NACCO INDUSTRIES, INC.
COMPENSATION COMMITTEE CHARTER
The Compensation Committee (the “Committee”) of the Boards of Directors of NACCO Industries, Inc. (“NACCO”) and its subsidiaries (NACCO and its subsidiaries hereinafter referred to collectively as the “Company”) establishes and oversees the administration of, or provides for the administration of, the Company’s policies, programs and procedures for compensating employees, including senior managers, executive officers and Directors. Among other things, the Committee has direct responsibility to:
- review and approve corporate goals and objectives relevant to Chief Executive Officer (“CEO”), non-CEO executive officer and senior manager compensation, evaluate the performance of the CEOs, non-CEO executive officers and senior managers in light of these goals and objectives, and determine and approve CEO, non-CEO executive officer and senior manager compensation levels based on this evaluation;
- make recommendations to the Board of Directors, where appropriate or required, and take other actions with respect to all other compensation matters that are subject to Board of Director approval, including incentive compensation plans and equity-based plans; and
- prepare a report on executive compensation for inclusion in the Company’s proxy statement for its annual meeting of stockholders in accordance with applicable rules and regulations.
Qualifications. The Committee will be comprised solely of Directors of the Company. Each Committee member must satisfy the applicable independence requirements set forth in the rules of the New York Stock Exchange (including the additional independence requirements set forth in New York Stock Exchange Listed Company Manual Section 303A.02(a)(ii)), unless the Company is determined by the Board of Directors to be a “controlled company,” as defined in NYSE Rule 303A.00. In addition, no person shall serve as a Committee member who does not qualify as both an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and satisfy the “non- employee” director standard contained in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended.
Appointment and Removal. The Board of Directors will appoint Committee members and will appoint a Chair of the Committee from among the Committee members. Each Committee member and Committee Chair will serve at the pleasure of the Board of Directors for such term as the Board may decide or until such Committee member is no longer a member of the Board of Directors.
Duties and Responsibilities
The duties and responsibilities of the Committee will include the following:
- Establish Compensation Policies and Programs. The Committee will develop and establish guidelines for the
administration of the Company’s compensation policies and programs for all employees, including senior managers, executive officers and Directors.
- Performance Evaluation and Compensation. The Committee will review and approve corporate goals and objectives relevant
to the compensation of NACCO’s CEO, as well as other executive officers and senior managers of the Company.
The Committee will evaluate the performance of NACCO’s CEO, as well as other executive officers and senior
managers of the Company in the light of those corporate goals and objectives and set compensation levels for NACCO’s CEO,
as well as the other executive officers and senior managers of the Company based on those evaluations and any other factors as it deems appropriate.
- Compensation Risk Analysis. The Committee will consider, at least annually, the extent to which the risks arising from
the compensation and practices for the Company’s employees are reasonably likely to have a material adverse effect on the Company as a whole.
- Equity-Based Plans. The Committee will make recommendations to the Board of Directors with respect to the approval,
adoption and amendment of all equity-based plans, including equity-based incentive compensation plans that are subject to
Board of Directors approval in which any executive officer of the Company participates. The Committee will be responsible for the
administration of, or providing for the administration of, all equity-based plans, and will approve all
grants of stock options and other equity-based awards, subject to the terms and conditions of applicable plans.
- Review Director Compensation. The Committee will periodically review Director compensation in the light of such factors as the
Committee may deem appropriate, and will make recommendations to the Board of Directors.
- Board Reports. The Committee will report its activities to the Board of Directors in such manner and at such
times as the Committee or the Board of Directors deems appropriate, but in no event less frequently than annually.
- Other Delegated Duties or Responsibilities. The Committee will discharge any other duties or
responsibilities delegated to the Committee by the Board of Directors from time to time.
The Committee will meet as frequently as it deems necessary to carry out its responsibilities under this Charter. The Committee Chair or a majority of the Committee members may call a meeting of the Committee at any time. A majority of the members of the Committee will constitute a quorum at any meeting, and the act of a majority of the members present at a meeting at which a quorum is present will be the act of the Committee, unless a greater number is required by law, the Company’s Certificate of Incorporation or its By-Laws. Any Committee member may be excused from a meeting to permit the remaining members of the Committee to act on any matter in which such member’s participation is not appropriate, and such member’s absence will not destroy the quorum for the meeting.
Consistent with applicable laws, rules and regulations, the Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to one or more subcommittees of the Committee or, in appropriate cases, to executive officers or senior managers of the Company.
Resources and Authority
The Committee, at its discretion, shall have the power to retain and/or obtain advice from one or more compensation consultants, which consultants shall be independent of management and in addition to any consultants that may have been retained by the Company, to assist the Committee in the evaluation of director, CEO, non-CEO executive officer and/or senior manager compensation. The Committee will have the sole authority to retain, obtain advice from and/or terminate any such compensation consultants and the sole authority to approve the fees and other retention terms of such compensation consultants. The Committee may also retain independent legal counsel and other advisors to assist it in carrying out its responsibilities. The Committee shall be directly responsible for the oversight of the work of any compensation consultant, independent legal counsel or other advisor retained by the Committee. The Company will provide the Committee appropriate resources to discharge these responsibilities, including, without limitation, appropriate funding, in such amounts as the Committee deems necessary, to compensate any compensation consultants, independent legal counsel and other advisors retained by the Committee.
In selecting, retaining or obtaining the advice of a compensation consultant, legal counsel or other advisor, the Committee will first consider all factors relevant to that person’s independence from management, including the following factors:
The provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other advisor;
The amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser,
as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
The policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
Any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee;
Any stock of the Company owned by the compensation consultant, legal counsel or other adviser; and
Any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the Company.
At least annually, the Committee will (a) review this Charter with the Board of Directors and recommend any changes to the Board of Directors and (b) evaluate its own performance against the requirements of this Charter and report the results of this evaluation to the Board of Directors. The Committee will conduct its review and evaluation in such manner as it deems appropriate.
Disclosure of Charter
Consistent with New York Stock Exchange listing requirements, this Charter is included on the Company’s website and is available upon request in writing sent to the Secretary of the Company. The Company’s annual report to stockholders states that this Charter is available on the Company’s website and is available upon request in writing sent to the Secretary of the Company.