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The Sherwin-Williams Company
Board of Directors
Compensation and Management Development Committee Charter

 

Purpose
Membership
Responsibilities
Meetings

 

Purpose
The purpose of the Compensation and Management Development Committee is to provide assistance to the Board of Directors in fulfilling the Board's responsibilities on matters relating to: (1) compensating the Company's management, which includes the Company's executive officers; (2) overseeing the Company's management succession planning; (3) producing an annual report on executive compensation required by the rules of the Securities and Exchange Commission to be included in the Company's annual proxy statement; and (4) engaging in such other matters as may from time to time be specifically delegated to the Committee by the Board.

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Membership
The Committee shall consist of at least three members. Each member of the Committee shall meet the independence requirements of the New York Stock Exchange as determined by the Board in its business judgment.

The members of the Committee will be appointed and replaced by the Board.  The Board will appoint a Chairman of the Committee.  The Chairman of the Committee will, in consultation with the other members of the Committee and the appropriate officers of the Company, be responsible for calling meetings of the Committee, establishing the agenda for the meetings and conducting the meetings of the Committee.

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Responsibilities
The Committee will have broad authority and powers in fulfilling its purpose and discharging its responsibilities.  In discharging its responsibilities, the Committee will: 

    1)   Annually review and approve corporate goals and objectives relevant to the Chief Executive Officer's compensation, evaluate the Chief Executive Officer's performance in light of those goals and objectives, and determine the Chief Executive Officer's compensation based on this evaluation.  In determining the long-term incentive component of the Chief Executive Officer's compensation, the Committee should consider the Company's performance and relative shareholder return, the value of similar awards to chief executive officers at comparable companies, and the awards given to the Chief Executive Officer in the past years.

    2)  Annually review and approve the compensation (including annual base salary, incentive opportunity, long-term incentive opportunity and other special or supplemental benefits) for the Company's executive officers, other key salaried employees and nonemployee directors.

    3)  Authorize and approve any grants of stock options, stock appreciation rights, restricted stock and other awards under the Company's stock and stock-based plans.

    4)  Authorize and approve any actions under the Company's pension and welfare benefit plans, programs and arrangements. 

    5)  Meet from time to time with Company management to review and evaluate the Company's programs, priorities and progress for the recruiting, staffing, developing and retaining of competent managers for present and future Company needs, including the management succession planning for the Chief Executive Officer and other executive officers.

    6)  Conduct an annual evaluation of the Committee's own performance.

    7)  Review and evaluate the adequacy of this Charter at least annually and recommend any proposed changes to the Board for approval.

The Committee shall have the sole authority to retain and terminate any compensation consultant or consulting firm to be used to assist in the evaluation of director, Chief Executive Officer or executive compensation and shall have sole authority to approve the consultant's or firm's fees and other retention terms.

The Committee shall have the authority to retain, at such times and on such terms as the Committee determines in its sole discretion and at the Company's expense, independent legal counsel or other independent consultants and advisors, to advise and assist the Committee in discharging its responsibilities.

The Committee may form and delegate authority to subcommittees (consisting of one or more members) when appropriate.

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Meetings
The Committee shall meet as frequently as it determines necessary to discharge its responsibilities. The Committee may request any officer or employee of the Company, the Company's outside legal counsel or other third parties to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. A majority of the members of the Committee shall constitute a quorum. Members of the Committee may participate in a meeting of the Committee by means of conference call or any other communications equipment by which all persons participating in the meeting can hear each other. The Committee shall report its activities to the Board at the Board's first regular meeting thereafter or at such earlier times as it deems appropriate.

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Copyright 2005 The Sherwin-Williams Company