Charter of the Compensation & Management Development Committee
The Compensation & Management Development Committee reviews and approves the corporation's compensation and benefit programs; ensures the competitiveness of these programs; and advises the Board on the development of and succession for key executives.
The purpose of the committee is to assist Board oversight of:
- The corporation's compensation principles and practices.
- The review of the relationship among risk, risk management, and compensation in light of the corporation's objectives, including its safety and soundness and the avoidance of practices that would encourage excessive or unnecessary risk-taking.
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The Compensation & Management Development Committee shall be composed solely of non-management directors, each of whom shall be independent as defined in the Corporate Governance Principles of the Board. Each member shall also be an outside director for purposes of Section 162(m) of the Internal Revenue Code and a non-employee director for purposes of Section 16 of the Securities Exchange Act of 1934 ("Section 16").
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The committee will:
- periodically review and approve a statement of the corporation's compensation philosophy, principles and practices.
- approve the goals and objectives of the corporation relevant to the compensation of the Chief Executive Officer and any other Officer-Director (the "Officer-Directors"); evaluate the Officer-Directors in light of those goals and objectives; and determine the compensation for the Officer-Directors based on this evaluation (subject to ratification by the independent directors of the Board). In determining the long-term incentive awards for the Officer-Directors, the committee seeks to further align the interests of the Officer-Directors with stockholders and considers among other factors the corporation's performance and relative shareholder return, overall risk and controls management, the awards given to the Officer-Directors in past years, the award practices of the relevant peer group of competitive financial institutions and the committee's assessment of the current and expected contribution of the Officer-Directors to the corporation's success.
- periodically review diversity programs; evaluate the performance of key executives; review the succession plan for key executives, including the Chairman and the Chief Executive Officer; and make recommendations to the Board regarding key executives.
- approve all salary, short-term incentive compensation, and long-term incentive awards for Officer-Directors (subject to ratification by the independent directors of the Board) and for Section 16 officers; and approve and administer the key executive 162(m) plan, including establishing performance goals and certifying that performance goals have been attained. The committee has authority to retain advisers when it deems appropriate, including compensation consultants, outside legal counsel or other advisors, and including approval of fees and terms of retention, without the prior permission of the Board or management, and shall be provided the necessary resources for such purposes. The committee shall be directly responsible for the appointment, compensation and oversight of the work of any advisor it retains. To the extent required by New York Stock Exchange rules, the committee will conduct an independence assessment, taking into consideration the factors set forth in the New York Stock Exchange rules and any other factors the committee deems relevant to the advisor's independence from management, prior to selecting or receiving advice from an adviser.
- approve the annual award totals under the Long-Term Incentive Plan and approve the terms and conditions for each type of award. The Head of Human Resources, with the concurrence of an Operating Committee member, can approve Long-Term Incentive Plan awards to prospective hires and to current officers for retention purposes (except for Section 16 officers). Awards to new hires who will be Section 16 officers require approval by the committee chair with subsequent notification to the committee. The committee chair will determine if the entire committee should approve such awards at the time of hire.
- review and recommend employee equity-based plans to the full Board.
- approve the overall incentive compensation pool for the corporation.
- review the corporation's compensation practices and the relationship among risk, risk management and compensation in light of the corporation's objectives, including its safety and soundness and the avoidance of practices that would encourage excessive risk; for this purpose, the committee will meet not less than annually with the corporation's Chief Risk Officer and other management, and will also meet with one or more members of the Risk Policy Committee of the Board of Directors.
- review and approve changes in the corporation's qualified benefit plans that result in a material change in costs or the benefit levels provided.
- approve the delegation of authority to the Head of Human Resources and the Chief Financial Officer to appoint the members of each employee pension plan's fiduciary committee and to appoint the Plan Administrator for employee benefit plans subject to ERISA; approve the Fiduciary Rules; approve the compensation for any Named Fiduciary who is not an employee; and receive reports regarding the operation of the employee benefit plans.
- review and discuss with management the Compensation Discussion and Analysis and approve the Compensation & Management Development Committee report to be included in the corporation's annual proxy statement.
- approve the delegation of authority to the Head of Human Resources or other appropriate officer to administer and amend the corporation's compensation and benefits programs, including the authority to interpret the program in individual cases when appropriate.
- review, at least annually, the committee's charter and recommend any proposed changes to the Board for approval. The Compensation & Management Development Committee shall prepare, and report to the Board the results of, an annual performance evaluation of the committee, which shall compare the performance of the committee with the requirements of this charter.
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