1.                  ORGANIZATION

The Compensation Committee (the “Committee”) of KCS Energy, Inc. (the “Company”) shall consist of three or more directors as determined by the Board of Directors of the Company (the “Board”), each of whom shall be free from any relationship that in the opinion of the Board would interfere with the exercise of independent judgment as a member of the Committee. Each member of the Committee shall meet the independence requirements of the New York Stock Exchange.

The members of the Committee shall be nominated by the Nominating and Corporate Governance Committee and elected by the Board at the annual organizational meeting of the Board for a one-year term and may be re-elected for successive terms.  Each member shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal. One member of the Committee will be elected by the Board as Chairman and will be responsible for the scheduling of regular and special meetings and the functioning of the Committee.  The Board may, pursuant to the By-laws of the Company, remove a member of the Committee at any time, with or without cause, provided that the Board must, at all times, assure that the Committee will have a Chairman and sufficient members to satisfy the requirements set forth above relating to the number and qualifications of Committee members.

The Committee shall meet as often as necessary to carry out its responsibilities. Meetings may be in person or by telephone as needed to conduct the business of the Committee.  A majority of the members, but not less than two, will constitute a quorum. The Committee may take action by the unanimous written consent of the members in the absence of a meeting.  The Committee will cause to be kept adequate minutes of all its proceedings. The Chairman of the Committee shall report on any Committee meeting held at the next regularly scheduled Board meeting following the Committee meeting.


The Committee shall assist the Board in fulfilling its oversight responsibilities to stockholders and to:

·                    review and approve corporate goals and objectives relevant to Chief Executive Officer (“CEO”) compensation;

·                    evaluate the CEO’s performance in light of these corporate goals and objectives;

·                    either as a committee or together with the other independent directors (as directed by the Board), determine and approve the CEO’s compensation level based on the Committee’s evaluation;

·                    make recommendations to the full Board regarding non-CEO executive officer compensation, and incentive-compensationand equity-based plans that are subject to Board approval;

·                    advise on compensation of members of the Board, including the Chairman of the Board and the chairmen of the committees of the Board; and

·                    produce a Compensation Committee report on executive officer compensation to be included in the Company’s annual proxy statement as required by the rules and regulations of the Securities and Exchange Commission.

The Committee shall have the authority to delegate its responsibilities to subcommittees of one or more independent directors.  Any such subcommittee must have a published committee charter.  In addition, the Committee shall have the sole authority to retain and terminate any compensation consultant engaged to assist in the evaluation of compensation of directors and senior executives, including the sole authority to approve the consultant’s fees and other retention terms.


            The Committee shall have the responsibility to carry out its statement of purpose above.  In addition, the Committee shall:

·                    review and approve any employment agreements, severance arrangements, change-in-control arrangements or special or supplemental employee benefits, and any material amendments to the foregoing, applicable to executive officers;

·                    conduct an annual performance evaluation of its performance;

·                    report periodically to the full Board regarding its actions and recommendations; and

·                    review and assess the adequacy of this charter annually and recommend any proposed changes to the Board for approval.

Other responsibilities and procedures of the Committee may be required from time to time by applicable law, the rules of the New York Stock Exchange, the SEC, the Company’s By-laws or the Board.

Adopted: April 19, 2004

Revised: March 2, 2005