2003 Committee Charter : BGP

X:\IROL\65\65380\corpgov\COMP_CHARTER_4_2003.DOC
BORDERS
GROUP, INC.
BOARD OF DIRECTORS
COMPENSATION COMMITTEE CHARTER
Composition and Term of Office
The Compensation Committee shall be composed of not less than three (3) independent
Directors. The members of the Committee shall be elected annually at the meeting of the Board
immediately following the shareholders meeting or as necessary to fill vacancies in the interim.
Purpose
The purpose of the Compensation Committee shall be to discharge the Board's responsibilities
relating to the compensation of the Company's executives, and to produce an annual report on
executive compensation for inclusion in the Company's proxy statement, in accordance with
applicable rules and regulations.
Meetings
The Committee shall hold meetings as necessary. Compensation Committee meetings are
usually scheduled at least twice a year, at the time of the September and March Board Meetings.
Duties and Powers
The Compensation Committee shall have the following duties and powers:
1. Review and approve periodically a general compensation program and salary structure
for management employees of the Company that (i) supports the Company's overall
business strategy and objectives; (ii) attracts and retains key executives; (iii) links
compensation with business objectives and organizational performance; and (iv)
provides competitive compensation opportunities.
2. Review and approve corporate goals and objectives relevant to CEO compensation,
evaluate the CEO's performance in light of those goals and objectives, and set the
CEO's compensation level based on this evaluation.
3. Approve all changes in the compensation of the executive officers of the Company.
4. Administer the compensation plans under which it has been granted administrative
responsibility in a manner consistent with the terms of such plans, including, as
applicable, approving all stock option grants for executive officers and establishing
performance goals under incentive plans and determining whether or not such goals
have been attained. The Committee shall have the authority to delegate responsibility in
accordance with the terms of the applicable plan for matters relating to employees other
than executive officers.
5. Review and make recommendations to the Board of Directors with respect to any
incentive-compensation, equity based or retirement plan covering salaried employees,
including material changes in existing plans and any additions or deletions of
investment funds under any retirement plan maintained by the Company.
X:\IROL\65\65380\corpgov\COMP_CHARTER_4_2003.DOC
6. Review and approve the Company's disclosure of executive compensation in the
Company's proxy statement.
7. Retain and terminate any compensation consultant to be used to assist in the evaluation
of the compensation of the directors, CEO or executive officers of the Company,
including the sole authority to select the consultant and to approve the firm's fees and
other retention terms.
8. Obtain advice and assistance from internal or external legal, accounting or other
advisors as required for the performance of its duties.
9. Monitor compliance with legal prohibitions on loans to directors and executive officers
of the Company.
10. In conjunction with the Nominating and Corporate Governance Committee, undertake
an annual evaluation of the Compensation Committee.
11. Report to the Board on its activities after each meeting of the Committee.