CHARTER FOR THE EXECUTIVE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF KINDRED HEALTHCARE, INC.
Mission Statement
The Executive Compensation Committee (the “Committee”) is appointed to fulfill the Board of Directors’ responsibility to the shareholders, potential shareholders, and investment community to ensure that the Company’s key executives, officers and Board members are compensated in accordance with the Company’s overall compensation policies and executive compensation policy. The Committee shall recommend and approve compensation policies, programs, and pay levels that are necessary to support the Company’s objectives and that are rational and reasonable to the value of the services rendered.
Organization
The Committee shall be comprised of at least three directors. Each member of the Committee shall meet the independence and any other requirements under applicable laws and regulations and the rules of the New York Stock Exchange or such other exchange upon which the Company’s securities are principally traded. The members of the Committee shall be appointed and removed by the Board. The Board of Directors also shall designate a Committee Chairperson. The Committee shall meet at least three times annually and shall report to the Board of Directors on its findings and matters within the scope of its responsibility.
A quorum at any Committee meeting shall be a majority of the members. All determinations of the Committee shall be made by a majority of its members present at a meeting duly called and held, except as specifically provided herein (or where only two members are present, by unanimous vote). Any decision or determination of the Committee reduced to writing and signed by all of the members of the Committee shall be fully as effective as if it had been made at a meeting duly called and held. The Chairperson of the Committee shall be responsible for establishing the agendas for meetings of the Committee. An agenda, together with materials relating to the subject matter of each meeting, shall be sent to the members of the Committee prior to the meeting. The Committee shall maintain minutes of all of its meetings to document its activities and recommendations. The Committee shall review and reassess this Charter at least annually or more frequently as conditions dictate and recommend changes it considers appropriate to the Board for approval. A copy of the current version of this Charter shall be posted on the Company’s website. The Committee shall annually review its own performance.
Committee Authority and Responsibilities
The Committee’s policies should remain flexible to react to changing conditions and to ensure that the Board of Directors and shareholders that (1) the achievement of the overall goals and objectives of the Company can be supported by adopting an appropriate compensation policy and implementing it through an effective total compensation program, and (2) the total compensation program of the Company is designed with full consideration of all accounting, tax, securities laws, and regulatory requirements and is of the highest quality.
The Committee shall:
- Review and approve the overall compensation program along with an executive
compensation program. The executive compensation program should (1) motivate
and retain executive officers, (2) award the achievement of short-term
and long-term performance goals, (3) establish an appropriate relationship
between executive pay and short-term and long-term performance, and (4)
align executive officers’ interests with those of the Company’s
shareholders.
- Review and approve the annual base salary level, annual incentive opportunity
levels, long-term incentive opportunity levels, equity-based compensation
plans, executive perquisites, employment agreement, change in control
agreement, benefits, and supplemental benefits of the chief executive
officer of the Company. In determining the long-term incentive component
of chief executive officer compensation, the Committee will consider the
Company’s performance and relative shareholder return, the value
of similar incentive awards to chief executive officers at comparable
companies, and the awards given to the chief executive officer in past
years.
- Review and approve the annual base salary levels, annual incentive
opportunity levels, long-term incentive opportunity levels, equity-based
compensation plans, executive perquisites, employment agreements, change
in control agreements, benefits, and supplemental benefits of the named
executive officers as required under applicable securities laws, and,
where appropriate, the other key executives of the Company. The chief
executive officer of the Company may be present at the Committee meetings
where such matters are reviewed and approved.
- Evaluate annually the compensation levels of the chief executive officer
and other key executives against (1) pre-established performance goals
and objectives, and (2) an appropriate peer group.
- Review and assess performance goals established for a plan year and
determine when performance goals have been achieved at the end of the
plan year.
- Administer the compensation plans of the Company for the chief executive
officer, named executive officers, and, where appropriate, other key officers
and employees and review and approve awards under such plans as recommended
by Company management.
- Review and recommend for approval new incentive plans to the Board
of Directors that are consistent with the overall compensation program,
and monitor the appropriateness of payouts under alternative business
scenarios.
- Review the retirement plans of the Company and the results of the retirement
plan investments for compliance with the Company’s overall compensation
policies, tax law, the Employment Retirement Income Security Act of 1974
(ERISA), and related legal requirements.
- The Committee shall have the sole authority to retain and terminate
any compensation consultant to be used to assist in the evaluation of
the compensation package for directors, the chief executive officer, or
the other senior executives and shall have sole authority to approve the
consultant’s fees and other retention terms. The Committee also
shall have authority to obtain advice and assistance from internal or
external legal, accounting or other advisors.
- Review and approve outside directors’ compensation (retainers,
fees, benefit plans, equity awards, and perquisites) as recommended by
Company management.
- Keep abreast of current developments in executive compensation outside
the Company.
- Submit the minutes of all meetings of the Committee to, or discuss
the matters discussed at each Committee meeting with, the Board of Directors.
- Review and discuss the Compensation Discussion and Analysis section
proposed for inclusion in the Company’s Annual Report on Form 10-K
and annual proxy statement with management and, based upon such review
and discussion, recommend to the Board of Directors whether such section
should be included in such Annual Report and proxy statement.
- Furnish a report of the Committee for inclusion in the Company’s
Annual Report and proxy statement as required by applicable law.
- Take any other actions necessary or advisable from time to time to comply with applicable laws and regulations and all applicable listing standards.
