Charter of the Compensation & Benefits Committee
Board of Directors of Penseco Financial Services Corporation
The Compensation and Benefits Committee (the “Committee”) of the Board of Directors (“Board”) of Penseco Financial Services Corporation (the “Company”) shall consist of at least three members each of whom, in the opinion of the Board of Directors, meets the independence requirements of The Nasdaq Stock Market (“Nasdaq”).
Membership on the Committee shall be determined annually by the Board. Unless a Chairman of the Committee is elected by the full Board, the members of the Committee may designate a Chairman of the Committee by majority vote of the full Committee membership. Should any member of the Committee cease to be independent, such member shall immediately resign his or her membership on the Committee. The Board of Directors may remove a member of the Committee at any time with or without cause. In the case of a vacancy on the Committee, the Board may appoint an independent director to fill the vacancy for the remainder of the term.
The Committee shall meet at such times and from time to time as it deems to be appropriate, but not less than once annually. Members of the Committee may attend a meeting by telephone conference, but not be compensated, unless determined by the Board. The Committee may request any officer or employee of the Company or the Company’s outside counsel or independent public accountants to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
Except as otherwise provided by statute or this Charter, a majority of the incumbent members of the Committee shall be required to constitute a quorum for the transaction of business at any meeting, and the act of a majority of the Committee members present and voting at any meeting at which a quorum is present shall be the act of the Committee. Minutes of each meeting of the Committee shall be reduced to writing. The Committee shall report to the Board at the first regular Board meeting following each such Committee meeting. The Committee may also act by unanimous written consent without a meeting.
In addition, compensation matters may be discussed in executive session or with the full Board during the course of the year.
II. COMPENSATION PHILOSOPHY
The Compensation Committee's compensation policies with respect to the company's employees are based on the principles that the compensation should, to a significant extent, be reflective of the financial performance of the Company and that a portion of the executive officers' compensation should provide long term incentives. The Committee seeks to have compensation set at levels that are sufficiently competitive so that the Company may attract, retain and motivate high quality employees to contribute to the Company's success. In assessing overall compensation, the Committee considers among other things the Company's performance and industry position and reviews compensation levels at comparable publicly-held companies.
The following functions are the common recurring activities of the Committee in carrying out its responsibilities. These functions are set forth as a guide with the understanding that the Committee may diverge from this guide as appropriate given the circumstances.
- Review and approve compensation policies and practices for the Company’s employees.
- Coordinate the Board’s role in establishing performance criteria for all employees and evaluate their performance annually.
- Review and approve the annual salary, bonus, and other benefits, direct and indirect, of the Company’s employees.
- Review and recommend to the Board new compensation programs; review periodically the operation of the Company’s compensation programs to determine whether they are properly coordinated and achieving their intended purpose(s); establish and periodically review policies for the administration of compensation programs; and take steps to ensure that the Company’s compensation programs comport with the Compensation Committee’s compensation philosophy stated above.
- Establish and periodically review policies in the area of senior management perquisites.
- Review and recommend to the Board the terms of any employment agreement executed by the Company.
- Review and recommend to the Board the appropriate structure and amount of compensation for the Directors.
- Review and approve material changes in the Company’s employee benefit plans.
- Administer the Company’s compensation programs for those employees involved at the senior management level, as well as for the remaining employees of the Company.
- As necessary, produce an annual Report of the Compensation Committee on Executive Compensation for the Company’s annual proxy statement in compliance with applicable rules and regulations.
- Review and reassess the adequacy of this Committee and its Charter periodically and recommend any proposed changes to the Board for consideration and approval.
The Committee will have the resources budgeted for it and authority necessary to discharge its duties and responsibilities. The Committee has authority to retain and terminate outside counsel, or other experts or consultants, subject to approval by the Board. The Committee will be provided with appropriate funding by the Company with a budget set by the Board, for the payment of compensation to the Company's outside counsel and other advisors, and ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention related to compensation matters. Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Committee will take all necessary steps to preserve the privileged nature of those communications.