SOUTH JERSEY INDUSTRIES, INC.
AND PENSION COMMITTEE OF THE BOARD OF DIRECTORS
The primary function of the Compensation & Pension (C&P) Committee is to assist the Board of Directors in fulfilling its oversight responsibilities related to the performance and compensation of executives and the structure and performance of significant, long-term employee defined benefit and defined contribution plans. Consistent with this function, the C&P Committee should encourage continuous improvement of, and adherence to the Corporation's policies, procedures and practices at all levels. The C&P Committee's primary duties and responsibilities are as follows:
· Develop and administer an executive compensation program which is competitive; which ensures that the interests of executives are aligned with the interests of shareholders; which ensures the company’s ability to attract and retain qualified executive talent; and, which strikes a proper balance between compensation and corporate growth. Subordinate tasks include:
§ Engagement of an executive compensation consultant and evaluation of that consultant’s work product and recommendations.
§ Prepare a written report to shareholders on executive compensation for the annual proxy statement
§ Review / modify peer group for executive compensation purposes
§ Establish the annual EPS target for executive compensation purposes
§ Review and recommend to the Board executive base salary adjustments (if any)
§ Review, validate and report to the Board on actual results of officer annual cash program
§ Review, validate and report on Restricted Stock Grants (LTIP) issued to executives
§ Review, validate and approve actual Restricted Stock Awards (stock earned) (begins in 3/2003) (note: restricted period expires in March of each year; peer Total Shareholder Return (TSR) data will be available to finalize relative TSR performance; required that Committee approve under the Plan (Section 11(d)); a written report will be prepared and provided prior to meeting)
§ Prepare, maintain and recommend a CEO evaluation policy and procedure and facilitate the effective completion of that process
§ Review, approval and recommendation to full Board on renewals, new or modifications to Officer Employment Agreements
§ Approve any waivers provided for under Restricted Stock, Deferred Compensation, or SERP agreements
· Oversee the management of the assets of the Company’s pension plans, VEBAs and Rabbi Trust related to retirement benefits in a manner which preserves the inflation-adjusted value of the Plans; produces investment returns that achieve the Plans’ actuarially assumed rate of return; achieve the optimal return within specified risk tolerances; and, prudently invests assets in a high-quality, diversified manner. Subordinate tasks include:
§ Review of actuarial assumptions to be used in valuation studies for pension plans, VEBAs, Rabbi Trust & SERP
§ Review, approve and recommend to the Board annual contributions to the pension plans, VEBAs and Rabbi Trust (if any)
§ Identify and recommend appointees to the Trust Committee
§ Establish Investment Guidelines consistent with Plans’ purposes and objectives; approve changes to those guidelines
§ Review the performance of investment managers/ funds annually
§ Approve any change of Investment Manager(s) or Investment Management Consultant
§ Review, endorse and recommend proposed ERIPs (Early Retirement Incentive Programs)
§ Review 401 (K) Plan participation and fund performance
§ Review, endorse and recommend substantive changes to any of the Plans (Pension, VEBA, Rabbi Trust, 401(k), ESOP, SERP)
§ Review, endorse and recommend any proposed employee benefit plan termination or, the creation of any new plan which enures primarily to the benefit of executives or, which creates a new financial obligation for the Company.
§ Review, endorse and recommend any proposed waivers provided for under executive plans (SERP; deferred compensation; etc.) or executive agreements (i.e.. Employment contracts; severance/general release agreements; restricted stock agreements; etc.)
The C&P Committee shall comprise three or more directors as determined by the Board, each of whom shall be independent directors as defined by the rules of the New York Stock Exchange, and free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee. The members of the Committee shall be appointed by the Board at the annual organizational meeting of the Board and the Chair shall be appointed by the Executive Committee. Committee members and the Chair shall serve until their successors shall be duly appointed and qualified.
The Committee shall meet at least twice annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee should meet at least annually with the named investment management consultant and at least every three years with its executive compensation consultant.
IV. REVIEW OF CHARTER
The Committee shall review and update this Charter periodically, at least annually, as conditions dictate.