Corporate Governance - Compensation and Nominating Committee Charter

CORPORATE GOVERNANCE Compensation and Nominating Committee Charter

August 30, 2004

PURPOSE
The purpose of the Compensation and Nominating Committee (the “Committee”) of the Board of Managing Directors (the “Board”) of Fuel Tech, Inc. (the “Company”) is to review and approve executive compensation, stock options and similar awards, and adoption or revision of benefit, welfare and executive compensation plans for the Company and also to determine the identity of director nominees for election to the Board.

MEMBERSHIP

•	The Committee shall be comprised of not less than such number of members as shall be required by the rules of The NASDAQ Stock Market, Inc., from time to time, but not less than two (2) members.
•	Each member of the Nominating Committee shall be “independent” as required by the rules of The NASDAQ Stock Market, Inc.
•	The members of the Committee shall be appointed and replaced by the Board.

OPERATIONS
The Committee shall meet as frequently as the Chairman of the Committee deems advisable to fulfill the Committee’s responsibilities but not less often than once per year. The Committee will report its actions to the next following meeting of the Board. The Committee will cause minutes to be kept of its meetings, copies of which will be furnished to Committee and other Board members. The Committee shall be governed by the same rules regarding meetings as are applicable to the Board.

AUTHORITY
The Committee shall have the resources and authority necessary to discharge its responsibilities, including the authority to obtain advice, reports or opinions from internal or external counsel and expert advisors, including compensation consultants or director search firms.

RESPONSIBILITIES
The responsibilities of the Committee are:

1.	Review and approve in advance all salary actions and bonuses for those who are officers, participate in the Management Incentive Program or have base salaries in excess of $100,000 per year.
2.	Review and approve in advance all grants of stock options or other stock awards and all performance awards exceeding 10% of base salary.
3.	Review and approve in advance all significant changes or revisions in benefit, welfare and executive compensation plans and all profit sharing contributions to benefit plans.
4.	Review and approve in advance the annual salary budget, percentage increases therein, planned review dates (which need not be annual), distinctions between cost of living and merit increases, and projected performance award budgets of up to 10% of salary.
5.	Annually present to the Board a list of individuals recommended for election to the Board at the annual meeting of shareholders.
6.	Periodically assist in identifying, interviewing and recruiting candidates for nomination to fill vacancies on the Board at the next annual or special meeting of shareholders.
7.	Prior to recommending an incumbent, replacement or additional director, review the director’s qualifications, consistent with criteria approved by the Board.
8.	Establish procedures for receipt of shareholder nominations for election as directors and review such nominations.
9.	Monitor the independence of the directors to ensure that a majority of the Board and the members of the Committee continue to be independent.
10.	As requested by the Board, assist the Board in its evaluation of the performance of the Board and each committee of the Board.
11.	Form and delegate authority to subcommittees when appropriate.
12.	Review this Charter periodically and recommend revisions to the Board, where appropriate.

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