Compensation Committee Charter

A. Management Development and Compensation Philosophy

The Management Development and Compensation Philosophy (The Philosophy) of Cascade Microtech ("Cascade" or "the Company") is designed to maximize shareholder value and serve the best interest of shareholders and employees, incorporating the following principles:

Compensation shall attract and retain highly qualified employees and stimulate their useful and profitable efforts on behalf of the Company;
Compensation shall be internally equitable and externally competitive;
Compensation shall be defined broadly and comprehensively.
Compensation shall be guided by, and seek to promote, the best interests of the Corporation and its shareholders.
Company Management shall be committed to the professional development of the Company's employees.

B. Purpose and Scope

The primary function of the Management Development and Compensation Committee (The Committee) is to assist the Board of Directors (the Board) in fulfilling its responsibilities with regard to oversight and determination of executive compensation in accordance with The Philosophy. It will accomplish this by: (i) reviewing, recommending and approving salaries and other compensation of the Corporation's executive officers; (ii) administering the Corporation's equity incentive and compensation plans, including reviewing, recommending and approving stock option and other equity incentive and compensation awards to executive officers; and (iii) reviewing, recommending and taking action upon any other compensation practices or policies of the Corporation as the Board may request or that the Committee may determine to be appropriate.

The secondary function of the Committee is to provide guidance and support to the Executive Management Team in its efforts to train and develop the management of Cascade Microtech.

C. Composition and Meetings

The Committee shall be comprised of at least three members of the Board as appointed by the Board, each of whom shall meet any independence requirements promulgated by the Securities and Exchange Commission, the National Association of Securities Dealers, any exchange upon which securities of the Corporation are traded, or any governmental or regulatory body exercising authority over the Corporation (each a "Regulatory Body"), and each member of the Committee shall be free from any relationship that, in the opinion of the Board, would interfere with the exercise of his or her independent judgment as a member of the Committee.

The members of the Committee shall be appointed by the Board annually. Each member of the Committee shall serve until his or her successor has been duly appointed and qualified or until his or her earlier resignation or removal. Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership.

The Committee shall meet as necessary to enable it to fulfill its responsibilities and duties as set forth herein. The Committee shall report its actions to the Board and keep written minutes of its meetings, which shall be recorded and filed with the books and records of the Corporation.

D. Responsibilities and Duties

To fulfill its responsibilities and duties the Committee shall:

Meet in executive session to develop a recommendation to the Board for the salary, bonus, benefits, and other matters relating to the compensation of the Chief Executive Officer of the Corporation. In determining the amount, form, and terms of such compensation, the Committee shall consider the annual performance evaluation of the CEO in light of the Corporation's goals and objectives relevant to CEO compensation, competitive market data pertaining to CEO compensation at comparable companies, and such other factors as it shall deem relevant, and shall be guided by The Philosophy.
Administer the annual performance plan and performance evaluation of the CEO.
Develop a recommendation to the Board for the salaries, bonuses, benefits and other matters relating to compensation of the executive officers of the Corporation. In determining the amount, form, and terms of such compensation, the Committee shall consider the officer's performance in light of the Corporation's goals and objectives relevant to executive compensation, competitive market data pertaining to executive compensation at comparable companies, the recommendations of the CEO, and such other factors as it shall deem relevant, and shall be guided by The Philosophy. The CEO and CFO of the Corporation may be present at meetings during which such compensation is under review and consideration but may not vote.
Review, consult and make recommendations regarding employee compensation and benefit plans and programs generally, including employee bonus, deferred compensation; and retirement plans and programs.
Administer the Corporation's equity incentive plans, including the review and grant of stock option and other equity incentive grants to executive officers.
Administer the Corporation's employee stock purchase plan.
Maintain a continuing review of significant organizational and restructuring events and changes that may impact compensation.
Review and make recommendations to the Board regarding the Annual Succession Planning Report from the CEO.
Review employment contracts and severance payments for the CEO's direct reports.
Establish guidelines for executive stock ownership.
Review and approve the Report of the Management Development and Compensation Committee on Executive Compensation to be included in the Corporation's annual proxy statement.
When appropriate, be authorized to designate one or more of its members to perform certain of its duties on its behalf, subject to such reporting to or ratification by the Committee as the Committee shall direct.
Annually review and reassess the adequacy of the Committee's charter and recommend any changes to the full Board.
Annually review the Committee's own performance and report its findings to the Board of Directors.
Take such other actions regarding the Corporation's compensation plans and policies as are in the best interests of the Corporation, and its shareholders, as the Committee shall consider appropriate or as shall be required by any Regulatory Body.

In fulfilling its responsibilities, the Management Development and Compensation Committee shall have the authority, and shall be afforded resources sufficient, to engage independent compensation consultants or legal advisers when determined by the Committee to be necessary or appropriate. The Management Development and Compensation Committee shall have sole authority to retain and terminate any such consultant or legal adviser, including sole authority to approve the fees and other retention terms.