2003 Committee Charter : AV
CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE CHARTER
Adopted October 13, 2001
Amended July 22, 2003
1.1 The Corporate Governance and Compensation Committee (the "Committee") of the
Board of Directors of Avaya Inc. (the "Company") is responsible for matters relating
to the organization and membership of the Board of Directors (the "Board") and for
other issues relating to the Company's corporate governance. The Committee is
also responsible for the Company's compensation and benefit programs.
Composition and Term of Office
2.1 The Committee will consist of at least three members all of whom are non-employee
directors of the Company and meet the independence requirements of the New
York Stock Exchange and individuals that would qualify as "outside directors" under
Section 162(m) of the Internal Revenue Code. One member shall serve as
Chairman of the Committee
2.2 The members of the Committee shall serve one-year terms, and shall be elected
annually by the Board on such date as the Board shall determine. Committee
members may be replaced by the Board.
Committee Meetings - Operating Principles
3.1 The Committee shall meet at least three times each year.
3.2 Regularly scheduled Committee meetings will occur in conjunction with meetings of
the full Board.
3.3 Special meetings of the Committee may be called as needed by the Committee
Chairman, the Chairman of the Board and Chief Executive Officer or the Senior
Vice President, Human Resources.
3.4 The Committee may request that members of management or outside consultants
be present to assist the Committee in performing its duties.
3.5 Minutes of each meeting will be kept and distributed to the entire Board.
Compensation/Employee Benefits Responsibilities
The Committee shall perform the following functions:
4.1 Discharge the Board's responsibilities relating to compensation of executives and
provide oversight and guidance in the development of compensation and benefit
programs for all employees of the Company, including recommendations to the
Board with respect to incentive-compensation and equity-based plans.
4.2 Approve compensation and benefit programs for officers (individuals holding
positions classified as Vice President, or higher). This includes salary, annual
incentive and long term incentive programs, whether stock or cash, and
determinations relating to the deductibility of compensation under Section 162(m) of
the Internal Revenue Code of 1986.
4.3 Confer, as needed, with the Senior Vice President, Human Resources on
compensation and benefit matters.
4.4 Review the individual goals and objectives, and evaluate the performance of the
CEO, and set CEO compensation based on this evaluation.
4.5 Review the individual performance of the officers reporting directly to the CEO.
4.6 Review and make recommendations to the Board on matters concerning the
Directors' annual retainer, as well as any other compensation programs relating to
the Board of Directors.
4.7 Prepare the Annual Report on Executive Compensation for inclusion in the
Company's Proxy Statement.
4.8 Exercise any fiduciary, administrative or other function assigned to the Committee
under any of the Company's benefit or welfare plans.
4.9 The Committee shall have sole authority to retain, at the Company's expense, and
terminate any compensation consultant and shall have sole authority to approve the
consultant's fees and other retention terms.
The Committee may delegate (where legally permissible) authority to perform any of the
foregoing responsibilities where desirable to facilitate the operation or administration of
the plans or programs.
Corporate Governance Responsibilities
The Committee shall perform the following functions:
5.1 Review the performance of the Board annually and the performance of Board
members before nominating for re-election. Review the independence (as defined
in the Corporate Governance Guidelines) of each Board member annually.
5.2 Review the composition of the full Board of Directors to determine the qualifications
and areas of expertise needed to further enhance the composition of the Board of
Directors and work with management in attracting candidates with those
5.3 Establish criteria for the selection of new directors; identify individuals qualified to
become directors and review the qualifications of prospective nominees;
recommend the slate of nominees, for inclusion in the Company's proxy statement
and presentation to the Shareholders at the Annual Meeting.
5.4 Periodically review all standing or any ad hoc committees and recommend to the full
Board of Directors, as appropriate, changes in number, function or composition of
5.5 Review and make recommendations to the full Board of Directors on matters
relating to the governance of the Company.
5.6 Periodically review the Company's director and officer liability insurance coverage.
5.7 Confer, as appropriate, with the General Counsel on matters of corporate
5.8 Review and assess the adequacy of the Corporate Governance Guidelines of the
Company and recommend any proposed changes to the Board for approval.
5.9 The Committee shall have sole authority to retain, at the Company's expense, and
terminate any search firm to be used to identify director candidates and shall have
sole authority to approve the search firm's fees and other retention terms.
6.1 Report at the next meeting of the full Board of Directors all significant items
discussed at any Committee meeting.
6.2 Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board.
6.3 Take such further actions or provide such further advice as the full Board of
Directors may from time to time delegate to the Committee.
6.4 Conduct an annual performance evaluation of the compensation and corporate
governance functions of the Committee.