CHARTER OF THE COMPENSATION COMMITTEE
I. Purpose
The Compensation Committee (the "Committee") of the Board of Directors ("Board") of CONSOL Energy Inc. (the "Company") is appointed by, and generally acts on behalf of, the Board. The Committee's purposes shall be:
A.
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Oversight of Compensation Plans and Programs. To establish and periodically review the Company's compensation philosophy and the adequacy of compensation plans and programs for non-employee directors and executive officers; |
B.
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Administration of Plans. To engage in the administration of compensation plans (though excluding ministerial responsibilities of the plans (e.g., day-to-day responsibilities);
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C.
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Executive Performance and Compensation. To review the performance of executive officers and award incentive compensation and adjust compensation arrangements and incentive goals as appropriate based upon performance; provided, however, that with respect to the Chief Executive Officer (the "CEO"), the Committee shall approve and recommend to the independent directors of the Board for approval his or her compensation arrangements and incentive goals;
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D.
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Management Succession Plans. To review and monitor management development and succession plans and activities; and
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E.
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Proxy Statement. To prepare the report on executive compensation for inclusion in the Company's annual proxy statement in accordance with Securities and Exchange Commission (the "SEC") rules and regulations.
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II. Compensation Philosophy for Executive Officers
The Committee individually reviews the performance of the executive officers of the Company and establishes or approves compensation actions for them. The Committee’s objectives in compensating the executive officers are to align the executive officers’ compensation with shareholder interests; to provide incentives for the achievement of the Company’s annual and long-term performance goals; and to attract, motivate and retain superior personnel who are dedicated to the long-term interests of the shareholders. The Committee relies on its own judgment in setting each executive officer’s compensation and not on any rigid guidelines or formula. Key factors affecting the Committee's compensation judgments include: (i) the nature and scope of an executive's responsibilities; (ii) an executive officer’s performance (including contribution to the Company's financial results); and (iii) an outside compensation consultant's report(s) on survey and/or proxy data for compensation paid to executives with similar responsibilities in other companies.
III. Membership
A.
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Number of Directors and Independence. The Committee shall be composed of at least three directors, each of whom must be independent. A director shall qualify as independent if the Board has affirmatively determined that the member has met the independence criteria set forth in the Company's Corporate Governance Guidelines. In addition, for purposes of meeting the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor Code section, the Committee, or a sub-committee approving the goals relating to performance-based awards for executives, shall consist of at least two "outside" directors, as defined in Treasury Regulation 1.162-27(e)(3) promulgated under the Code. All members of the Committee shall qualify as a "non-employee directors" (as defined in Rule 16b-3 of the Securities Exchange Act of 1934). |
B.
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Term and Nomination of Chairperson and Resignation, Retirement or Removal of Member. The members of the Committee shall be nominated by the Nominating and Corporate Governance Committee and appointed by the Board for one-year terms. The Nominating and Corporate Governance Committee shall recommend, and the Board shall designate, one member of the Committee to serve as Chairperson. The members of the Committee shall serve until their resignation, retirement, or removal by the Board or until their successors shall be appointed. No member of the Committee shall be removed except by majority vote of the independent directors of the full Board then in office.
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IV. Meetings and Procedures
A.
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Meetings. The Committee shall meet as often as it may deem necessary and appropriate in its judgment, but in no event less than three times per year. A majority of the members of the Committee shall constitute a quorum. |
B.
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Special Meetings. The Chairperson of the Committee or a majority of the members of the Committee may call a special meeting of the Committee.
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C.
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Delegation of Authority. The Committee may delegate authority, duties and responsibilities (or functions) to one or more members of the Committee or to the Company's officers, when appropriate, but no such delegation shall be permitted if the authority is required by law, regulation, or listing standard to be exercised by the Committee as a whole or is otherwise prohibited by law, regulation or listing standard.
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D.
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Attendance by Third Parties. The Committee may request that any directors, officers, or employees of the Company, or other persons whose advice and counsel are sought by the Committee, attend any meeting to provide such information as the Committee requests. It is the Committee's intent that all non-employee directors be entitled to attend and observe any Committee meeting.
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E.
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Procedures. The Committee shall fix its own rules of procedure, which shall be consistent with the By-laws of the Company and this Charter.
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F.
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Minutes. The Committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of the Company.
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G.
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Executive Session. The Committee may meet in Executive Session without members of Management present if the Chairperson of the Committee or members of the Committee deem that it is appropriate.
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H.
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Reporting to the Board. The Committee shall report to the Board on the matters discussed at each meeting of the Committee, including describing all actions taken by the Committee at the meeting.
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V. Duties and Responsibilities
The Committee shall have the following duties and responsibilities:
A.
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Resources.
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Retaining Advisors. Sole authority, and necessary funding, to retain, set compensation and retention terms for, and terminate any consultants, legal counsel, or other advisors that the Committee determines to employ to assist it in the performance of its duties.
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| 2. |
Access to Advisors. Access to internal advisors and all other resources within the Company to assist it in carrying out its duties and responsibilities.
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B.
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Compensation Philosophy, Plans, Programs, and Levels.
| 1. |
Review Compensation Philosophy for Executive Officers. Periodically review, consider, and approve the philosophy for compensation of the Company's executive officers.
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| 2. |
Establish and Review Non-Employee Director Compensation. Review periodically the compensation of non-employee directors, including the compensation of the Chairman of the Board, and the principles upon which such compensation is determined. Periodically review the adequacy of such plans and programs for non-employee directors, and report the results of and the recommendations resulting from such review to the Board (including how the Company's non-employee director compensation practices compare with those of other similarly situated public corporations).
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| 3. |
Establish and Review Compensation Plans for Executive Officers. Establish compensation plans, programs and levels for executive officers, including incentive and equity-based plans and programs, any appropriate employment contracts, special retirement benefits, and severance or change in control arrangements. Periodically review the adequacy of such plans and programs for executive officers, and report the results of, and in the case of the Chief Executive Officer, the recommendations resulting from, such review to the Board.
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Administration of Incentive and Equity-Based Plans. Engage in the administration of the Company's incentive and equity-based plans and programs (excluding ministerial responsibilities of the plans (e.g., day-to-day responsibilities of the plans)). As part of the administration of the Company’s incentive and equity-based plans and programs, the Committee will establish, where necessary, the performance goals, performance period, vesting conditions, range of award payouts, and the peer group (defined below) used to determine performance.
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Monitor Section 162(m) of the Code. Monitor the requirements of Section 162(m) of the Code and determine the extent to which the Company should comply with its provisions and any steps that the Committee must take in order to comply with such provisions.
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Peer Group. Periodically review and approve the composition of the comparator group of companies (“peer group”) used for pay and performance evaluations. This peer group may also be used in the assessment of the Company’s pay practices and levels or to measure the Company’s performance with respect to annual or long-term incentive plans or programs.
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Compensation Trends. Periodically review and consider pay practices for the general industry and peer group, in addition to pertinent legislation that may impact the design of the Company’s executive compensation program.
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C.
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Specific Compensation Amounts and Incentives.
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CEO Compensation. The independent directors of the Board shall meet annually with the CEO to receive his or her: (i) recommendations concerning his or her goals and objectives for the upcoming year; and (ii) self-evaluation of his or her performance in light of the prior year's goals and objectives. The Committee shall then evaluate the CEO's performance and review the CEO's self-evaluation in the development and approval, and the subsequent submission to the independent directors of the Board for approval, of the CEO's salary, bonus and long-term incentives (such as equity-based compensation). In determining the long-term incentive component of the CEO's compensation, the Committee shall consider, among other things: (x) the Company's performance and relative shareholder return, (y) the value of similar incentive awards to CEOs of comparable companies, and (z) the awards given to the Company's CEO in prior years. In addition, the Committee will develop and approve annual and long-term performance goals for the CEO, and submit them to the independent directors of the Board for approval.
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| 2. |
Non-CEO Executive Officer Compensation. The Committee shall annually review with the CEO his evaluation of the performance of the other executive officers and determine and approve with the CEO, the amounts of annual base salary, bonus and long-term incentive compensation awards and any adjustments to such amounts based upon such executive officer's performance and consistent with the achievement of established annual incentive opportunity levels and financial and any other goals.
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D.
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Management Development and Succession.
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Review and Monitor Management's Plans and Activities. Review and monitor management development plans and activities.
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| 2. |
Review Process for Identifying Executive Officers. Review annually the process for identifying executive officers of the Company.
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| 3. |
CEO's Succession Plan for and Evaluation of Executive Officers. Review annually with the CEO the CEO's proposed succession plan for each executive officer and the CEO's evaluation of each executive officer. As (and if) needed, meet with each executive officer to review the succession plan for his/her immediate subordinates. Provide a summary of the succession plan to the Board.
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Review Succession Plan for Executive Officers with Board. Review with the Board the Company's succession plan for the CEO and other executive officers, including plans for emergency succession in case of the unexpected resignation, retirement or disability of the CEO.
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E.
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Other Responsibilities.
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Compensation Committee Report. Produce a compensation committee report on executive compensation for inclusion in the Company's annual proxy statement in accordance with SEC rules and regulations.
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| 2. |
Charter Review. Review and reassess on an annual basis the adequacy of this Charter and recommend any proposed changes to the Board for its approval.
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| 3. |
Committee Performance Evaluation. Annually review and assess the performance of the Committee and deliver a report to the Board setting forth the results of the evaluation. In conducting the evaluation, the Committee shall address matters that it considers relevant to its performance, including at a minimum, the adequacy, appropriateness, and quality of the information and recommendations presented to the Board, the manner in which they were discussed or debated, and whether the number and length of meetings of the Committee were adequate for the Committee to complete its work in a thorough and thoughtful manner.
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Other Activities. Perform any other activities consistent with this Charter, the Company's Certificate of Incorporation, the Company's By-laws, and governing law as the Committee or the Board deems necessary or appropriate.
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| 1. |
Compensation Committee Report. Produce a compensation committee report on executive compensation for inclusion in the Company's annual proxy statement in accordance with SEC rules and regulations.
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| 2. |
Charter Review. Review and reassess on an annual basis the adequacy of this Charter and recommend any proposed changes to the Board for its approval.
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| 3. |
Committee Performance Evaluation. Annually review and assess the performance of the Committee and deliver a report to the Board setting forth the results of the evaluation. In conducting the evaluation, the Committee shall address matters that it considers relevant to its performance, including at a minimum, the adequacy, appropriateness, and quality of the information and recommendations presented to the Board, the manner in which they were discussed or debated, and whether the number and length of meetings of the Committee were adequate for the Committee to complete its work in a thorough and thoughtful manner.
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| 4. |
Other Activities. Perform any other activities consistent with this Charter, the Company's Certificate of Incorporation, the Company's By-laws, and governing law as the Committee or the Board deems necessary or appropriate.
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| 5. |
Monitor Secrder to comply with such provisions.
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| 6. |
Peer Group. Pes.
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| 7. |
Compensation Trempany’s executive compensation program.
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Effective 9/9/08