PATHEON N.V. Charter of the Compensation and Human Resources Committee

Transcription

1 PATHEON N.V. This charter governs the operations of the Compensation and Human Resources Committee (the Committee ) of the Board of Directors (the Board ) of Patheon N.V. (the Company ) and is adopted on the basis of Rule 11.1 of the Rules of the Board. Capitalized terms used but not defined in this Committee Charter shall have the meaning given to such terms in the Rules of the Board. I. PURPOSE OF THE COMMITTEE The purposes of the Committee shall be to oversee the compensation and employee benefit plans and practices of the Company and its subsidiaries, including, without limitation, the following objectives: a) The Committee shall monitor, evaluate and, where necessary, make recommendations to the Board for purposes of ensuring that policies and programs relating to executive and director compensation are: (i) appropriate in light of individual executive responsibility and performance and the achievement of the Company s objectives; and (ii) will permit the Company to attract and retain the services of experienced and highly qualified executives and members of the Board. b) The Committee shall review and approve, or recommend to the Board for approval, the employment contract and compensation arrangements with the Company s Chief Executive Officer ( CEO ), the executive officers and senior management of the Company. c) The Committee shall ensure that there are effective succession plans in place for the CEO and other senior executives of the Company. d) The Committee shall oversee the Company s compensation and employee benefit plans and practices, including its executive compensation plans, and its incentive-compensation and equity-based plans. e) The Committee shall oversee and monitor the management and overall governance of the pension and retirement plans sponsored and administered by the Company. II. COMPOSITION OF THE COMMITTEE 2.1 Membership The Committee shall consist of three (3) or more non-executive Directors as determined from time to time by the Board. Each member of the Committee shall be qualified to serve on the Committee pursuant to the requirements of the New York Stock Exchange (the NYSE ), and any additional requirements that the Board deems appropriate. Members of the Committee shall also 1 P a g e

2 qualify as non-employee directors within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act ), as amended, and at least two (2) members shall qualify as outside directors within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended. In accordance with the rules of the NYSE, if the Company ceases to be a controlled company as defined therein, at least one member of the Committee shall meet the NYSE s independence requirements applicable to compensation committees on the date the Company ceases to be a controlled company (the Compliance Date ), a majority of the Committee s members shall meet the NYSE s independence requirements within 90 days of the Compliance Date and all Committee members shall meet the NYSE s independence requirements within twelve (12) months of the Compliance Date (and, in any event, no later than the timeframe imposed by applicable law and regulations). 2.2 Chair The Board shall designate one (1) of the members of the Committee as chairperson. 2.3 Annual Appointment of Members The appointment of members of the Committee and the designation of its chairperson shall take place annually at the first (1 st ) meeting of the Board after a meeting of the shareholders at which Directors are elected. Any vacancy on the Committee shall be filled by majority vote of the Board at the next meeting of the Board following the occurrence of the vacancy. No member of the Committee shall be removed except by majority vote of the Board. III. MEETINGS OF THE COMMITTEE 3.1 Meetings The Committee shall meet as often as it determines necessary to carry out its duties and responsibilities, but no less than twice annually. The Committee, in its discretion, may ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary. Notwithstanding the foregoing, the Committee may also exclude from its meetings any persons it deems appropriate, including, but not limited to, any non-management director that is not a member of the Committee. The time and place of the meetings of the Committee and the calling of meetings and the procedure in all things at such meetings shall be determined by the Committee so long as such procedures are not inconsistent with any provisions of the Company s Articles of Association or Board rules that are applicable to the Committee. 2 P a g e

3 3.2 Quorum A majority of the members of the Committee present in person or by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other shall constitute a quorum. 3.3 Minutes The Committee shall maintain minutes of its meetings and records relating to those meetings and provide copies of such minutes to the Board. 3.4 Consultants The Committee shall have the sole authority, as it deems appropriate, to retain (or obtain the advice of) and/or replace, as needed, any legal counsel, compensation and benefits consultants and other outside experts or advisors as the Committee believes to be necessary or appropriate. For the avoidance of doubt, the Committee may also utilize the services of the Company s regular legal counsel or other advisors to the Company. Prior to engaging a compensation consultant, legal counsel or other advisor, the Committee shall evaluate whether any work provided by the compensation consultant, legal counsel or other advisor will raise a conflict of interest and shall consider the factors listed under Exchange Act Rule 10C-1(b)(4)(i) through (vi) in making such determination. Nothing herein requires a compensation consultant, legal counsel or other advisor to be independent, only that the Committee consider the relevant independence factors before selecting or receiving advice from a compensation consultant, legal counsel or other advisor. If the Company ceases to be a controlled company as defined in NYSE rules, the Company shall comply with any applicable NYSE listing standards regarding the assessment, selection, retention, oversight and funding of such compensation and benefits consultants, independent counsel, experts and other advisors. The Company shall provide for appropriate funding, as determined by the Committee in its sole discretion, for payment of compensation to any such persons retained by the Committee. IV. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE 4.1 Responsibilities Relating to Compensation The duties and responsibilities of the Committee shall include the following: a) Review, evaluate and make recommendations to the Board, as necessary, at least annually, regarding the compensation philosophy of the Company to ensure it promotes shareholder interests, supports the Company s long-term strategic objectives, goals and interests and provides appropriate rewards and incentives for management and employees of the Company, including a review and periodic assessment of the material risks associated with the Company s compensation structure, policies and programs generally for all employees; 3 P a g e

4 b) Evaluate annually the performance of the CEO in light of the goals and objectives of the Company s executive compensation plans, and, either as a Committee or a subset of the Committee comprised of the outside directors, determine and approve, or make a recommendation to the Board for approval, the CEO s compensation level based on this evaluation. In determining the long-term incentive component of the CEO s compensation, the Committee shall consider factors as it determines relevant, which may include, for example, the Company s performance and relative shareholder return, the value of similar awards to chief executive officers of comparable companies, and the awards given to the CEO of the Company in past years. The Committee shall approve the CEO s compensation or submit a recommendation to the Board regarding the CEO s compensation for determination by the Board in line with the policy adopted by the General Meeting; c) Evaluate annually the performance of the executive officers of the Company (excluding the CEO) in light of the goals and objectives of the Company s executive compensation plans, and, either as a Committee or a subset of the Committee comprised of the outside directors, determine and approve, or make a recommendation to the Board for approval, the compensation of such executive officers. To the extent that long-term incentive compensation is a component of such executive officer s compensation, the Committee shall consider all relevant factors in determining the appropriate level of such compensation, including the factors noted above applicable with respect to the CEO; d) Review, periodically, the fees and other compensation arrangements in place for members of the Board and Committee service by non-employee directors to ensure that they are competitive for the purpose of attracting and retaining the services of experienced and highly qualified independent directors and, where appropriate, recommend to the Board any amendments to such fees and compensation arrangements; e) Review and, if appropriate, approve, the CEO s recommendation with respect to the compensation of senior management (excluding the CEO and the Company s other executive officers) and report as appropriate to the Board thereon (and it shall be within the authority of the CEO to review and, if appropriate, approve the compensation of personnel at levels below the CEO s direct reports); f) Review and, if appropriate, approve (i) the establishment of an annual cash incentive plan for the executive officers (including the CEO) and senior management of the Company; (ii) an amendment to any existing annual cash incentive plan, including the amendment of any performance criteria thereunder; (iii) any payment under an existing annual cash incentive plan; and (iv) any other discretionary annual cash incentive payment and report as appropriate to the Board thereon; 4 P a g e

5 g) Assure itself that the Company s executive and director compensation programs have been administered in accordance with their terms; h) Consider the results of the most recent shareholder advisory vote on executive compensation as required by Section 14A of the Exchange Act and, to the extent the Committee determines it appropriate to do so, take such results into consideration in connection with the review and approval of executive officer compensation; i) Review and discuss annually with management the Company s Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K under U.S. securities laws (the CD&A ), and based on such review, determine whether to recommend to the Board that the CD&A be included in the Company s annual report on Form 10-K, proxy statement or information statement, as applicable, and similarly review, discuss and determine whether to recommend the inclusion of any information related to compensation in the management reports required to be filed in The Netherlands in accordance with Dutch law; j) To the extent it deems necessary, review and approve the terms of any compensation clawback or similar policy or agreement between the Company and the Company s executive officers or other employees subject to Section 16 of the Exchange Act; k) Prepare the Compensation Committee Report in accordance with the rules and regulations of the Securities and Exchange Commission (the SEC ) for inclusion in the Company s annual proxy statement or annual report on Form 10-K; l) Perform such duties and responsibilities as may be assigned to the Board or the Committee under the terms of any executive compensation plan; m) Review perquisites or other personal benefits to the Company s executive officers and directors and recommend any changes to the Board; n) Review all other executive compensation disclosure before it is delivered to the Company s shareholders or filed with applicable regulatory authorities or with the NYSE; and o) Perform such other functions as are required pursuant to applicable law, including applicable rules and regulations of the NYSE and the SEC. Notwithstanding anything to the contrary herein, the Committee or a subset of the Committee comprised of the outside directors shall have sole discretion and authority with respect to any action regarding compensation payable to the CEO or other executive officers of the Company that the Committee intends to constitute qualified performance-based compensation for purposes of section 162(m) of the Internal Revenue Code of 1986, as amended and the Treasury Regulations promulgated thereunder. 5 P a g e

6 4.2 Responsibilities Relating to Succession Plan The Committee shall review, at least annually, the succession plans for the CEO and other senior executives of the Company and shall provide any recommendations to the Board as appropriate. 4.3 Responsibilities Relating to each Plan of the Company The Committee shall be responsible for the administration of each compensation of employee benefit plan of the Company and shall consider and recommend to the Board any amendments to each such plan which the Committee considers necessary or desirable from time to time. It shall, from time to time, designate the persons who are considered eligible persons, eligible directors, or participants (as defined by the applicable plan of the Company) and shall approve or recommend to the Board for approval the grant of options, share appreciation rights, restricted shares, restricted share units, share bonuses, other share-based awards, cash awards (and shares to be covered by such amounts) to such eligible persons, eligible directors, or participants, as applicable, from time to time. 4.4 Responsibilities Relating to Retirement and Pension Plans The Committee shall be responsible for the oversight, monitoring, management and overall governance of the pension and retirement plans of the Company. In respect of the foregoing, the Committee shall, based on any recommendations of management or any subcommittee established by the Committee: a) Oversee and review the investment and funding policies, procedures, guidelines, strategies, structures, objectives, and the general operation and administration of the pension and retirement plans; b) Review and approve, as appropriate, reports from management or any subcommittee established by the Committee on the actuarial status, contribution policies and investment performance of the pension and retirement plans; c) Review and approve material changes to each pension and retirement plan s Statement of Investment Policies and Procedures or comparable policy; and d) Review and approve material amendments to the pension and retirement plans. The Committee is expressly permitted to delegate the foregoing responsibility for the oversight, monitoring, management and overall governance of the pension and retirement plans to the respective governing bodies of any Company subsidiary to which such pension or retirement plan is applicable or to a committee comprised of officials of the Company or any of its subsidiaries. 6 P a g e

7 4.5 Authority Except as otherwise provided in this charter or by resolution of the Board, the Committee shall have the authority to make recommendations to the Board, but shall have no decision-making authority. The Committee may form subcommittees for any purpose that the Committee deems appropriate and has the authority to delegate to such subcommittees such power and authority as the Committee deems appropriate; provided, however, that no subcommittee shall consist of fewer than two (2) members; and provided further that the Committee shall not delegate to a subcommittee any power or authority required by any law, regulation or listing standard to be exercised by the Committee as a whole. 4.6 Consultation with the Board The chairperson shall report to the Board following meetings of the Committee at the Board s next meeting (and as otherwise requested by the Chairman of the Board) on the proceedings of any meeting of the Committee, all recommendations to the Board made by the Committee at such meeting and any approvals given by the Committee at such meeting. V. GENERAL 5.1 Annual Review of the Committee The Committee shall, no less frequently than annually, evaluate its performance. In conducting this review, the Committee shall evaluate whether this Charter appropriately addresses the matters that are or should be within its scope and shall recommend such changes as it deems necessary or appropriate. The Committee shall address all matters that the Committee considers relevant to its performance, including at least the following: the adequacy, appropriateness and quality of the information and recommendations presented by the Committee to the Board, the manner in which they were discussed or debated, an overview of the compensation policy planned by the Committee for the next financial year and the subsequent years, and whether the number and length of meetings of the Committee were adequate for the Committee to complete its work in a thorough and thoughtful manner. The Committee shall deliver to the Board a report, which may be oral, setting forth the results of its evaluation, including any recommended amendments to this Charter and any recommended changes to the Company s or the Board s policies or procedures. 7 P a g e