As Revised on April 27, 2023
I. PURPOSE AND PRINCIPAL DUTIES
The primary purpose of the Compensation Committee (the "Committee") of the Board of Directors (the "Board") of RadNet, Inc. (the "Company") is to assist the Board in discharging its responsibilities relating to the compensation of the Company's officers and directors. The Committee's principal duties are to
1. assist the Board in developing and reviewing compensation programs and strategy applicable to the Company's directors and senior executives, and overseeing the Company's overall compensation philosophy;
2. make recommendations to the Board with respect to incentive-compensation plans and equity-based plans, and interpret and administer such plans;
3. review and discuss with the Company's management the tables and narrative discussion and analysis regarding executive officer and director compensation policies and practices to be included in the Company's public filings, including its annual proxy statement and annual report on Form 10-K; and
4. prepare the Compensation Committee Report to be included in the Company’s proxy statement and annual report on Form 10-K, in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC").
II. MEMBERSHIP
The Committee shall consist of three or more members of the Board, or such lower number as may be allowed by the listing standards of the NASDAQ Stock Market LLC ("NASDAQ") or such other national securities exchange on which the Company's securities are then listed, as the same may be amended from time to time (the "Listing Standards"). Subject to the requirements of the Listing Standards and the Bylaws of the Company, the members of the Committee shall be appointed by and serve at the discretion of the Board. The Chair of the Committee also shall be appointed by the Board. Committee members may be removed at any time, without cause, by the affirmative vote of the majority of the Board. Any Committee member may resign effective upon giving oral or written notice to the Chairman of the Board, the Corporate Secretary or the Board (unless the notice specifies a later time for the effectiveness of such resignation). Vacancies occurring on the Committee shall be filled by the Board based on recommendations of the Nominating and Governance Committee.
Each member of the Committee shall (1) be an "independent director" as defined under the Listing Standards, (2) be a "non-employee director" as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (3) be an "outside director" as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, (4) be free from any relationship with the Company which, in the opinion of the Board, would materially interfere with that director’s exercise of independent judgment from management in connection with its duties as a Committee member, and (5) meet any other requirements imposed by applicable laws, rules, regulations and Listing Standards, subject to any applicable exemptions and transition provisions.
III. MEETINGS AND PROCEDURES
The Committee shall meet in person or virtually as often as it deems appropriate to perform its duties and responsibilities. The Committee will regularly report to the Board on significant matters related to the Committee's responsibilities, and as requested by the Board with respect to other matters. The Committee will maintain written minutes of its meetings and will make such minutes available to the Board.
The Chair of the Committee, in consultation with the Committee members and members of management, will determine the frequency and length of Committee meetings and develop the Committee’s agenda. A majority of the members of the Committee shall constitute a quorum and the act of a majority of the members present at a meeting where a quorum is present shall be the act of the Committee. The Committee will otherwise be governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board.
The Committee may invite members of management to its meetings as it deems appropriate. However, the Committee shall meet regularly without such members present, and in all cases the Chief Executive Officer (the "CEO") and any other executive officers shall not be present at meetings when the CEO’s or such other executive officer’s compensation is approved or under circumstances when the independence of Committee determinations may be compromised.
IV. RESPONSIBILITIES AND AUTHORITY
The following are general guidelines establishing the responsibilities and authority of the Committee, in addition to the purposes set forth above. This list is not intended to be exhaustive, and the Committee may modify the list as appropriate, establishing policies and procedures as required or recommended to meet its purpose and carry out its principal functions.
Executive Compensation Arrangements
1. Annually review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO's performance in light of those goals and objectives, and determine and approve the CEO's compensation level, including base, bonus and incentive compensation, based on such evaluation. In determining CEO compensation, the Committee shall consider the results of the most recent stockholder advisory vote on executive compensation required by Section 14A of the Exchange Act (the "Say on Pay Vote"). The CEO cannot be present during any voting or deliberations by the Committee on his or her compensation.
2. Annually review and approve corporate goals and objectives relevant to executive compensation for executive officers other than the CEO, evaluate the executive officer’s performance in light of those goals and objectives, and determine and approve the executive officer’s compensation level, including base, bonus and incentive compensation, based on such evaluation. In evaluating and determining executive compensation, the Committee shall consider the results of the most recent Say on Pay Vote.
3. Consider and approve the grant of all forms of bonus and equity compensation to each named executive officer, including the aggregate maximum value of bonus and incentive compensation that may be awarded to such executive officers of the Company. Identify guidelines and limitations with respect to the CEO's determination of bonus and incentive compensation awarded to certain other senior management (other than the executive officers). In evaluating and determining the guidelines and limitations with respect to the bonus and incentive compensation awarded to named executive officers and certain other senior management, the Committee shall consider the results of the most recent Say on Pay Vote, the respective performance of such executive officer or member of senior management, and any recommendations made by the CEO with respect thereto.
4. Review and, either as a committee or together with the other independent directors (as directed by the Board), approve all employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for the Company's CEO, executive officers and certain other members of senior management, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans.
5. Make recommendations to the Board regarding independent director compensation.
6. Oversee the creation and implementation of the Company's compensation philosophy and strategy, which shall be based on aligning compensation with the Company’s long-term economic performance and value creation.
Compensation Plans and Policies
7. Make recommendations to the Board with respect to incentive-compensation plans and equity-based plans and interpret and administer such plans, including but not limited to determining eligibility, the number and type of equity awards available for grant, approving grants under the plans and the terms of such grants.
8. Appoint, monitor and terminate plan trustees, and monitor, adopt, amend and terminate the Company's qualified and non-qualified pension plans.
9. Determine and establish, as applicable, stock ownership guidelines and claw-back policies for directors and executive officers and monitor compliance with such guidelines and policies.
Reporting and Disclosure
10. Review and discuss with management the Company's Compensation Discussion and Analysis including the pay versus performance disclosures (the "CD&A") and determine whether to recommend to the Board that the CD&A be included in the Company's proxy statement and/or annual report on Form 10-K.
11. Prepare the report of the Committee required by the rules of the SEC to be included in the Company's annual proxy statement.
12. Review and recommend to the Board for approval the frequency with which the Company will conduct Say on Pay Votes, taking into account the results of the most recent stockholder advisory vote on frequency of Say on Pay Votes required by Section 14A of the Exchange Act, and review and approve the proposals regarding the Say on Pay Vote and the frequency of the Say on Pay Vote to be included in the Company's proxy statement.
Risk Oversight
13. Oversee the Company's compliance with any applicable requirements under Listing Standards that, with limited exceptions, stockholders must approve equity compensation plans.
14. Review the Company's incentive compensation arrangements to determine whether such plans encourage excessive risk-taking, and discuss at least annually the relationship between risk management policies and practices and overall compensation, and to evaluate compensation policies and practices that could mitigate any such risk.
15. Monitor the Company's compliance with the requirements of the Sarbanes-Oxley Act of 2002 (including relating to 401(k) plans and loans to directors and officers), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, each as amended, and other applicable laws, regulations and rules, and oversee the Company's response to regulatory developments, in each case relating to compensation arrangements for directors and executive officers.
General
16. Annually review, evaluate and assess the Committee's own performance and compliance with this Charter.
17. Annually review this Charter and periodically revise, as determined appropriate by the Committee.
18. Perform any other activities consistent with this Charter, the Company's Bylaws and governing law, as the Compensation Committee or the Board deems necessary or appropriate.
The Committee can delegate any of its responsibilities to such person or persons, including officers or employees of the Company or any of its members, except to the extent otherwise prohibited by applicable law or the rules and regulations of the SEC or applicable Listing Standards. Any such person to whom the Committee grants such authority shall regularly report to the Committee any actions so taken and the Committee may revoke any such delegation of authority at any time.
V. OUTSIDE ADVISORS
The Committee shall have the authority, in its sole discretion, to select, retain and obtain the advice of a compensation consultant, outside legal counsel and such other advisors as it deems necessary to assist with the execution of its duties and responsibilities as set forth herein. The Committee shall set the compensation, and oversee the work, of the compensation consultant, outside legal counsel or other advisors. The Company shall provide appropriate funding, as determined by the Committee, for the payment of reasonable compensation to any advisors retained by the Committee. The authority granted herein shall not affect the ability or obligation of the Committee to exercise its own judgment in fulfillment of its duties.
In retaining or seeking advice from compensation consultants, outside legal counsel and other advisors (other than the Company's in-house legal counsel), the Committee must take into consideration the factors specified in NASDAQ Listing Rule 5605(d)(3) and comply with any applicable rules of the SEC regarding assessing the independence of Committee consultants or advisors. [The Committee may retain, or receive advice from, any compensation advisor they prefer, including ones that are not independent, after considering such specified factors. The Committee is not required to assess the independence of any compensation consultant or other advisor that acts in a role limited to consulting on broad-based plans available generally to all salaried employees without discriminating, in scope, terms or operation, in favor of executive officers or directors, or that provides information not customized to a particular company and/or is customized based on parameters that are not developed by the consultant or advisor, and about which purports to be for informational use rather than advice.]
The Committee shall evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with Item 407(e)(3)(iv) of Regulation S‑K.
VI. CONSISTENCY WITH CERTIFICATE OF INCORPORATION AND BYLAWS
To the extent that any provision or section of this Charter may be inconsistent with any article, provision or section of the Certificate of Incorporation or Bylaws of the Company, the Certificate of Incorporation or Bylaws, as appropriate, shall fully control.