JOHNSON CONTROLS, INC.
2003 Compensation Charter: JCI
BOARD OF DIRECTORS
The Compensation Committee is appointed by the Board of Directors to discharge the Board's responsibilities relating to compensation of the Company's executives and executive officers. The Committee has overall responsibility for approving and evaluating the compensation plans, policies, and programs of the Company with respect to officers and executives.
The Compensation Committee, in accordance with applicable rules and regulations, shall produce an annual report on executive compensation for inclusion in the Company's proxy statement (the "Proxy").
The Compensation Committee is a standing committee of the Board of Directors composed of not less than three (3) independent Directors. An independent director may not have a material relationship with the Company, as determined by the Board. Further, for purposes hereof, a director must be independent as defined by the requirements of the New York Stock Exchange and the Corporate Governance Guidelines applicable to the Company. Additionally, no director may serve on the Compensation Committee unless he or she (a) is a "Non-Employee Director" under the qualifications set forth in Rule 16b-3 of the Securities Exchange Act of 1934 and (b) satisfies the requirements of an "outside director" for purposes of Section 162(m)(4)(C) of the Internal Revenue Code. The members shall be elected to the Committee by the Board, on the recommendation of the Corporate Governance Committee, annually or as necessary to fill vacancies in the interim. The Board shall designate one of the Committee members as Chairperson. Compensation Committee members may be replaced by the Board.
The Committee shall hold meetings as necessary. Compensation Committee meetings are usually scheduled four times a year the afternoon prior to the March, July, September or November Board meetings.
The Compensation Committee shall annually review and approve corporate goals and objectives relevant to CEO compensation and evaluate the CEO's performance in light of those goals and objectives. The Compensation Committee shall have the sole authority to determine the CEO's compensation levels based on this evaluation. In determining the long-term incentive component of CEO compensation, the Compensation Committee will consider the Company's performance, the value of similar incentive awards to CEOs at comparable companies, and the awards given to the CEO in past years.
The Compensation Committee shall consider and make recommendations to the Board regarding the selection and retention of all elected officers of the Company and certain principal officers of subsidiaries or other key employees.
The Compensation Committee shall annually review and approve, for the CEO and the senior executives of the Company, (a) the annual base salary level, (b) the annual incentive opportunity level, (c) the long-term incentive opportunity level, (d) employment agreements, severance arrangements, and change in control agreements/provisions, in each case as, when and if appropriate, and (e) any special or supplemental benefits..
The Compensation Committee shall administer, interpret, make grants and awards, adopt rules and recommend to the Board amendments of the Company's executive benefits, including the Executive Incentive Compensation Plan, the Long Term Performance Plan, the restricted stock plan, the stock option plans, the Deferred Compensation Plan, and the Equalization Benefit Plan.
The Compensation Committee shall have the sole authority to determine the perquisites and other remuneration of the CEO and shall consider and make recommendations to the Board concerning perquisites and other remuneration with respect to other elected officers.
The Compensation Committee shall consider the total compensation package, including incentive compensation plans and equity based plans, and the structure and award formulae and calculation and performance targets for all incentive compensation programs, for all elected officers, and key executives and how these compare to peer companies and how they relate to the Company's performance when compared to such peer companies determine the total compensation package for the CEO; make recommendations to the Board concerning the total compensation package for all other elected officers and key executives; and review and approve the Company's disclosure of such matters in the Proxy.
The Compensation Committee shall have the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of CEO or senior executive compensation and shall have sole authority to approve the consultant's fees and other retention terms. The Compensation Committee shall also have authority to obtain advice and assistance from internal or external legal, accounting, or other advisors. The Company will provide the Compensation Committee with the appropriate funding to exercise its authority to retain consultants or advisors.
The Compensation Committee shall review and make recommendations to the Board concerning management succession.
The Compensation Committee shall recommend to the Board of Directors the selection of the CEO.
The Compensation Committee may form and delegate authority to subcommittees formed in accordance with applicable law when appropriate.
The Compensation Committee shall make regular reports to the Board.
The Compensation Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Compensation Committee shall annually review its own performance.
Effective July 2003
Compensation Committee Procedures