Corp. Gov. | Compensation & Management Development Committee Charter
The purpose of the Compensation and Management Development Committee (the "Committee") of the Board of Directors of Central Federal Corporation (the “Company”) is to discharge the Board's responsibilities relating to compensation for the Company's directors and officers. The Committee has overall responsibility for approving and evaluating director, officer and employee compensation plans, policies, and programs of the Company. The Committee also is responsible for producing, in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC"), an annual report on executive compensation for inclusion in the Company's annual proxy statement.
The Committee shall consist of three or more members of the Board, each of whom the Board has determined has no material relationship with the Company and each of whom is otherwise "independent" under the rules of the National Association of Securities Dealers, Inc.
The members of the Committee shall be appointed and replaced by the Board on the recommendation of the Corporate Governance and Nominating Committee. Members shall serve at the pleasure of the Board and for such term or terms as the Board may determine.
Committee Structure and Operations
The Board shall designate one member of the Committee as its Chair. The Committee shall meet in person or telephonically at least two times a year at a time and place determined by its Chair, with further meetings to occur, or actions to be taken by unanimous written consent, when deemed necessary or desirable by the Committee or its Chair.
The Committee may invite such members of management to its meetings as it may deem desirable or appropriate, consistent with the maintenance of the confidentiality of compensation discussions. The Company's Chief Executive Officer ("CEO") should not be in attendance during any portion of a meeting in which the CEO's performance or compensation is discussed, unless specifically invited by the Committee.
Committee Duties and Responsibilities
The Committee shall have the following duties and other responsibilities:
- Establish, in consultation with executive management, the Company's general compensation philosophy, and oversee the development and implementation of balanced executive compensation programs which provide for short term and long term compensation, and incentive compensation.
- The Committee will refer to the performance goals, the strategic goals and tactical processes as outlined in the annual business plan for CFBank as guidance and basis for their review. The Committee, in its sole discretion, may also use other information, both past and current, and facts to base their determination as they considered relevant in the evaluation of the performance of executive management.
- Make recommendations to the Board with respect to the Company's incentive compensation plans and equity based plans, oversee the activities of the individual or committee responsible for administering these plans and discharge any responsibilities imposed on the Committee by any of these plans.
- Annually the Committee will conduct an evaluation of the performance of the CEO and the chair shall communicate such evaluation to the CEO.
- Approve for the CEO (i) annual base salary level, (ii) annual incentive opportunity level, (iii) long-term incentive opportunity level, (iv) employment agreements, severance arrangements, change in control or similar termination agreements (v) profit sharing plans, (vi) other special or supplemental benefits, and (vii) any other payments that are deemed compensation under applicable federal securities and banking laws.
- Annually the Committee will review the form and amounts of director compensation and make recommendations to the Board with respect thereto. The recommendations from the Committee shall fairly reflect the contributions of the directors to the performance of the Company. The Board shall set the form and amounts of director compensation, taking into account the recommendations of the Compensation and Management Development Committee
- Prepare and issue the evaluation and reports required under "Committee Reports" below.
- Periodically, review the succession planning and changes to the executive level organizational structure.
- Perform any other duties or responsibilities expressly delegated to the Committee by the Board from time to time relating to the Company's compensation programs.
Delegation to Subcommittee
The Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee.
The Committee shall produce the following reports and provide them to the Board.
- A summary of the pertinent actions, in the form of minutes, taken at each Committee meeting, which shall be presented to the Board at the next Board meeting.
- An annual report of the Committee on executive compensation for inclusion in the Company's annual proxy statement in accordance with applicable SEC rules and regulations.
- An annual performance evaluation of the Committee, which evaluation shall compare the performance of the Committee with the requirements of this charter. The performance evaluation shall also recommend to the Board any improvements to this charter deemed necessary or desirable by the Committee. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board may take the form of an oral report by the Chair or any other member of the Committee designated by the Committee to make this report.
Resources and Authority of the Committee
The Committee shall have resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate, and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems appropriate without seeking approval of the Board or management. With respect to compensation consultants retained to assist in the evaluation of director, CEO, or other senior executive compensation, this authority shall be vested solely in the Committee.
In accordance with the Interim Final Rule of the United States Treasury Department, during the period in which the Company has any outstanding obligation arising from the receipt of financial assistance under the Troubled Asset Relief Program (TARP), the Committee shall, at least every six months, discuss, evaluate and review with the Company’s senior risk officers any risks (including long-term as well as short-term risks) that the Company faces that could threaten the value of the Company. The Committee will identify the features of the Company’s senior executive officer (SEO) compensation plans that could lead SEOs to take these risks and the features in the employee compensation plans that pose risks to the Company, including any features in the SEO compensation plans and the employee compensation plans that would encourage behavior focused on short-term results and not on long-term value creation. The Committee will limit these features to ensure that the SEOs are not encouraged to take risks that are unnecessary or excessive and that the Company is not unnecessarily exposed to risks. The Committee will provide the certifications and disclosures as required by the Interim Final Rule. In accordance with the Interim Final Rule, the Committee will certify that:
- it has reviewed with senior risk officers the senior executive officer (SEO) compensation plans and has made all reasonable efforts to ensure that these plans do not encourage SEOs to take unnecessary and excessive risks that threaten the value of the Company;
- it has reviewed with senior risk officers the employee compensation plans and has made all reasonable efforts to limit any unnecessary risks these plans pose to the Company; and
- it has reviewed the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of the Company to enhance the compensation of any employee.
In addition, at least once per the Company’s fiscal year, the Committee will provide a narrative description identifying each SEO compensation plan and explaining how the SEO compensation plan does not encourage the SEOs to take unnecessary and excessive risks that threaten the value of the TARP recipient. The Committee will also identify each employee compensation plan, explain how any unnecessary risks posed by the employee compensation plan have been limited, and further explain how the employee compensation plan does not encourage the manipulation of reported earnings to enhance the compensation of any employee.