The Compensation Committee (the “Committee”) is appointed by the Board of Directors (the “Board”) of Insperity, Inc. (the “Company”) to (1) oversee and administer the Company’s compensation policies, plans and practices; (2) to prepare the report on executive compensation required by the rules of the Securities and Exchange Commission (“SEC”) for inclusion in the Company’s annual report or proxy statement for the annual meeting of shareholders; and (3) review and discuss with the Company’s management the Compensation Discussion and Analysis required by the rules of the SEC.
Membership and Meetings
The Committee shall consist of a number of directors fixed from time to time by the Board, not less than two. The members of the Committee shall be appointed by the Board in its discretion upon the recommendation of the Nominating and Corporate Governance Committee, and shall serve for such term as the Board determines or until their successors are elected or appointed. The members of the Committee shall meet the independence requirements of The New York Stock Exchange listing standards. In addition, it is expected that each member shall be (a) a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, and (b) an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended. Committee members may be removed by a majority vote of the Board in its discretion. The Committee shall meet as often as its members shall determine to be necessary, or as meetings may be called by the Chair of the Committee, any two members of the Committee or the Chairman of the Board, but in any event shall meet at least three times each year. The Committee may invite members of management or others to attend meetings and/or to furnish pertinent information. The Committee shall also meet in executive session as required. The Board shall appoint one member of the Committee as Chair. The Chair of the Committee shall be responsible for scheduling all meetings of the Committee, determining the agenda for each meeting (following consultation with other members of the Committee and with management), presiding over meetings of the Committee and coordinating reporting to the Board. In the absence of the Chair, the majority of the members of the Committee present at a meeting shall appoint a member to preside at the meeting. A majority of the Committee members will constitute a quorum for the transaction of business by the Committee and the vote of a majority of the members of the Committee so voting will constitute an act of the Committee.
The Committee shall make regular reports to the Board, and all actions of the Committee shall be reported to the Board at the next regular meeting of the Board.
The Committee may form and delegate authority to subcommittees as it deems appropriate.
Duties and Responsibilities
The Committee shall:
1. Establish a compensation policy that is designed to attract and retain key executives responsible for the success of the Company and motivate senior management (used herein to refer to the Management Team) to enhance long-term stockholder value.
2. Establish bonus policies and other forms of compensation or benefits for all employees of the Company.
Executive and Board Compensation
3. Annually review and approve the corporate goals and objectives relevant to compensation of the chief executive officer and senior management of the Company.
4. In light of these goals and objectives, annually evaluate the performance of the chief executive officer and other senior management of the Company and, either as a Committee or together with the other independent directors (as directed by the Board), determine and approve the compensation of such individuals. For the purposes of this Charter, “compensation” for the chief executive officer and other senior management of the Company shall include: (a) annual base salary, (b) bonus, (c) long-term incentive compensation, (d) equity-based compensation, (e) compensation pursuant to employment agreements and extensions thereto, severance arrangements and change in control agreements or provisions, (f) any special or supplemental benefits, including management perquisites, and (g) all other forms of compensation.
5. In determining the long-term incentive component of the compensation of the chief executive officer and other senior management, the Committee will consider the Company’s performance and relative shareholder return, the value of similar incentive awards to chief executive officers and senior management at comparable companies, the awards given to the chief executive officer and senior management in past years and any other factors it deems relevant.
6. Review from time to time, approve and make recommendations to the Board with respect to the compensation and benefits of non-employee directors of the Company, including incentive compensation plans and equity-based plans.
7. Review from time to time, the Company’s policies regarding the tax deductibility of compensation paid to the Company’s senior management for purposes of Section 162(m) of the Internal Revenue Code, including, but not limited to, establishing performance goals and certifying that such goals have been attained.
8. Establish and periodically review policies in the area of management perquisites.
Incentive Compensation and Equity-Based Plans
9. Review, approve and recommend to the Board all incentive-compensation plans and equity-based plans of the Company.
10. Review and determine the awards for all employees eligible to participate in the Company’s equity-based incentive plans, except to the extent the Board delegates responsibility for the review and determination of awards for employees other than senior management of the Company to the chief executive officer or another committee established by the Board.
Other Compensation and Employee Benefit Plans
11. Review new executive compensation programs; review on a periodic basis the operation of the Company’s executive compensation programs to determine whether they are properly coordinated; establish and periodically review policies for the administration of executive compensation programs; and take steps to modify any executive compensation programs that yield payments and benefits that are not reasonably related to executive performance.
12. Monitor compliance with stock ownership guidelines.
13. Prepare and approve the compensation committee report as required by the SEC to be included in the Company’s proxy statement for the annual meeting.
14. Review and discuss with the Company’s management the Compensation Discussion and Analysis required by the rules of the SEC. Based on such review and discussion, the Committee shall determine whether to recommend to the Board that the Compensation Discussion and Analysis be included in the Company’s proxy statement for the annual meeting.
15. Consult with the Finance, Risk Management and Audit Committee regarding the Company’s major risk exposures and whether the Company’s compensation policies and practices create risks that are reasonably likely to have a material effect on the Company.
16. Perform such duties as may, from time to time, be delegated to the Committee under the compensation and benefit plans of the Company or its subsidiaries.
17. Exercise such other duties and responsibilities as may be assigned by the Board from time to time.
In carrying out these duties and responsibilities, the Committee shall:
- Take into account various qualitative and quantitative indicators of corporate and individual performance.
- Seek to set salaries comparable to peer group companies, considered to be certain companies in the service industry and in the same revenue category as the Company.
- In evaluating the performance of senior management, take into consideration such factors as revenue growth, acquisitions, achievement of expansion goals and profitability.
- Recognize performance and achievements that are more difficult to quantify, such as the successful supervision of major corporate projects, demonstrated leadership ability, and contributions to the industry and the community.
In exercising its authority, duties and responsibilities under this Charter, the Committee shall have and may exercise all the powers and authority of the Board. The Committee shall have the sole authority to retain and terminate any compensation consultants retained to assist in the evaluation of director, chief executive officer and senior management compensation, including the sole authority to approve the consultant’s fees and other retention terms. The Committee shall be assisted by the Company’s human resources, legal and accounting staff and in addition, to the extent it deems necessary or appropriate, the Committee may obtain assistance from such other persons, who need not be employees of the Company, or organizations, with the expenses incurred in their use to be paid by the Company. The foregoing authority includes the authority to retain, terminate and obtain advice and assistance from external legal, accounting or other advisors and consultants.
Annual Review of Charter and Performance
At least annually, the Committee shall review and reassess the adequacy of this Charter. The Committee shall report the results of the review to the Board, and, if necessary, recommend that the Board amend this Charter. The Committee shall annually review its own performance.