prentiss properties trust

 

COMPENSATION COMMITTEE CHARTER

 

Purpose

 

The Compensation Committee is appointed by the Board of Trustees (the “Board”) of Prentiss Properties Trust (the “Company”) to (a) assist the Board in ensuring that a proper system of long-term and short-term compensation is in place to provide performance-oriented incentives to management, and that compensation plans are appropriate and competitive and properly reflect the objectives and performance of management and the Company; (b) evaluate the Company’s Chairman and  the Chief Executive Officer and set their remuneration package; (c) prepare an annual report on executive compensation for inclusion in the Company’s proxy statement; and (d) perform such other functions as the Board may from time to time assign to the Compensation Committee.  In performing its duties, the Compensation Committee shall seek to maintain an effective working relationship with the Board and the Company’s management.

 

Committee Membership

 

The Compensation Committee shall consist of no fewer than two, but not more than five, members.  Each member of the Compensation Committee shall be a member of the Board.  Each member of the Compensation Committee shall meet the independence requirements of the New York Stock Exchange, shall be a “Non-Employee Director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934 and shall be an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986. No person may be made a member of the Compensation Committee if his or her service on the Compensation Committee would violate any restriction on service imposed by any rule or regulation of the United States Securities and Exchange Commission or the New York Stock Exchange.

 

The members of the Compensation Committee shall be appointed by the Board on the recommendation of the Nominating Committee.  Compensation Committee members may be removed or replaced, with or without cause, by the Board.  One of the members shall be appointed Chairman of the Compensation Committee by the Board.  The Chairman will be responsible for leadership of the Committee, including preparing the agenda, presiding over the meetings, making Committee assignments and reporting to the Board.

 

Committee Authority and Responsibilities

 

In carrying out its oversight responsibilities, the Compensation Committee’s policies and procedures should remain flexible to enable the Compensation Committee to react to changes in circumstances and conditions so as to ensure the Company remains in compliance with applicable legal and regulatory requirements. 

 

The Compensation Committee shall have responsibility for oversight of the determination, implementation and administration of remuneration, including compensation, benefits and perquisites, of all executive officers and other members of senior management whose remuneration is the responsibility of the Board or whose remuneration the Chief Executive Officer requests the Compensation Committee to review and affirm.  Such responsibility includes the following:

 

(a)  To review and to make periodic recommendations to the Board as to the general compensation and benefits policies and practices of the Company, including incentive-compensation plans and equity-based plans;

 

 

 

(b)  To review and adopt, and to recommend to the Board (and for shareholder approval where required by applicable law, the Declaration of Trust or the Board’s Governance Guidelines) compensation and benefits policies, plans and programs and amendments thereto, determining eligible employees and the type, amount and timing of such compensation and benefits;

 

 

 

(c)  To oversee the administration of such policies, plans and programs and, on an ongoing basis to monitor them to assure that they remain competitive and within the Board’s compensation objectives for executive officers and such other members of senior management;

 

 

 

(d) To review and affirm contractual employment and compensation arrangements with executive officers and other members of senior management who are the responsibility of the Board or whose compensation the Chief Executive Officer requests the Compensation Committee to review and affirm;

 

 

 

(e)  To review and approve corporate goals and objectives relevant to the Chairman’s and Chief Executive Officer’s compensation package and to evaluate each of the Chairman and Chief Executive Officer’s performance and compensation based on such goals and objectives as set forth in clause (g) below;

 

 

 

(f)  To (i) establish a procedure for evaluating the Chairman’s and Chief Executive Officer’s performance, (ii) annually evaluate such performance and (iii) have the Compensation Committee Chairperson review, after completion of the annual evaluation, with each of the Chairman and Chief Executive Officer the results of the Compensation Committee’s evaluation of each of the Chairman’s and Chief Executive Officer’s performance;

 

 

 

(g)  To review, at least annually, and set the base salary and annual and long-term incentive compensation of each of the Chairman and Chief Executive Officer, after taking into account the annual evaluation of the Chairman and the Chief Executive Officer referred to in clause (f) above;

 

 

 

(h)  To review and to make recommendations to the Board at least annually with respect to the base salary and annual and long-term incentive compensation of the other executive officers and other members of senior management (upon the recommendation of the Chief Executive Officer) who are the responsibility of the Board or whose compensation the Chief Executive Officer requests the Compensation Committee to review and affirm;

 

 

 

(i)   To prepare an annual executive compensation report for the shareholders of the Company in accordance with the rules and regulations of the United States Securities and Exchange Commission;

 

 

 

(j)   To review and consider recommendations from the Nominating & Corporate Governance Committee with respect to the compensation and benefits of trustees who are not employees of the Company and to recommend any changes to the Board that the Compensation Committee deems appropriate;

 

 

 

(k)  To perform such other duties as the Board may assign to the Compensation Committee;

 

(l)   The Compensation Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval;

 

(m) The Compensation Committee shall annually review its own performance;

 

(n)  To ensure the Company’s compensation and benefit policies and practices are in compliances with applicable laws and regulations including those of the United States Securities and Exchange Commission and the Internal Revenue Services.

 

In discharging the foregoing responsibilities, the Compensation Committee considers, as appropriate and as contemplated by Company policies, plans and programs, individual, team, business unit, regional and Company-wide performance against applicable pre-established annual and long-term performance goals, results taking into account shareholder return, economic and business conditions, remuneration given to the Chairman and the Chief Executive Officer and other executive officers, as applicable, in the past and comparative and competitive compensation and benefit performance levels.

 

Meetings

 

The Compensation Committee shall meet at least annually, and as many additional times as the Compensation Committee deems necessary.  Meetings of the Compensation Committee for the consideration of pertinent matters may be requested by the Chairman of the Board, the President of the Company, the Chairman of the Compensation Committee or any member of the Compensation Committee by request of the Chairman of the Compensation Committee. The Compensation Committee may meet by telephone conference call or by any other means permitted by law or the Company’s Bylaws.  A majority of the members of the Compensation Committee shall constitute a quorum.  The Compensation Committee shall act on the affirmative vote of a majority of members present at a meeting at which a quorum is present.  Without a meeting, the Compensation Committee may act by unanimous written consent of all members. The Chairman of the Compensation Committee shall develop the agenda for each meeting and in doing so may consult with management or the Board.  Officers of the Company may not attend these meetings unless invited by the Chairman of the Compensation Committee.

 

The Corporate Secretary need not be a member of the Compensation Committee and shall attend Compensation Committee meetings and prepare minutes.  The Compensation Committee shall keep written minutes of its meetings, which shall be recorded or filed with the books and records of the Company.  Any member of the Board shall be provided with copies of such Compensation Committee minutes if requested and distributed to each member of the Compensation Committee and the members of the Board who are not members of the Compensation Committee.

 

Annual Evaluation Procedures

 

The Compensation Committee shall annually assess its performance to confirm that it is meeting its responsibilities under this Charter.  In this review, the Compensation Committee shall consider, among other things, (a) the appropriateness of the scope and content of this Charter, (b) the appropriateness of matters presented for information and approval, (c) the sufficiency of time for consideration of agenda items, (d) frequency and length of meetings, and (e) the quality of written materials and presentations.  The Compensation Committee may recommend to the Board such changes to this Charter as the Compensation Committee deems appropriate.

 

Studies

 

The Compensation Committee may conduct or authorize studies of matters within the Compensation Committee’s scope of responsibilities as described above, and may retain, at the expense of the Company, independent counsel or other consultants necessary to assist the Compensation Committee in any such studies.  The Compensation Committee shall have sole authority to retain and terminate any compensation consultant to be used to survey the compensation practices in the Company’s industry and to provide advice so that the Company can maintain its competitive ability to recruit and retain highly qualified personnel.  The Compensation Committee shall have the sole authority to negotiate and approve the fees and retention terms of any compensation consultant retained.

 

Miscellaneous

 

Nothing contained in this Charter is intended to expand applicable standards of liability under statutory or regulatory requirements for the trustees of the Company or members of the Compensation Committee.  The purposes and responsibilities outlined in this Charter are meant to serve as guidelines rather than as inflexible rules and the Compensation Committee is encouraged to adopt such additional procedures and standards as it deems necessary from time to time to fulfill its responsibilities.

 

 

 

Adopted by the Compensation Committee and

 

approved by the Board of Trustees on October 23, 2002.