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Corporate Governance

Compensation Committee Charter

COMPENSATION COMMITTEE CHARTER

This charter sets forth the authority and responsibility of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Virco Mfg. Corporation (the “Company”).

  • Purpose and Authority
  • Composition
  • Meetings
  • Quorum
  • Responsibilities and Duties

PURPOSE AND AUTHORITY

The Committee shall provide assistance to the Board in fulfilling its responsibilities to achieve the Company’s business purposes and to maximize the long-term total return to stockholders by ensuring that officers, directors and employees are compensated in accordance with the Company’s compensation philosophy, objectives and policies. The Committee shall review and approve compensation and benefits policies, strategies and pay levels necessary to support corporate objectives. The Committee may:

  • Utilize Company staff to assist on projects from time to time;
  • Consult with the Chief Executive Officer (“CEO”) and other members of senior management as it determines necessary;
  • engage the assistance of outside consultants to assist in determining and establishing compensation policies; and
  • authorize independent studies of corporate compensation and benefits of comparable companies.

The Committee will primarily fulfill these responsibilities by carrying out the activities listed below in this charter. Subject to any restrictions or limitations on the delegation of power and authority imposed by the rules or regulations promulgated by the Securities and Exchange Commission (“SEC”), the NASDAQ Stock Market (“NASDAQ”), or other regulatory authority, or by applicable law, the Committee shall have and may exercise all the powers and authority of the Board reasonably necessary or advisable for the Committee to effectuate its purposes and perform its responsibilities as set forth in this charter.

COMPOSITION

The Committee shall be appointed annually to serve at the pleasure of the Board and consist of no fewer than two members. Each member of the Committee shall be independent in accordance with the provisions of Rule 10C-1(b)(1) under Securities Exchange Act of 1934, as amended (the “Exchange Act”), and NASDAQ Listing Rule 5605(a)(2). In addition, each member must qualify as a “Non-Employee Director” under Rule 16b-3 under the Exchange Act, and satisfy any other regulatory requirements.

In affirmatively determining the independence of any director who will serve on the Committee, the board of directors must consider all factors specifically relevant to determining whether a director has a relationship to the Company which is material to that director’s ability to be independent from management in connection with the duties of a member of the Committee, including, but not limited to:

  1. The source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the Company to such director; and
  2. whether such director is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company.

The Board shall designate one member of the Committee to serve as Chairman or, in the absence of such a designation, by a majority of the members of the Committee. Vacancies in the Committee may be filled at any meeting of the Board.

MEETINGS

The Committee shall meet at least two times annually, or more frequently as circumstances dictate. Regular meetings of the Committee may be held without call or notice at such times and places as the Committee from time to time may fix. Special meetings of the Committee may be called by the Chairman of the Committee or by the Secretary of the Company when requested to do so by any two members of the Committee. Notice shall be given in the same manner as notice of special meetings of the Board.

Meetings may include participation by Company management and independent compensation consultants as determined necessary by the Committee.

Any action required or permitted to be taken at any meeting of the Committee may be taken without a meeting if consent in writing is given thereto by all members of the Committee and such consent is filed with the minutes.

Minutes of the meetings of the Committee will be prepared and kept in the minute books of the Company, together with minutes of meetings of other committees of the Board. These minutes shall be made available to the members of the Board from time to time for their information.

QUORUM

A majority of the members of the Committee, but no fewer than two persons, shall constitute a quorum for the transaction of business at any meeting of the Committee. Any action of the Committee to be effective must be authorized by the affirmative vote of a majority of the members thereof present and in any event shall require not less than two affirmative votes.

 RESPONSIBILITIES

The responsibilities and authority of the Committee shall include:

1)  Assist the Company in defining an executive total compensation policy that:

  • supports the Company’s overall strategy and objectives;
  • attracts and retains key executives;
  • links total compensation to financial performance and the attainment of strategic objectives; and
  • provides competitive total compensation opportunities at a reasonable cost while enhancing the ability to fulfill the Company’s objectives.

2)  Act on behalf of the Board in:

  • setting compensation policy;
  • administering compensation plans;
  • making decisions on the compensation of key company executives (including the review and approval of merit/other compensation budgets and payouts under incentive plans);
  • administering the Company’s Clawback Policy if so designated by the Board; and
  • administering the Company’s Stock Ownership Policy for Non-Employee Directors.

3)  Review and approve the following with respect to the CEO and other executive officers:

  • annual base salary levels;
  • annual incentive opportunity levels;
  • awards under the Company’s equity incentive plans;
  • perquisites;
  • employment agreements (when and if appropriate); and
  • benefits and supplemental benefits.

The CEO shall not be present during voting or deliberations on his or her compensation.

4)  Annually evaluate the CEO and, when appropriate, other executive officers as to performance and compensation levels and payouts against pre-established measurable performance goals and objectives and compensation levels of executives in comparable companies.

5)  Review and comment on the Company’s existing strategic and financial plans to determine their relationship to the compensation program and review and approve new compensation plans that are consistent with compensation policy and monitor the appropriateness and effectives of such plans.

6)  Recommend pay levels for Board Members including retainers, fees, benefits and perquisites for consideration and approval by the full Board.

7)  Act as the administrator (with all powers specified in the applicable plan) of each of the Company's (i) 2011 Stock Incentive Plan, (ii) 2019 Omnibus Equity Incentive Plan, (iii) Entrepreneurial Salaried Bonus Plan, and (iv) such other compensation or equity incentive plans as may be enacted by the Company from time to time (collectively, the “Plans”).  The Committee may also make recommendations to the Board with respect to amendments to the Plans and changes in the number of shares reserved for issuance under each equity incentive plan.

8)  The Committee shall have the authority, in its sole discretion, to retain or obtain the advice of a compensation consultant, legal counsel or other adviser. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the Committee. The Company shall provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the Committee.  The Committee may select a compensation consultant, legal counsel or other adviser only after taking into consideration the following factors, as well as any other factors identified by NASDAQ (provided that such factors need not be considered for the selection of in-house counsel):

  1.  The provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other adviser;
  2. The amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
  3. ​​​​​​ ​The policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
  4. Any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee;
  5. Any stock of the Company owned by the compensation consultant, legal counsel or other adviser; and
  6. ​​​​​​ Any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the Company.

Nothing in this charter shall require any compensation consultant, legal counsel or other adviser to be independent, only that the Committee consider the six independence factors enumerated above before selecting, or receiving advice from, such a compensation adviser. However, the Committee is not required to consider the foregoing factors if the compensation consultant, legal counsel or other adviser’s services are limited to consulting on any broad-based plan that does not discriminate in scope, terms or operation in favor of executive officers or directors and that is generally available to all salaried employees or providing information that is either not customized for the Company or that is customized based on parameters that are not developed by the adviser, and about which the adviser does not provide advice.

9)  The Committee may delegate authority to one or more directors or subcommittees or to members of management, to the extent permitted by applicable law and as the Committee deems appropriate.

10)  If required to be included in the Company’s proxy statement or annual report on Form 10-K filed with the SEC, review and discuss with management the Company’s Compensation Discussion and Analysis (“CD&A”), recommend that the CD&A be included in the Company’s annual report on Form 10-K and proxy statement, and produce the Compensation Committee report on executive officer compensation. 

11)  Review the total compensation program and practices of the Company with a view to whether they appear to be designed with full consideration of all tax, accounting, legal and regulatory requirements (including 162(m)) and are of the highest quality.

12)  Keep abreast of current developments in executive compensation and employee compensation practices outside the Company.

13)  Report to the Board following meetings of the Committee and perform any other activities consistent with this charter, the Company’s Certificate of Incorporation and Bylaws and governing law as the Committee or the Board deems necessary or appropriate.

14)  The Committee shall annually review and assess the adequacy of this charter and recommend any proposed changes to the Board for approval.  The Committee shall also perform an annual evaluation of its own performance, which shall compare the performance of the Committee with the requirements of this charter.  The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate, and may take the form of an oral report by the chairperson of the Committee or any other member of the Committee designated by the Committee to make this report.

 

Board Approved: October 17, 2023