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(The Compensation Committee of Independent Directors for
Companies Listed on the New York Stock Exchange)
Independent directors must make up the majority of boards of directors of companies listed on the New York Stock Exchange. Exchange rules also provide that each listed company must have committees of independent directors responsible for various areas of corporate governance. The Compensation Committee required by Rule 303A.05 is one such committee.
- Setting compensation of the chief executive officer of the company based upon an evaluation of the performance of the chief executive officer in meeting company objectives;
- Recommending to the board of directors what compensation, including incentives and options, should be provided to persons other than the chief executive officer;
- Providing a report on company executive compensation required by the Securities and Exchange Commission and to be published in the company's proxy statement for its annual meeting or in its Form 10K Annual Report to be filed with the SEC and then made public; and
- Evaluating and reporting annually on the Compensation Committee's own performance.
In setting compensation for the chief executive officer of the company, it is expected that the Committee will take into consideration what comparable company chief executive officers are paid and what the listed company's chief executive officer has been paid in the past.
The charter of the Compensation Committee should include how independent directors qualify for the Compensation Committee and how members of the Committee will be appointed and removed. Finally, how the Compensation Committee will operate and report to the full board of directors should be described in the Committee's written charter.
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