Corporate Governance

Discovery Holding Company
Compensation Committee Charter

There will be a committee of the Board of Directors (the "Board") of Discovery Holding Company (the "Corporation"), which will be called the Compensation Committee.

1. Statement of Purpose

The purposes of the Compensation Committee are (1) to assist the Board in discharging its responsibilities relating to compensation of the Corporation's executives and (2) to produce an annual report on executive compensation for inclusion in the Corporation's proxy statement in accordance with applicable rules and regulations.

2. Committee Membership

The Compensation Committee will have at least two members. It will be composed of directors who satisfy the independence requirements set forth in the Corporate Governance Rules of The Nasdaq Stock Market, Inc. (after giving effect to any grace period or transition period that may be applicable in accordance with such rules) and all other applicable legal and regulatory requirements.

The members of the Compensation Committee will be appointed, and may from time to time be removed, by the Board.

3. Functions and Responsibilities

In furtherance of the purposes set forth in this Charter, the Compensation Committee will perform the functions and responsibilities enumerated herein as appropriate and will have all the powers of the Board necessary or desirable to perform such functions and responsibilities as may be delegated to a committee of the Board under Delaware law. Notwithstanding the enumeration of specific functions and responsibilities in this Charter, the Compensation Committee believes that its policies and procedures should remain flexible to facilitate its ability to respond to changing circumstances and conditions in fulfilling its responsibilities to the Corporation and its shareholders. The Compensation Committee may by resolution establish its own rules and regulations, including notice and quorum requirements for all meetings. In the absence of such action by the Committee, the provisions of the Corporation's bylaws generally applicable to committees of the Board will apply to the Compensation Committee.

The Compensation Committee will review and approve corporate goals and objectives relevant to the compensation of the chief executive officer of the Corporation ("CEO") and other executive officers of the Corporation.

The Compensation Committee will evaluate the CEO's performance in light of those goals and objectives and will set the CEO's compensation level based on that evaluation, as well as the short-term and long-term performance of the Corporation. In determining the long-term incentive component of CEO compensation, the Compensation Committee will consider the Corporation's performance and relative shareholder return, the value of similar incentive awards to chief executive officers at comparable companies, the awards given to the CEO in past years and any other factors that the Compensation Committee may deem appropriate.

The Compensation Committee will review and approve the compensation of all executive officers of the Corporation other than the CEO, based on such factors as the Compensation Committee may deem relevant. Those factors may include, for example, (i) the short-term and long-term performance of the Corporation, (ii) the performance of each of those executive officers in light of relevant goals and objectives approved by the Compensation Committee, (iii) executive compensation levels at comparable companies and (iv) the recommendations of the CEO.

The Compensation Committee will review and make recommendations regarding the compensation of the chief executive officer and the chief financial officer (or any officer serving in a capacity similar to either of those positions) of each of the Corporation's operating subsidiaries, based on such factors as the Compensation Committee may deem relevant. Those factors may include, for example, factors similar to those considered by the Compensation Committee in approving the compensation of the CEO and other officers of the Corporation.

The Compensation Committee may make recommendations to the Board with respect to incentive-compensation plans and equity-based plans, and will administer such plans, with authority to make and modify grants under, and to approve or disapprove participation in, such plans.

The Compensation Committee will have the sole authority to retain and terminate consultants and other advisors to assist it in carrying out its functions and responsibilities and to approve the fees and other terms of engagement of those consultants and advisors. The Corporation will be responsible for the payment of the fees and expenses of any such consultant or advisor.

The Compensation Committee will have authority to make or recommend such changes to any incentive-compensation plan and equity-based plan of the Corporation as the Compensation Committee deems appropriate, subject to any necessary shareholder approval.

The Compensation Committee will make regular reports to the Board. The Compensation Committee will annually review its own performance.

The Compensation Committee will from time to time review and reassess this Charter and submit any proposed changes to the Board for review.

The Compensation Committee may form and delegate authority to one or more subcommittees when appropriate.

4. Functions and Responsibilities Regarding Management Services Arrangements with Third Parties

The Compensation Committee is familiar with the terms and conditions of the contemplated spin off (the "Spin Off") of the Corporation from Liberty Media Corporation ("LMC"), the Corporation's parent company, pursuant to which LMC will distribute to its shareholders all of the outstanding shares of capital stock of the Corporation. As a result of the Spin Off, the Corporation will become an independent publicly-traded company.

In connection with the Spin Off, the Corporation will enter into a Services Agreement (the "LMC Services Agreement") with LMC pursuant to which, among other things, LMC will make certain of its officers and employees available to serve as the Corporation's executive officers (including the CEO), and the Corporation will make payments to LMC based upon an allocable portion of the costs and expenses incurred by LMC with respect to such executive officers (taking into account wages and benefits). The Corporation may, from time to time, renew, modify or supplement the LMC Services Agreement or enter into, with LMC or any other affiliated or un-affiliated entity (any such entity, a "Provider"), another services agreement or similar arrangement relating to the compensation of the Corporation's CEO and/or any other executive officers (each such agreement or arrangement, a "Management Services Agreement").

The Compensation Committee will have the following responsibilities with respect to the LMC Services Agreement:

  Review, evaluate and approve the terms and conditions of the LMC Services Agreement, including, without limitation, the initial estimated annual Allocated Employee Expenses (as defined in the LMC Services Agreement) for the Corporation's CEO and other executive officers, as set forth in Schedule 2.1 to the LMC Services Agreement;

  On a semiannual basis, review, evaluate and approve the Allocated Employee Expenses for the Corporation's CEO and other executive officers;

  Review, evaluate and approve any renewal, modification or supplement to the LMC Services Agreement; and

  Review, evaluate and include in any report to the Board relating to executive officer compensation all compensation (including salary, bonus, benefits and incentive awards) paid, granted or made available by LMC (or any affiliate of LMC) to the Corporation's CEO or its other executive officers, to the extent that the LMC Services Agreement provides, or LMC otherwise indicates to the Corporation, that such compensation is paid, granted or made available to the CEO or any other executive officers of the Corporation for services rendered by such officers in all capacities to the Corporation.

The Compensation Committee will have the following responsibilities with respect to any Management Services Agreement other than the LMC Services Agreement:

  Review, evaluate and approve the terms and conditions of such Management Services Agreement, including, without limitation, any arrangements pursuant to which the Corporation makes payments to a Provider based on or in connection with services rendered to the Corporation by the CEO and/or any other executive officers of the Corporation;

  Review, evaluate and approve any renewal, modification or supplement to such Management Services Agreement; and

  Review, evaluate and include in any report to the Board relating to executive officer compensation all compensation (including salary, bonus, benefits and incentive awards) paid, granted or made available by a Provider to the Corporation's CEO and/or any other executive officers, to the extent that such Management Services Agreement provides, or such Provider otherwise indicates to the Corporation, that such compensation is paid, granted or made available to the CEO and/or any other executive officers of the Corporation for services rendered in all capacities to the Corporation.

ADOPTED by the Board this 1 st day of June, 2005.

 

 

 

 

 

Terms & Conditions | 2006 Discovery Holdings