CHARTER OF THE
COMPENSATION AND HUMAN RESOURCES COMMITTEE
OF ARROW INTERNATIONAL, INC.
The primary purpose of the Compensation and Human Resources Committee (the “Committee) of Arrow International, Inc. (the “Company”) is to (a) review and recommend to the Company’s Board of Directors (the “Board”) the compensation for the Company’s chief executive officer (“CEO”) and all of its executive officers, (b) administer the Company’s stock incentive plans, and (c) produce a report on executive compensation for inclusion in the Company’s annual proxy statement in accordance with applicable rules and regulations.
The Committee shall be comprised of not less than three directors appointed by the Board. Each member of the Committee must satisfy the independence requirements contained in the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and The Nasdaq Stock Market, and must be free of any relationship that, in the opinion of the Board, would interfere with their exercise of independent judgment as a Committee member. The Board shall appoint one person to act as Chair of the Committee. The members of the Committee shall serve for a term of one year.
The Committee shall meet at least two times per year and as many other times as it deems necessary to fulfill its duties and responsibilities set forth in this Charter. A majority of the members of the Committee shall constitute a quorum for the transaction of business. The vote of a majority of the members present at any meeting at which a quorum is present shall be the act of the Committee.
The Committee shall have the authority, to the extent it deems necessary or appropriate, to retain special legal, accounting or other consultants or advisors to advise the Committee. The Company shall provide funding, as determined by the Committee, for payment of compensation to any consultants or advisors retained by the Committee. The Committee may form and delegate authority to subcommittees, comprised of one or more members of the Committee, as it deems necessary or appropriate.
The Committee shall have the following duties and responsibilities:
1. Review and recommend to the Board periodically the Company’s executive compensation program and strategy to assure that it (i) supports the Company’s financial, operational and strategic objectives, (ii) attracts, motivates and retains key executive officers, (iii) links executive compensation with the Company’s business objectives and performance to promote shareholder interest, and (iv) provides for appropriate and competitive rewards and incentives for the Company’s executive officers and other higher level employees.
2. Review and recommend to the Board the Company’s overall compensation policy for all employees.
3. Review and recommend to the Board corporate goals and objectives relevant to the compensation of the CEO, evaluate the CEO’s performance and recommend the CEO’s compensation level, including salary, bonus and grants of awards under the Company’s stock incentive plans and any other executive compensation plans, based on this evaluation.
4. Review and recommend to the Board corporate goals and objectives relevant to compensation of the Company’s executive officers, other than the CEO, evaluate the executive officers’ performance and review and approve their compensation level, including salary, bonus and grants of awards under the Company’s stock incentive plans and any other executive compensation plans, based on this evaluation.
5. Review and recommend to the Board employees to whom awards will be made under the Company’s stock incentive plans, determine the number of shares to be optioned or awarded, and the time, manner of exercise and other terms of the awards.
6. Administer the Company’s stock incentive plans and any other executive compensation plans to the extent required by the terms of such plans.
7. Annually produce the report on the Company’s executive compensation required under the SEC’s rules to be included in the Company’s annual proxy statement.
8. In consultation with management of the Company, oversee the Company’s compliance with regulatory requirements relating to compensation of its officers and employees, including overseeing the Company’s policies on structuring compensation programs to preserve tax deductibility and, as and when required, recommending performance goals and certifying the performance goals have been attained for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended.
9. Review and recommend to the Board employment, severance, change-in-control, termination and retirement agreements and arrangements for all executive officers.
10. Perform such other duties and responsibilities pertaining to the Company’s compensation matters as may be assigned to the Committee by the Board and/or the Chairman of the Board.
The Committee shall keep minutes of its proceedings that shall be signed by the person whom the Chairperson designates to act as secretary of the meeting. The minutes of the meeting shall be approved by the Committee at its next meeting, shall be available for review by the entire Board, and shall be filed as permanent records with the Secretary of the Company.
The Committee shall conduct an annual evaluation of its performance in fulfilling its duties and responsibilities. The adequacy of this Charter shall be reviewed by the Committee on an annual basis. The Committee will recommend to the Board any modifications to this Charter, which the Committee deems appropriate, for approval by the Board.
This Charter may be amended from time to time with the approval of a majority of the Board.
Last Revised: January 21, 2004