Compensation Committee Charter
A. Management Development and Compensation Philosophy
The Management Development and Compensation Philosophy ("The Philosophy") of Cascade Microtech (the "Company") is designed to maximize shareholder value and serve the best interests 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 Company 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 Company's executive officers; (ii) administering the Company'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 Company 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 Company are traded, or any governmental or regulatory body exercising authority over the Company (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 Company.
D. Responsibilities and Duties
To fulfill its responsibilities and duties the Committee shall:
- Develop a recommendation to the Board for the salary, bonus, benefits, and other matters relating to the compensation of the Chief Executive Officer ("CEO") of the Company. 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 Company'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. The CEO shall not be present during any Committee deliberations or voting with respect to his or her compensation.
- 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 Company. In determining the amount, form, and terms of such compensation, the Committee shall consider the officer's performance in light of the Company'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 Chief Financial Officer of the Company 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 Company's equity incentive plans, including the review and grant of stock option and other equity incentive grants to executive officers.
- Administer the Company'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 Company'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.
- Take such other actions regarding the Company's compensation plans and policies as are in the best interests of the Company and its shareholders, as the Committee shall consider appropriate or as shall be required by any Regulatory Body.
The Committee shall have the authority, in its sole discretion, to retain and terminate (or obtain the advice of) a compensation consultant, independent legal counsel or other adviser ("Compensation Adviser") to assist the Committee with the discharge of its duties under this charter. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any Compensation Adviser retained by the Committee. The Company shall provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to any Compensation Adviser engaged by the Committee.
The Committee may select a Compensation Adviser only after taking into consideration all factors relevant to that person's independence from management, including the following:
- The provision of other services to the Company by the person that employs the Compensation Adviser.
- The amount of fees received from the Company by the person that employs the Compensation Adviser, as a percentage of the total revenue of the person that employs the Compensation Adviser.
- The policies and procedures of the person that employs the Compensation Adviser that are designed to prevent conflicts of interest.
- Any business or personal relationship of the Compensation Adviser with a member of the Committee.
- Any stock of the Company owned by the Compensation Adviser.
- Any business or personal relationship of the Compensation Adviser or the person employing the Compensation Adviser with any executive officer of the Company.
After considering the independence factors outlined above, the Committee may select, or receive advice from, any Compensation Advisers it prefers, including ones that are not independent. [The Committee is not required to conduct the independence assessment outlined above for in-house counsel or any Compensation Adviser whose role is limited to the following activities: (i) consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company, and that is available generally to all salaried employees; and/or (ii) providing information that either is not customized for a particular company or that is customized based on parameters that are not developed by the Compensation Adviser, and about which the Compensation Adviser does not provide advice.]
If the Committee determines that the work performed by a Compensation Advisor retained by the Committee has raised any conflict of interest, the Committee shall disclose to the Board the nature of such conflict of interest and how it is being addressed. In determining whether a conflict of interest exists, the Committee shall consider the six factors described above [and the other requirements of Item 407(e)(3)(iv) of Regulation S-K].