Compensation Committee Charter
CHARTER FOR THE COMPENSATION COMMITTEE OF STAGE STORES, INC.
(As of January 25, 2012)
CHARTER FOR THE COMPENSATION COMMITTEE
OF
STAGE STORES, INC.
(January 25, 2012)
I. DESCRIPTION AND PURPOSE
A. Description
The Compensation Committee (the “Committee”) is a standing committee of the Board of Directors (the “Board”) of Stage Stores, Inc. (the “Company”).
B. Purpose
The Committee’s primary purpose is to administer the cash salary, bonus and other incentive compensation programs for the current and future Executive Officers of the Company, as the term Executive Officer is defined in this Charter. In addition, the Committee’s purposes include (i) review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO's performance in light of those goals and objectives, and, either as a committee or together with the other Independent Directors, as defined below (as directed by the Board), determine and approve the CEO's compensation level based on this evaluation; (ii) make recommendations to the Board with respect to non-CEO executive officer compensation, and incentive-compensation and equity-based plans that are subject to Board approval; and (iii) prepare the disclosure required by Item 407(e)(5) of Regulation S-K (Compensation Committee Report) and/or such other disclosure as may be required by applicable SEC rule or regulation.
II. COMPOSITION OF THE COMMITTEE
The Committee shall consist of at least three members, comprised solely of Independent Directors, as that term is defined below.
III. DEFINITIONS
A. Executive Officer
As used in this Charter, “Executive Officer” means the Company’s president, chief operating officer, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice president of the Company in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function, or any other person who performs similar policy-making functions for the Company, in all cases including officers of the Company’s subsidiaries if they perform policy making functions for the Company.
B. Independent Director
As used in this Charter, “Independent Director” means a member of the Board who does not have a material relationship with the Company, including any of its subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). A director is not independent if:
1. The director is, or has been within the last three years, an employee of the Company, or an Immediate Family Member is, or has been within the last three years, an Executive Officer of the Company;
2. The director has received, or has an Immediate Family Member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);
3. (A) The director is a current partner or employee of a firm that is the Company’s internal or external auditor; (B) the director has an Immediate Family Member who is a current partner of such a firm; (C) the director has an Immediate Family Member who is a current employee of such a firm and personally works on the Company’s audit; or (D) the director or an Immediate Family Member was within the last three years a partner or employee of such a firm and personally worked on the Company’s audit within that time.
4. The director or an Immediate Family Member is, or has been within the last three years, employed as an Executive Officer of another company where any of the Company’s present Executive Officers at the same time served on that company’s compensation committee; or
5. The director is a current employee, or an Immediate Family Member is a current Executive Officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues. In applying this test, both the payments and the consolidated gross revenues to be measured shall be those reported in the last completed fiscal year of such other company. The look-back provision for this test applies solely to the financial relationship between the Company and the director or Immediate Family Member’s current employer; the Company need not consider former employment of the director or Immediate Family Member.
For purposes of independence, any three year look back periods commence on the date the relationship ceases.
An “Immediate Family Member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home.
IV. MEETINGS
The Committee shall meet as frequently as circumstances require, but in any event a minimum of twice each year. The Committee may ask members of management or others to attend meetings and may provide pertinent information to them, as the Committee deems necessary. Minutes shall be taken for each Committee meeting and shall be approved at the next meeting of the Committee.
V. RESPONSIBILITIES AND DUTIES
The Committee’s primary responsibilities and duties are as follows:
1. review and evaluate the performance and approve the compensation of the Company’s Executive Officers;
2. review and approve the terms and conditions of written employment agreements for Executive Officers;
3. provide oversight of all cash compensation, equity compensation, benefits and perquisites for the entire officer population;
4. review and monitor equity incentive plans as well as any pension, profit sharing and benefit plans;
5. oversee the Company’s compensation policies and practices for all employees, including non-executive officers, so that they do not create risks that are reasonably likely to have a material adverse affect on the Company; and
6. oversee the Board’s annual performance evaluation of the Company’s Chief Executive Officer using a process consistent with that set forth in the Company’s Corporate Governance Guidelines.
The Committee’s responsibilities and duties also include the following:
- review and recommend to the Board the annual salary, bonus, equity incentive awards and other benefits, direct and indirect, to be paid to the Executive Officers of the Company;
2. 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 and achieving their intended purposes; establish and periodically review policies for the administration of executive compensation programs; and take steps to modify any executive compensation program that yields payments and benefits that are not reasonably related to executive and corporate performance of peer businesses;
3. establish and periodically review policies in the area of Executive Officer perquisites;
4. review and monitor the Company's equity incentive plans and any other employee pension, profit sharing and benefit plans, taking into account the importance of retaining and incentivizing the employee assets of the Company as well as the overall cost to the Company of such programs;
5. review and recommend to the Board director and officer insurance coverage;
6. review the Compensation Discussion and Analysis and approve the Compensation Committee Report to be included in the Company’s proxy statement for its annual shareholders meeting;
7. review, approve and administer any other matters or plans specifically delegated to the Committee by the Board;
8. conduct an annual performance evaluation of the Committee, unless one is conducted by the Board’s Corporate Governance and Nominating Committee; and
9. review and reassess the adequacy of this Charter on an annual basis.
VI. COMPENSATION OBJECTIVES AND PRINCIPLES
The objectives of the Company’s compensation program are as follows:
- to enable us to recruit, motivate and retain the executive talent required to successfully manage and grow our business and to achieve our short and long-term business objectives;
- to maximize the long-term commitment of our Executive Officers to our success by providing compensation elements that align their interests and our shareholders in that the compensation elements are directly related to our stock performance and other financial metrics that the Committee believes influence the creation of long-term shareholder value; and
- to reward our Executive Officers upon the achievement of short-term and long-term business objectives and enhanced shareholder value.
The principles of the Company’s compensation program are as follows:
- Compensation arrangements shall emphasize pay-for-performance and encourage retention of those executive officers who enhance the Company’s performance;
- Compensation arrangements shall maintain an appropriate balance between base salary and annual and long-term incentive compensation;
- Cash incentive compensation plans for the Company’s Executive Officers shall link pay to achievement of goals set in advance by the Committee;
- The Committee shall set annual and long-term performance goals for the Chief Executive Officer and evaluate his or her performance against those goals on an absolute basis as well as related to the performance of the Company’s Peer Group and the Company’s Performance Group;
- Compensation arrangements shall align the interests of the Company’s Executive Officers with those of shareholders;
- In the event minimum thresholds for annual and long-term performance goals are not met, incentive compensation related to those goals shall not be paid;
- It is the policy of the Board that the Company should not reprice or swap stock options granted to Executive Officers, directors and employees without shareholder approval;
- The Committee shall meet at least once each year in executive session, without the Chief Executive Officer;
- The Chief Executive Officer is not permitted to be present during deliberations and voting regarding his compensation. While the Chief Executive Officer may be present during deliberations and voting on other Executive Officers’ compensation, the Chief Executive Officer makes recommendations, but does not vote on their compensation;
- The compensation of the Chief Executive Officer and other Executive Officers shall be recommended to the Board for final approval by the Committee comprised solely of Independent Directors; and
- In approving compensation, the recent compensation history of the Executive Officer, including special or unusual compensation payments, and all forms of compensation to which the Executive Officer may be entitled, shall be taken into consideration using tally sheets or other comparable tools the Committee deems appropriate.
VII. COMPENSATION CONSULTANTS, INDEPENDENT LEGAL COUNSEL AND OTHER ADVISERS
The Committee has the authority, in its sole discretion, to retain, from time to time and at the Company’s expense, a professional compensation consulting firm to review the Company’s Executive Officer compensation program including, but not limited to, a review of those “performance based” compensation programs in light of Section 162(m) of the Internal Revenue Code, and to approve the consulting firm’s fees and other retention terms The Committee is directly responsible for the appointment, compensation and oversight of the work of any compensation consultant retained by the Committee. The decision to retain a compensation consultant is at the sole discretion of the Committee and the compensation consultant works at the direction of the Committee.
The Committee has the authority, in its sole discretion, to retain, from time to time and at the Company’s expense, independent legal counsel and other advisers. The Committee is directly responsible for the appointment, compensation and oversight of the work of any independent legal counsel and other advisers retained by the Committee.
VIII. COMPENSATION COMMITTEE REPORT
To the extent required by statute or regulation to be contained in the Company’s Form 10-K, proxy statement on Schedule 14A, or information statement on Schedule 14C, the Committee shall review the Compensation Discussion and Analysis and prepare a Compensation Committee Report (the “Report”). In addition to any other disclosure required by applicable SEC regulation to be contained in the Report, the Committee must state in the Report whether:
1. The Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of SEC Regulation S-K with management; and
2. Based on the review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K, proxy statement on Schedule 14A, or information statement on Schedule 14C.
The name of each member of the Committee shall appear below the disclosure required by this Article VIII.
IX. WEBSITE POSTING AND DISCLOSURE
The Company shall make this Charter available on or through its website. The Company shall disclose in its annual proxy statement or, if it does not file an annual proxy statement, in its annual report on Form 10-K filed with the SEC, that this Charter is available on or through its website and provide the website address.