The Compensation Committee (the “Committee”) is a committee of the Board of Directors (the “Board”) of The Bear Stearns Companies Inc. (the “Corporation”). The purpose of the Committee is to discharge the responsibilities of the Board relating to compensation of the Corporation’s Chief Executive Officer (“CEO”) and the other participants in the Corporation’s Performance Compensation Plan and to oversee the Corporation’s compensation system and practices.
The Committee shall consist of at least three directors of the Corporation. A person may serve on the Committee only after the Board determines that he or she: (i) is a “Non-employee Director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended; (ii) satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended; (iii) is an “independent director” as that term is defined in the rules of the New York Stock Exchange (“NYSE”); and (iv) meets all other conditions that may otherwise be required by applicable law, rule or regulation. Committee members shall be appointed by the Board annually and may be removed with or without cause by action taken by a majority of the whole Board.
The Committee is responsible for establishing annual and long-term performance goals and objectives for the Corporation’s CEO and the other participants in the Corporation’s Performance Compensation Plan. This responsibility includes: (i) evaluating the performance of the participants in the Corporation’s Performance Compensation Plan in relation to approved performance goals and objectives and setting the compensation level of the participants based upon this evaluation; (ii) reviewing and approving goals and objectives relevant to CEO compensation, evaluating the CEO’s performance in light of such goals and objectives and determining, either as a committee or with other independent directors (as directed by the Board), the CEO’s compensation based upon this evaluation; and (iii) making recommendations to the Board with respect to non-CEO executive officer compensation, incentive-based compensation plans and equity-based plans that are subject to Board approval. In addition, the Committee:
In determining the long-term incentive compensation component for the Corporation’s CEO, the Committee should consider: (i) the Corporation’s performance and relative shareholder return; (ii) the value of similar incentive awards to CEOs at comparable corporations; and (iii) the awards given to the Corporation’s CEO in previous years.
Committee Structure and Operations
A majority of the Committee shall constitute a quorum. The Board shall designate a member of the Committee as its chairman. The Committee may act by a majority vote of the members present at a duly constituted meeting of the Committee or by unanimous written consent. In the absence or disqualification of a member of the Committee, the members present, whether or not they constitute a quorum, may unanimously appoint another independent member of the Board to act at the meeting in the place of an absent or disqualified member. In the event of a “tie” vote on any issue voted upon by the Committee, the chairman’s vote shall decide the issue. The Committee shall meet in person or telephonically at least once a year, with additional meetings called when deemed necessary or desirable by the Committee or its chairman. The Committee may delegate some or all of its duties that are required by the NYSE to a subcommittee, provided that such subcommittee is composed entirely of independent directors, as that term is defined under the rules of the NYSE, and provided such subcommittee has a published charter. The Committee may also delegate some or all of its other duties set forth in this Charter to a subcommittee of its choice. The Committee or a subcommittee thereof may hire a compensation consultant(s) at the Corporation’s expense to assist the Committee or subcommittee in the performance of its duties. The Committee shall have the sole authority to retain, terminate and approve the fees and other retention terms of any compensation consultant(s). In addition, the Committee may ask members of management or others whose advice and counsel are relevant to the issues then being considered by the Committee, or a subcommittee thereof, to attend a Committee or subcommittee meeting and to provide such pertinent information as may be requested by the Committee. The Committee shall report to the Board with respect to the Committee’s meetings and activities.
Each year the Committee shall conduct a self-evaluation. In this regard, the Committee shall compare its performance with the provisions of this Charter and recommend changes to the Board, as the Committee deems necessary or appropriate. The Committee shall report the results of the evaluation to the Board in such manner as the Committee shall determine.
The Committee shall have and may exercise all powers, authority and responsibilities as the Board shall determine and as may be properly granted to the Committee under the laws of the State of Delaware and the Corporation’s Certificate of Incorporation and By-laws. Nothing contained in this Charter is intended to create, or should be construed as creating, any responsibility or liability of any member of the Committee, except to the extent otherwise provided under applicable law of the State of Delaware, which sets the legal standard for the conduct of the members of the Committee.
March 21, 2005