Board of Directors
Management Development and Compensation Committee Charter
Effective 25 January 2007
The Management Development and Compensation Committee (the “Committee”) shall assist the Board of Directors (the “Board”) in its responsibilities for (i) selecting, evaluating, and compensating the chief executive officer (“CEO”) and overseeing CEO succession planning; (ii) providing counsel and oversight on the selection, evaluation, development, and compensation of Company executives who are serving on the Corporate Executive Committee or who are otherwise treated as "executive officers" for purposes of federal securities laws (together, the "Executive Officers"); (iii) approving compensation for the Executive Officers; and (iv) providing oversight for policies regarding management compensation and benefit programs. The Committee shall also have the authority of the Board with respect to oversight for the design and administration of the Company’s and its controlled subsidiaries’ employee pension, savings, and welfare benefit plans worldwide, except that only the Board shall have the authority to establish or terminate significant Company plans.
The Committee is also responsible for preparing and publishing a report on executive compensation for inclusion in the Company’s proxy statement for the annual meeting of shareholders.
Committee Structure; Member Qualifications, Appointment, and Removal
The Committee shall consist of not less than three (3) directors of the Company, each of whom shall meet the independence requirements of the New York Stock Exchange and other applicable rules. Each member of the Committee also shall satisfy all requirements necessary from time to time to be “disinterested directors” under Securities and Exchange Commission (“SEC”) Rule 16b-3 and qualified “outside directors” under Section 162(m) of the Internal Revenue Code and related regulations, all as amended from time to time.
The members and the Chairperson of the Committee are appointed by the Board, upon the recommendation of the Corporate Governance and Nominating Committee (the “Governance Committee”), and serve at the pleasure of the Board.
Authority and Responsibilities
Management Development and Succession
To assist the Board in developing and evaluating potential candidates for Executive Officer positions, including the CEO, and to oversee the development of Executive Officer succession plans, the Committee shall periodically review and, when appropriate, make recommendations to the Board regarding
- Long-range plans for orderly succession of the CEO and other Executive Officers including contingency procedures for management succession in the event of the unexpected departures of Executive Officers or their inability to serve due to an emergency;
- Company management resources, development, and performance processes;
As applied to management development and performance, progress with diversity practices and programs;
- Significant organization changes affecting Executive Officer staffing; and
- Election or termination of each officer of the Company or a subsidiary of the Company who is, or will be, an Executive Officer.
Compensation and Benefits
The Committee shall:
- Have direct responsibility to (a) review and approve the annual corporate goals and objectives relevant to compensation of the CEO; (b) evaluate the performance of the CEO in light of the agreed upon goals and objectives; and (c) set the compensation level of the CEO based on such evaluation, including the balance of the components of total compensation.
- Provide oversight of the CEO’s evaluation of the performance of the Executive Officers.
- Establish and approve the salaries, annual incentive awards, and long-term incentive awards of the CEO and other Executive Officers.
- Evaluate and approve severance arrangements and employment contracts for the CEO and other Executive Officers.
- Approve, make recommendations to the Board regarding, and administer the Company’s cash- and equity-based incentive plans for or as applied to management, unless reserved by the Board or delegated to management through plan provisions or as is otherwise consistent with applicable law, and establish criteria for and terms of grants of stock options and other stock rights to management and other employees.
- Establish and periodically review Company policies relating to Executive Officer perquisite and other non-cash benefits.
- Periodically review the operation of, and make recommendations to the Board regarding, the Company’s overall compensation program for management and evaluate its effectiveness in promoting shareholder value and Company objectives.
- Perform any other activities consistent with this Charter, the Company’s Bylaws, and governing law as the Committee or Board deem appropriate.
Committee Operations: Meetings, Agendas, Reporting, Delegation, and Performance Evaluation
The Committee may adopt procedural rules for its meetings and the conduct of its business, not inconsistent under this Charter, the Bylaws, or applicable law. The Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. Adequate provision is made for notice to members of all meetings; one-third of the members, but not less than two, constitute a quorum; and all matters are determined by a majority vote of the members present. The Committee may delegate all or a portion of the authority granted to it by the Board to one or more of the Committee members, senior executives, or subcommittees, subject to applicable plans, laws, regulations, and listing standards.
The Committee proposes its regular meeting schedule for each year for approval by the Board, upon recommendation of the Governance Committee. The Chairman of the Board, the Corporate Secretary, and the Committee Chairperson agree on the length of regular meetings and the need to schedule additional special meetings. The Committee will meet periodically in executive session without Company management present.
The annual Committee agenda and individual meeting agendas are developed by the Chairman of the Board and Corporate Secretary in consultation with the Committee Chairperson, with input from appropriate members of management and staff.
When present, the Chairperson will preside at Committee meetings. In his or her absence, the Committee members present may appoint a chairman pro temp. The Committee Chairperson reports to the Board on Committee meetings and actions, and the Committee Secretary (who is the Director, Compensation and Benefits) keeps minutes of all Committee meetings, which are distributed to Committee members for review and approval.
The Committee shall evaluate its performance annually and discuss the outcome of the evaluation with the full Board.
The Committee will have the resources and authority necessary to discharge its duties and responsibilities, including access to relevant records of the Company and officers and employees of the Company. The Committee has sole authority to retain and terminate outside counsel, compensation consultants, or other experts or consultants, as it deems appropriate, including sole authority to approve the fees and other retention terms for such persons. Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company, and the Committee will take all necessary steps to preserve the privileged nature of those communications.