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Compensation Committee Charter

  1. Purpose

    The overall purpose of the Compensation Committee (the "Committee") is to implement and oversee human resources and compensation policies approved by the Board of Directors (the "Board") of New Gold Inc. (the "Company").

  2. Composition, Procedures and Organization

    1. The Committee shall consist of at least three members of the Board, all of whom shall be non management directors, and "independent", as that term is defined in National Instrument 58-101 "Disclosure of Corporate Governance Practices" and under the rules of the applicable exchanges.
    2. The Board, at its organizational meeting held in conjunction with each annual general meeting of the shareholders, shall appoint the members of the Committee for the ensuing year. The Board may at any time remove or replace any member of the Committee and may fill any vacancy in the Committee.
    3. Unless the Board shall have appointed a chair ("Chair") of the Committee, the members of the Committee shall elect a chair from among their number.
    4. The secretary of the Committee shall be designated from time to time from one of the members of the Committee or, failing that, shall be the Company's corporate secretary, unless otherwise determined by the Committee.
    5. The quorum for meetings shall be a majority of the members of the Committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and to hear each other.
    6. The Chief Executive Officer (the "CEO") shall be available to advise the Committee, shall receive notice of all meetings of the Committee and may attend meetings at the invitation of the chair of the Committee.
    7. The Committee shall have access to such officers and employees of the Company and to such information respecting the Company and may engage independent compensation consultants at the expense of the Company, all as it considers to be necessary or advisable in order to perform its duties and responsibilities.

  3. Meetings

    The Committee will meet on a regular basis and no less than twice per year. Any member of the Committee may call a meeting of the Committee. The Committee shall hold in camera sessions without the presence of management at each meeting.

  4. Duties And Responsibilities

    The duties and responsibilities of the Committee shall be as follows:

    1. to recommend to the Board human resources and compensation policies and guidelines for application to the Company;
    2. to ensure that the Company has in place programs to attract and develop management of the highest calibre and a process to provide for the orderly succession of management;
    3. to review and approve corporate goals and objectives relevant to the compensation of the senior management and, in light of those goals and objectives, to recommend to the Board the annual salary, bonus and other benefits, direct and indirect, of senior management and to approve compensation for all other designated officers in the Company, after considering the recommendations of the CEO all within the human resources and compensation policies and guidelines approved by the Board; provided, however, that the CEO may not be present for voting or deliberations with respect to the compensation of the CEO;
    4. to implement and administer human resources and compensation policies approved by the Board concerning the following:
      1. executive compensation, contracts, stock option plans or other incentive plans, including making recommendations to the Board regarding equity-based compensation and options; and
      2. proposed personnel changes involving officers reporting to the CEO;
    5. from time to time, to review the Company's broad policies and programs in relation to benefits;
    6. to annually receive from the CEO recommendations concerning annual compensation policies and budgets, including stock options, for all employees;
    7. from time to time, to review with the CEO the Company's broad policies on compensation for all employees and overall labour relations strategy for employees;
    8. to review the recommendations of the Board on the adequacy and form of the compensation of directors and to ensure that the compensation realistically reflects the responsibilities and risks involved in being an effective director, and to respond to and advise the Board accordingly;
    9. to report regularly to the Board on all of the Committee's activities and findings during that year;
    10. to develop a calendar of activities to be undertaken by the Committee for each ensuing year and to submit the calendar in the appropriate format to the Board of Directors within a reasonable period of time following each annual general meeting of shareholders; and
    11. to review executive compensation disclosure before the Company publicly discloses this information.
    12. to recommend to the Board the Company's internal stock option policy as governed by the shareholder approved Stock Option Plan.

  5. Chair of the Committee

    The Chair of the Committee:

    1. provides leadership to the Committee with respect to its functions as described in this Charter and as otherwise may be appropriate, including overseeing the logistics of the operations of the Committee;
    2. chairs meetings of the Committee, unless not present, including in camera sessions, and reports to the Board of Directors following each meeting of the Committee on the findings, activities and any recommendations of the Committee;
    3. ensures that the Committee meets on a regular basis and at least twice per year;
    4. in consultation with the Chair of the Board and the Committee members, establishes a calendar for holding meetings of the Committee;
    5. establishes the agenda for each meeting of the Committee, with input from other Committee members, the Chair of the Board, and any other parties as applicable;
    6. acts as liaison and maintains communication with the Chair of the Board and the Board to optimize and co-ordinate input from Board members, and to optimize the effectiveness of the Committee. This includes reporting to the full Board on all proceedings and deliberations of the Committee at the first meeting of the Board after each Committee meeting and at such other times and in such manner as the Committee considers advisable;
    7. reports annually to the Board on the role of the Committee and the effectiveness of the Committee role in contributing to the objectives and responsibilities of the Board as a whole;
    8. ensures that the members of the Committee understand and discharge their duties and obligations;
    9. fosters ethical and responsible decision making by the Committee and its individual members;
    10. together with the Corporate Governance and Nominating Committee, oversees the structure, composition, membership and activities delegated to the Committee from time to time;
    11. ensures that resources and expertise are available to the Committee so that it may conduct its work effectively and efficiently and pre-approves work to be done for the Committee by consultants;
    12. facilitates effective communication between members of the Committee and management; and
    13. performs such other duties and responsibilities as may be delegated to the Chair by the Board of Directors from time to time.

The Corporate Governance and Nominating Committee will annually review and reassess the adequacy of this Charter and submit any recommended changes to the Board for approval.

Adopted by the Board on July 8, 2008.