Compensation Committee Charter of Popular Inc

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                                                                         ANNEX A
 
COMPENSATION COMMITTEE CHARTER
 
PURPOSE OF COMMITTEE
 
         The purpose of the Compensation Committee (the "Committee") of the
Board of Directors (the "Board") of Popular, Inc. (the "Corporation") is to
discharge the Board's responsibilities (subject to review by the full Board)
relating to compensation of the Corporation's Chief Executive Officer and all
other Executive Officers and to produce an annual report on executive
compensation for inclusion in the Corporation's proxy statement, in accordance
with the rules and regulations of the Securities and Exchange Commission (the
"SEC").
 
COMMITTEE MEMBERSHIP
 
         The Committee will consist of three or more members of the Board, each
of whom the Board has determined has no material relationship with the
Corporation and each of whom is otherwise "independent" under the rules of The
NASDAQ Stock Market, Inc.
 
         The Board will appoint the members of the Committee. Members will serve
at the pleasure of the Board and for such term or terms as the Board may
determine.
 
COMMITTEE STRUCTURE AND OPERATIONS
 
         The Committee will designate one member of the Committee as its chair.
In the event of a tie vote on any issue, the chair's vote will decide the issue.
The Committee will meet in person or telephonically at least three times a year
at a time and place determined by the Committee chair, with further meetings to
occur, or actions to be taken by unanimous written consent, when deemed
necessary or desirable by the Committee or its chair.
 
         The Committee may invite such members of management to its meetings as
it may deem desirable or appropriate, consistent with the maintenance of the
confidentiality of compensation discussions. The Corporation's Chief Executive
Officer ("CEO") should not attend any meeting where the CEO's performance or
compensation are discussed, unless specifically invited by the Committee.
 
COMMITTEE DUTIES AND RESPONSIBILITIES
 
         The following are the duties and responsibilities of the Committee:
 
                  1.       In consultation with senior management, to establish
                           the Corporation's general compensation philosophy,
                           and oversee the development and implementation of
                           compensation programs.
 
                  2.       To review and approve corporate goals and objectives
                           relevant to the compensation of the CEO, evaluate the
                           performance of the CEO in light of those goals and
                           objectives, and set the CEO's compensation level
                           based on this evaluation. In determining the
                           long-term incentive component of CEO compensation,
                           the Committee will consider, among other factors, the
                           Corporation's performance relative to other major
                           companies in the banking and financial services
                           industries, as measured by standards such as net
                           income and its growth over prior periods and
                           shareholder return, the level of compensation paid to
                           CEOs at comparable companies, the level of the CEO's
                           individual contribution to the performance of the
                           Corporation, the incentive awards given to the CEO in
                           past years and the CEO's compensation as a percentage
                           of the Corporation's net income.
 
                  3.       To review and approve compensation programs
                           applicable to the executive officers of the
                           Corporation.
 
                  4.       To make recommendations to the Board with respect to
                           the Corporation's incentive compensation plans and
                           equity-based plans, including the 2001 Stock Option
                           Plan and the Profit Sharing, Annual Incentive,
                           Long-Term Incentive and Benefit Restoration Plans,
                           oversee the activities of the individuals and
                           committees responsible for administering these plans,
                           and discharge any responsibilities imposed on the
                           Committee by any of these plans.
 
                  5.       In consultation with management, to oversee
                           compliance with federal and state laws and
                           regulations as they affect compensation matters.
 
                  6.       To review and approve any severance or similar
                           termination payments proposed to be made to any
                           current or former executive officer of the
                           Corporation.
 
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                  7.       To prepare and issue the evaluations and reports
                           required under "Committee Reports" below.
 
                  8.       To handle any other duties or responsibilities
                           expressly delegated to the Committee by the Board
                           from time to time relating to the Corporation's
                           compensation programs.
 
DELEGATION TO SUBCOMMITTEE
 
         The Committee may, in its discretion, delegate all or a portion of its
duties and responsibilities to a subcommittee consisting solely of members of
the Committee.
 
COMMITTEE REPORTS
 
         The Committee will produce the following reports and provide them to
the Board.
 
                  1.       An annual Report of the Compensation Committee on
                           Executive Compensation for inclusion in the
                           Corporation's annual proxy statement in accordance
                           with applicable SEC rules and regulations.
 
                  2.       An annual performance evaluation of the Committee,
                           which evaluation must compare the performance of the
                           Committee with the requirements of this charter. The
                           performance evaluation should also recommend to the
                           Board any improvements to this charter deemed
                           necessary or desirable by the Committee. The
                           performance evaluation by the Committee may be
                           conducted in any manner that the Committee deems
                           appropriate. The report to the Board may take the
                           form of an oral report by the chair of the Committee
                           or any other member of the Committee designated by
                           the Committee to make this report.
 
                  3.       A summary of the actions taken at each Committee
                           meeting, which will be presented to the Board at the
                           next Board meeting.
 
RESOURCES AND AUTHORITY OF THE COMMITTEE
 
         The Committee will have the resources and authority appropriate to
discharge its duties and responsibilities, including the authority to select,
retain, terminate, and approve the fees and other retention terms of special
counsel or other experts or consultants, as it deems appropriate, without
seeking approval of the Board or management. With respect to compensation
consultants retained to assist in the evaluation of CEO or senior executive
compensation, this authority will be vested solely in the Committee.