NewAlliance Bancshares, Inc.
Board of Directors
For the purposes of this Charter, the term "Bank" shall include NewAlliance Bank and NewAlliance Bancshares, Inc., its parent holding company, as appropriate. The Compensation Committee of the Board of Directors of the Bank shall operate within the terms of reference set out in this Charter.
The Compensation Committee assists the Board in its oversight of compensation, evaluation and succession planning for the CEO and other senior executives of the Bank and in its oversight of other compensation and benefit plans and programs. The committee's mandate includes the following:
Specific responsibilities of the Compensation Committee in fulfilling its mandate are outlined below.
The Compensation Committee shall consist of at least three non-employee directors, each of whom is "independent" in accordance with Nasdaq rules. Committee membership and chairmanship will be recommended by the Governance Committee to the full Board, who shall appoint members of the committee and a committee chair from among the members, on an annual basis. The Compensation Committee shall provide relevant information to the Governance Committee relative to its recommendations to the Board with respect to membership and chairmanship of the Compensation Committee and with respect to the independence of Compensation Committee members. The Governance Committee shall review these matters at least annually.
All members of the Compensation Committee will be generally familiar with corporate compensation and benefit practices and relevant regulations pertaining thereto. Each committee member shall participate in a continuing education program and shall diligently attempt to increase his or her knowledge of compensation issues and practices and the laws and regulations governing the Bank's compensation practices. All committee members will become familiar with the qualified benefit plans of the Bank.
The Compensation Committee shall meet at least quarterly. Such meetings may be in person or by conference call. At least a majority of the members of the committee must be in attendance for a quorum. The Compensation Committee may also act by unanimous written consent.
The Chair of the Compensation Committee shall be responsible for scheduling meetings of the committee, developing meeting agendas, providing pre-reading materials to committee members relative to agenda items and chairing the meetings. He or she shall work in conjunction with management of the Bank with respect to these matters, as appropriate.
The Compensation Committee shall report to the Board after each committee meeting and shall make every effort to facilitate regular communication between and among the committee, all other Board members and the CEO on issues relative to executive compensation and performance. The CEO will not be present during any discussions of his or her own compensation and performance evaluation unless specifically invited into such discussions by the committee. He or she will, however, regularly participate in discussions relative to compensation and performance evaluation of other executive officers. The committee will meet in executive session whenever it deems appropriate.
Compensation Philosophy and Programs
The Compensation Committee will determine and approve the Bank's compensation philosophy, including the balance between or mix of base salaries, incentives and other compensation components for the CEO and other executive officers (defined as all direct reports to the CEO, or as otherwise directed by the Board of Directors).
CEO Compensation and Performance Evaluation
The Compensation Committee will determine and approve corporate goals and objectives consistent with business and/or strategic plans approved by the Board of Directors, relating to the compensation of the CEO, annually evaluate the performance of the CEO in light of these goals and objectives and make appropriate recommendations. The committee will determine the CEO's base salary level, incentives and other compensation components based on this evaluation. The committee will also approve all formal employment or other contracts with the CEO.
Compensation of Other Executive Officers
The Compensation Committee will approve corporate goals and objectives relating to the compensation of executive officers other than the CEO, review the CEO's evaluation of the performance of these executive officers in light of these goals and objectives and make appropriate recommendations. The committee will approve base salary levels, incentives and other compensation components for such executive officers based on their performance evaluations. The committee will also approve all formal employment or other contracts with executive officers of the Bank. In performing these functions, the committee will meet with the CEO for purposes of considering his/her recommendations regarding these matters
Executive Development and Succession Planning
The Compensation Committee will annually review and make recommendations to the Board of Directors regarding executive development and succession planning. As appropriate, the committee may create an ad hoc committee or sub-committee to focus on CEO and executive development and succession planning and delegate certain of its powers and responsibilities to this ad hoc committee or sub-committee.
The Compensation Committee will review and make recommendations with respect to the adoption of equity-based plans for any employees for approval by the Board of Directors and the Bank's shareholders.
Stock Ownership Guidelines
The Compensation Committee will review and recommend any guidelines regarding minimum retention and ownership of the Bank's common stock by various levels of Bank officers and by Board members for approval of the Board of Directors.
The Compensation Committee will review and recommend the types and structures of employee retirement programs for approval of the Board of Directors.
Employees' Retirement Plan
The Compensation Committee will meet with and monitor the performance of the Bank's management committee(s) that review and approve the investment results of the Bank's Retirement Plan and the allocation of assets, the investment alternatives for the employees participating in the Bank's 401K plan, the actuarial valuation report of the Employees' Retirement Plan, the summary annual report for the Employees' Retirement Plan and known parties of interest involved in the Bank's Retirement Plan and that otherwise oversee the Bank's employee benefit plans.
Broad-Based Compensation Programs
At least annually, the Compensation Committee will review the administration of all broad-based compensation plans with the assistance of Bank management.
The Compensation Committee will review and make recommendations to the Board with respect to any changes to compensation paid to the Bank's Board of Directors for their service as Board members. Such recommendations will be made after considering comments from the Governance Committee.
The Compensation Committee will review and approve all disclosures relative to executive compensation included as part of the Bank's annual proxy statement, including the Compensation Committee Report on Executive Compensation, with the assistance of counsel.
Executive Compensation Consultants
The Compensation Committee will appoint such advisors and consultants to provide independent advice to the committee as are necessary to achieve the Committee's objectives. The committee shall report any such appointments to the Board or Directors.
The committee may consult with management of the Bank on compensation issues and may delegate to management the duty to work with and/or supervise the day-to-day activities of independent advisors and consultants retained by the Committee.
The Compensation Committee will review this Charter annually and may recommend to the Governance Committee any proposed changes to this charter for approval by the Board or Directors.
The Compensation Committee will perform an annual self-assessment of the committee's performance to be included in an overall assessment report of the committee developed by the Governance Committee for Board review and comment.
The Compensation Committee will also perform such other functions and have such other powers as may be necessary or convenient to facilitate the discharge of the committee's responsibilities.