(Approved June 23, 2003)

ARMSTRONG

MANAGEMENT DEVELOPMENT AND COMPENSATION

COMMITTEE CHARTER

I. Purpose

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).

II. Authority

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.

III. Composition

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.

IV. Meetings

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

appropriate matters.

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

Committee.

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.

V. Minutes

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

Achievement Plan.

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

retention terms.

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

Committee.

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

practices.