The primary purpose of the Joint Compensation Committee (the “Committee”) is to aid the Board of Directors of United Security Bancshares and the Board of Directors of United Security Bank (either board shall be referred to as the “Board” and the two companies shall be referred to collectively as the “Companies”) in discharging their responsibilities relating to the compensation of the Companies’ Executive Officers (as defined in NASDAQ Listing Rule 5605(a)(1) or any successor rule), including the Chief Executive Officer (“CEO”) of United Security Bancshares (“Company”).
The Committee shall be composed of at least three (3) members of the Board of the Company each of whom shall: (a) meet the independence requirements of the NASDAQ Stock Market listing standards, including Listing Rule 5605(a)(2), and any other applicable laws, rules and regulations governing independence, as determined by the Board; (b) qualify as “non-employee directors” as defined in Section 16 of the Securities Exchange Act of 1934; and (c) qualify as “outside directors” under Section 162(m) of the Internal Revenue Code. The Board will appoint a Chairperson to the Committee, and hereby delegates authority to the Committee to designate one member as Chairperson of the Committee in the event the Board has not appointed one. Members of the Committee shall be appointed by the Board and shall serve for such term or terms as the Board may determine or until earlier resignation or death. The Board may remove any member from the Committee at any time with or without cause.
Structure and Frequency of Meetings
The Chairperson of the Committee will preside at each meeting of the Committee and in consultation with the other members of the Committee, shall set the frequency and length of each meeting and the agenda of items to be addressed at each meeting. The Committee shall hold at least two regular meetings each year, and such additional meetings as may be required.
Duties and Responsibilities
The Committee shall have the duties, responsibilities and authority to:
- Review from time to time the goals and objectives of the Companies’ compensation plans and, if the Committee deems it appropriate, recommend that the Board amend these goals and objectives.
- Review from time to time the Companies’ compensation plans in light of the Companies’ goals and objectives with respect to such plans and, if the Committee deems it appropriate, recommend to the Board the adoption of new incentive compensation plans, equity-based plans, other compensation plans, or amendments to existing plans.
- Annually review and determine (i) the annual compensation, including salary, bonus, incentive and other compensation of the CEO, and (ii) corporate goals and objectives relevant to compensation of the CEO, evaluate performance in light of these goals and objectives, approve compensation in accordance therewith and provide a report thereon to the Board. The CEO cannot be present during voting or deliberations by the Committee on his or her compensation.
- Annually review and approve the amounts and terms of base salary, incentive compensation and all other compensation for the Companies’ other Executive Officers, and report the Committee’s determination to the Board.
- Oversee an annual review of the Companies’ incentive compensation arrangements to identify whether the plans appropriately balance risk and financial results in a manner that does not encourage employees to expose the Companies to imprudent risk, and oversee the remedy of plans where material concerns are identified.
- Prepare, or oversee the preparation of, and approve the annual Committee report on executive compensation for inclusion in the Company’s proxy statement. If applicable, review and discuss with the Companies’ management the Compensation Discussion and Analysis (“CD&A”) disclosure to appear in the Company’s Annual Report on Form 10-K and/or annual proxy statement, and recommend whether the CD&A should be included in the Annual Report on Form 10-K and/or annual proxy statement.
- Review Executive Officer compensation in reference to Section 162(m) of the Internal Revenue Code, as it may be amended from time to time, and any other applicable laws, rules and regulations.
- Annually review and recommend to the Board the compensation for directors (including retainer, Board meeting fees, committee and committee chair fees, equity-based compensation and other similar items, as appropriate).
- As to Executive Officers, review and approve all employment agreements, severance arrangements and change in control agreements and provisions , as well as any special supplemental benefits, as appropriate.
- Review and make recommendations to the Board with respect to incentive based compensation plans and equity based plans, establish or review criteria for the terms of awards granted to Executive Officer participants under such plans, and approve all grant awards under such plans to Executive Officers in accordance with such criteria.
- Regularly report to the Board on the Committee’s activities.
- Perform any other activities consistent with this Charter, the Company’s Bylaws and governing law as the Committee or the Board deem appropriate.
- Delegate responsibility to subcommittees of the Committee as necessary or appropriate.
The Committee will have the authority, in its sole discretion, to select, retain and obtain the advice of a compensation consultant, legal counsel, executive search firm or other advisor to assist it in the full performance of its functions as set forth in this Charter. The Committee shall set the compensation, and oversee the work, of any compensation consultant, legal counsel, executive search firm or other advisor retained by 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 payment of compensation to its compensation consultants, legal counsel, and any other advisors. However, the Committee shall not be required to implement or act consistently with the advice or recommendations of its compensation consultant, legal counsel or other advisors to the Committee, and the authority granted in this Charter shall not affect the ability or obligation of the Committee to exercise its own judgment in fulfillment of its duties under this Charter.
In retaining or seeking advice from compensation consultants, outside counsel and other advisors (other than Company’s in-house counsel), the Committee must take into consideration the factors specified in Nasdaq Listing Rule 5605(d)(3)(D). The Committee may retain, or receive advice from, any compensation advisor they prefer, including ones that are not independent, after considering the specified factors. The Committee is not required to assess the independence of any compensation consultant or other advisor that acts in a role limited to consulting on any broad-based plan that does not discriminate in scope, terms or operation in favor of executive officers or directors and that is generally available to all salaried employees or providing information that is not customized for a particular company or that is customized based on parameters that are not developed by the consultant or advisor, and about which the consultant or advisor does not provide advice.
Compensation Committee Charter
The Committee shall review this Charter at least annually for adequacy and recommend to the Board any necessary changes.