STATE NATIONAL BANCSHARES, INC.

COMPENSATION COMMITTEE CHARTER

Purpose

The function of the Compensation Committee (the “Committee”) is to assist the Board of Directors in fulfilling its oversight responsibilities relating to executive compensation and to produce an annual report on executive compensation for inclusion in the Company’s annual proxy statement.

Composition

The Committee shall consist of two or more members of the Board of Directors, each of whom is determined by the Board of Directors to be “independent” under the rules of the NASDAQ Stock Market and the SEC.  Additionally, no director may serve unless that director (1) is a “non-employee director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and (2) satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Internal Revenue Code.

Appointment and Removal

The members of the Committee shall be appointed by the Board of Directors upon the recommendation of the Nominating/Corporate Governance Committee and shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal. The members of the Committee may be removed, with or without cause, by a majority vote of the Board of Directors.

Chairperson

Unless a Chairperson is elected by the full Board of Directors, upon the recommendation of the Nominating/Corporate Governance Committee, the members of the Committee shall designate a Chairperson by majority vote of the full Committee membership.  The Chairperson will chair all regular sessions of the Committee and set the agendas for Committee meetings.

Delegation to Subcommittees

In fulfilling its responsibilities, the Committee shall be entitled to delegate any or all of its responsibilities to a subcommittee of the Committee.

Meetings

The Committee shall meet as frequently as circumstances dictate. The Chairman of the Board or any member of the Committee may call meetings of the Committee.  The Committee may invite to its meetings any director, member of management of the Company, and such other persons as it deems appropriate in order to carry out its responsibilities.

Duties and Responsibilities

The Committee shall have the following duties and responsibilities: 

·        Review and approve on an annual basis the corporate goals and objectives relevant to the compensation of the Chief Executive Officer, evaluate the Chief Executive Officer’s performance in light of these goals and objectives, and, either as a committee or together with other independent directors (as directed by the Board), determine and approve the Chief Executive Officer’s compensation based on this evaluation (including salary, bonus, incentive and equity compensation, and perquisites).

·        Review and approve on an annual basis the evaluation process and compensation structure for the Company’s officers.  Evaluate the performance of the Company’s senior executive officers and approve annual compensation (including salary, bonus, incentive and equity compensation, and perquisites).

·        Review director compensation levels and practices, and recommend, from time to time, changes in such compensation levels and practices to the Board of Directors.

·        Review the Company’s compensation, incentive compensation and equity-based plans and recommend changes in such plans to the Board of Directors as needed.

·        Prepare and publish an annual executive compensation report in the Company’s proxy statement.

·        Perform any other activities consistent with this Charter, the Company’s Bylaws and governing law as the Committee or the Board of Directors deem appropriate.

Advisors

The Committee shall have the authority to retain such compensation consultants, outside counsel and other advisors as the Committee may deem appropriate in its sole discretion.  The Committee shall have sole authority to approve related fees and retention terms.

 

Reports and Performance Review

 

The Committee shall report its actions and any recommendations to the Board of Directors after each Committee meeting.  The Committee shall review at least annually the adequacy of this Charter and recommend any proposed changes to the Board of Directors for approval.

 

Disclosure of Charter

 

This Charter will be made available in accordance with applicable rules and regulations.

 

 

                                                            Adopted by Resolution of the Board of Directors

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