TURQUOISE HILL RESOURCES LTD.
COMPENSATION AND BENEFITS COMMITTEE
COMPENSATION AND BENEFITS COMMITTEE
The primary objective of the Compensation and Benefits Committee (the "Committee") of Turquoise Hill Resources Ltd. (the "Corporation") is to assist the Board of Directors of the Corporation (the "Board") in discharging its responsibilities relating to compensation of the executive officers and directors of the Corporation.
2 Organization of the Committee
The Committee shall consist of three or more directors and shall satisfy the independence and experience requirements of applicable securities laws, stock exchanges and any other regulatory requirements. Members of the Committee shall have, as a whole: (i) direct experience in executive compensation, and (ii) skills and experience that should enable the Committee to make decisions on the suitability of compensation policies and practices, all as determined by the Board. The members of the Committee shall be appointed by the Board on the recommendation of the Nominating and Corporate Governance Committee and may be removed by the Board at any time. A majority of the members of the Committee shall constitute a quorum.
3 Meetings of the Committee
The Committee shall meet as many times as the Committee deems necessary to carry out its duties effectively, but not less frequently than two times per year.
The Board, or failing such selection, the members of the Committee, shall select a chair who will preside at each meeting of the Committee. The chair shall be an independent director.
The chair of the Committee shall ensure that the agenda for each upcoming meeting of the Committee is circulated to each member of the Committee on a timely basis in advance of such meeting.
4 Responsibilities of the Committee
The Committee shall have the following responsibilities:
- With respect to executive officers' and directors' compensation
- Review and approve on an annual basis corporate goals and objectives relevant to Chief Executive Officer ("CEO") compensation, evaluate the CEO's performance in light of those goals and objectives and set the CEO's compensation level based on this evaluation. The CEO shall not be present during voting or deliberations relating to his or her compensation.
- Determine fees payable to members of any ad hoc committees established by the Board.
- Review and make recommendations to the Board on an annual basis with respect to the adequacy and form of compensation and benefits of all executive officers and directors.
- Administer and make recommendations to the Board with respect to the Corporation's incentive compensation plans and equity-based plans.
- Review the recipients of, and the nature and size of equity-linked awards and bonuses granted from time to time, in compliance with applicable securities laws, stock exchanges and any other regulatory requirements.
- Prepare any report as may be required under applicable securities laws, stock exchanges and any other regulatory requirements.
- Oversee risk identification and management in relation to compensation policies and practices and reviewing disclosure in this respect.
- Oversee the selection of a benchmark group for the purposes of comparing compensation or any element of compensation and reviewing disclosure in this respect.
- Review the compensation discussion and analysis section of the Corporation's management information circular and recommend its approval to the Board.
- With respect to other matters
- Monitor the appropriate compensation structures in place so that the Corporation can attract, motivate and retain the quality of personnel required to meet its business objectives.
- Maintain an assessment and compensation philosophy that rewards the creation of shareholder value.
- Monitor strategic labour and human resources policies and practices.
- With respect to Committee issues
- Review and assess annually its own performance and the adequacy of this Charter and recommend to the Nominating and Corporate Governance Committee any changes deemed appropriate by the Committee.
The chair of the Committee reports regularly to the Board on the business of the Committee as well as at such time and in such manner as the Board may otherwise require.
6 Retention of Independent Advisors
In performing its responsibilities, the Committee may, as required and subject to advising the Chairman of the Board, engage an outside advisor (an "Advisor") for advice and assistance at the expense of the Corporation. Before retaining an Advisor (other than in-house legal counsel and any Advisor whose role is limited to consulting on broad-based, non-discriminatory plans or providing information that is not customized in particular for the Corporation), the Committee shall consider the independence of such Advisor, including any independence factors that it is required to consider by applicable securities laws, stock exchanges or any other regulatory requirements.
Note that the Corporation is subject to the requirements set forth in the following agreements which may affect the above:
- The Private Placement Agreement dated October 18, 2006 among the Corporation and Rio Tinto International Holdings Limited;
- The Heads of Agreement dated December 8, 2010 among the Corporation and Rio Tinto International Holdings Limited;
- The Memorandum of Agreement dated April 17, 2012 among the Corporation, Rio Tinto International Holdings Limited and Rio Tinto South East Asia Limited, as amended pursuant to an Amending Agreement dated May 22, 2012;
- The Memorandum of Agreement dated August 23, 2013 among the Corporation, Rio Tinto International Holdings Limited and Rio Tinto South East Asia Limited, as amended pursuant to an Amending Agreement dated November 14, 2013; and
- The Financing Support Agreement dated December 15, 2015 among the Corporation and Rio Tinto plc.