Charter of the Compensation Committee
Compensation Committee Charter
This Compensation Committee Charter was adopted by the Board of Directors (the “Board”) of Sotheby’s (the “Company”) and amended as of November 4, 2016.
This Charter is intended as a component of the flexible governance framework within which the Board, assisted by its committees, directs the affairs of the Company. While it should be interpreted in the context of all applicable laws, regulations and listing requirements, as well as the context of the Company’s Certificate of Incorporation
Purpose of the Compensation Committee
The Compensation Committee (the “Committee”) of the Board of Directors is responsible for approving and evaluating the director and officer compensation and benefit plans, policies, and programs of the Company, including (i) determining and approving the compensation of the Company’s Chief Executive Officer (“CEO”); (ii) reviewing and approving compensation levels for the Company’s other executive officers; (iii) reviewing the compensation of the Company’s directors and making recommendations to the Board in respect thereof; (iv) reviewing and approving management incentive compensation policies and programs; (iv) reviewing and approving equity compensation programs for employees, and exercising discretion in the administration of such programs; and (v) producing an annual report on executive compensation for inclusion in the Company’s proxy statement in accordance with applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The Committee is also responsible for overseeing generally the Company’s employee compensation and benefit plans, policies and programs.
In discharging its role, the Committee is empowered to inquire into any matter that it considers appropriate to carry out its responsibilities, with access to all books, records, facilities and personnel of the Company. The Committee has the power to retain outside counsel, compensation consultants or other advisors to assist it in carrying out its activities. The Company shall provide adequate resources to support the Committee’s activities, including compensation of the Committee’s counsel, consultants and other advisors. The Committee shall have the sole authority to retain, compensate, direct, oversee and terminate counsel, compensation consultants, and other advisors hired to assist the Committee, who shall be accountable ultimately to the Committee.
The Compensation Committee shall consist of no fewer than three directors who satisfy the independence requirements of the New York Stock Exchange and the Company’s categorical standards for independence. In addition, unless otherwise approved by the Board, no director may serve unless he or she (i) is a “Non-employee Director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (ii) satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Internal Revenue Code.
The members of the Compensation Committee shall be appointed annually by the Board on the recommendation of the Nominating and Corporate Governance Committee. The Board will designate one of the members to serve as the Chairman. The Chairman shall preside at meetings of the Committee and shall set agendas for meetings and determine the Committee’s information needs, except as otherwise provided by action of the Committee. Each member of the Committee will serve until the next annual meeting of the Company or until he or she resigns or is removed from the Committee by a majority vote of the full Board.
Committee Authority and Responsibilities
The following responsibilities are set forth as a guide to fulfilling the Committee’s purpose, with the understanding that the Committee’s activities may diverge as appropriate given the circumstances. The Committee is authorized to carry out these activities and other actions reasonably related to the Committee’s purposes or assigned by the Board from time to time.
The Committee may form, and delegate any of its responsibilities to, a subcommittee so long as such subcommittee is solely comprised or one or more members of the Committee.
To fulfill its purposes, the Committee shall:
1. Oversee and approve the Company’s overall compensation philosophy and policy;
2. Annually review and approve corporate goals and objectives relevant to the CEO’s compensation, including annual performance objectives;
3. Evaluate at least annually the performance of the CEO and other senior executives of the Company against corporate goals and objectives, including the annual performance objectives for the CEO and such executives, as the case may be, determine and approve the compensation level (including any discretionary incentive awards) based on this evaluation and, in the case of the CEO, report on the same to the other non-management directors. The Committee will review, as appropriate, any agreement or understanding relating to the CEO’s or such other senior executive’s employment, incentive compensation, or other benefits based on this evaluation. In determining the long-term incentive component of the CEO’s or such other senior executive’s compensation, the Committee will consider the Company’s performance and stockholder return, the value of similar incentive awards to CEOs or other comparable senior executives at comparable companies, and the awards given to the CEO in past years. The Committee will also consider the results of the most recent stockholder advisory vote on executive compensation required by Section 14A of the Exchange Act (“Say on Pay Vote”). The Board expressly delegates its authority over such matters to the Committee;
4. Review periodically and recommend to the Board, the compensation of all directors. Prior to the Committee making any recommendation to the Board for increased director compensation, the Committee’s independent compensation consultant shall provide to the Committee benchmarking information regarding “market” compensation for directors at the Company’s peer group;
5. Review annually any conflicts of interest raised by the work of compensation consultants engaged by the Committee and how any such conflicts are being addressed;
6. Review on a periodic basis the Company’s management compensation programs, including any management incentive compensation plans, to determine whether they are appropriate, properly coordinated and achieve their intended purposes(s), and recommend to the Board any appropriate modifications or new plans or programs. The Committee shall have and shall exercise all authority of the Board with respect to the administration of such plans;
7. Review the Company’s benefit plans, including pension or other retirement plans, severance plans, notice and non-compete agreements and any other plans and programs related to these matters as it deems reasonable and appropriate;
8. Review and approve all grants of awards, including the award of shares or options to purchase shares, pursuant to the incentive and equity-based compensation plans of the Company, provided, however, that the Committee may delegate to the Chief Executive Officer its authority to make equity grants as “sign-on” awards to new employees who are not deemed to be “executive officers” for purposes of Section 16 of the Exchange Act;
9. Review and discuss with management the Company’s Compensation Discussion and Analysis (“CD&A”) and related executive compensation disclosure required by SEC regulations and determine whether to recommend to the Board that such disclosure be included in the Company’s Annual Report on Form 10-K or proxy statement on Schedule 14A, as applicable;
10. Prepare the report of the Committee required to be included in the Company’s Annual Report on Form 10-K or proxy statement on Schedule 14A, as applicable, in accordance with applicable rules and regulations of the SEC and other applicable regulatory bodies;
11. Review and approve any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for the CEO and other senior executives of the Company, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans;
12. Determine stock ownership guidelines for the CEO and other senior executives and monitor compliance with such guidelines;
13. Review the Company's incentive compensation arrangements to determine whether they encourage excessive risk-taking; review and discuss at least annually the relationship between risk management policies and practices and compensation; and evaluate compensation policies and practices that could mitigate any such risk;
14. Review and recommend to the Board for approval the frequency with which the Company will conduct Say on Pay Votes, taking into account the results of the most recent stockholder advisory vote on frequency of Say on Pay Votes required by Section 14A of the Exchange Act, and review and approve the proposals regarding the Say on Pay Vote and the frequency of the Say on Pay Vote to be included in the Company's proxy statement;
15. Develop plans for the succession to the position of CEO, including policies regarding succession in the event of an emergency or the retirement of the CEO, and implementing appropriate oversight of the leadership talent development and succession planning for other senior officers of the Company;
16. Make regular reports to the Board on Committee findings and recommendations on any other matters the Committee deems appropriate or the Board requests;
17. Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval; and
18. Conduct an annual self-evaluation of the performance of the Committee, including its effectiveness and compliance with this Charter.
The Committee will meet as often as necessary to carry out its responsibilities. Meetings may be called by the Chairman of the Committee or a majority of the members of the Committee. Written minutes of each meeting will be duly filed in the Company records. Reports of meetings of the Committee will be made to the Board at its next regularly scheduled meeting. The Committee shall be governed by the same rules regarding meetings (including meetings in person or by telephone or other similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.
This Charter may be amended only by the affirmative vote of the Board.