APPLIED INDUSTRIAL TECHNOLOGIES, INC. EXECUTIVE ORGANIZATION & COMPENSATION COMMITTEE CHARTER

Transcription

1 APPLIED INDUSTRIAL TECHNOLOGIES, INC. EXECUTIVE ORGANIZATION & COMPENSATION COMMITTEE CHARTER Primary respnsibility fr the rganizatin and cmpensatin f the Crpratin s executive management is vested in the Bard f Directrs (the Bard ). The Executive Organizatin & Cmpensatin Cmmittee (the Cmmittee ) is a standing cmmittee f the Bard cmprising slely such independent directrs as the Bard may appint frm time t time. Independence f Cmmittee members will be determined by the Bard accrding t its guidelines set frm time t time and accrding t applicable laws and rules f the Securities and Exchange Cmmissin ( SEC ) and the New Yrk Stck Exchange, with the gal f assuring that Cmmittee members have n relatinship t the Crpratin that may interfere with the exercise f their independence frm management. The members f the Cmmittee shall be appinted, and may be remved, by the Bard. The primary purpses f the Cmmittee are t assist the Bard in the gvernance f the Crpratin by: Mnitring and verseeing the Crpratin s management successin planning and leadership develpment prcesses with respect t the named executive fficer psitins identified in the Crpratin s prxy statements and ther psitins identified by the Cmmittee frm time t time. Nminating candidates fr the slate f fficers t be elected by the Bard. Reviewing and evaluating, and apprving changes t, the cmpensatin and benefits fr the Crpratin s executive fficers. Administering and interpreting the Crpratin s incentive cmpensatin, benefit, and stck-related plans in which the Chief Executive Officer and ther senir executives and key emplyees may be participants. The Cmmittee shall have unrestricted access t the Crpratin s persnnel and dcuments and will be given the resurces necessary t discharge its respnsibilities. The Cmmittee shall meet at least fur times per year and may establish a schedule f additinal

2 regular meetings as it cnsiders apprpriate. The Cmmittee may als call special meetings as required. The Cmmittee shall cmmunicate its findings, cnclusins and recmmendatins t the Bard and/r the Chief Executive Officer as required by the Bard r pursuant t its wn initiative. The Cmmittee may, as apprpriate, in its sle discretin, retain r btain the advice f a cmpensatin cnsultant, legal cunsel, r ther adviser, subject t the fllwing: The Cmmittee shall be directly respnsible fr the appintment, cmpensatin, and versight f the wrk f any cmpensatin cnsultant, legal cunsel, r ther adviser retained by the Cmmittee. The Crpratin shall prvide fr apprpriate funding, as determined by the Cmmittee, fr payment f reasnable cmpensatin t a cmpensatin cnsultant, legal cunsel, r ther adviser retained by the Cmmittee. The Cmmittee may select, r receive advice frm, a cmpensatin cnsultant, legal cunsel, r ther adviser t the Cmmittee, ther than in-huse legal cunsel, nly after taking int cnsideratin the fllwing factrs: The prvisin f ther services t the Crpratin by the persn wh emplys the cmpensatin cnsultant, legal cunsel, r ther adviser; The amunt f fees received frm the Crpratin by the persn wh emplys the cmpensatin cnsultant, legal cunsel, r ther adviser, as a percentage f the ttal revenue f the persn wh emplys the cmpensatin cnsultant, legal cunsel, r ther adviser; The plicies and prcedures f the persn wh emplys the cmpensatin cnsultant, legal cunsel, r ther adviser that are designed t prevent cnflicts f interest; Any business r persnal relatinship f the cmpensatin cnsultant, legal cunsel, r ther adviser with a member f the Cmmittee; Any stck f the Crpratin wned by the cmpensatin cnsultant, legal cunsel, r ther adviser; 2

3 Any business r persnal relatinship f the cmpensatin cnsultant, legal cunsel, ther adviser, r the persn emplying the adviser with an executive fficer f the Crpratin; and Any ther factr that wuld be relevant t independence frm the Crpratin s management f the cmpensatin cnsultant, legal cunsel, ther adviser, r the persn emplying the adviser. The Cmmittee will cnduct the freging independence assessment prir t retentin f the adviser and nce per year thereafter fr cntinuing engagements; prvided, hwever, that the Cmmittee is nt required t cnduct an independence assessment fr an adviser wh acts in a rle limited t: Cnsulting n certain nn-discriminatry, brad-based plans; Prviding infrmatin that is nt custmized t a particular cmpany; r Prviding infrmatin that is custmized based n parameters that are nt develped by the adviser and abut which the adviser des nt prvide advice. Annually, the Cmmittee shall evaluate its perfrmance and review and update this charter fr cnsideratin by the Bard. The Cmmittee s specific respnsibilities include the fllwing: A. Executive Organizatin. 1. Successin Planning and Leadership Develpment. The Cmmittee shall initiate the prcess fr mnitring and versight f management s successin planning and leadership develpment prcesses with respect t the named executive fficer psitins identified in the Crpratin s prxy statements and ther psitins identified by the Cmmittee frm time t time. In particular, the Cmmittee shall (i) review and evaluate management s successin planning and leadership develpment prcesses fr thse psitins, (ii) cnfirm that the prcesses prmte the diversity f management, in a manner in which individuals cultural and ther differences are respected and valued, and (iii) perfrm a peridic review and evaluatin f the prcesses results; 3

4 2. alternatively, the Cmmittee may cnfirm that the Bard itself is cnducting thse activities. The Cmmittee shall present the results f any review and evaluatin it cnducts t the full Bard. In additin t such presentatins as the Cmmittee may request, management shall present its successin plan t the full Bard. Officer Nminatin. The Cmmittee shall nminate individuals fr the slate f fficers t be elected at the Bard s rganizatinal meeting, and frm time t time as may be apprpriate t fill vacancies r as new fficer psitins may be created. The Cmmittee shall cnsider the recmmendatins f the Chief Executive Officer. B. Cmpensatin and Benefits. The Cmmittee shall review the Crpratin s executive cmpensatin and benefit prgrams and plans, and cnsider prpsals and make recmmendatins relating theret in rder t (i) attract, retain, and apprpriately reward the executive fficers, (ii) mtivate their perfrmance in the achievement f the Crpratin s business bjectives, (iii) ensure that such prgrams and plans d nt encurage the Crpratin s executive fficers and emplyees t take unnecessary and excessive risks, and (iv) align the interests f the executive fficers with the interests f the Crpratin s sharehlders. Prpsals relating t the executive cmpensatin and benefit prgrams and plans may be made by the Cmmittee at its wn initiative. The Cmmittee s specific respnsibilities with respect t executive cmpensatin and benefits shall include the fllwing: The Cmmittee shall peridically review its philsphy in setting plicies relative t the Crpratin s executive cmpensatin and benefits. The Cmmittee shall peridically review market data t assess the Crpratin s cmpetitive psitin fr base salary, annual incentives and lng-term incentives. Cnsistent with the Cmmittee s philsphy regarding executive cmpensatin and the market data, the Cmmittee shall establish the cmpensatin (including base salary, annual incentives, and lng-term incentives), benefits, and perquisites fr the executive fficers. When setting the Chief Executive Officer s cmpensatin, the 4

5 Cmmittee shall evaluate his r her perfrmance and cnsider the results f the mst recent CEO evaluatin prcess cnducted by the Bard s Crprate Gvernance Cmmittee. When setting the ther executive fficers cmpensatin, the Cmmittee shall take int cnsideratin the CEO s recmmendatins. The Cmmittee may recmmend t the Bard the adptin and/r amendment f the Crpratin s annual and lng-term incentive cmpensatin plans, benefit plans, and stck-related plans in which the Chief Executive Officer and ther senir executives and key emplyees may be participants, and emplyment agreements t which they may be parties. The Cmmittee shall peridically review (1) whether such plans and arrangements, as well as ther plicies and practices relating t cmpensating executives, are reasnably likely t prmte excessive risk taking behavir, and (2) the effectiveness f plicies, practices, r ther circumstances that mitigate such behavir. The Cmmittee shall administer and interpret, and make awards and grants under, the Crpratin s annual and lng-term incentive cmpensatin plans, benefit plans, and stck-related plans in which the Chief Executive Officer and ther senir executives and key emplyees may be participants. All such pwers shall be executed in the best interests f the Crpratin and in keeping with the bjectives f the plans. The Cmmittee shall review and discuss with management the Cmpensatin Discussin and Analysis required by SEC rules (the CD&A ). Based n the review and discussin, the Cmmittee shall determine whether t recmmend t the Bard that the CD&A be included in the prxy statement fr the annual meeting f sharehlders. The Cmmittee shall als prvide, ver the names f its members, the required cmpensatin cmmittee reprt fr the prxy statement fr the annual meeting f sharehlders. (June 2013) 5