MRC GLOBAL INC.
CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
(Adopted Effective as of October 28, 2008; Last Revised Effective as of February 24, 2011)
I. PURPOSE AND ROLE
The Compensation Committee (the “Committee”) has been appointed by the Board of Directors (the “Board”) of MRC Global Inc. (the “Company”) to (1) establish, review and oversee the administration of compensation programs and employee benefit plans of the Company and its subsidiaries and (2) review and determine or make recommendations to the Board with respect to the compensation of the Company’s chief executive officer (“CEO”), executive officers other than the CEO (the “Executive Officers”) and directors and, as determined by the Committee, with respect to other employees, each as set forth herein. This Compensation Committee charter (the “Charter”) has been approved by the Board and may be amended by the Board from time to time in compliance with applicable laws, rules and regulations, including the applicable rules of the SEC and the New York Stock Exchange (the “NYSE”).
II. PRINCIPAL RESPONSIBILITIES AND DUTIES
The Committee’s responsibilities and duties are:
A. Compensation and Benefits Policies
- To review, amend, modify or adopt proposals relating to the incentive compensation plans, equity-based compensation plans, qualified retirement plans, health and welfare plans, deferred compensation plans, and any other benefit plans, programs or arrangements sponsored or maintained by the Company or any of its subsidiaries, including proposals relating to the establishment, amendment, modification or termination of such plans, or make recommendations to the Board with respect thereto, as determined by the Committee.
- To oversee the procedures and substance of the Company’s compensation and benefits policies (subject, if applicable, to shareholder approval), including establishing, reviewing, approving and making recommendations to the Board with respect to any incentive-compensation and equity-based plans of the Company that are subject to Board approval.
- To provide oversight and supervision to management with regard to the Company’s employee pension, profit sharing, severance and other benefit plans and trusts.
- To approve the overall structure of annual compensation and incentive plans with respect to employees of the Company and its subsidiaries on an annual basis.
- To evaluate and determine, or as determined by the Committee, delegate the authority to one or more officers of the Company to determine, the compensation of employees of the Company other than the CEO and Executive Officers.
In performing the above duties, the Committee may consider the recruitment, development, promotion, retention and compensation of executive officers and other employees of the Company and any other factors it deems appropriate. The Committee shall report the results of such review and any action it takes with respect to the Company’s compensation and benefits policies to the Board.
B. Executive Compensation
- Subject to the terms of any contracts with the CEO and the Executive Officers, to review and determine, or recommend to the Board, the annual salary, bonus, stock options and other compensation, incentives and benefits, direct and indirect, of the CEO and the Executive Officers. In determining long-term incentive compensation of the CEO and the Executive Officers, the Committee will consider, among other things, the Company’s performance and relative shareholder return, the value of similar incentive awards to chief executive officers and other executive officers of comparable companies and the awards given to the CEO and the Executive Officers in the past.
- To review and approve corporate goals and objectives relevant to compensation of the CEO and the Executive Officers and to evaluate the CEO’s and the Executive Officers’ performance in light of those goals and objectives on an annual basis, and, either separately or together with other independent directors (as directed by the Board), determine and approve the CEO’s and Executive Officers’ compensation level based on this evaluation or make recommendations to the Board with respect thereto.
- To review and authorize or recommend to the Board to authorize, as determined by the Committee, the Company to enter into, amend or terminate any employment, consulting, change in control, severance or termination, or other compensation agreements or arrangements with the CEO and other Executive Officers of the Company (and, at the option of the Committee, other officers and employees of the Company).
- To periodically review and consider the competitiveness of the Company’s executive compensation.
- To review new executive compensation programs, review on a periodic basis the operation of the Company’s existing executive compensation programs to determine whether they integrate appropriately, and establish and periodically review policies for the administration of executive compensation programs.
C. Director Compensation
To conduct a review of compensation for non-employee directors at least annually (including compensation for service on the Board and Board committees, meeting fees and equity-based compensation) and to determine or make recommendations to the Board, as determined by the Committee, regarding the compensation of non-employee directors. The Committee shall also be responsible for the oversight of the administration of any plans or programs providing for the compensation of non-employee directors.
D. Incentive Compensation Plans and Equity-Based Plans
- To oversee the administration of incentive compensation plans and equity-based compensation plans and to exercise all authority and discretion provided to the Committee under those plans and to perform such duties and responsibilities as may be assigned by the Board with respect to such plans.
- To review and recommend to the Board the creation, revision and/or termination of the Company’s incentive compensation and equity-based plans and to oversee the activities of the individuals responsible for administering the plans, as applicable.
- The Committee may delegate to one or more officers of the Company the authority to make grants and awards of stock options or stock-based compensation awards to any non-executive officer of the Company under such of the Company’s incentive compensation or other equity-based plans, as the Committee deems appropriate, in accordance with the terms of such plans and as permitted under applicable law.
E. Other Responsibilities
- To establish and periodically review policies in the area of management perquisites and “fringe” benefits.
- To perform such duties and responsibilities as may be assigned by the Board to the Committee under the terms of any executive compensation plan, incentive compensation plan or equity based plan.
- To provide oversight to the Retirement Plan Committee with respect to its activities and the activities of its subcommittees, as further described in Section IV. B. of the Charter.
- To plan for executive development and succession.
- To consider and discuss with management and the Board the Company’s compensation practices and policies for all employees as they relate to risk management and risk taking incentives. As part of such consideration and discussion, it should be determined whether any risks arising from compensation policies or practices are reasonably likely to have a material adverse effect on the Company.
- To review and discuss with management the Company’s “Compensation Discussion and Analysis” and, based on such review and discussion, recommend to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Proxy Statement or Annual Report on Form 10-K in accordance with the applicable laws, rules and regulations of the Securities and Exchange Commission (the “SEC”).
- To oversee compliance with any applicable compensation reporting requirements of the SEC.
III. COMPOSITION AND APPOINTMENT
The Committee will be comprised of three or more directors. In the event the company completes an initial public offering of common stock, then following such offering, at such time as the Company is no longer a “controlled company,” each director who serves on the Committee must satisfy the independence requirements of the NYSE for compensation committee members, subject to any applicable phase-in period under the rules of the NYSE (which require one independent director on the date the Company is no longer a controlled company, a majority of independent directors within 90 days of the date the Company is no longer a controlled company, and an all independent committee one year after the date the Company is no longer a controlled company).
In the event the company completes an initial public offering of common stock, then following such offering the Committee shall, in making awards, (1) consider the deductibility under Section 162(m) of the Internal Revenue Code of the compensation awarded and (2) endeavor to obtain the benefit of the exemption from Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) provided by Exchange Act Rule 16b-3. The Committee may elect to have specific grants and awards awarded by a subcommittee of the Committee in order to assist in achieving these purposes.
Members of the Committee shall be appointed by the Board on an annual basis and serve for a term of one year. The Board will also appoint members of the Compensation Committee as vacancies or newly created positions occur. The Board shall designate one member of the Committee as chairperson (the “Chairperson”). The Board may designate one or more directors as alternate members of the Committee, who may replace any absent or disqualified member at any meeting of the Committee. The members shall serve until their failure to qualify, resignation, or retirement, their removal by the Board or until their successors shall be duly appointed and qualified. A member of the Committee shall be deemed to have resigned from the Committee at such time that the member shall no longer be a director of the Company.
IV. PROCEDURE AND MEETINGS
- The Committee will meet as required to fulfill its responsibilities set forth in this Charter and the Company’s by-laws. The Chairperson or his or her designee shall set in advance of each meeting an agenda and preside over all meetings of the Committee. The Committee shall meet at least one time each year and at such other times as the Chairperson deems appropriate. A majority of the members of the Committee shall constitute a quorum. The vote of a majority of the members present at any meeting at which a quorum is present shall be the act of the Committee. The Committee may meet in person or telephonically. Any decision or determination of the Committee in writing and signed by all of the members of the Committee shall be fully as effective as if it had been made at a meeting duly called and held.
The Chairperson or a majority of the members of the Committee may call a special meeting of the Committee. At the discretion of the Committee, other members of the Board and any officer or employee of the Company may be invited to attend and participate in meetings of the Committee. The Committee shall have the authority to form, and delegate authority and responsibilities to, subcommittees when it deems appropriate. The Committee shall periodically review any such delegations and may revoke any such delegation at any time.
- The Committee has established a Retirement Plan Committee, consisting of members of management of the Company, to oversee the administration of the McJunkin Red Man Retirement Plan under the supervision of the Committee and report to the Committee with respect to its activities.
In addition, the Committee has authorized the Retirement Plan Committee to establish two subcommittees: 1) a Canadian Retirement Plan Subcommittee to oversee the administration of the retirement savings plan for Canadian employees of the Company’s direct and indirect subsidiaries, and 2) an International Retirement Plan Subcommittee to oversee the administration of the retirement plans maintained abroad by the Corporation and its subsidiaries (except for those in Canada). Each of the Canadian Retirement Plan Subcommittee and the International Retirement Plan Subcommittee operates under the supervision of and reports to the Retirement Plan Committee with respect to their activities.
The Committee shall have direct access to, and complete and open communications with, senior management and may obtain advice and assistance from internal legal, accounting, and other advisors to assist it. The Committee shall have authority to retain such compensation consultants, outside counsel and other advisors as the Committee may deem necessary or appropriate in its sole discretion. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any such advisors and consultants. The Committee shall have sole authority to retain and terminate any independent compensation consultant, including sole authority to approve fees and retention terms associated with the retention of any such firm or individual, which fees shall be paid by the Company. In determining whether to retain or terminate a provider of such services, the Committee may, in its discretion, obtain the input of senior management.
If a compensation consultant is to assist in the evaluation of director, CEO or executive officer compensation, the Committee shall have sole authority to retain and terminate the consulting firm, including sole authority to approve the firm’s fees and other retention terms.
VI. RELIANCE ON OTHERS
Unless a committee member has knowledge that makes reliance unwarranted, each Committee member, in discharging his or her duties to the Company, may rely on information, opinions, reports, or statements, any of which may be written or oral, formal or informal, including financial statements, valuation reports, and other financial data, if prepared or presented by: (a) one or more officers or employees of the Company whom the Committee member believes in his or her reasonable business judgment and good faith to be reliable and competent in the matters presented; (b) compensation consultants, legal counsel, or other persons as to matters which the Committee member believes in his or her reasonable business judgment and good faith to be within the professional or expert competence of such person; or (c) another committee of the Board of which such Committee member is not a member if the Committee member believes in his or her reasonable business judgment and good faith that such committee merits confidence.
VII. ADEQUACY OF CHARTER
The Committee shall review and reassess the adequacy of this Charter on an annual basis and recommend any proposed changes to the Board for approval. To the extent required by the rules of the SEC or the NYSE, a copy of this Charter will be attached to the Company’s annual proxy statement at least once every three years and/or included on the Company’s website.
VIII. MINUTES; REPORTS TO BOARD OF DIRECTORS
The Committee shall keep correct and complete minutes of its proceedings and the names and places of residence of its members.
The Committee will report regularly to the full Board with respect to its activities.
IX. ANNUAL EVALUATION OF PERFORMANCE
At least annually, the Committee shall conduct an evaluation of its performance. The Committee shall report its conclusions regarding this evaluation to the Board. The Committee’s report should generally include an assessment of its compliance with this Charter, as well as identification of areas in which the Committee could improve its performance.
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