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Compensation Committee

Purpose
Statement Of Policy
Membership
Committee Responsibilities and Authority
Meetings
Minutes
Reports
Compensation

 
FOR REVIEW AND DISCUSSION

CHARTER FOR THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OF
LUNA INNOVATIONS INCORPORATED


PURPOSE:

The purpose of the Compensation Committee of the Board of Directors (the "Board") of Luna Innovations Incorporated (the "Company") shall be to discharge the Board's responsibilities relating to compensation of the Company's executive officers (the "Executive Officers"). The term "Executive Officers" is defined as including all executive direct reports to the CEO and any other Section 16 Officers.The Committee has overall responsibility for approving and evaluating the executive officer compensation plans, policies and programs of the Company. The Compensation Committee is also responsible for producing an annual report on executive compensation for inclusion in the Company's proxy statement.

The Compensation Committee has the authority to undertake the specific duties and responsibilities listed below and will have the authority to undertake such other specific duties as the Board from time to time prescribes.
 

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STATEMENT OF POLICY:

The philosophy of the Compensation Committee is to provide compensation to the Executive Officers in such a manner as to attract and retain the best available personnel for positions of substantial responsibility with the Company, to provide incentives for such persons to perform to the best of their abilities for the Company, and to promote the success of the Company's business.
 

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MEMBERSHIP:

The Compensation Committee will be appointed by and will serve at the discretion of the Board. The Compensation Committee shall consist of at least two members. The members of the Compensation Committee shall meet (i) the non-employee director and definition of Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended, (ii) the outside director definition of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "IRC") and (iii) the independence requirements of the listing standards of the NASDAQ Stock Market, except as otherwise permitted by the rules of the NASDAQ Stock Market.

 



The members of the Compensation Committee will be appointed by the Board, and will serve at the discretion of the Board.
 

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COMMITTEE RESPONSIBILITIES AND AUTHORITY:

The responsibilities of the Compensation Committee include the following:
 
• The Compensation Committee shall review and approve for the CEO and the other Executive Officers (a) the annual base salary, (b) the annual incentive bonus, including the specific goals and amount, (c) equity compensation, (d) employment agreements, severance arrangements, and change in control agreements/provisions, (e) any signing bonusor payment of relocation costs(above normal policy) and (f) any other benefits(other than those provided to all employees), compensation or arrangements. Equity compensation arrangements involving Executive Officers that are "reporting persons" for purposes of Section 16 of the Exchange Act shall be reviewed and approved by the Compensation Committee to ensure compliance with SEC Rule
16b-3.
.

• The Compensation Committee has the authority to review and to make recommendations to the Board with respect to amendments to the equity compensation plans adopted by the Board of Directors (the "Stock Plans")
 
• The Compensation Committee shall act as the Administrator (as defined in the Stock Plans) of the Company's Stock Plans. In its administration of the Stock Plans, the Compensation Committee may (i) grant stock options or stock purchase rights to individuals eligible for such grants, (ii) amend such stock options or stock purchase rights and (iii) take all other actions permitted under the Stock Plans.

• The Compensation Committee shall evaluate on a periodic basis the competitiveness of (i) the compensation of the CEO and the Executive Officers and (ii) the Company's overall compensation plans. The Compensation Committee shall approve all option grants to Executive Officers so that grants will comply with Section 162(m) of the IRC.

• The Compensation Committee may authorize the repurchase of shares from terminated employees pursuant to applicable law.

• The Compensation Committee may form and delegate authority to subcommittees when appropriate, including a Non-Officer Stock Option Committee, which would consist of one or more members of the Board of Directors with the authority to grant stock options to purchase shares of Common Stock within fixed guidelines (previously approved by the Board of Directors) to each new non-officer employee of the Company.

• The Compensation Committee shall have the sole authority to retain and terminate any compensation consultant to be used by the Company to assist in the evaluation of CEO or other executive officer compensation and shall have sole authority to approve the consultant's fees and other retention terms. The Compensation Committee shall also have authority to obtain advice and assistance from internal or external legal, accounting or other advisors.

• The Compensation Committee shall produce a report on executive compensation for inclusion in the Company's proxy statement that complies with the rules and regulations of the SEC and any other applicable rules and regulations.

• 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 review its own performance.

• The Compensation Committee shall review the performance of the Company's Chief Executive Officer at least annually and report to the Board its findings.
 

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MEETINGS:

The Compensation Committee will meet at least four times each year. The Compensation Committee may establish its own schedule, which it will provide to the Board of Directors in advance.
 

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MINUTES:

The Compensation Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board of Directors.
 

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REPORTS:

In addition to preparing the report in the Company's proxy statement in accordance with the rules and regulations of the SEC, the Compensation Committee will summarize its examinations and recommendations to the Board of Directors as may be appropriate, consistent with the Compensation Committee's charter.
 

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COMPENSATION:

Members of the Compensation Committee shall receive such fees, if any, for their service as Compensation Committee members as may be determined by the Board of Directors in its sole discretion. Such fees may include retainers and per meeting fees. Fees may be paid in such form of consideration as is determined by the Board of Directors.

Members of the Compensation Committee may not receive any compensation from the Company except the fees that they receive for service as a member of the Board of Directors or any committee thereof.

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Don Pastor Richard W. Roedel Gary Spiegel Barry Phelps
  • Member
  • Chair
  • Financial Expert
  • Independent Director