Purpose and Authority
The Management Development and Compensation Committee (the “Committee”) is established by the Board of Directors (the “Board”):
1. To discharge the Board's responsibilities relating to compensation of the Company's Chief Executive Officer (“CEO”) and Management Executive Committee members;
2. To review and approve the Company's compensation policies and plans;
3. To oversee the management of the various pension, savings and other benefit plans that cover the Company's employees;
4. To produce the annual report on executive compensation for inclusion in the Company's proxy statement in accordance with applicable rules and regulations; and
5. To oversee the Company's management development and succession planning processes.
“Executive Officers” as used in this charter means members of the Company's Management Executive Committee and vice presidents who head significant functions and business units.
The Committee will report regularly to the Board regarding its execution of its duties and responsibilities.
The Committee shall have the authority to retain and terminate, and to approve the fees and other retention terms of, such consultants, outside counsel and other experts and advisors as it deems necessary to carry out its duties.
This Charter shall be reviewed and updated as necessary annually. The Committee shall also perform an annual evaluation of its performance relative to the purpose, duties and responsibilities described herein. The Committee may delegate any of its duties and responsibilities to subcommittees.
Composition and Meetings
The Committee shall consist of at least three directors who are determined by the Board to be “independent” as that term is defined by the NYSE, “non-employee” as defined in SEC Rule 16b-3(b)(3)(i) and “outside” as required for purposes of Internal Revenue Code §162(m).
The Board shall select Committee members at the first Board meeting following the annual meeting of stockholders. The Board, by majority vote, may remove a member of the Committee without cause at any duly noticed meeting of the Board. The Committee shall meet at least four times per year either in person or by teleconference. A majority of the members of the Committee must be present at a meeting to constitute a quorum.
Duties and Responsibilities
The Committee shall:
1. With respect to executive compensation:
o Review and approve the Company's goals and objectives that provide a basis for decisions concerning the compensation of the CEO and the members of the Management Executive Committee.
o Evaluate the CEO's performance in light of the Company's goals and objectives and periodically determine the CEO's salary and other compensation based on that evaluation, taking into account the input of non-employee directors who are not on the Committee.
o Review periodically with the CEO the performance of the members of the Management Executive Committee in light of the Company's goals and objectives and approve their salary and other compensation based on that evaluation.
o Annually determine and certify for each participant in the Executive Incentive Compensation Plan and for each Management Executive Committee participant in the Short-term Incentive Plan the extent to which performance goals have been met and the amount of any award to be made.
o Determine the amount of individual awards to be made to Executive Officers under the Company's long-term incentive compensation plans.
o Review and approve recommendations of the CEO regarding retirement income and other deferred benefit plans applicable to Executive Officers.
o Review and approve recommendations of the CEO regarding new Management Executive Committee positions, before the job is filled. (Each recommendation should be supported by a job description, proposed salary range for the position, and tentative incentive compensation).
respect to incentive compensation and equity plans
o Make recommendations to the Board with respect to the structure of overall incentive and equity-based plans that are subject to shareholder approval.
o Review and approve performance measures and related targets, applicable target, threshold and maximum awards and maximum aggregate funding for participants in the Short-term Incentive Plan who are not Management Executive Committee members.
o Administer all stock option, restricted stock and other long term compensation plans and programs.
o Review and approve aggregate share levels for long-term incentive plan awards to employees who are not Executive Officers.
o Initiate studies of new executive compensation plans and of existing plans, as the economy and tax laws change.
3. With respect to benefit and health & welfare plans:
o Review and approve recommendations of the Employee Benefits Committee regarding amendments to the Company's tax qualified retirement plans such as Pension and 401(k) Plans. Authority to approve amendments that are recommended by legal counsel and do not have a substantial adverse impact on the Company and that are necessary to comply with law or are ministerial in nature and do not affect the level of plan benefits offered under the plan has been delegated to The Clorox Company Employee Benefits Committee.
o Oversee the administration of ERISA employee benefit plans. Responsibility for administering the plans has been delegated to The Clorox Company Employee Benefits Committee.
4. With respect to director compensation, annually review the compensation of non-employee directors and the principles upon which such compensation is determined and make any recommendations to the Nominating and Governance Committee.
5. With respect to succession:
o Recommend to the Board candidates for the CEO.
o Review the plans of the Company with regard to the training and availability of qualified personnel for appointment to Executive Officer positions.
o Participate with the CEO in planning for the succession of Executive Officers through an annual succession planning review.
o Provide all directors the opportunity to participate in talent and succession planning review.
6. With respect to reporting:
o Prepare the report of the Committee to be included in the Company's proxy statement annually.