The Compensation Committee (the "Committee") is a standing committee of the Board of Directors of lululemon athletica inc. (the "Company"). The purpose of the Committee is to discharge the responsibilities of the Board of Directors, relating to compensation of members of the Board of Directors and the executive officers of the Company.
Membership on the Committee shall be determined annually by the Board of Directors upon the recommendation of the Nominating Committee. Committee members shall serve until their successors shall be duly elected and qualified. The Board of Directors, in consultation with the Nominating Committee, may remove a member of the Committee at any time with or without cause and may appoint an independent director to fill the vacancy for the remainder of the term.
The Committee shall be comprised of at least three members, each of whom shall meet the independence requirements of applicable law and the listing standards of The Nasdaq Stock Market LLC. Unless otherwise determined by the Board of Directors, each member of the Committee shall also meet the requirements of an "outside director" for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and the requirements of a "non-employee director" for purposes of Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Board of Directors, with the assistance of the Nominating Committee, shall make a determination on the independence of each member and may also designate a chairperson for the Committee. If a chairperson of the Committee is not designated by the Board of Directors, the members of the Committee may designate a chairperson of the Committee by majority vote of the full Committee membership.
The Company's compensation policies with respect to the executive officers of the Company are based on the principles that compensation should, to a significant extent, be reflective of the financial performance of the Company, and that a significant portion of executive officers' compensation should be provided through long-term incentives. The Committee seeks to have compensation of the Company's directors and executive officers set at levels that are sufficiently competitive so that the Company may attract, retain and motivate highly qualified directors and executive officers to contribute to the Company's success. In assessing the overall compensation for executive officers, the Committee will consider the Company's performance, relative stockholder return and industry position, market compensation data, awards given to the Company's executive officers in past years, and the recommendations of third-party consultants.
The following functions are the common recurring activities of the Committee in carrying out its responsibilities. These functions are set forth as a guide with the understanding that the Committee may diverge from this guide as appropriate given the circumstances.
The Committee will have the resources and authority necessary to discharge its duties and responsibilities. In carrying out its duties and responsibilities, the Committee shall have full access to any relevant records of the Company and may retain experts and outside consultants to advise the Committee. The Committee shall also have authority to obtain advice and assistance from internal or external legal, accounting or other advisors. The Committee shall have sole authority to engage, terminate and determine the independence, compensation and terms of engagement of any experts, outside consultants, external lega counsell, accounting or other advisors. The Committee may also request that any officer or other employee of the Company, the Company's outside counsel or any other person meet with any members of, or consultants to, the Committee. The fees, expenses or compensation owed to any person retained by the Committee and any ordinary administrative expenses of the Committee incurred in carrying out its duties and responsibilities shall be borne by the Company.
Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Committee will take all necessary steps to preserve the privileged nature of those communications.
The Committee shall be entitled to delegate any or all of its duties or responsibilities to a subcommittee of the Committee, to the extent consistent with the Company's certificate of incorporation, bylaws, and applicable laws and rules of the markets in which the Company's securities then trade. In addition, the Committee may authorize one or more officers to (i) designate eligible individuals other than executive officers and directors to be the recipients of equity compensation and (ii) determine, within an amount established by the Committee or the Board of Directors, the size of equity awards to be granted to each such recipient, to the extent consistent with the Company's certificate of incorporation, bylaws, and applicable laws and rules of the markets in which the Company's securities then trade; provided, however, that no officer may designate himself or herself as such a recipient. Any officer to whom such authority is delegated shall regularly report to the Committee on the grants so made.
Without limiting the foregoing, the Committee may establish a subcommittee of the Compensation Committee (the "Subcommittee") that is intended to qualify (a) as a committee consisting solely of two or more non-employee directors within the meaning of Rule 16b-3 ("Rule 16b-3") under the Exchange Act, and (b) as a committee consisting solely of two or more outside directors within the meaning of Section 162(m) of the Code. The Subcommittee shall have two primary responsibilities: (i) to approve grants under the Company's equity incentive compensation plans that are intended to be exempt from the short-swing profit recovery rules of Section 16(b) of the Exchange Act by operation of Rule 16b-3 ("16b-3 Matters"), and (ii) to approve any compensation matters where such compensation is intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code by virtue of being approved by a committee of "outside directors" ("162(m) Matters"). To the extent necessary to comply with Section 162(m) of the Code or Rule 16b-3, the Subcommittee shall have authority to act on behalf of the Committee. If the Subcommittee shall have less than two members, or is not otherwise qualified as set forth in clauses (a) and (b), 16b-3 Matters and 162(m) Matters shall be referred to the full Committee or the Board of Directors for its consideration.
Adopted May 30, 2007
Revised through May 2012