Compensation Committee Framework

COMP COMMITTEE FUNDAMENTALS

Compensation Committee Role

COMPENSATION COMMITTEE FUNDAMENTALS

PURPOSE:
☐ Ensure competitive, fair executive compensation
☐ Align compensation with company strategy
☐ Manage equity programs responsibly
☐ Protect shareholder interests
☐ Ensure appropriate governance

AUTHORITY:
☐ CEO compensation: Recommend to full board
☐ Other executives: Direct approval (typically)
☐ Equity grants: Within delegated authority
☐ Bonus plans: Design and approve
☐ Consultants: Engage independently

COMPOSITION REQUIREMENTS:
☐ All independent directors
☐ No management members
☐ At least 2-3 members
☐ One with comp experience preferred
☐ No conflicts of interest

KEY RELATIONSHIPS:
☐ CEO: Subject of review, provides input on team
☐ CFO: Financial data, modeling support
☐ HR/People: Compensation data, administration
☐ Comp consultant: Benchmarking, advice
☐ Legal: Compliance, documentation

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ANNUAL CALENDAR

Compensation Committee Annual Activities

COMPENSATION COMMITTEE CALENDAR

Q1 (JANUARY-MARCH):
Annual Compensation Review:
☐ CEO performance evaluation
☐ CEO compensation decision
☐ Executive compensation review
☐ Annual bonus payouts
☐ Next year base salary decisions
☐ Market benchmarking review

Q2 (APRIL-JUNE):
☐ Q1 performance check-in
☐ Equity refresh grants (if annual)
☐ New hire grants (ongoing)
☐ Mid-year bonus forecast
☐ Compensation consultant check-in

Q3 (JULY-SEPTEMBER):
☐ Mid-year performance review
☐ Updated benchmarking data
☐ Equity pool status review
☐ Next year planning begins
☐ Peer group review

Q4 (OCTOBER-DECEMBER):
☐ Preliminary next year planning
☐ Bonus plan design
☐ Equity plan assessment
☐ Year-end grant timing
☐ Committee self-assessment
☐ Charter review

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MEETING CADENCE:
Minimum: Quarterly (4x/year)
Typical: 5-6 meetings
Additional: As needed for offers/grants

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EXECUTIVE COMPENSATION

Executive Compensation Review Process

EXECUTIVE COMPENSATION REVIEW

COMPENSATION PHILOSOPHY (Define First):
☐ Target percentile: ___th (e.g., 50th, 75th)
☐ Cash vs. equity mix
☐ Short-term vs. long-term incentives
☐ Performance linkage
☐ Internal equity considerations

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ANNUAL REVIEW PROCESS:

Step 1: Performance Assessment
☐ Review company performance
☐ Review individual performance
☐ Gather 360 feedback (for CEO)
☐ Document accomplishments

Step 2: Market Benchmarking
☐ Obtain updated benchmark data
☐ Review peer group relevance
☐ Analyze each compensation element
☐ Identify gaps vs. target

Step 3: Compensation Decisions
☐ Base salary adjustment
☐ Target bonus percentage
☐ Bonus payout (vs. plan)
☐ Equity grant (refresh)
☐ Special adjustments

Step 4: Documentation
☐ Committee approval
☐ Board approval (CEO)
☐ Offer letters/amendments
☐ File documentation

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COMPENSATION ELEMENT ANALYSIS:

| Element | Current | Market | Target | Change |
|---------|---------|--------|--------|--------|
| Base | $____ | $____ | $____ | +/-__% |
| Bonus Target | ___% | ___% | ___% | +/-__% |
| Bonus Actual | $____ | n/a | $____ | __% of target |
| Equity (Annual) | $____ | $____ | $____ | +/-__% |
| Total Cash | $____ | $____ | $____ | +/-__% |
| Total Comp | $____ | $____ | $____ | +/-__% |

CEO Compensation Review

CEO COMPENSATION REVIEW

UNIQUE CONSIDERATIONS:
☐ CEO sets tone for company
☐ Board-level decision
☐ Requires more rigorous process
☐ External scrutiny (increasingly)
☐ Retention criticality

REVIEW PROCESS:

1. Performance Evaluation
☐ Board evaluates CEO (annually)
☐ Written assessment
☐ 360 feedback from team (optional)
☐ Self-assessment from CEO

2. Benchmarking
☐ CEO-specific peer group
☐ Multiple data sources
☐ Consider company performance
☐ Size/stage adjustments

3. Committee Recommendation
☐ Committee discusses independently
☐ Prepares recommendation
☐ Documents rationale
☐ Presents to full board

4. Board Approval
☐ Executive session discussion
☐ Board vote
☐ Documentation

5. Communication
☐ Chair communicates to CEO
☐ Offer letter/amendment
☐ Positive, forward-looking

CEO PERFORMANCE DIMENSIONS:
| Dimension | Rating (1-5) | Comments |
|-----------|--------------|----------|
| Strategic leadership | | |
| Financial performance | | |
| Team building | | |
| Culture/values | | |
| Board relationship | | |
| External representation | | |
| Overall | | |

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EQUITY GRANTS

Equity Grant Approval Process

EQUITY GRANT MANAGEMENT

GRANT TYPES:
☐ New hire grants
☐ Promotion grants
☐ Refresh/retention grants
☐ Performance grants
☐ Special recognition

APPROVAL AUTHORITY:
CEO grants: Full board approval
Executive grants: Committee approval
Other grants: Delegated to CEO (within bands)

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GRANT APPROVAL PROCESS:

Step 1: Request Submitted
Requestor: Manager or HR
Information required:
☐ Employee name and role
☐ Grant type and reason
☐ Proposed shares/value
☐ Benchmark comparison
☐ Internal equity analysis

Step 2: CEO Review (Non-Executive)
☐ Approve/modify/deny
☐ Document rationale
☐ Queue for next committee

Step 3: Committee Review (Executives)
Materials provided:
☐ Grant summary
☐ Benchmark data
☐ Individual context
☐ Pool status

Step 4: Approval
☐ Committee discussion
☐ Resolution passed
☐ Minutes documented

Step 5: Grant Execution
☐ Legal prepares documents
☐ Grant entered in cap table
☐ Employee signs agreement
☐ Grant date recorded

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GRANT DOCUMENTATION:

| Field | Value |
|-------|-------|
| Employee | |
| Role | |
| Grant date | |
| Grant type | |
| Shares | |
| Strike price | |
| Vesting | |
| Cliff | |
| Committee approval | |
| Resolution # | |

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DOCUMENTATION

Compensation Committee Documentation

COMP COMMITTEE DOCUMENTATION

MEETING DOCUMENTATION:

Minutes:
☐ Date, attendees, quorum
☐ Agenda items discussed
☐ Decisions made
☐ Votes recorded
☐ Action items

Resolutions:
☐ Compensation approvals
☐ Grant approvals
☐ Plan adoptions
☐ Consultant engagement

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ANNUAL DOCUMENTATION:

☐ Committee charter (reviewed)
☐ Compensation philosophy (reaffirmed)
☐ CEO compensation decision memo
☐ Executive compensation summary
☐ Grant summary report
☐ Benchmarking analysis
☐ Self-assessment

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CONFIDENTIALITY:

☐ Compensation highly sensitive
☐ Limit distribution
☐ Secure storage
☐ Board portal only
☐ No personal email

Compensation Committee Effectiveness

Dimension	Score (1-10)	Notes
Independence
Process rigor
Market awareness
Documentation
Time management

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