COMPENSATION AND NOMINATING COMMITTEE CHARTER
The role of the Compensation and Nominating Committee (the “Committee”) of Torotel Inc. is to assist the Board of Directors (the “Board”) of the company by:
- Identifying, reviewing, and evaluating individuals’ qualifications to become members of the Board;
- Setting the compensation of the Corporate Officers and performing other compensation oversight; including Base Pay, Incentive Compensation, Stock Options and Severances. The Corporate Officers are the CEO, Secretary and CFO of the Corporation.
- Reviewing and recommending the nomination of Board members; and recommending independent Board Member compensation.
- Assisting the Board with other related tasks, as assigned from time to time.
- The committee shall consist of a majority of Independent Board Members , each of whom is free of any relationship that, in the opinion of the Board, would interfere with his or her exercise of independent judgment.
- Committee members shall be generally acquainted with corporate governance and compensation issues and have experience in one or more of the areas of the Committee’s responsibilities.
- The members of the Committee shall be appointed annually by the Board. Members may be replaced by the Board or the Executive Committee at any time, but shall otherwise serve until their successor has been named. Members of the committee will elect a Chairman of the committee.
- The Committee shall meet at least once a year in January or February at the call of the Chair. Additional meetings may occur as any member of the Committee request or as it’s Chair deems advisable.
- The Committee shall be governed by the same rules regarding meetings (including meetings by conference telephone or similar communication equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.
- The Committee is authorized and empowered to adopt its own rules of procedure not inconsistent with (a) any provision of their Charter, (b) any provisions of the Bylaws of the Corporations, or (c) the law of the State of incorporation.
- The Committee will have the resources and authority necessary to discharge its duties and responsibilities.
- Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Committee will take necessary steps to preserve the privileged nature of those communications.
- The Committee shall have the authority to form and delegate responsibility to subcommittees as appropriate.
- The Committee shall report to the Board at a minimum of once a year or as deemed to be appropriate.
Duties and Responsibilities
The Compensation and Nominating Committee shall have the following duties and responsibilities, in addition to any others that may be assigned by the Board from time to time:
- Annually evaluate and report to the Board on the performance and effectiveness of the Board to assist the directors in fulfilling their responsibilities in a manner that serves the interest of the Company’s shareholders;
- Assist in identifying, interviewing and recruiting candidates for the Board;
- Before recommending an incumbent, replacement, or additional director, review his or her qualifications, including capability, availability to serve, independence, conflicts of interest, and other relevant factors;
- Annually present to the Board a list of individuals recommended for nomination for election to the Board at the annual meeting of the shareholders;
- Review and make recommendations about changes to the charter of the Governance, Compensation and Nominating Committee as requires in the Committee’s opinion;
- Review and approve corporate goals and objectives relevant to the corporate officer’s compensation and evaluate the corporate officer’s performance relative to those goals and objectives and set the corporate officer’s compensation annually.
- Review and recommend annually to the Board of Directors compensation for Board members to include an annual retainer and/or a fixed sum plus expenses of attendance.
- Leadership Experience:Directors should possess significant leadership experience, such as experience in business, finance/accounting, law, education or government, and shall possess qualities reflecting a proven record of accomplishment and ability to work with others.
- Commitment to the Company's Values:Directors shall be committed to promoting the financial success of the Company and preserving and enhancing the Company's reputation as a leader in American business, and in agreement with the values of the Company as embodied in its Codes of Conduct.
- Reputation and Integrity:Directors shall be of high repute and recognized integrity and not have been convicted in a criminal proceeding or be named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses). Such person shall not have been found in a civil proceeding to have violated any federal or state securities or commodities law, and shall not be subject to any court or regulatory order or decree limiting his or her business activity, including in connection with the purchase or sale of any security or commodity.
- Absence of Conflicts of Interest:Directors shall be free of conflicts of interest and potential conflicts of interest. Directors should not have any interests that would materially impair his or her ability to exercise independent judgment or otherwise discharge the fiduciary duties owed by a director to the Company and its shareholders. The Committee will send an Annual Survey to the Board Members to assess any potential Conflict of Interest and take appropriate action is there is a conflict.
- Business Understanding:Directors should have a general appreciation regarding major issues facing public companies of size and operational scope similar to that of the Company, including business strategy, business environment, corporate finance, corporate governance and board operations.
- Available Time:Directors should have sufficient time to effectively carry out their duties, including preparing for and attending Board meetings, meetings of the Board committees on which they serve and the Annual Meeting of Shareholders, after taking into consideration their other business and professional commitments.
- Independence:Directors should be independent in their thought and judgment and be committed to enhancing long-term value for all shareholders. Non-Management Directors must meet the independence requirements of NASDAQ Stock Market and all applicable laws and regulations
- Non-Compete/Non-Disclosure: All non-management Directors shall annually execute a Non-Compete/Non-Disclosure Agreement. (Management Directors restrictions are contained in their employment agreements)
The Board retains the sole right to interpret and apply the foregoing standards in determining the materiality of any relationship.
The Board shall undertake an annual review of the independence of all non-management Directors. To enable the Board to evaluate each non-management Director, in advance of the meeting at which the review occurs, each non-management Director shall provide the Board with full information regarding the Director’s business and other relationships with the Company, its affiliates and senior management.