(Approved June 23, 2003)
MANAGEMENT DEVELOPMENT AND COMPENSATION
1. The Management Development and Compensation Committee oversees the Company’s
compensation and benefit programs, and employment practices.
2. The Committee establishes the Company’s overall philosophy and policies governing these
programs, including those pertaining to management salaries, incentive compensation, benefits
and perquisites, and issues an annual report on executive compensation for inclusion in the
Company’s proxy statement, in accordance with applicable rules and regulations.
3. The Committee appoints and monitors outside advisors on compensation and benefit matters and
any other service providers to the Committee.
4. The Board of Directors reviews plans relating to senior management succession . In this
connection, the board annually reviews the performance of senior management including the
Chief Executive Officer (CEO).
The Management Development and Compensation Committee receives its authority and its
assignments from the Board of Directors, except in matters where its authority is derived by law or
rules of the principal stock exchange(s) where the securities of the Company are listed (the
“Exchange”). The Committee’s advisors are directly accountable to the Committee. The Committee
has direct access to management and support staff in the Company. The Committee has the ability to
contractually bind the Company, commit the Company to pay for services, expenses, or other costs,
and retain, at the Company’s expense, special legal, consulting and other experts, all as it deems
necessary in the performance of its duties. The Company will provide appropriate funding, as
determined by the Committee, for its expenses and for payment of compensation to advisors it
determines necessary to carry out its duties.
1. The Management Development and Compensation Committee shall be comprised of at least
three independent directors elected by the Board of Directors, and shall possess qualifications
which meet all applicable eligibility requirements as may be set by law, Exchange requirements
and the Board of Directors from time to time.
2. Committee members and the Chair shall be recommended by the Nominating and Governance
Committee and appointed by the Board of Directors. A member of the Committee may be
removed by majority vote of the board. The terms of Committee members shall be arranged to
maintain continuity to the extent practicable, consistent with the rotation process specified in the
Company’s Corporate Governance Principles.
1. The Committee shall meet at least four times per year, on a schedule adopted by the Committee,
and as many additional times as the Committee deems necessary. The Chairman of the Board,
the Committee Chair or any two other members of the Committee may call a special meeting in
the manner prescribed by the Bylaws of the Company for a special meeting of the board. The
Committee Chair may request members of management and other persons to be present at
meetings. The Committee shall meet in executive session and privately with Company
executives to discuss any matters that the Committee believes should be discussed.
2. The Chairman of the Board shall receive notice of meetings and may attend, but will have no
vote in its actions. The Committee shall solicit the views of the Chairman of the Board in
3. The votes of any member who is subsequently determined to have been erroneously considered
qualified for service shall be ignored in considering the validity of any action taken by the
4. The Committee may request any director and any member of management to advise or assist in
aspects of the Committee’s business, provided the same is consistent with applicable legal
requirements. The Committee may designate sub-committees comprised of its members and/or
other directors to make recommendations on specific matters.
Minutes of meetings are to be prepared at the direction of the Committee Chair and sent to
Committee members and all other directors. Copies are to be provided to the Chief Executive
Officer, the Senior Vice President - Human Resources, the Chief Financial Officer, the Chief
Accounting Officer, and the General Counsel.
VI. Scope of Responsibilities and Duties
A. Charter Review
1. Review and reassess the adequacy of this charter each year. Submit the charter to the Board of
Directors for approval and publish the document as required by law or Exchange rules.
B. Salaried Compensation and Employee Benefits
1. Establish the Company’s overall philosophy and policies regarding the compensation of salaried
employees and the employee benefit programs for hourly and salaried employees.
2. Review and adopt, or recommend to the Board of Directors for adoption as appropriate, changes
to the design of the Company’s pension, savings and severance pay plans as recommended by
the Retirement Committee.
3. Review and approve changes to the design of the Company’s Salaried Employees’ Bonus Plan.
4. Review merit increase plans for the salaried organization.
C. Executive Compensation and Benefits
1. Establish the Company’s overall philosophy and policies regarding the compensation and benefit
programs pertaining to managers in grade 14 and higher. This includes: base salaries, annual
incentive compensation, long-term incentive compensation, executive benefits and perquisites.
2. Approve and secure board ratification pertaining to all plans and arrangements involving
compensation of the CEO. Such plans shall include base salary, annual incentive compensation,
long-term incentive compensation, benefits and perquisites. The board must ratify all cash and
equity compensation paid or awarded to the CEO.
3. Approve all employment and compensation actions pertaining to executive officers who report
directly to the CEO including base salary, annual incentive compensation, long-term incentive
compensation, benefits and perquisites.
4. Review and adopt, or recommend to the Board of Directors for adoption as appropriate, changes
to the Company’s Management Achievement Plan and long-term incentive compensation plans.
5. Approve and administer awards under the Company’s long-term incentive plans.
6. Approve the specific performance goals and objectives related to annual and long-term incentive
compensation awards. Following the conclusion of the performance period, the Committee will
determine whether (or, if applicable, to what degree) the performance goals and any other
material terms were satisfied as required under Section 162(m) of the Internal Revenue Code.
7. Approve the aggregate payment amounts that may be paid annually under the Management
8. Approve and administer as appropriate executive benefit and perquisite programs including
deferred compensation, long-term disability insurance, executive physicals and personal
financial planning reimbursement.
9. Exercise sole authority to retain and discharge any compensation consultant used to assist in the
evaluation of CEO or executive compensation, and to approve the consultant’s fees and other
10. Review and approve matters pertaining to employment, severance and change-in-control
agreements between the Company and its executives .
11. Issue an annual report on executive compensation for inclusion in the Company’s proxy
statement, in accordance with applicable rules and regulations.
D. Review of CEO Performance
1. Conduct an annual review of the CEO’s performance. Such review will be subsequently
discussed with the CEO by the Chairman of the Management Development and Compensation
E. Other Committee Responsibilities
1. Periodically review the Company’s Equal Employment Opportunity policy and make
recommendations in this area. Review information from management regarding the Company’s
compliance with applicable employment laws, regulations and executive orders.
2. Periodically review the Company’s labor relations strategy and other initiatives to increase
human resources excellence in the organization.
3. Report to the Board of Directors at its next meeting on all material details of compensation and
benefit matters affecting the CEO or any executive officer who reports directly to the CEO,
whether or not board ratification is required.
4. Report to the Board of Directors at its next meeting on significant results of other activities.
5. Establish budgets for Committee functions.
6. Perform any other activities consistent with this Charter, the Company’s Bylaws and governing
law, as the Committee or the board deems necessary or appropriate.
7. Annually evaluate the Committee’s performance of its responsibilities.
8. Periodically review materials or receive education on Committee-related developments and best