COMPENSATION COMMITTEE CHARTER
The role of the Compensation Committee (the "Committee") of the Board of Directors (the "Board") of Fossil, Inc. (the "Company") is to discharge the Board's responsibilities relating to compensation of the Company's executives, to produce an annual report on executive compensation for inclusion in the Company's proxy statement, and to oversee and advise the Board on the adoption of policies that govern the Company's compensation programs, including stock and benefit plans.
The membership of the Committee consists of at least two directors, all of whom shall (a) meet the independence requirements established by the Board and applicable laws, regulations and listing requirements, (b) be a "non-employee director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and (c) be an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code, as amended.
Members shall be appointed by the Board based on recommendations by the Company's Nominating and Corporate Governance Committee. Members shall serve at the pleasure of the Board and for such term or terms as the Board may determine.
The principal responsibilities and duties of the Committee are as follows:
- Review the competitiveness of the Company's executive compensation programs to ensure (a) the attraction and retention of executives, (b) the motivation of executives to achieve the Company's business objectives, and (c) the alignment of the interests of key leadership with the long-term interests of the Company's stockholders.
- Review and approve corporate goals and objectives relevant to the compensation of the Company's Chief Executive Officer ("CEO"), evaluate the CEO's performance in light of those goals and objectives, and determine, or recommend to the Board for determination, the CEO's compensation level based on this evaluation. In determining or recommending the long-term incentive component of CEO compensation, the Committee shall consider, among other factors, the Company's performance and relative stockholder return, the value of similar incentive awards to CEOs at comparable companies and the awards given to the CEO in past years.
- Determine, or recommend to the Board for determination, the compensation of all other executive officers of the Company.
- Review and discuss with the Board and executive officers plans for executive officer development and corporate succession plans for the CEO and other executive officers.
- Approve all stock option grants and other equity-related awards to all persons who are members of the Board and/or an "officer" of the Company as defined in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended.
- Discharge the responsibilities of the Board with respect to the Company's non-equity based incentive compensation plans for executive officers and equity-based plans, oversee the activities of the individuals and committees responsible for administering these plans, and discharge any responsibilities imposed on the Committee by any of these plans.
- Approve issuances under, or any material amendment of, any stock option or other similar plan pursuant to which a person not previously an employee or director of the Company, as an inducement material to the individual's entering into employment with the Company, will acquire stock or options.
- In consultation with management, oversee regulatory compliance with respect to compensation matters, including overseeing the Company's policies on structuring compensation programs to preserve tax deductibility, and, as and when required, establishing performance goals and certifying that performance goals have been attained for purposes of Section 162(m) of the Internal Revenue Code.
- Review and approve any severance or similar termination payments proposed to be made to any current or former executive officer of the Company.
- Discuss with management the Company's Compensation Discussion and Analysis ("CD&A") for the annual report on Form 10-K or proxy statement; based on the review and discussion, recommend to the Board that the CD&A be included in the Company's annual report on Form 10-K or proxy statement; and produce an annual Compensation Committee Report on executive compensation for inclusion in the Company's annual proxy statement in accordance with applicable SEC rules and regulations and relevant listing authority.
- Report to the Board on a regular basis, and not less than twice per year.
- Perform any other duties or responsibilities expressly delegated to the Committee by the Board from time to time relating to the Company's compensation programs.
Committee Structure and Operations
The Board shall designate one member of the Committee as its chairperson. The chairperson shall, if present, preside at all meetings of the Committee. In the event of a tie vote on any issue, the chairperson's vote shall decide the issue.
The Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.
The Committee shall meet at least twice a year, and perhaps more frequently, at regularly scheduled times and places determined by the Committee or its chairperson, with further meetings to occur, or actions to be taken by unanimous written consent, when deemed necessary or desirable by the Committee or its chairperson. The Committee may invite members of management, compensation consultants or other advisors to attend meetings and provide pertinent information; provided, however, the Committee may meet in executive session at its discretion.
The CEO may not be present during any voting or deliberations of the Committee regarding the CEO's compensation.
Delegation to Subcommittee
The Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee consisting of one or more members or to one or more designated members of the Committee.
The Committee shall prepare and review with the Board an annual performance evaluation of the Committee, which evaluation shall compare the performance of the Committee with the requirements of this charter. The performance evaluation shall also recommend to the Board any improvements to the Committee's charter deemed necessary or desirable by the Committee. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board may take the form of an oral report by the chairperson of the Committee or any other member of the Committee designated by the Committee to make this report.
Resources and Authority of the Committee
The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate, and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems reasonably appropriate, without seeking approval of the Board or management. 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.