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CompensatION Committee

Purpose

The Compensation Committee is appointed by the Board of Directors (the "Board") of Bay Bancorp, Inc. (the "Company") to discharge the Board's responsibilities relating to compensation of the Company's directors, Chief Executive Officer ("CEO") and general management level officers. The Compensation Committee has overall responsibility for approving and evaluating the compensation plans, policies and programs of the Company for those persons. The Compensation Committee shall also be responsible for administering the Company's 1998 Long-Term Incentive Plan (the "Plan") or any other of the Company's employee stock options now or hereafter in effect.

The Compensation Committee is also responsible for producing an annual report on executive compensation for inclusion in the Company's proxy statement, in accordance with the applicable rules and regulations of the Securities and Exchange Commission ("SEC").

Committee Membership

The Compensation Committee shall consist of no fewer than three members, each of whom shall be a director of the Company. Each member of the Compensation Committee shall meet the listing standards relating to independence of NASDAQ and shall also meet the requirements for a "Non-Employee Director" set forth in Rule 16b-3(b)(3)(i) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the requirements for an "outside director" as defined in Section 1.162-27(e)(3)(i) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. The Compensation Committee shall report to the Board. A majority of the members of the Compensation Committee shall constitute a quorum.

The members of the Compensation Committee shall be appointed and replaced by the
Board.

Committee Authority and Responsibilities

  1. The Compensation Committee shall have a meeting annually at which only members of the Compensation Committee are in attendance (an "executive session") in order to review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO's performance in light of those goals and objectives, and determine the CEO's compensation levels based on this evaluation. In determining the long-term incentive component of CEO compensation, the Compensation Committee will consider the Company's performance and relative shareholder return, the value of similar incentive awards at comparable companies, the awards given to the CEO in past years, and other factors it deems appropriate.
     
  2. The Compensation Committee shall have the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of director or CEO compensation and shall have sole authority to approve the consultant's fees and other retention terms, all at the Company's expense.
     
  3. The Compensation Committee shall annually review and recommend to the Board the compensation of all directors, including incentive-compensation plans and equity-based plans.
     
  4. The Compensation Committee shall meet annually in an executive session to review and approve the compensation of the CEO, including incentive- compensation plans and equity-based plans.
     
  5. The Compensation Committee shall meet annually to review and approve the compensation of all other "officers" of the Company, as such term is defined in Rule 16a-1(f) of the Exchange Act (the "Executive Officers"), including incentive- compensation plans and equity-based plans. The CEO may be present during the deliberations of the Compensation Committee relating to compensation of the Executive Officers of the Company, but may not vote.
     
  6. The Compensation Committee shall meet annually in an executive session to review and approve for the CEO of the Company, (a) the annual base salary level, (b) the annual incentive opportunity level, (c) the long-term incentive opportunity level, (d) the terms of any employment agreements, severance arrangements, and change in control agreements/provisions, in each case as, when and if appropriate, and (e) any special or supplemental benefits.
     
  7. The Compensation Committee shall meet annually to review and approve for each of the other Executive Officers of the Company, (a) the annual base salary level, (b) the annual incentive opportunity level, (c) the long-term incentive opportunity level, (d) the terms of any employment agreements, severance arrangements, and change in control  agreements/provisions, in each case as, when and if appropriate, and (e) any special or supplemental benefits.
     
  8. The Compensation Committee may form and delegate authority to subcommittees when appropriate.
     
  9. The Compensation Committee shall make regular reports to the Board.
     
  10. The Compensation Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Compensation Committee shall annually evaluate its own performance.
     
  11. The Compensation Committee, and each member of the Compensation Committee in his or her capacity as such, shall be entitled to rely, in good faith, on information, opinions, reports or statements, or other information prepared or presented to them by (i) officers and other employees of the Company or Bay Bank, FSB whom such member believes to be reliable and competent in the matters presented, (ii) counsel, public accountants or other persons as to matters which the member believes to be within the professional competence of such person.
     
  12. The Compensation Committee shall fix and recommend to the Board awards to employees of stock or stock options pursuant to, and in accordance with, the Plan or any other of the Company's employee stock options now or hereafter in effect.
 
 
Corporate Office
2328 West Joppa Road, Suite 325
Lutherville, MD 21093-4637
(410) 494-2580
Toll Free (800) 222-6566

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