Mohawk Industries, Inc.
Nominating
and Corporate Governance Committee Charter
Purpose
The
Nominating and Corporate Governance Committee (the “Committee”) is intended to
assist the Board of Directors of Mohawk Industries, Inc. (the “Company”) in
fulfilling its oversight responsibilities under the New York Stock Exchange
listing standards and
First,
the Committee shall be responsible for identifying individuals qualified to
serve on the Board of Directors and to recommend director nominees for
selection by the full Board of Directors or shareholders of the Company in
accordance with the Company’s certificate of incorporation and by-laws and with
Second,
the Committee shall be responsible for evaluating the Company’s corporate
governance policies, developing for adoption by the Board of Directors a set of
formal, written guidelines for corporate governance and periodically
re-evaluating such policies and guidelines for the purpose of suggesting
improvements to them if appropriate.
Composition of the
Committee
The members of the Committee shall be
independent directors meeting the requirements of the New York Stock Exchange
and appointed by the Board of Directors on the recommendation of the Nominating
and Corporate Governance Committee. The
Chairman of the Committee shall be designated by the Board of Directors. In the absence of the Chairman, the members
of the Committee may designate a chairman by majority vote. The Board of Directors may, at any time,
remove one or more directors as members of the Committee. The Committee may delegate any of its
authority and responsibilities set forth below to a sub-committee of members of
the Committee designated by the Chairman of the Committee.
Authority and
Responsibilities
The Committee is responsible for identifying and
evaluating individuals qualified to serve on the
Board of Directors and recommending director nominees for selection by the full
Board of Directors. At least annually, the Committee shall review
with the Board of Directors the appropriate skills, experience and
characteristics desired of Board members.
The full Board shall remain responsible for selecting nominees and
recommending them for election by the stockholders. The Committee is responsible for developing
and implementing the screening process necessary to identify qualified
candidates. As a part of its screening
process, the Committee shall:
(i)
evaluate
a candidate’s independence from the Company’s management and other principal
service providers, and the effect of any relationships that might impair
independence, e.g., business, financial or family relationships with the
Company’s management or other service providers;
(ii)
evaluate
the skills, experiences and characteristics of a candidate; and
(iii)
consider candidates proposed by the Chief Executive
Officer, by any director or by any shareholder, in accordance with procedures
established by the Committee from time to time.
The Committee may determine, from time
to time, the advisability of retaining any search firm or consultant to assist
in the identification and evaluation of candidates for membership on the Board
of Directors. The Committee has the sole authority to retain, at Company
expense, and terminate any such search firm or consultant, including sole
authority to approve the fees to be paid to such firm or consultant and all
other retention terms.
On an annual basis, the Committee
shall evaluate the membership of the committees of the Board. The Committee shall provide to the full Board
of Directors the results of its evaluation, together with the Committee’s
recommendation as to committee membership during the upcoming year, for
consideration by the Board in connection with the annual committee appointment
process. In the event of a vacancy on
any of the committees of the Board, the Committee shall provide its
recommendation regarding a replacement committee member to the full Board of
Directors.
The Committee is also responsible
for evaluating, formulating and recommending to the full Board of Directors
corporate governance policies designed to improve the Board’s performance in its
oversight function. Therefore, promptly
following the initial adoption of this charter, the Committee shall evaluate
the Company’s existing corporate governance procedures with the specific goal
of improving such procedures where possible.
Following the evaluation, the Committee shall develop a set of formal, written guidelines for
corporate governance, which shall be presented to the full Board for
consideration and adoption.
The Committee shall, from
time to time, review the governance
structures and procedures of the Company and suggest improvements thereto to
the full Board of Directors. Such improvements, if adopted by the full Board of
Directors, shall be incorporated into the written guidelines.
The
Committee shall conduct an annual evaluation of its performance. Additionally,
the Committee shall provide an annual evaluation of the Board’s performance and
shall oversee the evaluation of senior management.
Committee Meetings
The Committee shall meet at least one
time per year. Other meetings may be held at the discretion of the Chairman of
the Committee. Minutes of each of these meetings shall be kept and the Chief
Executive Officer will function as the management liaison officer to this
Committee.
Mohawk
Industries, Inc.
Audit
Committee Charter
Purpose
The Audit
Committee (the “Committee”) is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Committee shall monitor (a) the integrity
of the Company’s publicly reported financial statements, (b) the Company’s
compliance with legal and regulatory requirements, (c) the independent
auditors’ qualifications and independence, and (d) the performance of the
Company’s internal audit function and independent auditors. In furtherance of this purpose, the Committee
shall maintain direct communication among the Company's independent auditors
and VP - Internal Audit and the Board of Directors. In discharging its oversight role, the
Committee is empowered to investigate any matter brought to its attention with
full access to all books, records, facilities and personnel of the
Company. The Committee has the authority
to retain at Company expense outside legal, accounting or other advisors to
advise the Committee and to determine and recommend funding for payment of
ordinary administrative expenses necessary and appropriate in carrying out the
Committee’s duties. The Committee shall
produce an annual report for inclusion in the Company’s proxy statement for the
annual meeting of stockholders, in accordance with applicable rules and
regulations.
The
Committee’s job is one of oversight and it recognizes that the Company’s
management is responsible for preparing the Company’s financial statements and
that the outside auditors are responsible for auditing those financial
statements. Additionally, the Committee recognizes that financial management,
as well as the independent auditors, have more time, knowledge and more
detailed information about the Company than do Committee members; consequently,
in carrying out its oversight responsibilities, the Committee is not providing
any expert or special assurance as to the Company’s financial statements or any
professional certification as to the independent auditors’ work.
Composition
of the Committee
The members
of the Committee shall be independent directors meeting the requirements of the
New York Stock Exchange and appointed by the Board of Directors on the
recommendation of the Nominating and Corporate Governance Committee. The Committee will have at least three (3)
members, and each member of the Committee will be financially literate at the
time he or she is appointed by the Board of Directors or will become
financially literate within a reasonable period of time after his or her
appointment. The Chairman of the
Committee shall be designated by the Board of Directors. In the absence of the Chairman, the members
of the Committee may designate a chairman by majority vote. The Board of Directors may, at any time,
remove one or more directors as members of the Committee.
In light of
the extraordinary commitment of time and attention required of members of the
Committee in fulfilling their responsibilities, no member of the Committee
shall be a member of the audit committee, or a committee fulfilling similar
functions, of more than two other public companies.
Authority and Responsibilities
The Committee
shall:
(a)
At
least annually, review and reassess the adequacy of this Charter and evaluate
the performance of the Committee and report the results thereof to the Board of
Directors.
(b)
Study
and make recommendations to the Board of Directors with respect to audit
policies and procedures and the scope and extent of audits. In consultation with corporate management,
the independent auditors, and the internal auditors, consider the integrity of
the Company’s financial reporting processes and controls. Discuss significant financial and other risk
exposures and the steps corporate management has taken to monitor, control, and
report such exposures.
(c)
Review
the qualifications, independence and performance of the independent auditors
including the lead partner of the independent auditor, and present its
conclusions to the Board of Directors annually in advance of the annual meeting
of stockholders. As part of such annual review, obtain and review a report by
the independent auditors describing: all relationships between the independent
auditors and the Company, the independent auditors’ internal quality-control
procedures, any material issues raised by the most recent internal
quality-control review, or peer review, of the independent auditors, or by any
inquiry or investigation by governmental or professional authorities, within
the preceding five years, respecting one or more independent audits carried out
by the independent auditors, and any steps taken to deal with any such issues.
Discuss with the independent auditors all significant relationships they have
with the Company that could impair the auditors’ independence. Discuss with corporate management and personnel
responsible for Mohawk’s internal audit function the qualifications,
independence and performance of the independent auditors. The independent auditors shall report
directly to the Committee and are ultimately accountable to the Committee and
the Board of Directors.
(d)
Retain
and terminate the Company’s independent auditors, with sole authority to
pre-approve, to the extent required by applicable law, all audit and non-audit
engagements and the related fees and terms with the independent auditors. In accordance with applicable law, the
Committee may delegate this authority to one or more designated members of the
Committee; provided that any such decision made pursuant to the foregoing
delegation of authority shall be presented to the Committee at its next
regularly-scheduled meeting.
(e) Satisfy itself as to the professional
competency of the VP - Internal Audit and the adequacy of his/her staff in
discharging responsibility of the office.
Review with management the appointment and replacement of the VP -
Internal Audit.
(f) Review with the independent auditors
and with the VP - Internal Audit, at a time when the annual audit plan is being
developed, the plan's timing, scope, staffing, locations, foreseeable issues,
priorities and procedures, the coordination between the independent auditors
and the VP - Internal Audit in executing the plan and the engagement team.
(g) Meet separately, periodically, with
corporate management, the VP - Internal Audit and the independent auditors.
(h) Review annually the Company's internal
auditing program and significant reports with the VP - Internal Audit and
corporate management’s response and follow-up to those reports.
(i) Meet
quarterly with corporate management and with the independent auditors, to
discuss the annual audited financial statements, including footnotes, the
unaudited quarterly financial results prior to the release of earnings and/or
the quarterly financial statements prior to filing or distribution, including,
in each case, a review of the Company’s disclosures under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”. In discharging this obligation, receive and
review, if necessary, a report from the controller as to any unusual deviations
from prior practice that were included in the preparation of the annual or
quarterly financial results. Review and
discuss (1) draft press releases of unaudited interim and annual financial
results before public release and (2) financial information and earnings
guidance provided to analysts and ratings agencies. Press releases and interim
financial statements also will be reviewed by the independent auditors prior to
public release.
(j) Review the report to the Committee from
the Company’s independent auditors in accordance with Section 204 of the
Sarbanes-Oxley Act of 2002. Review the
contents of such report and all major accounting policy matters involved in the
preparation of interim and annual financial reports with corporate management
and any deviations from prior practice with the independent auditors.
(k) Review with the independent auditors, on
completion of the annual audit, their experience, any difficulties encountered,
any restrictions on their work, cooperation received, significant disagreements
with corporate management, their findings and their recommendations. Discuss certain matters required to be
communicated to audit committees in accordance with AICPA SAS 61.
(l) Review the application of significant
regulatory, accounting and auditing policies, including new pronouncements, to
the Company's financial reports.
(m) Analyze financial reports to understand
performance fluctuations between reporting periods and between reports and
plan.
(n) Review and assess the adequacy of
internal accounting procedures and
controls, including a review with the independent auditors of their evaluation
of the Company's internal controls. Review quarterly the programs that the
Company has instituted to correct any control deficiencies noted by the VP -
Internal Audit in the periodic review or the independent auditors in their
annual review. Discuss with management
the results of the foregoing reviews, including significant items and potential
ways to improve the accounting procedures and controls.
(o) Establish procedures for (i) the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls, or
auditing matters and (ii) the confidential, anonymous submission by employees
of the Company of concerns regarding questionable accounting or auditing
matters.
(p) Establish clear hiring policies for
current or former employees of the independent auditors.
(q) Report
annually to the Board of Directors, after the close of each fiscal year
but prior to the Company's annual
meeting of stockholders, as well as on any other occasion, any issues that
arise with respect to the quality or integrity of the Company’s publicly
reported financial statements, the Company’s compliance with legal or
regulatory requirements, the performance and independence of the independent
auditors, the performance of the internal audit function, or whatever it deems
appropriate concerning the activities of the Committee.
(r) Perform any other activities consistent
with this Charter, the Company’s bylaws, and governing law as the Committee or
the Board deems necessary or appropriate.
Committee
Meetings
The Committee
shall meet at least four times per year.
Minutes of each of these meetings shall be kept and the Chief Financial
Officer will function as the management liaison officer to this Committee.
Mohawk
Industries, Inc.
Compensation Committee Charter
Purpose
The
Compensation Committee (the “Committee”) shall be responsible for reviewing and
making decisions under a delegation of authority from the Board of Directors
with respect to compensation, including salaries, bonuses, equity-based awards,
and other benefits for executive officers of Mohawk Industries, Inc. (the “Company”).
In performing this function, it shall be the objective of the Committee to: (i) encourage the achievement of the Company’s long-range
objectives by providing compensation which directly relates to the performance
of the individual and the achievement of internal strategic objectives; (ii)
establish compensation policies and guidelines that will attract, motivate and
retain qualified personnel through an overall level of compensation opportunity
that is competitive within the Company’s industry; and (iii) promote a direct
relationship between compensation and the Company’s performance by facilitating
executive officer stock ownership through restricted stock and stock option
awards. The Committee shall produce an annual report on executive compensation
for inclusion in the Company’s proxy statement for the annual meeting of
stockholders, in accordance with applicable rules and regulations.
Composition of the
Committee
The
members of the Committee shall be independent directors meeting the
requirements of the New York Stock Exchange and appointed by the Board of
Directors on the recommendation of the Nominating and Corporate Governance
Committee. At least two of the directors appointed to serve on the Committee
shall be “non-employee directors” (within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended) and “outside directors”
(within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder).
The Chairman of the Committee shall be designated by the Board of
Directors. In the absence of the
Chairman, the members of the Committee may designate a chairman by majority
vote. The Board of Directors may at any
time remove one or more directors as members of the Committee. The Committee may delegate any of its
authority and responsibilities set forth below to a subcommittee of members of
the Committee designated by the Chairman of the Committee
Authority and Responsibilities
The
Committee is authorized to fix the compensation of executive officers of the
Company, to establish and administer the annual incentive plan or plans
applicable to executive officers of the Company and to administer the equity
incentive plans of the Company as may from time to time be acquired or adopted
(all such plans collectively “Incentive Plans”). To that end, the Committee shall have and may
exercise all the powers and authority of the Board of Directors to the extent
permitted under Section 141 of the Delaware General Corporation Law.
To
the extent permitted by Delaware law, the Committee may delegate to one or more
officers of the Company the power (i) to designate
the officers and employees of the Company or any of its subsidiaries who will
receive grants of restricted shares, restricted share units or options to
purchase from the Company shares of the Company’s capital stock, and (ii) to
determine the number of restricted shares, restricted share units or options to
be received by them. Such delegation must be made by a resolution that
specifies the total number of restricted shares, restricted share units or
options that may be granted under the delegated authority, and no officer may
be delegated the power to designate himself or herself as a recipient of
restricted shares, restricted share units or options.
The
Committee may determine, from time to time, the advisability of retaining a
compensation consultant to assist in the evaluation of Chief Executive Officer
or other executive officer compensation.
The Committee has the authority to retain, at Company expense, and
terminate a compensation consultant, including sole authority to approve the
consultant’s fees and other retention terms.
The
Committee is responsible for making decisions with respect to the Company’s
executive compensation policies. In
addition, pursuant to authority granted by the Board of Directors, the
Committee shall review and approve corporate goals and objectives relevant to
the compensation to be paid to the Chief Executive Officer and each of the
other executive officers of the Company.
The
Committee shall:
1.
Annually
evaluate the performance of the Chief Executive Officer in light of the
corporate goals and objectives approved and approve base salary and incentive
bonus levels of the Chief Executive Officer of the Company;
2.
Annually
review and approve base salary and incentive bonus levels of the other
executive officers of the Company, as such are recommended to the Committee by
the Company’s Chief Executive Officer based on this evaluation;
3. Review
Company Compensation policies and practices, and consider potential impact on
risk to the Company.
4. Administer
the Company’s Incentive Plans, as well as any other stock option, stock purchase, incentive or other
benefit plans of the Company, fulfilling such duties
and responsibilities as are set forth in such plans;
5.
Review and approve awards pursuant to
delegated authority under the Company’s Incentive
Plans, as such are recommended to the Committee;
6.
Review and approve the Compensation
Discussion and Analysis and disclosure of other
compensation related information as recommended by management for inclusion in the annual proxy statement;
7. Periodically
review Mohawk Board of Directors’ Compensation, as reported by management, and provide suggestions for
changes, if any, to full Board for approval.
8. Make
regular reports to the Board of Directors concerning the activities of the Committee; and
9. Perform
an annual performance evaluation of the Committee.
Committee Meetings
The
Committee shall meet at least two times per year. One such meeting shall be held at a time when
the Committee can review and recommend annual base salary and incentive awards
as described above. The other meetings shall be held at the discretion of the
Chairman of the Committee, or as recommended by the Chief Executive Officer.Minutes of each of these meetings shall be kept.
The Chief Executive Officer will function as the management liaison officer to
the Compensation Committee.