Charter of the Compensation Committee of the Board of Directors

 

 

 

1. Purpose

 

 

 This Charter specifies the scope of the responsibilities of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Applied Signal Technology, Inc. (the “Company”).

 

 

 The primary purpose of the Committee is to discharge the Board’s responsibilities relating to compensation and benefits of the Company’s executive officers and directors, including the Chief Executive Officer. In carrying out these responsibilities, the Committee shall review all components of executive officer and directorcompensation for consistency with the Committee’s compensation philosophy as in effect from time to time.

 

 

 The Committee is also responsible for producing an annual report on executive compensation for inclusion in the Company’s proxy statement, in accordance with applicable rules and regulations.

 

 

 

2. Organization and Membership Requirements

 

 

 The Committee shall be comprised of at least three directors, each of whom shall satisfy the independence requirements of the Nasdaq Stock Market. A director shall not serve as a member of the Committee if the Chief Executive Officer or another executive officer of the Company serves on the compensation committee of another company that employs that director as an executive officer.

 

 

 The members shall be appointed by the Board on the recommendation of the Nominating and Corporate Governance Committee and shall serve until their successors are duly elected and qualified or their earlier resignation or removal. Any member of the Committee may be replaced by the Board on the recommendation of the Nominating and Corporate Governance Committee. The Committee may from time to time delegate duties or responsibilities to subcommittees or to one member of the Committee.

 

 

 A majority of the members shall represent a quorum of the Committee. Any action taken must be approved by at least a majority of the members of the Committee to represent the valid action of the Committee.

 

 

 

3. Meetings

 

 

 The Committee shall have the authority to obtain advice or assistance from consultants, legal counsel, accounting or other advisors as appropriate, to perform its duties hereunder and to determine the terms, costs and fees for such engagements. Without limitation, the Committee shall have the sole authority to retain or terminate any consulting firm used to evaluate director, CEO or executive compensation, and to determine and approve the terms of engagement and the fees and costs for such engagements. The fees and costs of any consultant or advisor engaged by the Committee to assist in it in performing any duties hereunder shall be borne by the Company.

 

 

 The Committee shall meet as often as it deems appropriate, but not less frequently than once each year to review the compensation of the executive officers and other employees of the Company, and otherwise perform its duties under this charter. The Committee shall maintain written minutes of its meetings.

 

 

 

4. Committee Authority and Responsibilities

 

 

 The Committee shall:

 

 

 

 1.

 Review and approve all compensation for the Chief Executive Officer, including incentive-based and equity-based compensation.

 

 

 

 2.

 Review and approve annual performance objectives and goals relevant to compensation for the Chief Executive Officer and evaluate the performance of the Chief Executive Officer in light of these goals and objectives. In making this evaluation, the Committee shall consider, among other factors, the Company’s performance and relative shareholder return, the value of similar incentive awards to chief executive officers at comparable companies, and the awards given to the Company’s Chief Executive Officer in past years.

 

 

 

 3.

 Review and approveincentive-based or equity-based compensation plans in which the Company’s executive officers participate, and review and approve salaries, incentive and equity awards for other executive officers. In connection therewith, the Committee shall consider both regional and industry-wide compensation practices and trends in order to assess the adequacy and competitiveness of the Company’s compensation programs for the CEO and other executive officers relative to comparable companies in the Company’s industry.

 

 

 

 4.

 Approve all employment, severance, or change-in-control agreements, special or supplemental benefits, or provisions including the same, applicable to executive officers.

 

 

 

 5.

 Review and propose to the Board from time to time changes in director compensation and director retirement policies.

 

 

 

 6.

 Prepare an annual report on executive compensation for inclusion in the Company’s proxy statement, in accordance with applicable rules and regulations.

 

 

 

 7.

 Perform such other activities consistent with this Charter, the Company’s Bylaws and governing law, as the Committee or the Board deems necessary or appropriate.

 

 

 

 8.

 Review and reassess the adequacy of this Charter as appropriate and recommend any proposed changes to the Board for approval.