EXHIBIT 99.4
HILLENBRAND INDUSTRIES, INC.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE OF THE
BOARD OF DIRECTORS CHARTER
(As approved by Board of Directors on September 14, 2006)
I. PURPOSE
The primary function of the Compensation and Management Development
Committee (the "Committee") is to assist the Board of Directors of Hillenbrand
Industries, Inc. (the "Company") in fulfilling its responsibility for assuring
that the officers and key management personnel of the Company are effectively
compensated in terms of salaries, supplemental compensation and other benefits
which are internally equitable, externally competitive and advance the long term
interests of the Company's shareholders. The Committee is also responsible to
review and assess the talent development and succession management actions
concerning the officers and key employees of the Company.
II. COMPOSITION
The Committee shall be comprised of at least three members of the Board, each of
whom must meet the independence criteria set forth in the Company's Corporate
Governance Standards for the Board of Directors at all times during his or her
tenure on the Committee.
The Board believes that any director who is "independent" should also qualify as
a "non-employee director"(1) under Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and as an "outside director"(2) under Section 162(m)(3) of the
Internal Revenue Code, as amended (the "Code"), as
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(1) A "non-employee director" is a director that (a) is not currently an
officer of the Company or a parent or subsidiary thereof, or otherwise
currently employed by the Company or a parent or subsidiary thereof, (b)
does not receive compensation, either directly or indirectly, from the
Company or a parent or subsidiary thereof, for services rendered as a
consultant or in any capacity other than as a director, except for an
amount that does not exceed the $60,000 threshold for which disclosure
would be required pursuant to Item 404(a) of Regulation S-K under the
Securities Act of 1933, as amended, (c) does not possess an interest in
any other transaction for which disclosure would be required pursuant to
Item 404(a) of Regulation S-K, and (d) is not engaged in a business
relationship for which disclosure would be required pursuant to Item
404(b) of Regulation S-K.
(2) An "outside director" is a director that (i) is not a current employee of
the Company, (ii) is not a former employee of the Company who receives
compensation for prior services (other than benefits under a tax-qualified
retirement plan), (iii) has not been an officer of the Company, and (iv)
does not receive remuneration from the Company, either directly or
indirectly, in any capacity other than as director.
(3) Section 162(m) relates to the deductibility of remuneration in excess of
$1 million paid to a CEO or the other four highest paid executive officers
of a public company. The payment of "qualified performance-based
compensation" by a public company that is approved by a committee of
"outside directors" is exempt from the $1 million limitation.
long as such director has never served as an officer of the Company. Any member
of the Committee who fails to meet all the criteria of an "outside director"
shall refrain from considering or acting upon any matter subject to Section
162(m) of the Code.
The members of the Committee shall be elected by the Board annually, based on a
recommendation by the Nominating/Corporate Governance Committee to serve until
the next annual meeting of the Board or until their successors shall be duly
elected and qualified. Unless the Board elects a Chair, the members of the
Committee may designate a Chair by majority vote of the Committee membership.
The Board may remove a member from the Committee with or without cause. The
Committee's Chair will periodically report the Committee's findings and
conclusions to the Board.
III. MEETINGS AND OPERATIONS
The Committee shall meet at least three times annually, or more frequently
as circumstances dictate. In furtherance of the Committee's responsibility to
foster the development of compensatory arrangements that are designed to both
motivate recipients and advance the interests of the Company's shareholders, the
Committee should meet at least annually with the Company's Chief Executive
Officer and its independent compensation consultants. The Committee will be
assisted by the Company's Vice President, Human Resources. The Company's
Secretary or any Assistant Secretary will serve as executive secretary of the
Committee.
A majority of the Committee members will constitute a quorum for the
transaction of business at any meeting of the Committee. Action of the majority
at any such meeting will be the action of the Committee.
The Committee shall conduct its operations in accordance with the
procedures set forth in Article 4 of the Company's Code of By-Laws applicable to
the operations of the Board, except to the extent that such procedures are
modified on superseded by the terms of this Charter. The Committee shall have
the authority to adopt such additional procedures for the conduct of its
business as are not inconsistent with those referred to in the preceding
sentence. The Committee shall have no authority to delegate its responsibilities
to any subcommittee.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Committee shall:
1. Assist the Company in defining a total management compensation philosophy
that supports the Company's overall strategy and objectives; attracts and
retains key executives; links total compensation to financial performance
and the attainment of short and long term strategic, operational, and
financial objectives; and provides competitive total compensation
opportunities at a reasonable cost, while enhancing the ability to fulfill
the Company's objectives.
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2. Review and approve annually the corporate goals and objectives relative to
the compensation of the Company's Chief Executive Officer, evaluate the
performance of the Company's Chief Executive Officer in the light of those
goals and objectives, provide development feedback to the Company's Chief
Executive Officer and set the annual compensation level of the Company's
Chief Executive Officer based on this evaluation.
3. Review at least annually the executive succession plans prepared by the
Company's Chief Executive Officer.
4. Review and approve annually the corporate goals and objectives relative to
the compensation of the elected officers of the Company (other than the
Chief Executive Officer) and, if appropriate, approve the compensation
arrangements submitted by the Company's Chief Executive Officer for all
elected officers (other than himself).
5. Propose the adoption, amendment, and termination by the Board of
Directors, and shareholders, if required, of stock option plans, stock
appreciation rights plans, pension and profit sharing plans, stock bonus
plans, stock purchase plans, bonus plans, deferred compensation plans,
executive perquisites, employment agreements and other similar programs
(the "Compensation Plans"). The Committee shall also administer and
interpret the Compensation Plans, establish performance targets under the
Company's bonus and incentive plans, exercise oversight responsibility
over other compensation programs of the Company, and review the structure,
cost effectiveness, and competitive position of the Company's compensation
programs. All incentive compensation plans will link executive
compensation directly and objectively to measure financial and
non-financial goals set in advance by the Committee.
6. Grant rights, participation and interests in Compensation Plans to
eligible participants and pre-approve all transactions in the Company's
securities, by and between the Company and any director and executive
officer of the Company, for which exemptive treatment from Section 16(b)
of the Exchange Act is sought.
7. Prepare the report on the Company's compensation policies for executives
for inclusion in the Company's proxy statement for use in connection with
the solicitation of proxies for each annual meeting of shareholders
("Proxy Statement") in accordance with applicable rules and regulations.
8. Ensure that all aspects of executive compensation are clearly and
comprehensively disclosed in each Proxy Statement.
9. Review and approve such other compensation matters as the Board or the
Chief Executive Officer of the Company wishes to have the Committee
approve.
10. Select, monitor and revise, as appropriate, the universe of companies
against which the Company is compared in the stock performance chart set
forth in each annual proxy statement.
11. Ensure the Company's total executive compensation program and practices
are designed with full consideration of all tax, accounting, legal and
regulatory requirements.
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12. Keep abreast of current trends, developments, and emerging issues in
executive compensation outside of the Company.
13. Perform such additional functions and have such additional powers as may
from time to time be expressly delegated to the Committee by the Board.
14. Have sole authority to select and retain independent compensation
consultants, considering effectiveness, responsiveness and other relevant
factors, and approve the retention terms, fees and other compensation to
be paid to the independent compensation consultants; provided that the
foregoing grant of sole authority shall not prevent the Board's
Nominating/Corporate Governance Committee from selecting and retaining
independent compensation consultants in carrying out its responsibilities
with respect to assessment of the compensation of the members of the Board
of Directors.
15. Review the performance of the independent compensation consultants and
approve any proposed discharge of the independent compensation consultants
when circumstances warrant.
16. Review this Charter and assess the performance of this Committee and its
members at least annually and recommend updates and changes to the Board
as conditions warrant.
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