Compensation Committee Charter
The Compensation Committee of the Board of Trustees of Northeast Utilities is responsible for oversight of the compensation and benefits programs for all employees of the Northeast Utilities System (the Company) with overall authority to establish and interpret the terms of the Company’s salary and incentive programs. The goal of these programs is to attract and retain highly qualified individuals with skills suited to the needs of the Company and to appropriately motivate and reward performance that will lead to enhancement of shareholder value in an increasingly competitive business environment.
The purpose of the Compensation Committee is: (a) to discharge the Board’s responsibilities relating to compensation and benefits of NU System employees; and (b) to prepare and publish an annual report on executive compensation in the Company’s annual proxy statement filed with the Securities and Exchange Commission, in accordance with applicable rules and regulations.
The Compensation Committee shall consist of no fewer than five members. The members of the Compensation Committee shall meet the independence requirements of the New York Stock Exchange. Members of the Committee shall also qualify as “non-employee directors” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, and shall satisfy any other necessary standards of independence under the federal securities and tax laws. Trustees serving on the Compensation Committee shall have sufficient knowledge and familiarity in the area of compensation practices and policies to discharge the duties and responsibilities of the Compensation Committee.
The members of the Compensation Committee shall be appointed annually by the Board on the recommendation of the Corporate Governance Committee. One of the members of the Compensation Committee shall be designated by the Board to be Chairman. Compensation Committee members may be removed by the majority vote of the independent Trustees at any time.
The Compensation Committee shall meet as often as it determines, but not less frequently than four times per year. The Chairman shall chair all regular sessions of the Compensation Committee and set the agendas for the Compensation Committee meetings.
Committee Authority and Responsibilities
The Compensation Committee shall have the authority to delegate its responsibilities to subcommittees (consisting of one or more members of the Compensation Committee) as the Compensation Committee sees fit.
The Compensation Committee shall have sole authority to retain and terminate such compensation consultants, outside counsel and other advisors as the Committee may deem appropriate. The Committee or its Chairman acting on behalf of the Committee shall have sole authority to approve related fees and retention terms.
The Compensation Committee shall make regular reports to the Board. The Compensation Committee shall maintain minutes of its meetings and provide copies of the minutes to the Board. The Compensation Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Corporate Governance Committee for approval. The Compensation Committee shall annually review the Compensation Committee’s own performance and report its findings to the Board.
The Compensation Committee, as necessary or appropriate, shall:
Executive and Employee Compensation
1. Review and approve cash compensation, perquisite, retirement and incentive programs (including payouts thereunder) for NU and its subsidiary companies, and make recommendations to the Board of Trustees with respect to the structure of incentive compensation plans, equity-based and retirement plans.
2. Review and approve any equity compensation plans that are not subject to shareholder approval.
3. Approve, or recommend to the Board as the circumstances require, such matters as are specifically provided for by system plans, such as the annual goals and objectives and the total amount of monies available, for the system pursuant to the incentive compensation plan for elected officers.
4. Review and approve the compensation and benefits of all executive officers of the NU System.
5. Review and approve all executive employment agreements, executive compensation arrangements and executive termination and severance arrangements.
and approve all officer indemnification and insurance arrangements.
with the Corporate Governance Committee, review and approve corporate goals and
objectives relevant to Chief Executive Officer compensation,
evaluate the performance of the Chief Executive Officer in light of those goals
and objectives, and set the compensation level of the Chief Executive Officer
based on this evaluation. In determining the long-term incentive component of
the Chief Executive Officer’s compensation, the Compensation Committee shall
consider (among other factors at the discretion of the Compensation Committee)
the performance and relative shareholder return for NU, the value of similar
incentive awards to chief executive officers at comparable companies and the
awards given to the Chief Executive Officer in past years.
8. Review and approve the compensation of members of the Board of Trustees who are not employees of the Company.
and approve all trustee indemnification and insurance arrangements.
in a succession planning process for the Chief Executive Officer jointly with
the Corporate Governance Committee.
11. Prepare and publish an annual report on executive compensation in the Company’s annual proxy statement filed with the Securities and Exchange Commission, in accordance with applicable rules and regulations.
12. The Compensation Committee shall review such other matters within the scope of its responsibilities as the Compensation Committee shall determine from time to time, and make such recommendations to the Board with respect thereto as the Compensation Committee deems appropriate.