The Board
of Directors (the “Board”) of Particle Drilling
Technologies, Inc. (the “Company”) has established
the Compensation Committee (the “Committee”) with
the authority, responsibilities and specific duties as
described in this Charter.
Purpose
The
purposes of the Committee are to:
1.
Evaluate
and approve the Company’s compensation plans,
agreements, policies and programs;
2.
Produce an
annual report on executive compensation as required by
the Securities and Exchange Commission’s rules and
regulations;
3.
Otherwise
discharge the Board’s responsibilities relating to
compensation of the Company’s directors and officers;
and
4.
Perform
such other functions as the Board may assign to the
Committee from time to time.
Committee
Membership
The
Committee shall consist of no fewer than two members,
all of whom shall be members of the Board. One of the
Committee members shall serve as the chairperson
(the “Chair”) of the Committee. Each member of the
Committee shall satisfy the independence requirements of
applicable federal law.
The Board,
based on the recommendation of the Nominating Committee,
shall annually appoint the members of the Committee, and
the Committee members shall serve until the annual
meeting of the Board following the next annual meeting
of the shareholders of the Company. The Board may
replace Committee members. The Board, based on the
recommendation of the Nominating Committee, shall
designate the Chair of the Committee or, if no such
designation is made, the Chair shall be selected by the
affirmative vote of the majority of the Committee.
Committee
Authority and Responsibilities
The
Committee is delegated all the authority of the Board as
may be required or advisable to fulfill the purposes of
the Committee. The Committee may form and delegate
authority to subcommittees when appropriate. Without
limiting the generality of the preceding statements, the
Committee shall have authority, and is entrusted with
the responsibility, to take the following actions:
1.
The
Committee shall annually review and approve corporate
goals and objectives relevant to the compensation of the
Company’s Chief Executive Officer (the “CEO”), evaluate
the CEO’s performance in light of those goals and
objectives, and have the sole authority to set the CEO’s
compensation levels based on this evaluation. In
determining the long-term incentive component of the
CEO’s compensation, the Committee shall consider the
Company’s performance and relative shareholder return,
the value of similar incentive awards to chief executive
officers at comparable companies, and the awards given
to the CEO in past years.
2.
The
Committee shall also annually review and set (i) the
compensation levels for all other senior executives of
the Company, including annual base salary, bonus and
long-term incentive compensation, (ii) the annual bonus
pool for those employees of the Company other than its
senior executives, and (iii) the annual long-term
incentive compensation pool for those employees of the
Company other than its senior executives. In determining
the compensation arrangements and components, the
Committee shall consider the Company’s performance and
relative shareholder return, the value of similar
incentive awards to officers and employees at comparable
companies, and the awards given to the Company’s
officers and employees in past years.
3.
The
Committee shall annually review and make recommendations
to the Board with respect to all incentive-compensation
plans and equity-based plans.
4.
The
Committee shall periodically review and approve, for the
CEO and the senior executives of the Company, employment
agreements, severance arrangements, change in control
agreements/provisions, and any special or supplemental
benefits, in each case as, when and if appropriate.
5.
The
Committee shall have the sole authority to retain and
terminate any compensation consultant to be used to
assist in the evaluation of director, CEO or senior
executive compensation and shall have sole authority to
approve the consultant’s fees and other retention terms.
The Committee shall also have authority to obtain advice
and assistance from internal or external legal,
accounting or other advisors, without consulting or
obtaining the approval of any officer of the Company in
advance.
6.
The
Committee shall review and make recommendations to the
Board with respect to the form and amount of director
compensation.
7.
Each year,
the Committee shall prepare a report on executive
compensation and publish the report as required by the
Securities and Exchange Commission’s rules and
regulations. The report, which shall be made over the
name of each member of the Committee, shall include any
disclosures required by the Securities and Exchange
Commission’s rules and regulations.
Procedures
1.
Meetings.
The
Committee shall meet at the call of its Chair, two or
more members of the Committee, or the Chairman of the
Board. Meetings may, at the discretion of the Committee,
include members of the Company’s management, independent
consultants, and such other persons as the Committee or
its Chair may determine. The Committee may meet in
person, by telephone conference call, or in any other
manner in which the Board is permitted to meet under law
or the Company’s bylaws.
2.
Quorum and
Approval. A majority
of the members of the Committee shall constitute a
quorum. The Committee shall act on the affirmative vote
of a majority of members present at a meeting at which a
quorum is present. The Committee may also act by
unanimous written consent in lieu of a
meeting.
3.
Rules.
The
Committee may determine additional rules and procedures,
including designation of a Chair pro tempore in
the absence of the Chair, at any meeting
thereof.
4.
Reports.
The
Committee shall make regular reports to the Board,
directly or through the Chair.
5.
Review of
Charter. Each year,
the Committee shall review and reassess the adequacy of
this Charter and recommend any proposed changes to the
Board for approval.
6.
Performance
Review. Each year,
the Committee shall review and evaluate its own
performance and shall submit itself to the review and
evaluation of the Board.
7.
Fees.
Each member
of the Committee shall be paid the fee set by the Board
for his or her services as a member of, or Chair of, the
Committee.
