2003 Compensation Charter: SAFC
COMPENSATION COMMITTEE CHARTER
Adopted by the Board of Directors February 5, 2003
The compensation committee shall discharge the Board of Directors' responsibilities
relating to compensation of SAFECO's officers and directors. Furthermore, the
compensation committee shall have overall responsibility for approving and evaluating
the compensation and benefit programs for employees and executives and recommending
to the Board the compensation of directors.
II. Organization and Meetings
The compensation committee shall be appointed by the Board of Directors upon the
recommendation of the Nominating/Governance Committee of the Board and shall
consist of no fewer than three members. The members of the committee shall meet the
director independence requirements for members of the exchange or market on which
SAFECO's securities are traded or listed, shall qualify as "outside directors" under
Section 162(m) of the Internal Revenue Code, as amended, and shall qualify as "nonemployee
directors" as defined under Section 16 of the Securities Exchange Act of 1934,
as amended. No member shall serve while at the same time being an officer of a company
on whose compensation committee serves the chief executive officer ("CEO") of
SAFECO. Each compensation committee member shall be independent of the
management of SAFECO and free of any relationship to SAFECO that, in the opinion of
the Board of Directors, would interfere with the member's exercise of independent
judgement as a committee member.
The compensation committee shall meet at least quarterly and may meet more frequently
as necessary. The compensation committee shall keep minutes of its meetings and make
regular reports on its activities to the Board of Directors.
III. Committee Authority and Responsibilities
1. The committee shall review this charter annually and recommend proposed
changes to the Board of Directors.
2. The committee shall have sole authority to retain and terminate advisors,
including those in the compensation, accounting and employee benefit areas, to
assist it in connection with compensation and health, welfare, retirement and
savings benefits, including the sole authority to approve the fees and other
retention terms with such advisors in connection with their work in these areas.
3. The committee shall annually review and approve for the CEO and the senior
executive officers of SAFECO (a) annual base salary level, (b) any annual
incentive opportunity level, (c) any long-term incentive opportunity level, (d)
employment agreements, severance arrangements and change in control
agreements and provisions, in each case, when and if appropriate, and (e) any
special or supplemental benefits.
4. With respect to the compensation of the CEO; the committee shall annually
establish goals and objectives relevant to the CEO's compensation, evaluate
performance in light of those goals and objectives and approve changes in
compensation, including awards under cash and equity based programs. Among
the elements the committee shall consider in connection with the long-term
incentive component of the CEO's compensation are: SAFECO's performance
and relative shareholder return, the value of similar incentive awards to CEOs of
comparable companies and the awards made to the CEO in prior years.
5. The committee shall approve salary changes that exceed a minimum amount as
established by the committee and report such changes and approvals to the Board
6. The committee shall oversee the management evaluation process and
management succession planning process.
7. The committee shall recommend the adoption of compensation and welfare or
benefit plans from time-to-time.
8. The committee shall approve such changes to benefit plans and programs to the
extent that such changes do not materially increase either the level of benefits
provided or cost to SAFECO.
9. The committee shall at least annually consider the level of director compensation,
including the award of equity based compensation, and make recommendations
for changes to the Board from time-to-time.
10. The committee shall monitor SAFECO's efforts to achieve diversity within its
11. The committee shall meet in executive session without the presence of any
management director or employee at least twice per year.
12. The committee may form and delegate authority to subcommittees, including
management subcommittees, when appropriate.
13. The committee shall produce an annual report on executive compensation for
inclusion in SAFECO's proxy statement for its annual meeting of shareholders.
14. The committee shall annually review its performance under this charter.