Charter of the Compensation Committee
Purpose
The purpose of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Maxygen, Inc., a Delaware corporation (the “Company”), is to, among other things, discharge the Board’s responsibilities relating to the compensation of the Company’s executives and to produce the report required by the rules and regulations of the Securities and Exchange Commission (the “SEC”) to be included in or incorporated by reference into the Company's annual report and proxy statement.
Composition
The Committee will be comprised solely of “independent directors,” i.e., those directors who neither are officers or employees of the Company or its subsidiaries nor have a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and each of whom is otherwise “independent” under the rules of the Nasdaq Stock Market, Inc. The members of the Committee shall be appointed by the Board based upon nominations by the Company’s Corporate Governance and Nominating Committee. The members of the Committee will serve at the discretion of the Board.
The Committee shall designate one member of the Committee as its chairperson.
Duties and Responsibilities
The following are the duties and responsibilities of the Committee:
1. Review and approve all compensation programs applicable to executive officers of the Company, including all forms of salary paid to executive officers of the Company and the grant of all forms of bonus and stock compensation provided to the executive officers of the Company.
2. In consultation with senior management establish, review, and evaluate the long-term strategy of employee compensation and the types of stock and other compensation plans used by the Company.
3. Review and approve corporate goals and objectives relevant to the compensation of the Company’s Chief Executive Officer (the “CEO”), evaluate the performance of the CEO in light of those goals and objectives, and set the CEO’s compensation level based on this evaluation. In determining the long-term incentive component of the CEO compensation, the Committee shall consider, among other factors, the Company’s performance and relative stockholder return, the value of similar incentive awards to CEOs at comparable companies, the awards given to the CEO in past years, and any other factors the Committee deems appropriate. In connection with this evaluation, the Committee may request and receive input from other non-employee Board members either formally or informally.
4. Approve any new company-wide compensation plan or any material change to an existing compensation plan whether or not subject to stockholder approval, make recommendations to the Board with respect to the Company’s incentive compensation plans and equity-based plans subject to shareholder approval, oversee the activities of the individuals and committees responsible for overseeing the Company’s compensation plans and discharge any responsibilities imposed on the Committee by any of these plans.
5. In consultation with management, oversee regulatory compliance with respect to compensation matters, including overseeing the Company’s policies on structuring compensation programs to preserve tax deductibility, and, as and when required, establishing performance goals and certifying that performance goals have been attained for purposes of Section 162(m) of the Internal Revenue Code.
6. Prepare and issue the evaluation required under “Committee Performance Evaluation” below.
7. Review and approve any severance or similar termination payments proposed to be made to any current or former executive officer of the Company.
8. Review and discuss with management the Company’s disclosures under “Compensation Discussion and Analysis” (the “CD&A”), and based on such review and discussion, make a recommendation to the Board as to whether the CD&A should be included in the Company’s annual report on Form 10-K and, as applicable, the Company's proxy statement.
9. Any other compensation matters as from time to time may be directed by the Board.
Committee Performance Evaluation
The Committee shall produce and provide to the Board on an annual basis a performance evaluation of the Committee’s performance of its duties under this charter. The evaluation shall also include any recommendations to improve the charter of the Committee. The performance evaluation shall be conducted in such a manner as the Committee deems appropriate. Any member of the Committee may present the evaluation to the Board either orally or in writing.
Meetings
The Committee will meet in person or telephonically at least [three] times per year at a time and place determined by the Committee chairperson, with further meetings to occur, or actions to be taken by unanimous written consent, when deemed necessary or desired by the Committee or its chairperson. The Committee may invite the Chief Executive Officer, President, Chairman of the Board, Chief Financial Officer and General Counsel or any other officer desirable by the Committee or its Chairman. No such person may be present during any discussions and deliberations of the Committee regarding the compensation of any such person. The Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee.
Committee Reports
The Committee shall provide the following reports to the Board.
1. An annual report of the Compensation Committee for inclusion in or incorporation by reference into the Company’s annual report and proxy statement in accordance with applicable SEC rules and regulations.
2. An annual performance evaluation of the Committee, which evaluation must compare the performance of the Committee with requirements of this charter.
3. A summary of the actions taken at each Committee meeting, which shall be presented to the Board at the next Board meeting.
Resources and Authority
The Committee shall have the 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. The Committee may, at its discretion, also review the choice of any consultants or other experts recommended by management for the purpose of reviewing executive Company compensation. Authority to select, retain, terminate, and approve the fees and other retention terms of any compensation consultants retained to assist in the evaluation of director, CEO or senior executive compensation shall be vested solely in the Committee.
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