Executive Compensation Committee Charter
Purposes of Committee
The purposes of the Executive Compensation Committee (the "Committee") of the Board of Directors (the "Board") of ALLETE, Inc. (the "Company") are to discharge the Board’s responsibilities relating to compensation of the Company’s executives, establish the Committee’s philosophy and policies regarding executive and director compensation, oversee the administration of the Company's director and executive compensation programs, review the compensation of directors, executive officers and senior management, and prepare any report on executive compensation required by the rules and regulations of the Securities and Exchange Commission (the "Commission") or other regulatory body.
The Committee shall consist of three or more members of the Board each of whom satisfies the requirements for independence taking into account the rules of the New York Stock Exchange, and at least two of whom are non-employee directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and outside directors within the meaning of Section 162(m) of the Internal Revenue Code.
Members shall be appointed by the Board after consideration of recommendations of the Company's Corporate Governance and Nominating Committee, and shall serve at the pleasure of the Board and for such term or terms as the Board may determine.
Committee Structure and Operations
The Board shall designate one member of the Committee as its Chair. The Committee shall meet at least three times a year at a time and place determined by the Board or the Committee Chair, with further meetings to occur when deemed necessary or desirable by a majority of the Committee or its Chair.
A majority of the Committee members currently holding office constitutes a quorum for the transaction of business. The Committee shall take action by the affirmative vote of a majority of the Committee members present at a duly held meeting. The Committee may meet in person or telephonically. The Committee may act by unanimous written consent when deemed necessary or desirable by the Committee or its Chair.
The Committee may invite such members of management to its meetings as it may deem desirable or appropriate, consistent with the maintenance of the confidentiality of compensation discussions. The Committee will periodically meet in executive session without management present. The Company's Chief Executive Officer ("CEO") will not attend portions of any meeting when the CEO's performance or compensation is discussed, unless specifically invited by the Committee.
Committee Duties and Responsibilities
The following are the duties and responsibilities of the Committee:
1. In consultation with the Board and senior management, establish the Committee’s philosophy and policies regarding director and executive compensation, and oversee the development and implementation of director and executive compensation programs.
2. Review and approve corporate goals and objectives relevant to the compensation of the CEO, evaluate the performance of the CEO in light of those goals and objectives, and set the level of compensation of the CEO based on this evaluation.
3. Review and approve the individual elements of total compensation for the executive management of the Company other than the CEO and communicate in the annual Compensation Committee Report to the shareholders the specific relationship of corporate performance to executive compensation.
4. Review and approve revisions to the Company’s executive and senior management salary range structure and annual salary increase guidelines.
5. Review the Company’s executive incentive compensation program, including the annual and long-term incentive plans, with a view to their administration in a manner consistent with the Committee’s compensation philosophy and policies as to participation, target annual incentive awards, corporate financial goals, and actual awards paid to executive management.
6. Review the Company’s employee benefit programs and approve changes, subject, where appropriate, to shareholder or Board approval.
7. Make recommendations to the Board with respect to the Company's incentive compensation plans and equity-based plans, oversee the activities of the individuals and committees responsible for administering these plans, and discharge any responsibilities imposed on the Committee by any of these plans.
8. In consultation with senior management, oversee regulatory compliance with respect to compensation matters, including overseeing the Company's policies on structuring compensation programs to preserve tax deductibility, and, as and whenrequired, establishing performance goals and certifying that performance goals have been attained for purposes of Section 162(m) of the Internal Revenue Code.
9. Prepare and issue the evaluations and reports required under "Committee Reports" below.
10. Any other duties or responsibilities expressly delegated to the Committee by the Board from time to time relating to the Company's executive compensation programs.
Delegation to Subcommittee
The Committee may, in its discretion, delegate to a subcommittee or subcommittees of the Committee its duties and responsibilities, including the approval of certain transactions to a subcommittee consisting solely of members of the Committee who are (i) "Non-Employee Directors" for the purposes of Rule 16b-3 of the Securities Exchange Act of 1934, as in effect from time to time, and (ii) "outside directors" for the purposes of Section 162(m) of the Internal Revenue Code, as in effect from time to time.
The Committee shall produce the following reports and provide them to the Board.
1. An annual Report of the Executive Compensation Committee on Executive Compensation for inclusion in the Company's annual proxy statement in accordance with applicable Commission rules and regulations.
2. An annual performance evaluation of the Committee, which evaluation must compare the performance of the Committee with the requirements of this charter and set forth the goals and objectives of the Committee for the upcoming year. The performance evaluation should also recommend to the Board any improvements to this charter deemed necessary or desirable by the Committee. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board may take the form of an oral report by the Chair of the Committee or any other member of the Committee designated by the Committee to make this report.
3. A summary of the proceedings of each Committee meeting shall be presented to the Board at its next regularly scheduled meeting. Meeting notices, agendas, and minutes of Committee meetings will be promptly sent to the Board.
Resources and Authority of the Committee
The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the sole authority to retain, discharge, and approve fees and other terms of retention of independent legal counsel, independent experts or consultants