Charter
This Compensation Committee Charter was adopted by the Board of Directors (the "Board") of SCPIE Holdings Inc. (the "Company") on February 26, 2004, and includes amendments through February 24, 2005.

  1. Purpose


The purpose of the Compensation Committee (the “Committee”) of the Board is (1) to discharge the Board’s responsibilities relating to compensation of the Company’s executives, including by designing (in consultation with management or the Board), recommending to the Board for approval and evaluating the compensation plans, policies and programs of the Company and (2) to produce an annual report on executive compensation for inclusion in the Company’s proxy materials in accordance with applicable rules and regulations. The Committee shall ensure that compensation programs are designed to encourage high performance, promote accountability and assure that employee interests are aligned with the interests of the Company’s stockholders.

In addition to the powers and responsibilities expressly delegated to the Committee in this Charter, the Committee may exercise any other powers and carry out any other responsibilities delegated to it by the Board from time to time consistent with the Company’s Bylaws. The powers and responsibilities delegated by the Board to the Committee in this Charter or otherwise shall be exercised and carried out by the Committee as it deems appropriate without requirement of Board approval, and any decision made by the Committee (including any decision to exercise or refrain from exercising any of the powers delegated to the Committee hereunder) shall be at the Committee’s sole discretion. While acting within the scope of the powers and responsibilities delegated to it, the Committee shall have and may exercise all the powers and authority of the Board. To the fullest extent permitted by law, the Committee shall have the power to determine which matters are within the scope of the powers and responsibilities delegated to it.

  1. Membership


The Committee shall be composed of three directors, none of whom shall be an employee of the Company and each of whom shall (1) satisfy the independence requirements of the New York Stock Exchange and (2) be a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”). The Board may from time to time change the number of members of the Committee.

The members of the Committee shall be appointed by the Board on the recommendation of the Nominating/Corporate Governance Committee. The Chair of the Committee shall be appointed by the Board on the recommendation of the Chairman of the Board. Committee members may be removed from the Committee, with or without cause, by the Board.

  1. Meetings and Procedures


The Chair (or in his or her absence, a member designated by the Chair) shall preside at each meeting of the Committee and set the agendas for Committee meetings. The Committee shall have the authority to establish its own rules and procedures for notice and conduct of its meetings so long as they are not inconsistent with any provisions of the Company’s Bylaws that are applicable to the Committee or the Company’s Corporate Governance Guidelines.

The Committee shall meet on a regularly scheduled basis at least two times per year and more frequently as the Committee deems necessary or desirable.

All non-management directors who are not members of the Committee may attend and observe meetings of the Committee, but shall not participate in any discussion or deliberation unless invited to do so by the Committee, and in any event shall not be entitled to vote. The Committee may, at its discretion, include in its meetings members of the Company’s management, representatives of the independent auditor, any other financial personnel employed or retained by the Company or any other persons whose presence the Committee believes to be necessary or appropriate. Notwithstanding the foregoing, the Committee may also exclude from its meetings any persons it deems appropriate, including but not limited to, any non-management director who is not a member of the Committee.

The Committee may retain any independent counsel, compensation and benefits consultants and other outside experts or advisors that the Committee believes to be desirable or appropriate. The Committee may also utilize the services of the Company’s regular legal counsel or other advisors to the Company. The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to any such persons retained by the Committee.

The Committee shall cause to be prepared and shall maintain minutes of Committee meetings.

The Chair shall report to the Board following meetings of the Committee and as otherwise requested by the Chairman of the Board.

  1. Duties and Responsibilities

 

    1. The Committee shall, at least annually, review the compensation philosophy of the Company.
    2. The Committee shall, at least annually, review and approve corporate goals and objectives relating to the compensation of the chief executive officer, evaluate the performance of the chief executive officer in light of those goals and objectives and determine and approve the compensation of the chief executive officer based on such evaluation. In determining the long-term incentive component of the chief executive officer’s compensation, the Committee shall consider the Company’s performance and relative stockholder return, the value of similar incentive awards to chief executive officers at comparable companies, and the awards given to the Company’s chief executive officer in past years. The Committee shall have sole authority to determine the chief executive officer’s compensation, but such compensation shall be in accordance with the terms of any employment agreement between the Company and the chief executive officer then in effect.
    3. The chief executive officer is authorized to establish the compensation for all other officers of the Company and its subsidiaries and all other employees of the Company or its subsidiaries. The Committee shall, at least annually, review all compensation for such other officers and all other employees having a base salary greater than or equal to $150,000.
    4. The Committee shall review and approve all officers’ employment agreements and severance arrangements.
    5. The Committee shall manage and review all annual bonus, long-term incentive compensation, employee pension and welfare benefit plans [including 401(k) and employee stock purchase plans, long-term incentive plan, management incentive plan and others] and make recommendations to the Board with respect thereto; provided, however, that the Stock Option and Incentive Bonus Committee of the Board (not the Committee) shall have responsibility for the administration of the stock option plans of the Company and any plan dealing with executive officers who may be “covered employees” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). With respect to those plans managed by the Committee, the Committee shall have responsibility for:
      1. general administration;
      2. setting performance targets under all annual bonus and long-term incentive compensation plans as appropriate for all executive officers who are not “covered employees” under Section 162(m) of the Code;
      3. certifying that any and all performance targets used for any performance- based compensation plans have been met before payment of any executive bonus or compensation or exercise of any executive award granted under any such plan(s);
      4. approving all amendments to, and terminations of, all compensation plans and any awards under such plans;
      5. granting any awards under any performance-based annual bonus, long-term incentive compensation;
      6. repurchasing securities from terminated employees, and conducting a review of all compensation plans. All plan reviews should include reviewing the plan’s administrative costs, reviewing current plan features relative to any proposed new features, and assessing the performance of the plan’s internal and external administrators if any duties have been delegated.
    6. The Committee shall establish and periodically review policies concerning perquisite benefits.
    7. The Committee shall determine the Company’s policy with respect to change of control or “parachute” payments.
    8. The Committee shall manage and review executive officer and director indemnification and insurance matters.
    9. The Committee shall manage and review any employee loan policy that is established by the Board.
    10. The Committee shall prepare and approve the Compensation Committee report to be included as part of the Company’s annual proxy statement.
    11. The Committee shall evaluate its own performance on an annual basis, including its compliance with this Charter, and provide the Board with any recommendations for changes in procedures or policies governing the Committee. The Committee shall conduct such evaluation and review in such manner as it deems appropriate.
    12. The Committee shall review and reassess this Charter at least annually and submit any recommended changes to the Board for its consideration.
  1. Stock Option and Incentive Bonus Committee


The Board has established the Stock Option and Incentive Bonus Committee to comply with the requirements of Section 162(m) of the Code and the rules and regulations promulgated thereunder. The Stock Option and Incentive Bonus Committee has the responsibility to establish criteria and standards for incentive compensation awarded to senior executives of the Company, to administer the stock option programs of the Company and to ensure compliance with Section 162(m) of the Code.

  1. Delegation of Duties


In fulfilling its responsibilities, the Committee shall be entitled to delegate any or all of its responsibilities to a subcommittee of the Committee, except that it shall not delegate its responsibilities set forth in paragraphs (C) and (E) of Section 4 above or for any matters that involve executive compensation or any matters where it has determined such compensation is intended to be exempt from Section 16(b) under the 1934 Act pursuant to Rule 16b-3 by virtue of being approved by a committee of “non-employee directors.”