Compensation Committee Charter
The primary purpose of the Compensation Committee (the "Committee") of the Board of Directors (the "Board") of TierOne Corporation (the "Company") is to discharge the Committee's responsibilities as provided herein relating to compensation of the Company's executive officers and directors and to produce an annual report on executive compensation for inclusion in the Company's Proxy Statement, in accordance with the rules and regulations of the Securities and Exchange Com-mission (the "SEC").
The Committee shall consist solely of "independent directors," i.e., those directors who neither are officers or employees of the Company or its subsidiaries nor have a relationship which, in the opinion of the Board, would interfere with or impair the exercise of independent judgment in carrying out the responsibilities of a director, and who are otherwise meet the definition of "independent director" under the rules of The Nasdaq Stock Market, Inc.
Members shall be appointed annually by the Board and may be removed by the Board. Such appointment shall be made based on nominations by the Company's Nominating and Corporate Governance Committee which shall be submitted at the annual organizational meeting of the Board held immediately after the Annual Meeting of Shareholders of the Company. Members of the Committee shall serve until removed or their successors are duly selected and qualified or their term on the Board has ended. Unless a Chairman is designated by the Board, the members of the Committee may designate a Chairman by majority vote of the full Committee.
The Committee shall meet in person or telephonically at least twice a year and more frequently, if deemed necessary by the Committee to fulfill its responsibilities hereunder, in conjunction with regularly scheduled meetings of the Board at regularly scheduled times and places determined by the Committee Chairman, with further meetings to occur, or actions to be taken by unanimous written consent, when deemed necessary or desirable by the Committee or its Chairman.
The Committee may, to the extent consistent with the maintenance of the confidentiality of compensation discussions, invite the Company's Chief Executive Officer ("CEO") to participate in meetings of the Committee, but if present during any deliberations of the Committee, the CEO may not vote. The CEO may not be present during any discussions and deliberations of the Committee regarding the CEO's compensation.
Committee Duties and Responsibilities
The following are the duties and responsibilities of the Committee:
1. In consultation with senior management, to establish the Company's general compensation philosophy and to over-see the development and implementation of compensation programs.
2. To review and approve corporate goals and objectives relevant to the compensation of the CEO, to evaluate the performance of the CEO in light of those goals and objectives and have the sole authority to determine the CEO's compensation based on this evaluation. In determining the long-term incentive component, if any, of CEO compensation, the Committee shall consider, among other factors, the Company's performance and relative shareholder return, the value of similar incentive awards to CEOs at comparable companies, the awards given to the CEO in past years, and other factors, if any, that the Committee determines to be appropriate.
3. To review and approve the compensation of all other "executive officers" of the Company (as defined in Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 16a-1 promulgated thereunder (the "Section 16 Officers")).
4. To make recommendations to the Board with respect to the Company's incentive compensation plans and equity-based plans, including the 2003 Stock Option Plan and the 2003 Management Recognition and Retention Plan and Trust Agreement, to oversee the activities of the individuals and committees responsible for administering these plans, and to discharge any responsibilities, if any, imposed on the Committee by any of these plans.
5. To approve issuances under, or any material amendment of, any tax-qualified, non-discriminatory employee benefit plan or parallel nonqualified plan pursuant to which a director, officer or employee will acquire stock or options.
6. To approve issuances under, or any material amendment of, any stock option or other similar plan pursuant to which a person not previously an employee or director of the Company, as an inducement material to the individual's entering into employment with the Company, will acquire stock or options.
7. In consultation with management, to oversee regulatory compliance with respect to compensation matters, including overseeing the Company's policies on structuring compensation programs to preserve tax deductibility, and, as and when required, establishing performance goals and certifying that performance goals have been attained for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), if not otherwise addressed by the committee administering the plans under which such performance goals are being established.
8. To review and approve any severance or similar termination payments proposed to be made to any current or former Section 16 Officer.
9. To prepare and issue the reports required under "Committee Reports" below.
10. To perform any other duties or responsibilities expressly delegated to the Committee by the Board from time to time relating to the Company's compensation programs.
Delegation to Subcommittee
The Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee consisting of one or more of its members. In particular, the Committee may delegate the approval of certain transactions to a subcommittee consisting solely of members of the Committee who are (i) "Non-Employee Directors" for the purposes of Rule 16b-3 under the Exchange Act, as in effect from time to time, and (ii) "outside directors" for the purposes of Section 162(m) of the Code, as in effect from time to time.
The Committee shall produce the following reports and provide them to the Board.
1. An annual report of the Compensation Committee on executive compensation for inclusion in the Company's annual Proxy Statement in accordance with applicable SEC rules and regulations.
2. A summary of the actions taken at each Committee meeting, which shall be presented to the Board at the next Board meeting.
3. An annual performance evaluation of the Committee, which evaluation must compare the performance of the Committee with the requirements of this Charter. The performance evaluation should also recommend to the Board any improvements to this Charter deemed necessary or desirable by the Committee. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board may take the form of an oral report by the chairperson of the Committee or any other member of the Committee designated by the Committee to make this report.
Resources and Authority of the Committee
The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate, and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems appropriate, without seeking approval of the Board or management.