Compensation Committee Charter
Compensation Committee Charter Quick Links
The purpose of the Compensation Committee (the "Committee") of the Board of Directors (the "Board") of NIC Inc. (the "Company") is to: (a) discharge the responsibilities of the Board relating to compensation of the Company’s executive officers, (b) review and approve such reports and discussions on executive compensation by management or the Committee as are required by law or deemed appropriate by the Committee, including reports and discussions for filing with the Securities and Exchange Commission, (c) prepare an annual Committee report for inclusion in the Company’s proxy statement and Annual Report on Form 10-K, (d) oversee the evaluation of the Company’'s executive officers, (e) establish and periodically review and revise the Company’'s executive compensation policy to align it with the Company’'s objectives, and (f) review such reports and discussions on director compensation as are required by law or deemed appropriate by the Committee, including reports and discussions for filing with the Securities and Exchange Commission, and to periodically review and recommend to the Board, director compensation levels from time to time.
II. Committee Membership
The Committee shall consist of at least three members, each of whom shall be independent directors. The term "independent directors" describes directors (a) who qualify as independent directors pursuant to the applicable provisions or the Securities Exchange Act of 1934, the rules promulgated thereunder and the rules and regulations of the NASDAQ Stock Market, and (b) who, in the Board's judgment, do not have a material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company).
Members of the Committee shall be appointed by the Board. The Board shall appoint one member of the Committee to act as its Chair. The Board may remove members of the Committee, with or without cause. Candidates to fill subsequent vacancies in the Committee shall be appointed by the Board based on nominations by the Committee.
III. Compensation Philosophy and Strategy
The Committee shall develop compensation policies which promote the long-term interests of the Company and its stockholders and which are designed to attract and retain those directors and officers necessary to support the Company's growth and success. The Committee shall review at least annually the Company's overall compensation strategy, philosophies and practices, including base salaries, bonus and incentive compensation and equity grants to the executive officers, to assure that they (a) appropriately reward executive officers for their contributions to the Company's growth and profitability, (b) provide appropriate incentives, (c) promote the long-term interests of the Company’'s stockholders, (d) support the Company's strategic objectives and (e) do not create unreasonable risks that are reasonably likely to have a material adverse effect on the Company.
The Committee shall also periodically review the executive officers’ compensation philosophy and practices for management and employees to assure that they (a) appropriately reward management and employees for their contributions to the Company's growth and profitability, (b) provide appropriate incentives, (c) promote the long-term interests of the Company's stockholders, (d) support the Company's strategic objectives and (e) do not create unreasonable risks that are reasonably likely to have a material adverse effect on the Company.
IV. Responsibilities and Duties
- Executive Officer Compensation. The Committee shall periodically review the level and form of the Company's compensation for its Chief Executive Officer (the "CEO") and the Company's other executive officers, including how such compensation compares to the compensation of the comparable positions at companies of comparable size, industry and complexity. The Committee shall establish on an annual basis the compensation levels of the Company’s CEO and the Company’s other executive officers, including base salary, bonus and incentive compensation levels, deferred compensation, perquisites, equity compensation and other forms of executive officer compensation; provided that the CEO shall not be present during voting or deliberations on his or her compensation by the Committee or the Board. The Committee shall approve any severance arrangements and change-in-control benefits payable to the Company’s executive officers.
- Director Compensation. The Committee shall periodically review and make recommendations to the Board regarding the level and form of the Company's director compensation, including how such compensation compares to director compensation of companies of comparable size, industry and complexity. Such review will include a review of both direct and indirect forms of compensation to the directors, including any charitable contributions to organizations with which a director is affiliated and consulting or other similar arrangements between the Company and a director.
- Incentive Plan Review and Approval. The Committee shall periodically review and make recommendations to the Board regarding the Company's incentive compensation for executive officers and equity-based plans, including evaluating whether the structure of those plans would encourage unnecessary or unreasonable risk-taking, and inquire into management’s compensation philosophy and specific compensation arrangements for other employees to evaluate whether those plans would encourage unnecessary or unreasonable risk-taking. The Committee shall review and make recommendations to the Board regarding all new equity compensation plans and all amendments to existing equity compensation plans (subject to stockholder approval when required).
- Incentive Plan Administration. The Committee shall administer all of the Company's equity-based plans, including its stock option and restricted stock plans and employee stock purchase plan. Such administration shall include granting equity awards under such plans to the extent provided in such plans. The Committee may delegate day-to-day administration of such plans for non-executive employees to the CEO or other appropriate Company officer. The Committee also shall determine the amount, if any, of cash incentive bonus payments to be paid to the Company’s executive employees pursuant to the Company’s cash incentive bonus plans.
- Employee Benefit Plans. The Committee shall oversee and periodically review the operation of the Company's employee benefit plans, including its Section 401(k) plan. Responsibility for the day-to-day administration of such plans, including the preparation and filing of all government reports and the preparation and delivery of all required employee material and communications, will be performed by appropriate Company personnel and their selected service providers.
- Report. The Committee shall produce an annual Committee report for inclusion in the Company's proxy statement and Annual Report on Form 10-K, in accordance with all applicable laws, rules and regulations, and shall review such reports and discussions on executive and director compensation by management or the Committee as are required by law or deemed appropriate by the Committee, including reports and discussions for filing with the Securities and Exchange Commission.
- Risk Considerations in Compensation Programs. The Committee shall review and discuss with the Board, at least annually, (a) the relationship between the Company's risk management and its compensation policies and practices, and (b) the structure of incentive compensation policies and practices for senior executives to ensure that such policies and practices do not encourage unnecessary or unreasonable risk-taking. The Committee shall review and discuss any disclosure in the Company's proxy statement regarding risks related to the Company's compensation policies and practices.
- Charter. The Committee shall review and reassess the adequacy of this Charter on at least an annual basis and recommend any proposed changes to the Board for approval. This Charter will be made available on the Company’s website at www.egov.com.
- Compensation for Internal Audit Department and Chief Accounting Officer. In order to promote the independence of the Internal Audit Department, which reports to the Audit Committee, and the Chief Accounting Officer, who reports to the Chief Financial Officer, the Committee shall establish the compensation for the Chief Accounting Officer, with input and consultation with the Chief Financial Officer and Chief Executive Officer, and for the Vice President of Internal Audit, with input and consultation with the Audit Committee and the Chief Executive Officer. Compensation for other employees of the Internal Audit Department shall be established by the Committee with input and consultation with the VP of Internal Audit, the Audit Committee, and the CEO.
The Committee shall have the authority, in its sole discretion, to select, retain and obtain the advice of compensation consultants, outside legal counsel or other advisors (“Compensation Advisors”) as necessary to assist with the execution of its duties and responsibilities as set forth in this Charter.
The Committee shall be directly responsible for the appointment, compensation and oversight of the work performed by any Compensation Advisor on behalf of the Committee. The Committee shall receive appropriate funding from the Company, as determined by the Committee in its capacity as a committee of the Board, for the reasonable compensation of the Compensation Advisors retained by the Committee. The level of appropriate funding and compensation is determined by the Committee.
Prior to selecting or receiving advice from a Compensation Advisor, other than in-house legal counsel, the Committee will conduct an independence assessment of the advisor to the extent required by the rules of the NASDAQ Stock Market, taking into consideration the factors specified in those rules and applicable federal securities laws, including the following factors: (i) the provision of other services to the Company by the person that employs the advisor; (ii) the amount of fees received from the Company by the person that employs the advisor, as a percentage of the total revenue of the person that employs the advisor; (iii) the policies and procedures of the person that employs the advisor that are designed to present conflicts of interest; (iv) any business or personal relationship of the advisor with a member of the Committee; (v) any stock of the Company owned by the advisor; and (vi) any business or personal relationship of the advisor or the person employing the advisor with an executive officer of the Company.
- Subcommittees. The Committee shall have the authority to delegate any of its responsibilities to subcommittees, as the Committee deems appropriate in its sole discretion; provided, that any subcommittee members who are not also members of the Committee shall meet the composition requirements under the rules of the NASDAQ Stock Market and Securities Exchange Commission and applicable state and federal laws to the extent that the subcommittee takes actions required to be taken by the Committee under such rules and laws.
- Access to Officers. The Committee shall have full and free access to the executive officers of the Company in order to fulfill its responsibilities and duties. Upon request of the Committee, the CEO shall provide information to the Committee regarding the Company and its management and shall serve as a liaison between the Committee and the Company’'s other executive officers.
VI. Procedures and Administration
- Meetings. The Committee shall meet at such times as it deems necessary or appropriate, but not less than semiannually.
- Minutes. The Committee shall maintain written minutes of each Committee meeting. Such minutes shall be distributed to each member of the Committee and to the other members of the Board.
- Reports. The Committee shall report to the Board concerning each meeting of the Committee and as otherwise requested by the Chair of the Board.
- Self-Evaluation. The Committee shall evaluate its own performance at least annually. The performance evaluation shall be conducted in such a manner as the Committee deems appropriate and may be presented to the Board either orally or in writing.
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