The Board of Directors (the "Board) of XYZ Corporation has created a committee of directors to be known as the Compensation Committee. The membership and responsibilities of the Committee are described below.

Membership

The Board shall appoint the members of the Committee, which will be composed of independent directors. A majority of members of the Compensation Committee shall constitute a quorum. The Compensation Committee members will elect the Compensation Committee Chairman as well as a Committee Clerk.

The Chief Executive Officer and other designated officers may participate in Compensation Committee meetings, except as the Committee's deliberations concern the CEO or the designated officer.

Meetings

The Committee meets in accordance with a predetermined schedule. Other meetings, initiated by the Committee Chair or at the request of the CEO, will be held as required.

Overall Responsibility

The Compensation Committee is accountable and ultimately responsible to the Board on matters related to XYZ Corporation's compensation and benefit programs including:

• Establishing and overseeing the overall compensation and benefits strategy
• Ensuring the compensation and benefit programs support the company's strategy
• Approving annual merit salary increase budgets and reviewing the Chief Executive Officer's recommendations for salary increases and short-term incentive awards
• Administering incentive plans
• Recommending to the Board of Directors compensation actions for the Chief Executive Officer each year
• Reviewing Director compensation and recommending appropriate actions to the Board of Directors

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