Compensation Committee Charter
PURPOSEThe purpose of the Compensation Committee (the "Committee") of the Board of Directors of FNB Bancorp (the "Company") is to assist in discharging the Board's responsibilities relating to compensation for directors, officers, and key management personnel of the Company and its subsidiary, First National Bank of Northern California (the “Bank”). The Committee shall have the authority and responsibilities described in this Compensation Committee Charter (“Charter”).
COMMITTEE MEMBERSHIPThe Committee shall be composed of three (3) members who shall be selected by the Board of Directors from among its own members, none of whom shall be an officer or employee of the Company or the Bank. The members shall serve on the Committee at the pleasure of the Board of Directors. Each Committee member shall, in the opinion of the Board of Directors, qualify as an “Independent Director” as defined in NASDAQ Listing Rule 5605(a)(2). Each Committee member shall also be an "outside director" for the purpose of Section 162(m) of the Internal Revenue Code and a "non-employee director" for the purpose of Rule 16b-3 of the Securities Exchange Act of 1934. The Committee shall appoint one of its members to serve as the Chairperson.
COMMITTEE AUTHORITY AND RESPONSIBILITIESThe Committee is charged with responsibility for oversight of the Company's Executive Compensation Policy, as set by the Board of Directors from time to time, and for determining whether directors, officers and key management personnel of the Company are compensated with salary, supplemental and incentive compensation and benefits that are reasonable, equitable, competitive and consistent with the Executive Compensation Policy.
The Committee reviews and evaluates the compensation of and benefits provided to the Company's Chief Executive Officer and all other executive officers at least annually, and the Committee reports to the Board of Directors and makes recommendations based on that review and evaluation. The Chief Executive Officer shall not be present during Committee voting or deliberations on his compensation.
Any executive officer of the Company who also serves as a member of the Board of Directors of the Company and/or the Bank shall abstain from voting on executive compensation decisions made by the Board of Directors, including decisions based on any Committee recommendations made with respect to Thomas C. McGraw, Chief Executive Officer of the Company and the Bank; Jim D. Black, President of the Company and the Bank; Anthony J. Clifford, Executive Vice President and Chief Operating Officer of the Company and the Bank; and David A. Curtis, Chief Financial Officer of the Company and the Bank (collectively referred to in this Charter as the “Senior Executive Officers”). Consistent with the foregoing, the Committee has the following authority and responsibilities:
- The Committee shall review and approve corporate goals and objectives relevant to the compensation of the Senior Executive Officers, evaluate the performance of the Senior Executive Officers in light of those goals and objectives, and set the level of each Senior Executive Officer's compensation based on that evaluation. In determining the long-term incentive component of a Senior Executive Officer's compensation, the Committee will consider the Company's performance and relative shareholder return, the effectiveness of risk management strategies utilized during the year, the value of similar incentives to the senior executive officers of comparable companies, and the awards given to the Senior Executive Officers in prior years.
- The Committee shall review any and all compensation plans of the Company and the Bank, including executive cash incentive plans, salary continuation agreements, management continuity agreements, deferred compensation plans, the 410(k) savings (profit sharing) plan and the Company's stock option plans. Recommendations for changes, amendments or adjustments to any of these plans shall be submitted to the full Board of Directors for discussion and/or approval. The Committee may periodically review the Company’s succession plans relating to the positions held by the Senior Executive Officers and may make recommendations to the Board of Directors regarding the process for selecting the individuals to fill those positions.
- The Committee shall review and provide advice on: (a) base salaries, (b) employee benefits, and (c) all other elements of compensation for the management of the Company and the Bank.
- The Committee shall evaluate the Executive Compensation Policy at least annually to ensure that there are no unreasonable incentives for short term performance gains at the expense of long-term benefits for the Company or the Bank or that could provide an incentive to manipulate earnings.
- The Committee shall review and recommend compensation to be paid to the Company's directors.
- The Committee shall review compliance with all applicable compensation laws, rules and regulations, including the rules and regulations and disclosure requirements of the Securities and Exchange Commission (the “SEC”), the Office of the Comptroller of the Currency, the U.S. Department of the Treasury and the Internal Revenue Service.
- The Committee shall have the authority, at the expense of the Company, at any time, to engage, consult with and terminate any legal or consulting firm as considered by the Committee to be reasonably necessary in order to properly advise the Committee on compensation for the Company's directors and executive officers, including the authority to approve the fees and other retention terms of any such firm. The Committee may request any officer or employee of the Company, or the Company's outside counsel or other consultants, to attend a meeting of the Committee or to meet with any members of, or a consultant to, the Committee.
- Annually, the Committee shall prepare and issue a “Compensation Committee Report” on executive officer compensation (as required by the rules and regulations and disclosure requirements of the Securities and Exchange Commission) to be included in management's proxy statement for the annual meeting of shareholders and the Company’s annual report on Form 10-K.
- The Committee shall conduct an evaluation of the performance of the Committee annually, and review and reassess the adequacy of this Charter at least annually and submit any recommended changes to the Board of Directors for review and approval.
- The Committee may form one or more subcommittees of the Committee and may delegate any of the above authority and responsibilities to a subcommittee, whenever and as the Committee may deem appropriate.
COMPENSATION CONSULTANTSThe Committee also has the following specific authority and responsibilities:
The Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser. In furtherance of this authority, the Committee shall have authority to retain and terminate any such adviser and to approve the adviser's compensation and the terms and conditions applicable to the services of the adviser.
The Committee shall be directly responsible for the oversight of the work of any compensation consultant, legal counsel and other adviser retained by the Committee.
The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the Committee.
The Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Committee, other than in-house legal counsel, only after taking into consideration the following factors:
- the provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other adviser;
- the amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
- the policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
- any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee;
- any stock of the Company owned by the compensation consultant, legal counsel or other adviser; and
- any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with a Senior Executive Officer of the Company.
Nothing in this Charter requires a compensation consultant, legal counsel or other compensation adviser to be independent, only that the Committee consider the above enumerated independence factors before selecting, or receiving advice from, a compensation adviser. The Committee may select, or receive advice from, any compensation adviser the Committee prefers, including advisers that are not independent, after considering the six independence factors enumerated above.
The Committee is not required to conduct an independence assessment for a compensation adviser that acts in a role limited to the following activities for which no disclosure is required under Item 407(e)(3)(iii) of SEC Regulation S-K: (a) 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; and/or (b) providing information that either is not customized for the Company or that is customized based on parameters that are not developed by the adviser, and about which the adviser does not provide advice.