STONEMOR INC. CHARTER OF THE COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE OF THE BOARD OF DIRECTORS
(Adopted as of December 31, 2019)
The Board of Directors (the “Board”) of StoneMor Inc., a Delaware corporation (the “Company”) has established the Compensation, Nominating and Governance Committee of the Board (the “Committee”) with authority, responsibility and specific duties as described in this Nominating & Governance Committee Charter (this “Charter”).
Nominating and Governance Matters
The purposes of the Committee with respect to nominating and governance matters are to:
A. Advise the Board and make recommendations regarding appropriate corporate governance practices and assist the Board in implementing those practices;
B. Assist the Board by identifying individuals qualified to become members of the Board, consistent with the criteria approved of by the Board, and recommending director nominees to the Board for election at the annual meetings of stockholders or for appointment to fill vacancies on the Board;
C. Advise the Board about the appropriate composition of the Board and its committees;
D. Lead the Board in the annual performance evaluation of the Board and its committees, and of management;
E. Direct all matters relating to the succession of the Company’s Chief Executive Officer (“CEO”); and
F. Perform such other functions as the Board may assign to the Committee from time to time.
The purposes of the Committee with respect to compensation matters are to:
A. Oversee the Company’s overall compensation philosophy that applies to all Company employees;
B. Review, evaluate, approve and administer, to the extent applicable, the agreements, plans, policies and programs of the Company to compensate the Company’s executive officers and directors;
C. Make recommendations to the Board relating to the compensation of the members of the Board;
D. Otherwise discharge the Board’s responsibilities relating to compensation of the Company’s executive officers and directors; and
E. Perform such other functions as the Board may assign to the Committee from time to time.
The Committee must consist of not less than three members of the Board. Each member of the Committee must be “independent” as defined by the listing requirements of the New York Stock Exchange (“NYSE”); provided, however, that this requirement is subject to the transition periods for compensation committee member independence requirements as set forth in the NYSE Listed Company Manual. Each member of the Committee shall (a) be a “non-employee director” within the meaning of Rule 16b-3, as amended, promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended, and (b) be an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code, if applicable. Notwithstanding the foregoing membership requirements, no action of the Committee will be invalid by reason of any such requirement not being met at the time such action is taken.
The members of the Committee and its Chairman will be selected annually by the Board and will serve at the pleasure of the Board. Any vacancy on the Committee will be filled by, and any member of the Committee may be removed with or without cause by, an affirmative vote of a majority of the Board. If a Chairman is not designated by the Board or present at a meeting, the Committee may designate a Chairman by majority vote of the Committee members then in office.
III. Authority and Responsibilities
The Committee is delegated all authority of the Board as may be required or advisable to fulfill the purposes of the Committee. Without limiting the generality of the preceding statements, the Committee has the authority, and is entrusted with the responsibility, to take the following actions:
Nominating and Governance Matters
The Committee has the authority to:
- Conduct or authorize investigations into any matter within the scope of the responsibilities delegated to the Committee as it deems appropriate, including the authority to request any officer, employee or advisor of the Company to meet with the Committee or any advisors engaged by the Committee.
- Retain and determine funding for independent legal counsel and other experts and advisors, including the sole authority to retain, approve the fees payable to, amend the engagement with, and terminate any search firm to assist the Committee in identifying director candidates, as it deems necessary or appropriate to fulfill its responsibilities. The Committee may also utilize the services of the Company’s regular outside legal counsel or other advisors to the Company. The Company must provide for appropriate funding, as determined by the Committee, for payment of (a) compensation to any advisors employed by the Committee; and (b) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
- Delegate to its Chairman, any one of its members or any subcommittee it may form, the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances and consistent with applicable law. However, subcommittees do not have the authority to engage independent legal counsel and other experts and advisors unless expressly granted such authority by the Committee. Each subcommittee will keep minutes and regularly report to the Committee.
The Committee has the following responsibilities:
1. The Committee will prepare and recommend to the Board for adoption appropriate corporate governance guidelines and consider any other corporate governance issues that arise from time to time and develop appropriate recommendations for the Board.
2. Periodically, the Committee will review and reassess the adequacy of the Company’s corporate governance guidelines and recommend any proposed changes to the Board for approval.
3. Periodically, and no less frequently than annually, meet to assess, develop and communicate with the Board concerning the appropriate criteria for nominating and appointing directors, including:
· The Board’s size and composition;
· The Company’s governance policies;
· Applicable Listing Standards and laws;
4. The Committee will review management’s monitoring of the Company’s compliance programs and Corporate Code of Business Conduct and Ethics, including a report of violations and waivers of the Corporate Code of Business Conduct and Ethics.
5. The Committee will periodically assess the need for changes to the Company’s stock ownership guidelines and recommend any proposed changes to the Board for approval for adoption of stock ownership guidelines and recommend such adoption, if any, to the Board for approval.
6. The Committee review policies relating to meetings of the Board, which may include meeting schedules and locations, meeting agendas and procedures for delivery of materials in advance of meetings.
Except where the Company is legally required by contract or otherwise to provide third parties with the ability to nominate directors, the Committee will perform the following actions:
1. Periodically, and no less frequently than annually, meet to assess, develop and communicate with the Board concerning the appropriate nominees for election as directors, including:
· Individual director performance, expertise, experience, qualifications, attributes, skills and willingness to serve actively;
· The number of other public and private company boards on which a director candidate serves;
· Consideration of director nominees proposed or recommended by stockholders and related policies and procedures;
· Questions of independence and possible conflicts of interest and whether a candidate has special interests or a specific agenda that would reasonably be expected to impair his or her ability to effectively represent the interests of all stockholders; and
· Other appropriate factors;
2. Assist the Board by identifying individuals qualified to serve as directors, and to select, or recommend that the Board select, the director nominees for election or appointment (including any such nominees to fill any vacancy on the Board).
3. In the event that a vacancy on the Board arises, either as a result of an increase in the size of the Board or as a result of the departure of a director, the Committee will seek and identify a qualified director nominee to be recommended to the Board for either appointment by the Board to serve the remainder of the term of the director position that is vacant or election at the next annual meeting of stockholders. To identify such a nominee, the Committee should solicit recommendations from existing directors and senior management. These recommendations should be considered by the Committee along with any recommendations that have been received from stockholders as discussed below. The Committee may, in its discretion, retain a search firm to provide additional candidates. Prior to recommending to the Board that a person be elected to fill a vacancy on the Board, the Committee will consider and review the candidate’s:
· relevant skills, qualifications and experience;
· independence under applicable standards;
· business judgment;
· service on boards of directors of other companies;
· personal and professional integrity, including commitment to the Company’s core values;
· openness and ability to work as part of a team;
· willingness to commit the required time to serve as a Board member; and
· familiarity with the Company and its industry.
4. If and as requested by the Board, identify and recommend to the Board the appointees to be selected by the Board for service on the committees of the Board.
5. The Committee will treat recommendations for directors that are received from the Company’s stockholders equally with recommendations received from any other source; provided, however, that in order for such stockholder recommendations to be considered, the recommendations must comply with the procedures outlined in the Company’s proxy statement for its annual meeting of stockholders.
6. Periodically, the Committee will review the criteria for the nomination of director candidates and approve changes to the criteria, as appropriate.
Each year, the Committee will:
7. Review the relationships between the Company and each director and report the results of its review to the Board, which will then determine which directors satisfy the applicable independence standards; and
8. Determine whether or not each director serving on a Board committee is independent, disinterested, a non-employee director or an outside director under the standards applicable to the committees on which such director is serving or may serve and report the results of its review to the Board, which will then determine which directors, if any, qualify as independent, disinterested, non-employee or outside directors under applicable standards.
Board and Committee Structure
Each year, the Committee will:
9. Review the advisability or need for any changes in the number and composition of the Board;
10. Review the advisability or need for any changes in the Board’s committee structure; and
11. Recommend to the Board the composition of each Board committee and the individual director to serve as Chairman of each committee, endeavoring to cause one member of the Audit Committee to satisfy the attributes of an “audit committee financial expert” as set forth in Item 407(d)(5) of Regulation S-K promulgated by the SEC.
Committee, Board and Management Performance Evaluations
Each year, the Committee will:
12. Request that the Chairman of each committee, including this Committee, report to the full Board about the committee’s annual evaluation of its performance and evaluation of its committee’s charter following the end of each fiscal year; and
13. Receive comments from all directors and report to the full Board with an assessment of the performance of the Board, the Board’s committees and management following the end of each fiscal year.
Periodically, the Committee will:
14. Meet on succession planning, whereby the Committee will identify, and periodically update, the qualities and characteristics necessary for an effective CEO and monitor and review the development and progression of potential candidates against these standards; and
15. Consult with the CEO on senior management succession planning.
Other Powers and Responsibilities
Periodically, the Committee will:
16. Develop and evaluate an orientation program for new directors and a continuing education program for current directors, and present a report to the Board and make appropriate recommendations for final Board action regarding this program;
17. Make a recommendation to the Board concerning the selection and designation of a “Lead Director” to preside over the meetings of the non-management directors in executive session;
18. Review the Board’s policy regarding the structure of the offices of Chairman of the Board and CEO; and
- Review and recommend to the Board proposed changes to the Company’s Certificate of Incorporation and Bylaws.
The Committee has the authority to:
- Conduct or authorize investigations into any matter within the scope of the responsibilities delegated to the Committee as it deems appropriate, including the authority to request any officer, employee or adviser of the Company meet with the Committee or any advisers engaged by the Committee;
- In its sole discretion, retain and determine funding for legal counsel and compensation consultants, as well as other experts and advisers (collectively, “Compensation Advisers”), including the authority to retain, approve the fees payable to, amend the engagement with, and terminate any Compensation Adviser, as the Committee deems necessary or appropriate to fulfill its responsibilities. The Company must provide for appropriate funding, as determined by the Committee, for payment of (a) compensation to any Compensation Adviser engaged by the Committee and (b) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties; and
- Delegate to its Chairman, any one of its members or any subcommittee it may form, the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances and consistent with applicable law. To the extent necessary, the Committee may delegate the approval of award grants and other transactions and responsibilities regarding the administration of compensatory programs to a subcommittee consisting solely of members of the Committee or the Board who are (a) “Non-Employee Directors” for the purposes of Rule 16b-3 and/or (b) “outside directors” for the purposes of Section 162(m). Each subcommittee will keep minutes and regularly report to the Committee.
The Committee has the following responsibilities:
19. Each year, the Committee will:
- Evaluate the performance of the Company’s Chief Executive Officer and review, modify (if necessary) and approve corporate goals and objectives relevant to the compensation of the Company’s Chief Executive Officer;
- Set the compensation of the Company’s Chief Executive Officer based on this evaluation and review, including the annual base salary levels; annual cash incentive awards; long-term incentive awards; employment agreements, severance arrangements and change-in-control agreements and provisions; and any special or supplemental benefits;
- Evaluate the performance of the Company’s other executive officers, which may be done in consultation with the Chief Executive Officer, and review, modify (if necessary) and approve the Company’s executive compensation program in light of the Company’s goals and objectives relative to executive compensation;
- Set the compensation of the Company’s other executive officers based on this evaluation and review, which may be done in consultation with the Chief Executive Officer, including the annual base salary levels; annual cash incentive awards; long-term incentive awards; employment agreements, severance arrangements and change-in-control agreements and provisions; and any special or supplemental benefits.
In determining any element of compensation, the Committee may consider, among other factors, the Company’s performance and relative stockholder return, the value of similar compensation to individuals in similar positions at comparable companies, and the awards historically given to the Chief Executive Officer and other executive officers.
20. The Committee will review the adequacy of the Company’s executive compensation programs to ensure (a) the attraction and retention of executive officers, (b) the motivation of executive officers to achieve the Company’s business objectives and (c) the alignment of the interests of the executive officers with the long-term interests of the Company’s stockholders.
21. The Committee will oversee the Company’s compliance with applicable SEC rules and regulations and Listing Standards regarding stockholder approval of certain executive compensation matters.
22. The Committee will review and approve agreements, plans and arrangements of the Company, and any amendments or renewals thereof, utilized to compensate existing and prospective executive officers.
23. The Committee will review periodic reports from management on matters relating to the Company’s compensation practices.
24. Once required, the Committee will review and discuss with the Company’s management the Compensation Discussion and Analysis (“CD&A”) to be included in the Company’s Proxy Statement or Annual Report on Form 10-K, as applicable, and, based on that review, determine whether to recommend to the Board that the CD&A be included in the Proxy Statement or Annual Report on Form 10-K, as applicable, in accordance with applicable rules and regulations.
25. Each year, the Committee will prepare a Compensation Committee Report as required by Item 407(e)(5) of Regulation S-K and publish the report in the Company’s Proxy Statement or Annual Report on Form 10-K, as applicable, in accordance with applicable rules and regulations.
26. The Committee will review and recommend to the Board how frequently the Company should submit to stockholders an advisory vote on executive compensation (“say-on-pay”), once required. This review should take into account the historical results of stockholder advisory votes on the frequency of say-on-pay resolutions at the Company.
27. Following each stockholder meeting at which say-on-pay resolutions are proposed for a stockholder advisory vote, the Committee will review the results of the advisory vote, and consider whether to make any adjustments to the Company’s executive compensation policies and practices.
Incentive and Equity Compensation
28. As often as it deems necessary and appropriate, the Committee will review and make recommendations to the Board with respect to incentive-compensation plans and equity-based plans that are subject to Board approval.
29. As often as it deems necessary and appropriate, the Committee will review the Company’s equity compensation plans to determine whether stockholders need be given the opportunity to vote on the plans, as may be required by law, the Company’s certificate of incorporation or bylaws (as amended from time to time), the Company’s Corporate Governance Guidelines and the listing standards of the NYSE.
30. Each year, the Committee will review director compensation and make a recommendation to the Board regarding the form and amount of director compensation. The Committee will consider that a director’s independence may be jeopardized if (a) his or her compensation and perquisites exceed customary levels, (b) the Company makes substantial charitable contributions to organizations with which the director is affiliated or (c) the Company enters into consulting contracts with (or provides other indirect forms of compensation to) the director or an organization with which the director is affiliated. Directors who are employees of the Company may not receive any additional compensation for service on the Board.
Other Powers and Responsibilities
31. The Committee will review and approve, or review and recommend to the Board for its approval, any transaction in equity securities of the Company, or derivatives of those equity securities, between the Company and any officer or director of the Company who is subject to the reporting and short-swing liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended.
32. The Committee will review, as it deems necessary, appropriate matters related to the Company’s compliance with applicable laws and regulations affecting employee and director compensation and benefits, including, but not limited to, Rule 16b-3, Section 162(m) and Section 13(k) of the Exchange Act.
33. If the Committee engages a Compensation Adviser, then the Committee is directly responsible for the appointment, compensation and oversight of such Compensation Adviser. Prior to any such engagement, the Committee will analyze the relationships such Compensation Adviser has with members of the Committee as well as management and the Company as a whole. This analysis will include the specific factors identified by the Securities and Exchange Commission and NYSE as well as any other factors that affect the independence of compensation advisers.
34. The Committee will receive and review periodic reports on the Company’s compensation plans, policies and programs as they affect all employees.
35. The Committee will oversee the assessment of risks related to the Company’s compensation policies and programs.
36. The Committee will periodically assess whether to establish and annually review executive officer compliance with the Company’s Stock Ownership Guidelines.
37. The Committee will oversee the Company’s trading policies and anti-hedging and pledging policies applicable to executive officers and directors.
A. Meetings. The Committee will meet at the call of its Chairman, two or more members of the Committee or the Chairman of the Board. The Committee will meet as frequently as circumstances dictate. Meetings of the Committee may be in person, by conference call or by unanimous written consent, in accordance with the Company’s Bylaws. Meetings of the Committee will be held at such time and place, and upon such notice, as its Chairman may from time to time determine. The Committee will keep such records of its meetings as it deems appropriate.
The Committee is at all times authorized to have direct, independent and confidential access to, at its meetings and otherwise, to the Company’s other directors, management and personnel, to carry out the Committee’s purposes. The Committee is authorized to conduct or authorize investigations into any matters relating to the purposes, duties or responsibilities of the Committee.
Meetings may, at the discretion of the Committee, include other directors, members of the Company’s management, independent advisors and consultants or any other persons whose presence the Committee believes to be necessary or appropriate. Those in attendance may observe meetings of the Committee, but may not participate in any discussion or deliberation unless invited to do so by the Committee, and in any event are not entitled to vote. Notwithstanding the foregoing, the Committee may also exclude from its meetings any persons it deems appropriate, including, but not limited to, any director who is not a member of the Committee.
B. Quorum and Approval. A majority of the Committee’s members will constitute a quorum. The Committee will act on the affirmative vote of a majority of members present at a meeting at which a quorum is present. Any action required or permitted to be taken at any meeting of the Committee may be taken without a meeting, if all members of the Committee consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Committee.
C. Rules. The Committee may determine additional rules and procedures, including designation of a Chair pro tempore in the absence of its Chairman and designation of a secretary of the Committee at any meeting thereof, which rules and procedures shall not be inconsistent with (a) any provision of this Charter, (b) any provision of the Company’s bylaws or charter or (c) the laws of the state of Delaware. .
D. Reports. The Committee will maintain minutes of its meetings and make regular oral or written reports to the Board, directly or through its Chairman, of its actions and any recommendations to the Board.
E. Review of Charter. Each year, the Committee will review the need for changes to this Charter and recommend any proposed changes to the Board for approval.
F. Performance Review. Each year, the Committee will review and evaluate its own performance and will submit itself to a review and evaluation by the Board.
G. Fees; Reimbursement of Expenses. Each member of the Committee, as well as the Chairman, will be paid the fee set by the Board for his or her services as a member, or Chairman, as the case may be, of the Committee. Subject to the Company’s Corporate Governance Guidelines and other policies, Committee members, including the Chairman, will be reimbursed by the Company for all reasonable expenses incurred in connection with their duties as Committee members or as Chairman. As the Committee deems necessary to carry out its duties, it is authorized to select, engage (including approval of the fees and terms of engagement), oversee, terminate and obtain advice and assistance from outside search firms, legal, compensation or other advisers or consultants. The Company will provide for appropriate funding, as determined by the Committee, for payment of compensation to any advisers engaged by the Committee and ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
The Committee shall be directly responsible for oversight of any work of any such advisers and consultants and may appoint such advisors and consultants with respect to any compensation matters only after taking into consideration all factors relevant to any such advisor’s or consultant’s independence from management as set forth in the Listing Standards.
V. Posting Requirement
The Company will make this Charter available on or through the Company’s website as required by applicable rules and regulations. In addition, the Company will disclose in its proxy statement for its annual meeting of stockholders or in its Annual Report on Form 10-K, as applicable, that a copy of this Charter is available on the Company’s website and provide the website address.
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Nothing in this Charter is intended to preclude or impair the protection provided under applicable law or the Company’s bylaws or charter for good faith reliance by members of the Committee on reports or other information provided by others. Further, nothing in this Charter is intended to preclude or impair the protection provided in Section 141(e) of the Delaware General Corporation Law for good faith reliance by Committee members on reports or other information provided by others.