Compensation and Corporate Governance Committee Charter
The Board of Directors (the “Board”) of CKE Inc., a Delaware corporation (the “Company”), has adopted this Charter for the Compensation and Corporate Governance Committee of the Board (the “Committee”) on July 25, 2012, to be effective as of the closing of the Company’s initial public offering of common stock pursuant to the Securities Act of 1933, as amended. This Charter supercedes all prior charters in connection with any previously existing compensation and corporate governance committee of the Company or any of its subsidiaries. This Charter shall be made available on the Company’s website.
A. Compensation. The purposes of the Committee regarding compensation matters are to:
(i) review and evaluate, and otherwise assist the Board in the discharge of the responsibilities of the Board with respect to, employment and compensation agreements, plans, policies, and programs of the Company and its subsidiaries; and
(ii) assist the Board in the discharge of the Board’s responsibilities relating to compensation of the officers and key employees of the Company and its subsidiaries, as well as members of the Board.
B. Corporate Governance. The purpose of the Committee regarding corporate governance matters is to assist the Board in fulfilling its responsibilities regarding:
(i) the identification of qualified candidates to become directors of the Company, consistent with criteria approved by the Board;
(ii) the selection of nominees for election as directors at the next annual meeting of stockholders or a special meeting of stockholders at which directors are to be elected;
(iii) the selection of candidates to fill vacancies and newly created directorships on the Board, as well as the selection of directors to serve on the other committees of the Board;
(iv) the identification of best practices and recommendation of corporate governance principles, including giving proper attention and making effective responses to stockholder concerns regarding corporate governance;
(v) the development of guidelines setting forth corporate governance principles applicable to the Company (the “Corporate Governance Guidelines”); and
(vi) oversight of the evaluation of the Board and management.
II. Powers and Authority
In addition to the powers and responsibilities expressly delegated to the Committee in this Charter, the Committee may exercise any other powers and carry out any other responsibilities delegated to it by the Board from time to time consistent with applicable law and the Company’s Certificate of Incorporation and Bylaws. The Committee is delegated all power and authority of the Board as may be required or advisable to fulfill the purposes and responsibilities of the Committee. The powers and responsibilities expressly delegated to the Committee in this Charter or otherwise shall be exercised and carried out by the Committee as it deems appropriate without requirement of Board approval and any decision made by the Committee (including any decision to exercise or refrain from exercising any of the powers delegated to the Committee) shall be at the Committee’s sole discretion.
III. Composition and Qualifications
A. The Committee shall consist of at least three (3) members, all of whom must be members of the Board. One of the members shall serve as the chairperson of the Committee. The Board shall appoint the members of the Committee. The chairperson of the Committee shall be designated by the Board, or, if no such designation is made, shall be selected by the affirmative vote of the majority of the Committee. The Board may remove or replace any member of the Committee at any time by the affirmative vote of a majority of the Board.
B. As long as the Company is, and elects to be treated as, a "controlled company" as defined by Section 303A.00 of the Listed Company Manual of the New York Stock Exchange (the "NYSE"), the members need not satisfy the independence requirements of the NYSE. However, if the Company is no longer, or elects not to be treated as, a controlled company, the Committee members shall satisfy the independence requirements of the NYSE to the extent and within the time periods specified by applicable law and rules.
C. Each member of the Committee shall have experience, in the business judgment of the Board, that would be helpful in addressing the matters delegated to the Committee. Members of the Committee shall also comply with other applicable requirements, including those of the Securities and Exchange Commission (the "SEC") and the NYSE.
IV. Responsibilities – Compensation Matters
A. Except to the extent explicitly otherwise retained by the Board, the Committee shall have sole authority, and is entrusted with the responsibility, to:
(i) review and approve corporate goals and objectives relevant to the compensation of the Company’s chief executive officer (the “CEO”);
(ii) evaluate the performance of the CEO in light of such goals and objectives; and
(iii) determine and approve the CEO’s compensation level based on the foregoing evaluation.
B. The Committee shall make recommendations to the Board with respect to non-CEO executive officer compensation, and incentive-compensation and equity-based plans that are subject to Board approval.
C. The Committee shall establish or recommend to the Board the financial and other performance targets that must be met in connection with annual bonuses and, as applicable, other performance-based compensation plans and arrangements of the Company and its subsidiaries that may be in effect from time to time.
D. The Committee shall review and recommend to the Board, for the CEO and the other officers and key employees of the Company and its subsidiaries:
(i) all material benefits, option or stock award grants and perquisites; and
(ii) all material employment agreements, severance arrangements, change-in-control agreements, and confidentiality and non-competition agreements.
E. The Committee shall review and recommend to the Board a succession plan for the CEO and development plans for other key corporate positions as shall be deemed necessary from time to time.
F. The Committee shall have the sole authority to retain or obtain the advice of compensation consultants, independent legal counsel or other advisers, as it deems appropriate in connection with the discharge of its duties. The Committee shall be directly responsible for the appointment, retention, termination, compensation and oversight of the work of any such adviser. The Company shall provide for appropriate funding, as determined by the Committee, in its capacity as a committee of the Board, for payment of compensation to any of the advisers employed by the Committee.
G. The Committee shall act as administrator as may be required by the Company’s incentive compensation and equity-related plans in which its executive officers may be participants, subject to the Committee’s right to delegate some or all of its powers and authority as may be provided in such plans.
H. From time to time the Committee shall review the adequacy of this Charter and recommend any proposed changes to the Board for approval.
I. The Committee shall produce a compensation committee report on executive officer compensation, as required by applicable rules to be included in the Company’s proxy statement or annual report on Form 10-K filed with the SEC.
J. The Committee shall set and review the compensation of members of the Board.
K. The Committee shall conduct an annual performance evaluation of the Committee’s own performance.
V. Responsibilities – Corporate Governance Matters
A. At an appropriate time prior to each annual meeting of stockholders at which directors are to be elected, the Committee shall recommend to the Board for nomination by the Board such candidates as the Committee, in the exercise of its judgment, has found to be well qualified and willing and available to serve.
B. At an appropriate time after a vacancy arises on the Board, a director advises the Board of his or her intention to resign from the Board, or there is a newly created directorship resulting from an increase in the authorized number of directors, the Committee shall recommend to the Board a person to be elected by the Board to fill such vacancy or newly created directorship whom the Committee, in the exercise of its judgment, has found to be well qualified and willing and available to serve. In addition, the Committee shall also be responsible for recommending to the Board the directors to serve on the committees of the Board.
C. For purposes of the two preceding paragraphs, the Committee may consider the following criteria, among others that the Committee shall deem appropriate, in recommending candidates for election to the Board:
(i) personal and professional integrity, ethics and values;
(ii) experience in corporate or financial management, such as serving as an officer or former officer of a publicly held company;
(iii) experience in the Company’s industry and with relevant social policy concerns;
(iv) experience as a board member of another publicly held company;
(v) academic expertise in an area of the Company’s operations or financial or other areas relevant to the Company;
(vi) practical and mature business judgment; and
(vii) such other criteria as the Board or the Committee may from time to time determine.
The Committee shall identify candidates without regard to any candidate’s race, color, disability, gender, national origin, religion or creed.
D. The Committee also shall monitor compliance by the directors of the Company with such Board membership criteria.
E. In addition to the foregoing, the Committee, to the extent that it deems necessary or appropriate, shall carry out the following responsibilities:
(i) review the performance of each current director and consider such performance when determining whether or not to recommend the nomination of such director for an additional term;
(ii) assess the size and composition of the Board and its committees;
(iii) when and if appropriate, consider and recommend the removal of a director for cause, in accordance with the applicable provisions of the Certificate of Incorporation, the Bylaws and the Corporate Governance Guidelines;
(iv) make recommendations to the Board regarding governance matters, including, without limitation, the Certificate of Incorporation, the Bylaws, this Charter and the charters of the Company’s other committees;
(v) develop and recommend to the Board the Corporate Governance Guidelines;
(vi) develop and recommend to the Board a policy regarding the consideration of director candidates recommended by the Company’s security holders and procedures for submission by security holders of director nominee recommendations;
(vii) review governance-related stockholder proposals and recommend Board responses;
(viii) oversee the Board in its annual review of the Board’s performance (including its composition and organization) and make appropriate recommendations to improve performance;
(ix) evaluate the Committee’s performance on an annual basis, including its compliance with this Charter, and provide the Board with any recommendations for changes in procedures or policies governing the Committee; and
(x) review and assess this Charter and submit any recommended changes to the Board for its consideration.
F. Notwithstanding any of the foregoing, if the Company is legally required, by contract or otherwise, to permit a party to designate one or more of the directors to be elected or appointed (for example, pursuant to rights contained in the Certificate of Incorporation, the Bylaws or the Nominating Agreement effective as of the close of the Company’s initial public offering of common stock pursuant to the Securities Act of 1933, as amended, among the Company and Apollo Management VII, L.P. (the “Nominating Agreement”)), then the nomination or appointment of such directors shall be governed by such requirements.
G. The Committee may retain any independent counsel, experts or advisers that the Committee believes to be desirable and appropriate without the approval of the Board or management. The Committee also may use the services of the Company’s regular legal counsel or other advisers to the Company. The Committee shall have the sole authority to retain, amend the engagement with, and terminate any search firm to be used to identify director candidates, including the sole authority to approve such search firm’s fees and other retention terms. The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to any such persons employed by the Committee and for ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
VI. Meetings and Procedures
A. The Committee shall meet at the call of its chairperson or two (2) or more members of the Committee. The chairperson (or in his or her absence, another member selected by the attending members) shall preside at Committee meetings and set the agendas for the meetings. Meetings may, at the discretion of the Committee, include members of the management of the Company or any of its subsidiaries, independent consultants, and such other persons as the Committee or its chairperson may determine, but no such persons are permitted to vote. The Committee may meet in person, by telephone conference call, or in any other manner in which the Board is permitted to meet under law or the Company’s Bylaws. The Committee shall meet at least twice per year and more frequently as required in order to fulfill its responsibilities and complete the activities required by this Charter.
B. A majority of the members of the Committee shall constitute a quorum. The Committee shall act on the affirmative vote of a majority of members present at a meeting at which a quorum is present. The Committee may also act by unanimous written consent in lieu of a meeting.
C. The Committee may determine additional rules and procedures, including designation of a secretary of the Committee or any meeting thereof.
D. The Committee shall make regular reports of its actions and any recommendations to the Board, directly or through the chairperson.
E. The Committee shall keep minutes of all meetings and of all actions taken by the Committee, file such minutes with the Secretary of the Company and make a copy of such minutes available to the Board.
F. Each member of the Committee shall be paid the fees, if any, set by the Board for his or her services as a member or a chairperson of the Committee.
VII. Delegation of Responsibilities
In fulfilling its responsibilities, the Committee shall be entitled to delegate any or all of its responsibilities to a subcommittee of the Committee, to the extent consistent with applicable laws and the Company’s Certificate of Incorporation, Bylaws and Corporate Governance Guidelines.