Personnel & Compensation Committee Charter
The Personnel and Compensation Committee ("Committee") will assist the Ashland Inc. ("Company") Board of Directors ("Board") in discharging its duties related to executive compensation. The purpose of the Committee is to (i) oversee the administration of the Company's compensation plans, in particular the incentive and equity-based plans; (ii) discharge the Board's responsibilities relating to compensation of the Company's executives; and (iii) oversee the preparation of the annual report on executive compensation required by the rules and regulations of the Securities and Exchange Commission to be included in the Company's proxy statement.
II. Principles of Compensation
In discharging its duties relating to compensation of Company executives, the Committee shall adhere to the following principles:
1. Compensation arrangements shall emphasize pay for performance and encourage retention of those employees who enhance the Company's performance;
2. Compensation arrangements shall promote ownership of Company stock to align the interests of management and stockholders;
3. Compensation arrangements shall maintain an appropriate balance between base salary and long-term and annual incentive compensation;
4. In approving compensation, the recent compensation history of the executive, including special or unusual compensation payments, shall be taken into consideration;
5. Cash incentive compensation plans for senior executives shall link pay to achievement of financial goals set in advance by the Committee.
The Committee is composed of three or more directors, as determined by the Board. All members of the Committee shall be independent directors and shall satisfy the New York Stock Exchange standard for independence for members of the Committee. The Board elects the members of the Committee upon the recommendation of the Governance and Nominating Committee at the annual organization meeting of the Board for terms of one year, or until their successors are duly elected and qualified. Members shall serve at the pleasure of the Board. Unless a Chairman is elected by the full Board, the members may designate a Chairman by majority vote of the full membership of the Committee.
The Committee shall meet at least twice a year and at such other times as required, upon the call of the Chairman of the Committee or the Chairman of the Board. A majority of the members of the Committee shall constitute a quorum.
IV. Responsibilities and Authorities
0. Review and approve on an annual basis the corporate goals and objectives with respect to compensation for the Chief Executive Officer. The Committee shall annually evaluate the Chief Executive Officer's performance in light of these established goals and objectives and, based upon these evaluations, shall, after an executive session of the Committee and together with the other independent Board members, set the Chief Executive Officer's annual compensation, including salary, bonus, incentive and equity compensation. In setting compensation, all relevant factors shall be considered, including the Company's performance and relative shareholder return, the value of similar incentive awards to those with similar responsibilities at comparable companies and the awards given by the Company in prior years.
1. Review and approve compensation of all key senior executives and elected corporate officers from time to time. The Committee shall make recommendations to the Board with respect to incentive compensation and equity-based plans, taking into account individual performance, Company performance, and comparable compensation paid to similarly-situated officers in comparable companies. The Committee shall approve the Company's policies and procedures governing key officers' expense accounts and perquisites.
2. Approve any employment agreements, consulting arrangements, severance or retirement arrangements, change-in-control agreements, and/or any special or supplemental benefits or provisions covering any current or former executive officer of the Company.
3. Oversee the implementation and administration of the compensation plans of the Company, including pension, welfare, incentive and equity-based plans, and to ensure that these plans are consistent with the Company's general compensation policy. The Finance Committee shall retain responsibility for oversight of the Company's funding of its benefit plans.
4. Oversee regulatory compliance with respect to compensation matters, including overseeing the Company's policies on structuring compensation programs to preserve tax deductibility.
5. Oversee the execution of any Chief Executive Officer and senior management succession plan and report to the Board periodically on such plan.
The Committee may form and delegate authority to subcommittees. In particular, the Committee may delegate approval of certain transactions to a subcommittee consisting solely of members of the Committee who are (i) "Non-Employee Directors" for purposes of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or (ii) "outside directors" for purposes of 162(m) of the Internal Revenue Code of 1986, as amended.
The Committee shall have the sole authority to retain and terminate a compensation consultant to assist in the evaluation of Chief Executive Officer or senior executive compensation, including the sole authority to approve the consultant's fees and other retention terms. The Committee shall have authority to obtain advice and assistance from legal, accounting or other advisors.
The Committee shall report its actions and recommendations to the Board after each Committee meeting and shall conduct and present to the Board an annual performance evaluation of the Committee. The Committee shall review at least annually the adequacy of this charter with the Governance and Nominating Committee and recommend any proposed changes to the Board for approval.