CHARTER FOR THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF SIGMATRON INTERNATIONAL, INC.
The purpose of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of SigmaTron International, Inc. (the “Company”) shall be to:
- act for the Board to (i) oversee the compensation of the Company’s Chief Executive Officer and other executive officers (officers reporting under Section 16 of the Securities Exchange Act of 1934), and (ii) evaluate and recommend to the Board the executive officer compensation plans, policies and programs of the Company;
- make recommendations to the Board with respect to compensation of directors;
- oversee and make recommendations to the Board concerning the Company’s compensation policies, plans and benefits programs that relate to the executive officers or directors, excluding those programs such as group life, health, flex or other plans that do not discriminate in scope, terms or operation in favor of executive officers or directors and that are available generally to all salaried employees; and
- oversee the design and implementation of the Company’s equity compensation and incentive plans.
The compensation programs for the Company’s executive officers shall be designed to attract, motivate and retain talented executives responsible for the success of the Company and shall be determined within a competitive framework and based on the achievement of the Company’s overall financial results, individual contributions, market conditions, and a compensation philosophy of “pay for performance.”
2. MEMBERSHIP AND ORGANIZATION
Composition. The Committee members shall be appointed by, and shall serve at the discretion of, the Board. The Committee shall consist of no fewer than two members of the Board. The Board may designate one member of the Committee as its chair. Unless otherwise determined by the Board, members of the Committee must meet the following criteria:
- the independence requirements of the Nasdaq Stock Market, Inc. Marketplace Rules;
- the “non-employee director” definition of Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended; and
- the “outside director” definition of Section 162(m) of the Internal Revenue Code of 1986, as amended.
Meetings. The Committee will meet as often as may be deemed necessary or appropriate in its judgment, but the Committee shall be expected to convene at least two times per year. The Committee may meet either in person or telephonically, and at such times and places as the Committee determines, and may act by written consent. The CEO shall not be present when the CEO’s compensation is determined.
The Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board. The Committee may also act by unanimous written consent of the Committee, and the minute book shall include copies of any such actions taken. The Committee shall make regular reports to the full Board on the actions and recommendations of the Committee. The Committee may delegate authority to one or more directors, to the whole Board, or to members of management, to the extent permitted by applicable law and as it deems appropriate.
3. RESPONSIBILITIES AND DUTIES
The following duties and responsibilities of the Committee are set forth below as a guide to the Committee with the understanding that the Committee may alter or supplement them as it deems appropriate under the circumstances to the extent permitted by applicable law or the Nasdaq Rules:
Executive and Other Compensation
- The Committee shall review and recommend to the Board with respect to the CEO and the other executive officers of the Company (a) the annual base salary, (b) any annual incentive bonus, (c) equity compensation, (d) any employment agreement, severance arrangement, or change in control agreement, (e) any signing bonus or payment of relocation costs, and (f) any other significant benefits or compensation arrangements not available to employees generally.
- Specifically with respect to the CEO and the other executive officers of the Company, the Committee shall review and approve corporate goals and objectives relevant to the compensation of the CEO and the other executive officers, evaluate their performance in light thereof, and consider identified and other factors related to the performance of the Company.
- The CEO may not be present during the voting or deliberations relating to the CEO’s compensation.
- The Committee shall oversee the design of the Company’s equity compensation and executive incentive plans and shall act as or designate the administrator of such plans.
- The Committee shall review the Company’s bonus plan objectives to ensure that incentive payments reward the achievement of appropriate corporate performance goals.
- The Committee shall review and recommend to the Board stock option grants and other equity-based or incentive awards under the Company’s incentive compensation plans, including any performance criteria relating to the plans or awards, and otherwise assist the board in administering awards under these plans.
- The Committee shall review and recommend to the Board the types and amounts of compensation for members of the Board, chairs and members of Board committees.
- The Committee shall evaluate on a periodic basis the competitiveness of (i) the compensation of the CEO, the other executive officers, and the directors of the Company, and (ii) the Company’s overall compensation plans.
Related Duties and Authority
- The Committee shall review and reassess the adequacy of this Charter on an annual basis and recommend any proposed changes to the Board for approval.
- The Committee has authority to select and hire outside consultants and shall have full access to the Human Resources Department or other Company employees to assist in the evaluation of executive officer compensation and may approve the fees and other retention terms of any consultants hired by the Committee. The Committee may also obtain advice and assistance from one or more legal, accounting or other adviser (“Adviser”) selected by the Committee. The Committee may select or receive advice from an Adviser only after consideration of the following independence factors: (i) the provision of other services to the Company by the Adviser’s employer (“Employer”); (ii) the amount of fees received from the Company by the Employer as a percentage of the Employer’s total revenue; (iii) the policies and procedures of the Employer that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the Adviser with any member of the Committee; (v) any stock of the Company owned by the Adviser; and (vi) any business or personal relationship of the Adviser or Employer with an Executive Officer of the Company, as defined in Nasdaq Rule 5605(a)(1). Notwithstanding the foregoing, the Committee shall not be required to conduct an independence assessment of any Adviser that acts in a role limited to the following for which no disclosure is required under Item 407(e)(3)(iii) of Regulation S-K: (a) consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of Executive Officers, as defined in Nasdaq Rule 5605(a)(1), or directors of the Company, and that is available generally to all salaried employees; and/or (b) providing information that either is not customized for the Company or that is customized based on parameters that are not developed by the Adviser, and about which the Adviser does not provide advice. While the Committee shall consider the independence factors described above, the Committee may, after consideration thereof, select or receive advice from any Adviser, including advisers that do not meet the independence criteria.
The Committee shall review and discuss with management the Company’s Compensation Discussion and Analysis, if any, to be included in the Company’s annual proxy statement and shall produce a Committee report for inclusion in the Company’s annual proxy statement that complies with the applicable rules and regulations of the Securities and Exchange Commission.