CHARTER OF THE HUMAN CAPITAL AND COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
(Approved January 24, 2013)
The Board of Directors (the “Board”) of PHH Corporation (the “Company”) has constituted and established a Human Capital and Compensation Committee (the “Committee”), with the authority and responsibility to ensure that:
- The executive compensation programs focus the Management Operating Committee (“MOC”) on sustainable shareholder value creation, and those programs reward MOC members commensurate with their value creation.
- The management of the Company’s human capital assets creates sustainable shareholder value through effective attraction, retention, organization, people development, employee benefits and other practices.
- The Company is properly managing the risks that may arise from the compensation and people management programs.
- The Directors compensation programs are aligned with sustainable shareholder value creation and market-competitive practice.
Committee Authority and Responsibility
The Committee will perform the following activities in meeting its responsibilities described above:
Review and Approve Compensation Philosophy
- Review and approve at least annually the Company’s stated compensation philosophy and strategy for all employees, and that compensation programs are developed consistent with that philosophy, so that those programs will appropriately reward MOC members and other employees for their contributions to Company growth, profitability and sustainable shareholder value creation.
Establish, Review and Approve Compensation Policies and Programs
- Establish, review, approve and modify all compensation arrangements and programs for the MOC, including salaries, bonuses, cash incentive plans, perquisites and equity-based compensation.
- Establish, review, approve and modify all severance and termination policies for all employees.
- Review and approve all proposed employment and retention agreements for MOC members.
- Review and approve all severance arrangements for MOC members that provide benefits in excess of those set forth in any severance and termination plans previously approved by the Committee or the Board.
- Review and approve the peer group used for benchmarking Named Executive Officer compensation, as well as the metrics used in determining relative performance for compensation purposes.
- Review the impact of compensation programs and payouts under Internal Revenue Code Section 162(m), in coordination with the Finance & Risk Management Committee.
Review and Approve MOC Member Compensation
- The Committee will:
- Set performance goals for annual incentive plans and performance-based equity awards granted to the Chief Executive Officer (“CEO”) and review and approve those goals for other MOC members.
- Evaluate the CEO’s performance based on previously-established goals and objectives, and recommend to the Board for final approval its determination of the Chief Executive Officer’s compensation based on such evaluation and such other factors as may be deemed appropriate and in the best interests of the Company.
- Review the Chief Executive Officer’s compensation recommendation for each MOC member based on the goals and objectives set for each person, and approve the compensation of each person based on such recommendation and such other factors as may be deemed appropriate and in the best interests of the Company.
- Consider, in determining the compensation of each MOC member, the Company’s performance, shareholder return and the value of compensation provided at comparable companies, and such other factors as the Committee deems appropriate and in the best interests of the Company.
- Approve the compensation packages for all newly-hired MOC members prior to their start date.
Determine and Recommend Directors Compensation
- The Committee shall review at least annually and recommend to the Board for final approval its determination of the amount and elements of the compensation provided to the non-executive Directors..
- This review shall include information relating to market-competitive Directors compensation practices.
Share Ownership and Retention
- The Committee shall determine, as appropriate, share retention and ownership guidelines for all employees who receive equity compensation, and any modifications to such guidelines, and shall periodically review compliance with such guidelines.
- The Committee shall further recommend to the Board for final approval share retention and ownership guidelines for non-executive Directors.
Executive Succession Planning and Leadership Development
- The Committee shall review and recommend to the Board for final approval the development and implementation of executive succession planning and leadership development programs.
- The Committee shall recommend to the Board for final approval determination of internal potential candidates for CEO succession, the evaluation of those candidates, and their developmental activities.
Human Capital Management
The Committee shall provide advice and guidance to management in its development and implementation of broad-based employee performance management programs.
Risk and Compensation Review
- The Committee shall review and approve, at least annually, a compensation risk assessment to be prepared by the Company’s management, and modifications to the compensation programs based on the results of the risk review.
- The Committee shall review and approve an analysis prepared by the Company’s management of all incentive plans which consists of a stress test demonstrating the maximum payouts under the incentive plans, and any subsequent changes to those plans.
- The Committee shall coordinate with the designated Board Committee on risk to review the relationship between the Company’s compensation programs and business risk.
Review and Approve Employee Benefit Plans
- The Committee shall review and approve the design of all the Company’s employee benefit plans and the Committee will appoint members to the Employee Benefits Committee, which may be by functional title.
- The Committee shall serve as the granting and administrative committee for any stock option or equity-based plans of the Company; provided, that, subject to the Company’s By-laws, applicable law, stock exchange listing standards, and the terms of each applicable plan, the Committee may delegate to one or more officers of the Company the authority to make grants and awards (other than grants and awards to any officer of the Company subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under such of the Company’s incentive compensation or other equity-based plans as the Committee deems appropriate and in accordance with the terms of such plans.
- The Committee shall approve the equity grants for all employees, including new hires, taking into account potential dilution.
- The Committee shall review and discuss with the Company’s management the Compensation Discussion and Analysis (“CD&A”) section of the Company’s annual proxy statement, as well as the tabular data, and determine whether it recommends that the CD&A be included in the Company’s proxy statement relating to the Company’s annual meeting to shareholders.
- The Committee shall prepare a compensation committee report to be included in the Company’s annual proxy statement to the extent required by applicable law.
- The Committee shall consist of not less than three members, each of whom shall be “independent” directors within the meaning of the Company’s corporate governance guidelines and any applicable stock exchange listing standards. Members of the Committee shall also meet the definition of “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (provided, that any inadvertent non-compliance shall not impair the authority of the Committee or the validity of any actions taken by the Committee.)
- Each member of the Committee shall be appointed by the Board upon the recommendation of the Corporate Governance Committee of the Board. The members of the Committee may be removed by a majority vote of the Board at any time.
- The members of the Committee shall select a Chair who will preside at each meeting of the Committee.
- The Committee may form and delegate authority to subcommittees or the Chair of the Committee as appropriate and in accordance with the Company’s By-laws and applicable laws, regulations or stock exchange listing standards.
The Committee shall review shareholder proposals that relate to matters within the scope of the Committee’s responsibilities, and make recommendations to the Board regarding such proposals.
Reporting to the Board
- The Committee shall report to the Board periodically and at least at the next regularly scheduled meeting following a Committee meeting. This report shall include a review of any recommendations or issues that arise with respect to Company compensation and benefits policies overseen by the
Committee, MOC compensation, and any other matters that the Committee deems appropriate or is requested to be included by the Board.
- At least annually, the Committee shall evaluate its own performance and report to the Board on such evaluation.
- The Committee shall, at least annually, review and assess this Charter and recommend any proposed changes to the Board for approval.
Consistent with New York Stock Exchange listing standards, this Charter will be included on the Company’s website and will be made available in print, free of charge, upon request or sent to the Company’s Corporate Secretary. The Company’s annual proxy statement will state that this Charter is available on the Company’s website and will be made available in print, free of charge, upon request sent to the Company’s Corporate Secretary.
- The Committee shall meet as often as it determines is appropriate. The Chair of the Committee, in consultation with the other Committee members and management, shall determine the frequency and length of the Committee meetings and shall determine meeting agendas consistent with this Charter. 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.
- The Committee is authorized to retain legal and other advisors as it determines necessary to carry out its duties, has direct and unrestricted access to any officer or employee of the Company, or the Company’s outside counsel, and may solicit any support or assistance as needed, as well as require them to meet with any members of, or advisors to, the Committee.
- Without limiting the foregoing, the Committee has the sole authority to retain and terminate any compensation consultant assisting the Committee in carrying out its responsibilities under this Charter, including sole authority to approve all such compensation consultants’ fees and other retention terms, and provide oversight to the consultant’s work. This authority includes a review, at least annually, of the performance of each compensation consultant engaged by the Committee, the fees of each such consultant for services provided to the Committee and to the Company, and any actual or potential conflicts of interest involving any such consultants. Notwithstanding this paragraph, the Committee is not required to engage any such consultant, nor require that only consultants that have no conflicts of interest advise the Committee.
- Before selecting a compensation consultant, legal counsel or other adviser, the Committee will take into consideration the following factors, none of which is determinative, to assess whether there are any actual or potential conflicts of interest involving any such consultants or other advisers:
- The provision of other services to the Company by the adviser’s employer;
- The amount of fees received from the Company by the adviser’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 adviser with a member of the Committee;
- Any Company stock owned by the adviser;
- Any business or personal relationship of the adviser or the adviser’s employer with an executive officer of the Company; and
- Any other factor that the Committee deems relevant.