Compensation Committee Charter
(EFFECTIVE OCTOBER 18, 2005)
This is the Charter of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of CBOT Holdings, Inc. (the “Corporation”).
The purpose of the Committee is to review and approve the Corporation's compensation and benefit programs, ensure the competitiveness of these programs, and advise the Board on the development of and succession of senior executive officers. In particular, the Committee will be responsible for, among other things:
establishing total compensation for senior executive officers, including overseeing all senior executive benefit plans (including Section 162(m) plans);
overseeing the Corporation's equity incentive plans;
developing and recommending to the Board total compensation for members of the Board; and
communicating to stockholders regarding the Corporation's compensation policies and the reasoning behind such policies as required byt the Securities Exchange Commission ("SEC") or as otherwise determined to be appropriate by the Committee.
Membership and Qualification
The Committee will be composed of at least three members of the Board. The nominating committee of the Board will recommend to our Board nominees for membership on the Committee. The chairperson of the Committee, as well as all Committee members, shall be appointed, removed or replaced by a majority vote of the Board. A majority of the Committee members shall constitute a quorum for the transaction of business. It is the responsibility of the chairperson of the Committee to schedule meetings and provide the Committee with a written agenda for all meetings.
Each member of the Committee shall be free of any relationship that, as determined by the Board, would interfere with his of her individual exercise of independent judgment and all members of the Committee shall be “independent” within the meaning provided below.
All members of the Committee must be independent directors under the New York Stock Exchange (“NYSE”) rules and the requirements set forth in the Corporation’s Amended and Restated Certificate of Incorporation (as amended from time to time, the “Charter”) and Amended and Restated Bylaws (as amended from time to time, the “Bylaws”). To be considered independent under the NYSE rules, the Board must affirmatively determine that a director does not have any direct or indirect material relationship with the Corporation. To assist it in determining director independence in accordance with the NYSE rules, the Board has established that an individual meeting one of the following criteria shall not be considered an independent director:
a person who is, or was within the previous three years, an employee, or person whose immediate family member is an executive officer of the Corporation;
a person who receives, or has received in the three prior years, more than $100,000 per year in direct compensation from the Corporation, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contigent in nay way on continued services);
a person who is, or was within the prior three years affiliated with or employed by, or whose immediate family member is,or was within the three prior years, affiliated with or employed in a professional capacity by, a present or former internal or external auditor of the Corporation;
a person who is, or was within the three prior years employed,or whose immediate family member is,or was within the three prior years, employed, as an executive officer of another Corporation where any of the Corporation's present executived serve on that Corporation's compensation committee; or
a person who is, or was within the three prior years, an executive officer or an employee,or whose immediate family member is, or was an executive officer of a Corporation that makes payments to, or receives payments from, the Corporation for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other Corporation's consolidated gross revenues.
For purposes of these independence standards, the term “the Corporation” includes any subsidiary and the term “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law and anyone (other than domestic employees) who shares such person’s home.
For relationships not covered by the independence standards above, the determination of whether a relationship is material, and therefore whether the director is independent, will be made by the directors who satisfy the independence standards set forth above and the basis for the determination will be explained in the Corporation’s annual proxy statement. Any determination by the Board that a director is independent despite the fact that the director does not meet the independence standards set forth above will also be explained in the Corporation’s annual proxy statement.
Each member of the Committee will notify the Board as soon as practical in the event that his or her circumstances change in any manner that may affect the Board’s independence determination.
Meetings and Other Actions
The Committee shall meet at least quarterly and as often as it determines appropriate to carry out its obligations under this Charter. The Committee shall periodically report on its activities to the Board and make such recommendations and findings as it deems appropriate.
Meetings of the Committee may be held in person or by telephone. Action may also be taken by the Committee without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the Committee.
The Committee shall keep a separate book of minutes of their proceedings and actions. All meetings shall be at the call of the chairperson. The Committee shall elect a Secretary to the Committee who shall give notice personally or by mail, telephone, facsimile or electronically to each member of the Committee of all meetings, not later than 12 noon, Central time, of the day before the meeting, unless all of the members of the Committee in office waive notice thereof in writing at or before the meeting, in which case the meeting may be held without the aforesaid advance notice. A majority of the members of the Committee shall constitute a quorum for the transaction of business.
Goals, Responsibilities, and Authority
In addition to any other responsibilities which may be assigned from time to time by the Board, the Committee is responsible for and has authority to conduct the following matters:
Compensation and Benefits
the Committee shall review and recommend to the Board the total compensation for the directors of the Corporation;
the Committee shall establish the total compensation package provided to, and other terms of employment of, the President and Chief Executive Officer (or most senior officer of the Corporation), as well as such other officers of the Corporation for whom compensation is disclosed in the Corporation's proxy statement, and review and/or approve the actual compensation (including base pay adjustments, and any annual and long‑term incentive payouts) paid to senior executive officers of the Corporation;
the Committee should be involved with any employment agreements, severance agreements or change of control agreements between the Corporation and any of its senior executive officers;
the Committee shall review and approve the goals and objectives relevant to the President and Chief Executive Officer's compensation, evaluate the Chief Executive Officer's performance in light of those goals and objectives and set the Chief Executive's compensation level based on this evaluation;
in determining the long-term incentive component of the President and Chief Executive Officer’s compensation, the Committee should consider the Corporation’s performance and relative shareholder return, the value of similar incentive awards to presidents and chief executive officers at comparable companies, and the awards given to the Corporation’s President and Chief Executive Officer in prior years;
the Committee shall review and approve the design of the benefit plans which pertain to Directors, the President and Chief Executive Officer, and other senior executive officers who report directly to the President and Chief Executive Officer;
the Committee shall review and recommend to the Board the creation and/or revision of incentive compensation plans and equity incentive plans;
the Committee shall draft and approve the Compensation Committee Report on Executive Compensation included in the Corporation's proxy statements and generally oversee compliance with the compensation reporting requirements of the federal securities laws and rules and regulations promulgated thereunder by the SEC;
the Committee may retain consultants, from time to time, to advise the Committee on executive compensation practices and policies, or any other matters within the scope of its purpose (The Committee shall have sole authority to retain and terminate such consulting firm, including sole authority to approve the firm’s fee and other retention terms).
subject to the approval of the Board, the Committee may hire other specialists, including independent counsel, in the performance of its functions (The Committee may, within limits set by the Board, approve the fees and retention terms payable to such specialists.);
the Committee shall obtain through discussions with management of the Corporation a general understanding of the compensation throughout the entire organization.
the Committee shall establish the design of the benefit plans that pertain to Directors, the President and Chief Executive Officer and senior executive officers of the Corporation who report directly to the President and Chief Executive Officer;
the Committee shall administer all plans that require “disinterested administration” under Rule 16b‑3 of the Securities Exchange Act of 1934, as amended;
Reporting to the Board
the Committee shall report to the Board periodically; such report to include a review of any issues that arise with respect to compensation matters and any other matters that the Committee deems appropriate or is requested to be included by the Board;
at least annually, the Committee shall evaluate its own performance and report to the Board on such evaluation;
the Committee shall periodically review and assess the adequacy of this Charter and recommend any proposed changes to the Board (This Charter may only be adopted, amended or repealed by the Board); and
the Committee shall perform any other activities consistent with this Charter, the Corporation’s Charter, Bylaws and governing law, as the Committee deems necessary or appropriate.
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