CHARTER OF THE EXECUTIVE COMPENSATION

AND STOCK OPTION COMMITTEE

OF THE BOARD OF DIRECTORS

OF FURNITURE BRANDS INTERNATIONAL, INC.

 

 

 

The Executive Compensation and Stock Option Committee ("Committee") of the Board of Directors ("Board") of Furniture Brands International, Inc. ("Company") hereby adopts this formal written charter ("Charter"), which has been approved by the full Board on the date set forth below.

 

Membership

 

Members of the Committee shall be appointed by the Board upon the recommendation of the Governance and Nominating Committee and may be removed by the Board in its discretion.  The Committee shall consist of three or more directors all of whom in the judgment of the Board shall be independent.  A person may serve on the Committee only if the Board determines that he or she (i) satisfies the requirements of an “outside director” for purposes of 162(m) of the Internal Revenue Code, and (ii) is “independent” in accordance with the New York Stock Exchange listing standards.

 

Purposes

 

The Committee shall (a) discharge the responsibilities of the Board relating to compensation of the Company’s Chief Executive Officer and other executives of the Company and its operating companies, and (b) produce an annual report on executive compensation for inclusion in the Company’s annual proxy statement that complies with the rules and regulations of the Securities and Exchange Commission, the New York Stock Exchange and any other applicable rules and regulations. 

 

Duties and Responsibilities

 

In furtherance of these purposes, the Committee shall have the following duties and responsibilities:

 

Executive Compensation

 

1.                  Review and approve goals and objectives relevant to the compensation of the

Chief Executive Officer and other elected officers of the Company and the chief

executive officers of the operating companies.

 

2.                  Evaluate the performance of the Chief Executive Officer and other elected officers of the Company and the chief executive officers of the operating companies in light of the approved goals and objectives and communicate the results to the Chief Executive Officer and the Board.

 

3.                  Set the compensation of the Chief Executive Officer and other elected officers of the Company and the chief executive officers of the operating companies based upon the evaluation of their respective performances.

 

4.                  Establish and modify the terms and conditions of employment of the Chief Executive

Officer and other elected officers of the Company and the chief executive officers of the

operating companies.

 

5.                  Review and recommend to the Board new executive compensation programs.

 

6.                  Monitor executive compensation programs to determine whether they are properly

coordinated and achieving their intended purpose.

 

Executive Compensation Plans

 

1.                  Administer the stock option and long-term incentive plans of the Company according to the terms of the respective plans.

 

2.                  Review and recommend to the Board new long-term equity-based incentive compensation plans.

 

3.                  Grant options and awards under the stock option and long-term incentive plans of the Company.

 

General

 

1.         Advise regarding (a) the compensation of other key employees of the Company and its operating companies, (b) management development and succession and (c) major personnel matters.

 

2.         In determining the long-term incentive component of the compensation of the Company’s Chief Executive Officer and other executives of the Company and its operating companies, in its discretion, consider:  (a) the Company’s performance and relative shareholder return; (b) the value of similar incentive awards to chief executive officers and elected officers at comparable companies; and, (c) the compensation provided the Company’s Chief Executive Officer and other elected officers in the past.

 

4.                  In its sole discretion, employ a compensation consultant to assist in the evaluation of the compensation of the Company’s Chief Executive Officer and other executives of the Company and its operating companies.  The Committee shall have the sole authority to approve the fees and other retention terms with respect to such a compensation consultant.

 

5.                  Review and recommend to the Board changes to the Company’s retirement and 401(k)

plans.

 

6.                  Prepare and present to the Board an annual performance evaluation of the Committee.

 

Meetings

 

The Committee shall meet as often as it deems necessary each year to fulfill its duties and responsibilities.  The Committee shall report regularly to the Board with respect to its activities

and make recommendations to the Board as appropriate.

 

This Charter has been adopted by the Committee and approved by the full Board on January 29, 2004.

 

 

 

                                                                                    Albert E. Suter, Chairman

                                                                                    Executive Compensation and

Stock Option Committee of

the Board of Directors of

                                                                                    Furniture Brands International, Inc.

formance of the CEO and other elected officers in light of the