Compensation Committee Charter
Purpose
The Compensation Committee (the “Committee”) is appointed by the Board of Directors (the “Board”) of Alterra Capital Holdings Limited (the “Company”) to: (1) discharge the Board’s responsibilities relevant to compensation of the Company’s Chief Executive Officer; (2) review, approve and determine other members of senior management remuneration, including compensation, incentive-compensation and equity-based compensation; (3) produce a Committee report on executive compensation and review the disclosures in the Compensation Discussion and Analysis as required by the United States Securities and Exchange Commission (the “Commission”) to be included in the Company’s annual proxy statement filed with the Commission; (4) administer the Company’s equity based compensation plans; (5) evaluate and make recommendation to the Board with respect to compensation for non-employee directors; and (6) have such other powers and perform such other duties as the Board may from time to time delegate to it.
Senior management is defined as any officer who is defined as a Section 16 officer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Committee Membership
The Committee shall be comprised of three or more directors, the exact number to be determined from time to time by resolution of the Board. Members of the Committee shall be appointed by the Board not less frequently than annually on the recommendation of the Nominating and Corporate Governance Committee, and may be replaced by the Board, with or without cause. The Board shall select the Chairperson of the Committee on the recommendation of the Nominating and Corporate Governance Committee. Each of the members of the Committee shall meet the independence requirements of the Nasdaq Stock Market Listing Rules and the rules and regulations of the Commission. In addition, each Committee member shall be a “Non-Employee Director” as defined by Rule 16b-3 under the Exchange Act, and an “outside director” as defined by Section 162(m) of the Internal Revenue Code (“Section 162(m)”). The Board may designate one or more independent directors who meet the requirements for membership on the Committee, as alternate members of the Committee who may replace any absent or disqualified member or members at any meetings of the Committee.
Committee Authority and Responsibilities
The Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate; provided, however, 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.
The Committee has the authority to retain and receive appropriate funding, as determined by the Committee and at the Company’s expense, for independent counsel and other advisers as it determines necessary or appropriate to carry out its duties, and for ordinary administrative expenses that are necessary or appropriate in carrying out its duties. The Committee may conduct or authorize studies of matters within the Committee’s scope of responsibilities, and may retain, at the expense of the Company, independent counsel or other consultants necessary to assist the Committee in any such studies.
The Committee shall have sole authority to retain and terminate any compensation consultant to be used to survey the compensation practices in the Company’s industry and to provide advice so that the Company can maintain its competitive ability to recruit and retain highly qualified executive officers. The Committee shall have the sole authority to negotiate and approve the fees and retention terms of any such compensation consultant retained.
In retaining independent counsel, compensation consultants and other advisors (other than in-house counsel), the Committee shall take into consideration factors identified by the Commission as affecting the independence of such advisors and any other factors identified in the Nasdaq Stock Market Listing Rules.
The Committee, to the extent it deems necessary or appropriate, shall:
- In consultation with senior management, establish and review the general compensation and benefits objectives, philosophies, policies and practices of the Company and its subsidiaries, including those with respect to incentive-compensation plans and equity-based plans.
- Oversee the administration of such policies, plans and programs and, on an ongoing basis, monitor them to assure that they remain competitive and within the compensation objectives for executive officers and such other members of senior management.
- Review and approve contractual employment and compensation arrangements with the Chief Executives Officer senior management and other persons whose compensation the Chief Executive Officer requests the Committee to review and affirm.
- Review and approve corporate goals and objectives relevant to the Chief Executive Officer’s compensation package, evaluate the Chief Executive Officer’s performance in light of those goals and objectives and based on this evaluation determine the Chief Executive Officer’s compensation level, including salary, bonus, incentive and equity compensation, as well as perquisites.
- In determining the long-term incentive component of the Chief Executive Officer’s compensation, consider all relevant factors, including:
(a) The Company’s performance and relative shareholder return;
(b) The value of similar awards to chief executive officers of comparable companies; and
(c) The awards given to the Chief Executive Officer of the Company in past years.
- Review and set the base salary and annual and long-term incentive compensation of senior management or persons whose compensation the Chief Executive Officer requests the Committee to review and affirm, in light of the goals and objectives of the Company’s executive compensation structure. To the extent that long-term incentive compensation is a component of such senior management or referred person's compensation, the Committee shall consider all relevant factors in determining the appropriate level of such compensation, including at least the factors applicable with respect to the Chief Executive Officer, as well as the Chief Executive Officer’s recommendation.
- Review and approve any severance or termination arrangements to be made with senior management.
- Review annually a report from management regarding material risks, if any, created by the Company’s compensation policies and practices, including compensation policies and practices for non-senior management.
- Upon recommendation of the Audit and Risk Management Committee, establish, review and approve compensation arrangements with the senior internal audit executive and establish guidelines for the compensation of the other internal audit staff. In performing these duties, the Committee shall act in such manner that the compensation paid to the internal audit function does not compromise the independence of such function.
- Review and discuss with management the disclosures made in the Compensation Discussion and Analysis, and recommend to the Board whether the Compensation Discussion and Analysis should be included in the Company’s Annual Report on Form 10-K and annual proxy statement.
- Prepare an annual executive compensation report for the shareholders of the Company in accordance with the rules and regulations of the Commission to be included in the Company’s annual proxy statement.
- Review the Company’s compensation practices and discern, at least annually, the relationship among risk, risk management and compensation in light of the Company’s objectives, including the avoidance of practices that encourage excessive risk taking.
- Discuss with management, reports from management relating to the Company’s regulatory compliance with respect to compensation matters and review the Company’s policy on tax deductibility of compensation paid to “covered employees” (as defined by Section 162(m)) and, as and when required, administer plans, establish performance goals and verify that such performance goals have been attained for purposes of Section 162(m).
- Review the results of advisory shareholder votes on compensation of named executive officers of the Company and consider whether to make any changes to the Company’s executive compensation policies and practices as a result thereof.
- Establish, review and approve policies that provide for the “clawback” of incentive-based compensation paid to current or former executive officers of the Company following a restatement of the Company’s financial statements due to material non-compliance of the Company with financial reporting requirements under the U.S. securities laws.
- Review and approve compensation for non-employee directors.
- Establish, review and approve guidelines for ownership of the Company’s shares by management or directors.
Meetings
The Committee shall meet as often as it determines, but not less frequently than annually. The Committee may request any officer or employee of the Company or the Company’s outside counsel to attend all or a portion of any meeting of the Committee and to provide such pertinent information as the Committee may request, or to meet with any members of, or consultants to, the Committee. Neither the Chief Executive Officer nor any other member of senior management may be present during voting or deliberations on the Chief Executive Officer’s compensation.
The Committee may meet by any means permitted by law and the Company’s Bye-laws. Two of the members of the Committee shall constitute a quorum. The Committee shall act on the affirmative vote of a majority of votes cast at a meeting at which a quorum is present. Subject to the Company’s Bye-laws, the Committee may act by unanimous written consent of all members in lieu of a meeting. The Committee shall determine its own rules and procedures, including designation of a chairperson pro tempore in the absence of the Chairperson, and designation of a secretary. The secretary need not be a member of the Committee and shall attend Committee meetings and prepare minutes. The Committee shall keep written minutes of its meetings, which shall be recorded or filed with the books and records of the Company. Any member of the Board shall be provided with copies of such Committee minutes if requested.
The Chairperson of the Committee shall be responsible for leadership of the Committee, including preparing the agenda, presiding over Committee meetings, making Committee assignments and regularly reporting the Committee’s actions to the Board.
Annual
Evaluation Procedures
The Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Committee shall annually evaluate the Committee’s own performance and report to the Board the results of its evaluation.
Limitation of Committee’s Role
Nothing contained in this Charter is intended to expand applicable standards of liability under statutory or regulatory requirements for the directors of the Company or members of the Committee. The purposes and responsibilities outlined in this Charter are meant to serve as guidelines rather than as inflexible rules and the Committee is encouraged to adopt such additional procedures and standards as it deems necessary from time to time to fulfill its responsibilities.
Adopted by the Compensation Committee and approved
by the Board of Directors on November 6, 2012.
