2003 Compensation Charter: ELK

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ElkCorp
COMPENSATION COMMITTEE CHARTER
(Revised August 27, 2002)
MISSION AND PURPOSE
One committee of the Board of Directors of ElkCorp ("the Corporation") will be
known as the Compensation Committee (Compensation Committee or Committee).
The Committee's mission will be to ensure that the Corporation's compensation
program for key executives is effective in attracting and retaining key executives, that
it links pay to performance, and that it is administered fairly and in the shareholders'
interests. The Compensation Committee will review and recommend to the Board of
Directors appropriate executive compensation policy, compensation of ElkCorp
directors and officers, and executive and employee benefit plans and programs, and
shall be responsible to the Board of Directors for overseeing such policies,
compensation, plans and programs approved by the Board of Directors and, where
appropriate, by the shareholders.
MEMBERSHIP
General.
The Committee shall consist of three or more directors, as determined by the Board.
Committee members shall be appointed by the Board, and each Committee member
shall serve for a period of one year or until such time as their successor has been duly
named and qualified.
Independence and Qualifications.
The Board must determine in its best judgement that each member of the Committee
is independent of management and qualified to serve by experience or education. An
independent director means a director who has been determined by the Board to be
free from any material relationship with ElkCorp, other than their relationship as a
director or Board committee member, within the meaning of New York Stock
Exchange Rules and any applicable laws and regulations, as amended from time to
time. In addition, each member of the Committee shall be a "non-employee director"
as that term is defined under Securities and Exchange Commission Rule 16b-3; and,
an "outside director" as that term is defined for the purposes of the Internal Revenue
Code section 162(m). No member of the Compensation Committee shall occupy a
position disclosable as a compensation committee interlock under Securities and
Exchange Commission regulations.
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Each member of the Compensation Committee shall remain independent during their
term of service on the Committee, and may not accept any consulting, advisory or
other compensatory fee or other compensation, other than standard director's and
committee compensation from ElkCorp, nor become an affiliated person of ElkCorp
or any of its subsidiaries.
POLICIES AND PRINCIPLES
The Committee shall apply the following principles in the performance of their duties
for the Corporation:
  • Compensate competitively in order to attract, retain and motivate a highly
    competent executive team dedicated to achieving the Corporation's mission and
    strategic plans, which are designed to result in long-term growth in shareholder
    value;
  • Tie individual compensation to individual and team performance and the success
    of the Corporation;
  • Align the executive officers and certain eligible employees' interests with those of
    the Corporation by making incentive compensation dependent upon the
    performance of the Corporation or the appropriate business unit;
  • Align executive officers' and selected eligible employees' interests with those of the
    Corporation and its shareholders by providing long-term compensation
    opportunities through participation in the Corporation's Employee Stock
    Ownership Plan, Incentive Stock Option Plan, Equity Incentive Compensation
    Plan and/or any successor or other long-term incentive compensation plans as may
    be adopted from time to time; and
  • Maximize the tax deductibility of executive compensation.
    DUTIES
    The Committee shall perform the following duties:
    General.
  • Recommend to the Board of Directors the compensation and benefits philosophy
    and strategy for the Corporation, in consultation with senior management of the
    Corporation.
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    Performance Evaluation.
  • Recommend performance measures and, if applicable, goals for measuring
    corporate and business unit performance in consultation with the Chairman of the
    Board, CEO and President, for approval by the Board of Directors.
  • Establish and administer performance goals and certify that performance goals
    have been attained for Section 162(m).
  • Assess the performance of the Chairman of the Board, CEO and President.
    Evaluation of Competitive Pay and Overall Financial Contributions.
  • Evaluate competitive pay levels for key executives based on reliable industry
    analyses; approve "peer group" companies to be included in competitive
    compensation comparisons.
  • Review the financial performance and operation of major compensation or benefit
    programs involving stock or commitments beyond one year (stock loan plan,
    incentive stock options, employee stock ownership, 401(k), employment contracts,
    etc.) and recommend approval of awards and rate of annual contribution to plans
    and changes where appropriate.
    Compensation Determinations.
  • Recommend to the Board of Directors compensation awards for the Chairman,
    CEO and President, including salary, bonus, stock and option awards, and, if
    applicable, contracts and any supplemental compensation or benefit arrangements.
  • Review and approve compensation programs covering ElkCorp executive officers
    and other selected employees and, upon recommendation of the Chairman of the
    Board, CEO and President, review and recommend Board of Directors' approval of
    individual compensation awards for the executive officers.
  • Recommend to the Board the compensation for Board members (retainer,
    committee chairman's fees, stock options, and other similar items as appropriate).
  • Recommend other ElkCorp compensation programs covering Corporation directors
    for approval by the Board of Directors and administration by management.
    Other Duties.
  • Oversee regulatory compliance and efficiency in connection with compensation
    matters, including determining Corporation policies on structuring compensation
    programs to preserve tax deductibility, and approving employee and director
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    compensation plans as needed for Section 16 exemptions and other regulatory and
    tax considerations.
  • Make non-material changes to the Corporation's executive incentive plans in
    accordance with their terms (subject to any required Board and/or shareholder
    approval).
  • Perform such other functions which from time to time may be assigned by the
    Board of Directors.
    ADMINISTRATION
    Election.
    The Board of Directors shall elect the members of the Committee at its first meeting
    following the Annual Meeting of Shareholders. Unless the Board of Directors elects a
    Chair, the members of the Committee shall designate a Chair by majority vote of the
    full Committee membership.
    Meetings.
    The Committee will meet at least three times each year, and more frequently if
    circumstances warrant. A majority shall constitute a quorum of the Committee for
    purposes of each meeting. All Committee actions shall be taken by a majority vote of
    the quorum of members present in person or by telephone at the meeting.
    The Committee members will have sole discretion in determining the meeting
    attendees and agenda. Senior executive officers may be invited to participate in
    meetings of the Committee, but may be excused from participation in discussions of
    any matter under consideration at the discretion of the Committee.
    Committee Access to Management and Outside Advisors.
    Members of the Committee shall have direct access to the Corporation's senior
    management, employees, and financial, legal and other business advisors, as requested
    and as may be necessary and appropriate to support Committee functions. The
    Committee shall have the authority (with the knowledge of the Board) to retain and
    terminate any compensation consultant used to assist in the evaluation of a director,
    CEO, or senior executive, or their compensation, and the authority to hire
    independent counsel and advisors as may be necessary or appropriate to support
    Compensation Committee functions.
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    Performance Evaluation of Committee.
    The Committee will establish and recommend for Board approval the criteria,
    procedures and timing of an annual performance evaluation of the Compensation
    Committee.
    Reports.
    The Committee will keep minutes of its meetings and promptly report on all
    Committee business and affairs to the Board. In addition, the Committee will prepare
    the Compensation Committee Report to shareholders included with the annual proxy
    statement.