Abaxis, Inc. Charter of the Compensation Committee of the Board of Directors
II. Organization and Membership Requirements
IV. Committee Authority and Responsibilities
This Charter specifies the scope of the responsibilities of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Abaxis, Inc. (the “Company”) and the manner in which those responsibilities shall be performed, including its structure, processes and membership requirements. The Committee may supplement or (except as otherwise required by applicable law or the requirements of the Nasdaq Stock Market (“Nasdaq”) deviate from these responsibilities as appropriate under the circumstances.
The primary purpose of the Committee is to discharge the Board’s responsibilities relating to compensation of the Company’s executive officers and directors. In carrying out these responsibilities, the Committee shall review all components of executive officer and director compensation for consistency with the Committee’s compensation philosophy as in effect from time to time.
The Committee is also responsible for reviewing and discussing with management the Company’s disclosures contained under the caption “Compensation Discussion and Analysis” (“CD&A”) for use in any of the Company’s annual reports on Form 10-K, registration statements, proxy statements or information statements and for producing an annual report on executive compensation for inclusion in the Company’s proxy statement, in accordance with applicable rules and regulations..
II. Organization and Membership Requirements
The Committee shall comprise at least three directors selected by the Board, each of whom shall satisfy (i) the independence requirements of Nasdaq applicable to compensation committee members, as in effect from time to time, when and as required by Nasdaq, including any exceptions permitted by these requirements, (ii) the “non-employee director” standard within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended from time to time and (iii) the “outside director” standard within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time.
The Committee shall not include any director who:
- accepts any consulting, advisory or other compensatory fee, directly or indirectly, from the Company or any subsidiary of the Company, other than in his or her capacity as a member of the Committee, the Board or any other committee of the Board;
- is an executive officer of the Company, or beneficially owns or controls, directly or indirectly, more than 10% of the Company’s outstanding common stock or is otherwise affiliated with the Company, any subsidiary of the Company or any affiliate of such subsidiary, in each case if the Board determines that such affiliation would impair the director’s judgment as a member of the Committee; or
- is employed as an executive officer by a company if the Chief Executive Officer or another executive officer of the Company serves on the compensation committee of such company.
The members shall be appointed by the Board and shall serve until their successors are duly elected and qualified or their earlier resignation or removal. Any member of the Committee may be replaced by the Board. Unless a chairman is elected by the Board, the members of the Committee may designate a chairman by the majority vote of the full Committee membership. The Committee may from time to time delegate duties or responsibilities to subcommittees or to one member of the Committee.
The Committee shall meet as often as it deems appropriate to review the compensation of the executive officers and directors of the Company, and otherwise perform its duties under this charter.
A majority of the members shall represent a quorum of the Committee, and, if a quorum is present, any action approved by at least a majority of the members present shall represent the valid action of the Committee. Any actions taken by the Committee during any period in which one or more members fail for any reason to meet the membership requirements set forth above shall be nonetheless duly authorized actions of the Committee for all corporate purposes.
The Committee shall maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board. The Committee will also record its summaries of recommendations to the Board in written form whenever requested by the Board, which will be incorporated as part of the minutes of the Board meeting at which those recommendations are presented.
IV. Committee Authority and Responsibilities
Each member of the Committee shall have full access to all books, records, facilities and personnel of the Company as deemed necessary or appropriate by such member to discharge his or her responsibilities hereunder, including human resources personnel preparing the CD&A for the Company’s reports to be filed with the SEC.
The Committee shall have the authority, in its sole discretion, to retain or obtain advice or assistance from compensation consultants, legal counsel, or accounting or other advisors (collectively, “Advisors”) as appropriate. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any such Advisor retained by the Committee. The Company shall provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to any such Advisor retained by the Committee. If and when required by the laws and rules applicable to the Company, before selecting, or receiving advice or assistance from, an Advisor, the Committee shall assess the independence of each such Advisor (other than in-house legal counsel), taking into account the following factors and any other factors required by Nasdaq or the SEC and corresponding rules that may be amended from time to time, including any exceptions permitted by such rules:
- the provision of other services to the Company by the Advisor’s employer;
- the amount of fees received from the Company by the Advisor’s employer, as a percentage of the total revenue of the employer;
- the policies and procedures of the Advisor’s employer that are designed to prevent conflicts of interest;
- any business or personal relationship of the Advisor with a member of the Committee;
- any stock of the Company owned by the Advisor; and
- any business or personal relationship of the Advisor or the Advisor’s employer with an executive officer of the Company.
Other reasonable expenditures for external resources that the Committee deems necessary or appropriate in the performance of its duties are permitted. The approval of this Charter shall be construed as a delegation of authority to the Committee with respect to the responsibilities set forth herein.
To fulfill its responsibilities and duties, the Committee shall be charged with the following functions and processes with the understanding, however, that the Committee may supplement or (except as otherwise required by applicable law or the requirements of Nasdaq) deviate from these activities as appropriate under the circumstances:
1. Determine all compensation of the Company’s executive officers (including the Chief Executive Officer) and directors as follows:
- Review and approve, after review and consultation with the other non-employee members of the Board and the Chief Executive Officer, all compensation for the executive officers, including incentive-based and equity-based compensation.
- Review and approve, after review and consultation with the other non-employee members of the Board and the Chief Executive Officer, annual performance objectives and goals relevant to compensation for the executive officers and evaluate the performance of the executive officers in light of these goals and objectives.
- Consider, in determining the long-term incentive component of compensation for the executive officers, the Company’s performance and relative shareholder return, the value of similar incentive awards to executive officers at comparable companies, and the awards given to the Company’s executive officers in past years.
- Develop or review and recommend to the Board for determination and approval the incentive-based or equity-based compensation plans in which the Company’s executive officers and employees participate.
- Approve all employment, severance, or change-in-control agreements, special or supplemental benefits, or provisions including the same, applicable to executive officers.
- Review and advise the Board concerning both regional and industry-wide compensation practices and trends in order to assess the adequacy and competitiveness of the Company’s compensation programs for the CEO, other executive officers and directors relative to comparable companies in the Company’s industry and geography.
- Review and recommend to the Board for determination and approval from time to time changes in director compensation.
Notwithstanding the foregoing provisions of this Section 1, the Chief Executive Officer shall not take part in, or be present during, any discussion, voting or deliberations regarding his own compensation. In addition, notwithstanding the foregoing provisions of this Section 1, Section 162(m) Compensation (as defined below) shall be determined and approved solely by the Committee, after review and consultation with the other non-employee members of the Board, and the Chief Executive Officer (except as it relates to his own compensation), as appropriate. “Section 162(m) Compensation” means compensation intended to qualify for the “performance-based compensation” exception of Section 162(m) of the Internal Revenue Code of 1986, as amended from time to time. Approval of Section 162(m) Compensation shall include but not be limited to, the establishment, evaluation and certification of achievement of performance goals related to cash or equity compensation.
2. The Committee shall review and discuss with management the Company’s disclosures contained under the caption “Compensation Discussion and Analysis” for use in any of the Company’s annual reports on Form 10-K, registration statements, proxy statements or information statements and make recommendations to the Board that the CD&A be approved for inclusion in the Company’s annual reports on Form 10-K, registration statements, proxy statements or information statements.
3. Prepare an annual report on executive compensation for inclusion in the Company’s proxy statement for the annual meeting of stockholders, in accordance with applicable rules and regulations.
4. Review on an annual basis, with the assistance of outside counsel, the Company’s equity incentive plans.
5. Perform such other activities consistent with this Charter, the Company’s Bylaws and governing law, as the Committee or the Board deems necessary or appropriate.
6. Make regular reports to the Board of Directors regarding the foregoing.
7. Review and reassess the adequacy of this Charter as appropriate (and at least as frequently as required by applicable law and Nasdaq requirements) and recommend any proposed changes to the Board for approval.