Executive Compensation Committee Sample Charter

Purpose. The Compensation Committee is a standing committee of the board. It shall assist the board in fulfilling its responsibility to oversee the compensation and benefits of the organization’s executives.

Composition. The committee will be appointed by and shall serve at the discretion of the board. It will consist of not fewer than three members of the board, with the exact number being determined by the board. Unless a committee chair is designated by the board, the committee may designate a chair.

The committee shall be comprised of independent board members. No member may serve on the committee if they have a bias regarding the compensation process or its outcome. The assessment of board member independence will include noneconomic factors, such as close personal relationships between potential board members and senior management, and donor/donee relationships.

Organization. The committee shall establish a schedule of meetings but will meet at least annually. The chair of the committee shall be responsible for establishing the agendas for meetings of the committee. An agenda, together with materials relating to the subject matter of each meeting, shall be sent to members of the committee for each meeting. Minutes for all meetings of the committee shall be prepared to document the committee’s discharge of its responsibilities. The minutes shall be circulated in draft form to committee members to ensure an accurate final record, shall be approved at a subsequent meeting of the committee and shall be distributed to the board.

Responsibilities. The committee shall:

  • Recommend the compensation of the organization’s executive (or executive officers) to the board

  • Oversee the development and administration of the executive compensation and benefits program

  • Make regular reports to the board about the committee’s activities

  • Make any recommendations to the board relating to proposed changes in the committee’s charter

Note: ECFA’s Standard 6 is a recommended resource, including ECFA’s Policy for Excellence in Compensation-Setting and Related-Party Transactions.

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This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.