board may call such meetings. The agenda for each Committee meeting shall be established by the Chair with the assistance of appropriate members of management. Each Committee member is free to raise at any Committee meeting subjects that are not on the agenda for that meeting. If the Committee Chair is not present at a meeting, the Committee member most senior in service on the Board shall serve as Chair. A majority of the members of the Committee shall constitute a quorum. The act of a majority of the members of the Committee present at which a quorum is present shall be the act of the Committee. Without a meeting, the Committee may act by unanimous written consent of all members.
The Committee may invite to its meetings any member of management of the Company and such other persons as it deems appropriate in order to carry out its responsibilities. The Committee may meet in executive session as the Committee deems necessary and appropriate.
IV. Responsibilities and duties
To fulfill its responsibilities and duties the Committee shall:
1. Establish a compensation policy for executives designed to (i) enhance the profitability of the Company and increase stockholder value, (ii) reward executive officers for their contribution to the Company’s profitability and for increases in stockholder value, (iii) recognize individual initiative, leadership, achievement, and other contributions and (iv) provide competitive compensation that will attract and retain qualified executives.
2. Subject to variation where appropriate, the compensation policy for executive officers and other key employees shall include (i) base salary, which shall be set on an annual or other periodic basis, (ii) annual or other time or project based incentive compensation, which shall be awarded for the achievement of predetermined financial, project, research or other designated objectives of the Company as a whole and of the executive officers and key employees individually and (iii) long-term incentive compensation in the forms of equity participation and other awards with the goal of aligning, where appropriate, the long-term interests of executive officers and other key employees with those of the Company’s stockholders and otherwise encouraging the achievement of superior results over an extended time period.
3. Review competitive practices and trends to determine the adequacy of the executive compensation program.
4. Review and consider participation and eligibility in the various components of the total executive compensation package.
5. Annually review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and recommend to the Board the CEO’s compensation levels based on this evaluation.
6. Annually review and make recommendations to the Board with respect to compensation of directors and executive officers of the Company other than the CEO. In consultation with the CEO, annually review and approve compensation of members of senior management and key employees who are not executive officers, as identified by the CEO.
7. Approve employment contracts, change in control provisions and other agreements.
8. Approve and administer cash incentives and similar such compensation plans for executives (including any modification to such plans) and oversee performance objectives and the funding for executive incentive plans.
9. Review matters relating to management succession, including, but not limited to, compensation.
10. 10. Make recommendations for Board approval with respect to incentive compensation plans and equity-based incentive plans, and administer such plans by (i) establishing policies and criteria for the granting of awards to the Company’s officers and other employees, and (ii) reviewing and approving the grants of awards in accordance with such policies and criteria.
11. If appropriate, hire experts in the field of executive compensation to assist the Committee with its evaluation of director, CEO or senior executive compensation. The Committee shall have the sole authority to retain and to terminate such experts, and to approve the experts’ fees and other retention terms. The Committee shall also have the authority to obtain advice and assistance from internal legal, accounting or other advisors.
12. Prepare annual reports for the Company’s proxy statement summarizing top executives’ compensation levels and explaining the relationship between executive compensation and the Company’s performance, as required by the SEC.
13. Periodically review executive supplementary benefits as well as the Company’s employee benefits and special compensation programs.
14. Form and delegate authority to subcommittees when appropriate.
15. Make regular reports to the Board.
16. Periodically review and reassess as necessary the adequacy of this Charter and recommend any proposed changes to the Board for approval.
17. Annually evaluate its own performance.
18. Fulfill such other duties and responsibilities as may be assigned to the Committee, from time to time, by the Board and/or the Chairman of the Board.
V. Disclosure of charter
This Charter will be made available on the Company’s website at http://www.wegener.com.
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