2004

ENGELHARD CORPORATION

COMPENSATION COMMITTEE CHARTER

I. Compensation Committee Purpose

The Compensation Committee (the “Committee”), in its capacity as a committee of

the Board, shall assist the Board by taking direct responsibility for:

• reviewing and approving corporate goals and objectives relevant to the

Chief Executive Officer’s compensation, evaluating the Chief Executive

Officer’s compensation in light of these goals and objectives and, either as

a committee or together with the other independent directors (as directed

by the Board), determining and approving the Chief Executive Officer’s

compensation level based on this evaluation;

• reviewing and approving compensation for executives (other than the

Chief Executive Officer) and reviewing and making recommendations to

the Board with respect to incentive compensation and equity-based plans;

and

• producing an annual report on executive compensation for inclusion in the

Company’s proxy statement in accordance with applicable laws, rules and

regulations.

II. Compensation Committee Authority

The Committee has the authority to retain and terminate any compensation consulting

firm in the field of executive compensation to assist the Committee with its evaluation

of director, chief executive officer or senior executive compensation as set forth

herein, including the authority to approve the firm’s fees and other retention terms.

The Committee also has the authority to retain, at the Company’s expense, internal or

external legal, accounting, investment manager, or other consultants or other advisors

of its choice as it deems necessary or appropriate in the performance of its duties.

The Committee may request any officer or employee of the Company or the Company’s

counsel or independent auditor to attend any meeting of the Committee or to

meet with any members of, or consultants to, the Committee.

-2-

The Committee may delegate authority to an individual member of the Committee or

to subcommittees to the extent permitted by applicable laws, rules and regulations, including

those of the New York Stock Exchange.

III. Compensation Committee Membership and Meetings

The Committee shall be comprised of two or more independent directors appointed

annually by the Board. Each member shall comply with and satisfy the requirements

of the New York Stock Exchange, Section 162 (m) of the Internal Revenue Code,

Rule 16b-3 promulgated by the Securities and Exchange Commission and all other

applicable laws, rules and regulations and may be removed by the Board of Directors

in its discretion.

The Committee shall meet as frequently as circumstances dictate. Meetings of the

Committee shall be called by the Chairman of the Committee or the Chief Executive

Officer of the Company. All meetings of the Committee shall be held pursuant to the

Bylaws of the Company with regard to notice and waiver thereof, and written minutes

of each meeting shall be duly filed in the Company’s records. If a Committee Chairman

is not designated by the Board or present at a meeting, the members of the Committee

may designate a Chairman of the meeting by majority vote of the Committee

membership. Reports of meetings of the Committee shall be made to the Board at its

regularly scheduled meeting following the Committee meeting accompanied by any

recommendations to the Board approved by the Committee.

IV. Compensation Committee Responsibilities

The Committee shall:

1. Review from time to time, but at least annually, the Company’s compensation

strategy to ensure that senior management is rewarded appropriately for its

contributions to Company growth and profitability and consistently with the

compensation strategy of the Company, competitive practice, and the requirements

of the appropriate regulatory bodies, and that the executive compensation

strategy supports organization objectives and shareholder interests.

2. Review and approve corporate goals and objectives relevant to the Chief Executive

Officer’s compensation, evaluate the Chief Executive Officer’s performance

in light of these goals and objectives, and, either as a committee or,

at the discretion of the Committee, together with the other independent directors,

determine and approve the Chief Executive Officer’s compensation level

based on this evaluation. In determining the long-term incentive component of

the compensation of the Chief Executive Officer, the Committee should consider

the Company’s performance and relative shareholder return, the value of

-3-

similar incentive rewards to the chief executive officer at comparable companies,

and the awards given to the Chief Executive Officer in past years, as well

as any other factors the Committee deems relevant.

3. Evaluate the performance of the Chief Executive Officer, and oversee the

evaluation of management.

4. Assure that the Company’s incentive compensation, supplemental pension, deferred

compensation and equity-based compensation plans are administered in

a manner consistent with the Company’s compensation strategy for executives,

including without limitation as to participation, target annual incentive awards,

corporate financial goals and total funds reserved for payment under the compensation

plans.

5. Review and approve compensation to executives of the Company (other than

the Chief Executive Officer), including incentive compensation awards, grants

of stock options and issuances of equity securities.

6. Prepare an annual report on executive compensation for inclusion in the Company’s

proxy statement, in accordance with applicable laws, rules and regulations.

7. Review and make recommendations to the Board with respect to the amount

and manner of payment and compensation for non-employee members of the

Board and committees of the Board and the terms on which such fees may be

deferred.

8. Review and make recommendations to the Board with respect to incentive

compensation, supplemental pension, deferred compensation and equity-based

compensation plans applicable to executives and changes to such plans, in each

case subject, where appropriate, to shareholder approval.

9. Review and reassess the adequacy of this Charter and the Committee’s own

performance annually or more often as conditions dictate, and recommend

proposed changes to the Board.

10. Perform any other activities consistent with this Charter, the Company’s Bylaws

and governing law, as the Committee or the Board deems necessary or

appropriate.