Compensation Committee Charter
1. Purpose of the Committee
The purpose of the Compensation Committee (the “Committee”) is to assist the board of directors (the “Board”) of DXI Energy Inc. (the “Company”) in overseeing compensation and succession planning matters, including the Board’s responsibilities of:
- appointing, compensating and evaluating and planning for the succession of officers and other senior management personnel of the Company;
- approving the Company’s annual compensation budget;
- reviewing the Company’s indemnification policies and Directors and Officers Insurance on an annual basis; and
- review and approve the Committee’s annual reporting for the annual proxy statement and Annual Information Form.
2. Authority of the Committee
- The Committee has the authority to delegate to individual members or subcommittees of the Committee.
- The Committee has the authority, in its sole discretion, to engage or otherwise obtain the advice of, and to compensate, any outside compensation consultant, independent legal counsel or other advisor that it determines to be necessary or advisable to permit it to carry out its duties with the prior approval of the Board; provided, however, that the Committee may select a compensation consultant, legal counsel or other advisor to the Committee only after taking into consideration all relevant factors, including the following:
(i) the provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other advisor;
(ii) the amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other advisor, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other advisor;
(iii) the policies and procedures of the person that employs the compensation consultant, legal counsel or other advisor that are designed to prevent conflicts of interest;
(iv) any business or personal relationship of the compensation consultant, legal counsel or other advisor with a member of the Committee;
(v) any stock of the Company owned by the compensation consultant, legal counsel or other advisor; and
(vi) any business or personal relationship of the compensation consultant, legal counsel, other advisor or the person employing the advisor with an executive officer of the Company. Notwithstanding the prior sentence, the Committee is not required to conduct the assessment described therein with respect to
(i) inhouse legal counsel; and
(ii) any compensation consultant, legal counsel or other advisor whose role is limited to the following activities: consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company, and that is available generally to all salaried employees; or providing information that either is not customized for a particular company or that is customized based on parameters that are not developed by the compensation consultant, and about which the compensation consultant does not provide advice.
- For certainty, a compensation consultant, legal counsel or other compensation advisor is not required to be independent, so long as the Committee considers the enumerated independence factors before selecting or receiving advice from a compensation consultant, legal counsel or other compensation advisor. The Committee may select or receive advice from any compensation consultant, legal counsel or other compensation advisor they prefer, including ones that are not independent, after considering the six independence factors outlined in paragraph (b) above.
- The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, independent legal counsel or other adviser retained by the Committee.
- The Company shall provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, independent legal counsel or any other adviser retained by the Committee.
II. PROCEDURAL MATTERS
The Committee shall be composed of a minimum of 3 members.
2. Member Qualifications
- Every Committee member must be a director of the Company.
- Every Committee member must be affirmatively determined by the Board to be “independent” within the meaning of such term is in applicable securities legislation and stock exchange rules, including, without limitation, Rule 803A and Rule 805(c)(1) of the NYSE MKT Company Guide. For certainty, in determining the independence of members of the Committee, in addition to applying the director independence requirements of Section 803A of the NYSE MKT Company Guide, the Board shall have considered all factors specifically relevant to determining whether a director has a relationship to the listed company which is material to that director's ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (A) the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the Company to such director; and (B) whether such director is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company.
- All members of the Committee shall meet all requirements and guidelines for compensation committee service as specified in applicable securities and corporate laws and the rules of the Toronto Stock Exchange and NYSE MKT.
3. Member Appointment and Removal
Members of the Committee shall be appointed by the Board for such terms as the Board deems appropriate and shall hold office for such time or until they are removed by the Board or cease to be directors of the Company.
Members of the Committee shall be appointed from time to time and shall hold office at the pleasure of the Board.
Where a vacancy occurs at any time in the membership of the Committee, it may be filled by the Board on the recommendation of the Committee, and shall be filled by the Board, if the membership of the Committee falls below 3 directors.
4. Committee Structure and Operations
The Board shall appoint one member of the Committee to act as Chair of the Committee. The Chair of the Committee may be removed at any time at the discretion of the Board. If in any year, the Board does not appoint a Chair, the incumbent Chair will continue in office until a successor is appointed. If the Chair of the Committee is absent from any meeting, the Committee shall select one of the other members of the Committee to preside at that meeting.
The Chair of the Committee shall be considered a financial expert, having accounting or related financial management experience or expertise.
Notice of the time and place of every meeting may be provided by e-mail, fax or phone to each member of the Committee, the Chairman of the Board, the Chief Executive Officer (the “CEO”) of the Company and the Chief Financial Officer of the Company, a reasonable time prior to the time fixed for such meeting.
A majority of the members of the Committee shall constitute a quorum. No business may be transacted by the Committee except at a meeting of its members at which a quorum of the Committee is present in person or by means of a telephonic, electronic or other communication facility as deemed appropriate by the Chairman.
The Committee may invite such directors, officers and employees of the Company and the external auditors and advisors as it sees fit from time to time to attend meetings of the Committee and assist in the discussion and consideration of matters relating to the Committee. The Committee shall meet without management present whenever the Committee deems it appropriate.
The Committee Chair shall appoint a Secretary to the Committee who need not be a director or officer of the Company.
Minutes of meetings of the Committee shall be recorded and maintained by the Secretary to the Committee and shall be subsequently presented to the Committee for review and approval.
The Company’s Chief Financial Officer shall act as management liaison with the Committee.
5. Committee and Charter Review
The Committee shall conduct an annual review and assessment of its performance, effectiveness and contribution, including a review of its compliance with this Charter, in accordance with the process developed by the Board. The Committee shall conduct such review and assessment in such manner as it deems appropriate and report the results thereof to the Board.
The Committee shall also review and assess the adequacy of this Charter on an annual basis, taking into account all legislative and regulatory requirements applicable to the Committee, as well as any best practice guidelines recommended by regulators or the Toronto Stock Exchange.
6. Reporting to the Board
The Committee will regularly report to the Board on all significant matters it has considered and addressed and with respect to such other matters that are within its responsibilities, including any matters approved by the Committee or recommended by the Committee for approval by the Board. The Committee shall report to the Board on, at least, an annual basis, with respect to its meetings held. This report may take the form of circulating copies of the minutes of each meeting held.
The Committee is responsible for:
- reviewing the Company’s overall compensation philosophy;
- addressing matters related to compensation of the CEO;
- making recommendations to the Board with respect to non-CEO and director compensation, incentive-compensation plans and equity-based plans; and
- with respect to matters related to the Company’s pension plans; and
- reviewing executive compensation disclosure before the Company publicly discloses this information.
2. CEO Compensation
With respect to compensation of the CEO, the Committee is responsible for:
- reviewing and approving corporate goals and objectives relevant to CEO compensation;
- evaluating the CEO’s performance in light of those corporate goals and objectives; and
- determining, or making recommendations to the Board with respect to, the CEO’s compensation level based on this evaluation. The CEO may not be present during voting or deliberations regarding the CEO’s compensation.
In setting corporate goals and objectives relevant to CEO compensation, the Committee should consider both short-term and long-term compensation goals, including analysis of the short- and long-term tax, accounting, cash flow and dilution implications of the compensation package. The Committee is also responsible for reviewing and making recommendations to the Board regarding the position description for the CEO.
3. Annual Review of CEO Compensation
The Committee shall annually review and assess the competitiveness and appropriateness of the compensation package of the CEO. In conducting such review, the Committee shall consider:
- the compensation package of the CEO for the prior year;
- the Committee’s evaluation of the performance of the CEO;
- the Company’s performance and relative shareholder return, as well as other key measures of performance;
- whether the compensation package reflects an appropriate balance between salary and incentive compensation, as well as the mix between short- and longer-term incentives to improve performance of the Company;
- the competitiveness of the compensation package, including the value of similar incentive awards and benefits such as pensions and supplementary executive retirement plans, paid to equivalent officers and positions at comparable companies;
- the impact of the level and form of awards on the Company and its shareholders from a tax, accounting, cash flow and dilution perspective; and
- the awards given to the CEO.
4. Compensation of Senior Officers
With respect to compensation of senior officers (which term, for purposes of this Charter includes, “officers” of the Company as such term is used in Part 8 of the NYSE MKT Company Guide), the Committee is responsible for:
- recommending the process and criteria to be used to evaluate the performance of senior officers;
- reviewing and approving the performance evaluations of the Company’s senior officers; and
- determining, or making recommendations to the Board with respect to, approving the individual compensation packages for all other senior officers of the Company.
In consultation with the CEO, the Committee shall oversee the evaluation of the Company’s senior officers and shall determine, or make recommendations to the Board with respect to, the total compensation package for the Company’s senior officers other than the CEO.
The Committee should consider all forms of remuneration when determining the level of compensation paid to senior officers, including long-term incentives and benefits. The Committee should also consider information regarding other companies, the nature of the Company’s business, the need to obtain qualified individuals, short-term and long-term performance goals and actual performance and shareholder returns and evaluations and compensation in previous years.
5. Compensation of Directors
The Committee shall, on an annual basis:
- review the adequacy, amount and form of the compensation to be paid to each director;
- consider whether such compensation realistically reflects the time commitment, responsibilities and risks of the directors; and
- make recommendations to the Board thereon.
6. Incentive-Compensation Plans
The Committee is responsible for:
- With respect to incentive-compensation plans, the Committee is responsible for:
making recommendations to the Board with respect to the adoption and amendment of executive incentive-compensation plans; and
approving all senior officer incentive bonus plans and all awards under such plans.
- With respect to incentive-compensation plans, the Committee is responsible for:
reviewing and approving all of the Company’s long-term incentive plans, including changes to those plans;
reviewing and approving all payments made under the Company’s short and long-term incentive plans; and
reviewing and approving any senior officer change of control contracts, special benefits and any other senior officer financial arrangements or changes thereto.
7. Equity-Based Plans
With respect to equity-based plans, the Committee is responsible for periodically reviewing and making recommendations to the Board regarding equity-based compensation plans that the Company establishes for, or makes available to, its employees and/or consultants, including the designation of those who may participate in such plans, share and option availability under such plans and the administration of share purchases thereunder.
With respect to equity-based plans, the Committee is responsible for reviewing such plans and authorizing their use, and for determining the number of securities, and the terms thereof, that may be issued under any such plan during any particular period and for issuing or authorizing the issuance of such securities in accordance with the applicable plan.
In addition, the Committee shall review periodically the extent to which these forms of compensation are meeting their intended objectives, and shall make recommendations to the Board regarding modifications to more accurately relate such compensation to employee performance.
The Committee will conduct periodic reviews of the status of any equity-based plans, and submit recommendations for Board consideration and approval with respect to any proposed material amendments to, and any proposed grants (or changes to previous grants) under such plans.
With respect to disclosure, the Committee is responsible for:
- obtaining advice on and tracking disclosure requirements related to executive compensation disclosure;
- reviewing executive compensation disclosure information before the Company publicly discloses this information; and
- in particular, reviewing the “Executive Compensation” and “Indebtedness” sections and preparing the “Report on Executive Compensation” section of the management information circular (or similarly captioned disclosure).