Compensation Committee
      Charter




STEWART & STEVENSON SERVICES, INC.

 

CHARTER


COMPENSATION & MANAGEMENT DEVELOPMENT
COMMITTEE OF THE BOARD OF DIRECTORS

 

I. ORGANIZATION

 

A. The Compensation & Management Development Committee is created pursuant to Section 4.13 of the Company’s Bylaws by resolution of the Board of Directors.

 

B. No Committee member may be a present or former officer of the Company or any of its subsidiaries and no executive officer of the Company may sit upon any compensation committee (or board of directors or other body performing the functions of a compensation committee) of any entity, one of whose executive officers is a member of the Board of Directors of the Company. Committee members shall otherwise meet all independence requirements of law, including federal tax law for purposes of Section 162(m) of the Internal Revenue Code of 1984, and stock exchange rules.

 

C. Committee members are elected at the Annual Meeting of Directors, to serve until the next Annual Meeting. All vacancies are filled by the Board of Directors.

 

II. DUTIES AND RESPONSIBILITIES

 

A. The Committee shall establish and monitor the basic philosophy and policies governing the compensation of the Company’s directors, executive officers and senior managers. Directors who are company employees shall not be compensated for their services as directors. The Committee will recommend the total compensation for each executive officer of the Company, subject to approval by those members of the Board of Directors who are not and have never been an officer of the Company or any of its subsidiaries and who are otherwise independent directors in accordance with law and stock exchange rules (“independent directors”).

 

B. The Committee will review and approve significant changes to the Company’s executive benefit plans and establish and monitor management succession plans.

 

C. Specific duties and responsibilities of the Committee include, but are not limited to, the following:

 

1. Appraise the performance of the Chief Executive Officer and recommend the total compensation for the Chief Executive Officer including base salary, annual bonus and stock-based compensation awards, subject to approval by those members of the Board of Directors who are independent directors.

 

2. Appraise the performance of all other executive officers of the Company and recommend the total compensation for each executive officer including base salary, annual bonus and stock-based compensation awards, subject to approval by those members of the Board of Directors who are independent directors.

 

3. Recommend to the Board of Directors proposed changes in directors’ compensation for service on the Board of Directors and Committee membership.

 

4. Administer the stock-based compensation plans which have been (or may be) adopted by the Company.

 

5. Review and approve significant issues pertaining to changes in executive benefit plans.

 

6. Review succession plans for the Chief Executive Officer and other key executives.

 

7. Retain and, on behalf of the Company, compensate consultants, advisors and other third parties to assist and advise the Committee in the performance of its duties and responsibilities.

 

8. Review, consider, and recommend for adoption to the Board any compensation plans the Committee believes appropriate to support the Company’s objective of maximizing long-term shareholder value.

 

9. Annually, prepare and submit to the shareholders of the Company all required reports related to the compensation of the Company’s executives.

 

10. At least annually, perform an evaluation of its performance to determine whether it is functioning effectively and require its members to certify that they are independent directors.

 

III. MEETINGS

 

A. The Committee shall meet in March of each year to:

1. Prepare Committee Report for Proxy.

2. Establish executive compensation.

3. Grant stock options.

 

B. The Committee shall meet at such other times as deemed necessary by the Chairman of the Committee or any number of members constituting a majority of the Committee.

 

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