The Compensation Committee (the “Committee”) of the Board of Directors of Chesapeake Utilities Corporation (the “Company”) shall be composed of not less than three directors each of whom is not an employee of the Company or any of its subsidiaries and each of whom shall qualify as:

An “independent director” as defined by the rules of the New York Stock Exchange,

A "non-employee director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and

An "outside director" within the meaning of Section 162(m) of the Internal Revenue Code, in each case, in accordance with these requirements as in effect at the time the director is appointed as a member of the Committee.

The Board of Directors shall have sole authority to appoint and remove members of the Committee. Each year, following the Company’s Annual Meeting, the Board of Directors shall appoint the members of the Committee and select a Chairman of the Committee, who may be the incumbent Chairman or another member of the Committee.

The Chairman of the Board shall serve as the Company liaison with the Committee.

PURPOSE

The Compensation Committee shall assist the Board of Directors in carrying out its responsibilities to manage the business and affairs of the Company by:

Providing effective oversight of the Company’s compensation policies and, if so designated by the Board of Directors, serve as the administrator or provide oversight of any one or more of the Company's employee benefit plans; and

Discharging the Board’s responsibilities relating to the compensation of the Company’s executives.

RESPONSIBILITIES

The responsibilities of the Compensation Committee shall consist of those set forth in this Charter and such additional responsibilities as may be assigned to the Committee from time to time by the Board of Directors. The Committee shall exercise its responsibilities under this Charter in a manner consistent with the Company's goal of maintaining compensation policies and practices and employee benefit plans that (i) promote the competitive position of the Company, (ii) are fair to employees, and (iii) comply with all applicable accounting rules and regulations, tax laws, securities laws and other regulatory requirements.
The Committee shall:

1. Design, recommend to the Board of Directors for adoption, and administer executive compensation policies and practices, including incentive compensation plans and equity-based plans, that:
   1. Are consistent with the Company's overall business strategy and objectives;
   2. Contribute to the ability of the Company to attract, retain, and motivate employees; and
   3. Appropriately link the Company's incentive compensation policies and practices to the performance of the Company and the creation of shareholder value.
2. Report to Board of Directors, at least annually, on the following matters as they relate to the Chief Executive Officer (the “CEO”) and all other executive officers who report to the CEO (“covered officers”): (i) annual base salary levels, (ii) annual incentive opportunity levels, (iii) long-term incentive opportunity levels, (iv) executive perquisites, (v) employment agreements, (vi) change in control provisions/agreements, and (vi) other supplemental benefits.
3. With respect to the CEO and, as directed by the Board of Directors, any other covered officer:
   1. Review and approve the corporate goals and objectives relevant to the compensation of the officer (which goals and objectives may include (A) the performance of the officer, divisions of the Company, or the Company as a whole relative to pre-established performance goals and objectives and (B) the performance of divisions of the Company or the Company as a whole relative to appropriate comparison companies or peer groups);
   2. Evaluate the officer’s performance in light of the established goals and objectives; and
   3. Determine and approve the officer’s compensation level based on this evaluation.

In determining the long-term incentive component of the officer’s compensation, the Committee shall consider (i) the Company’s performance and relative shareholder return, (ii) the value of similar incentive awards to similarly ranking officers at comparable companies, and (iii) the awards to the officer in past years.

4. Serve as the committee that is responsible for the administration of the Chesapeake Utilities Corporation Performance Incentive Plan, and in this capacity carry out the responsibilities that are conferred upon that committee by the terms of the Plan.
5. Serve as the committee that is responsible for the administration of the Chesapeake Utilities Corporation Cash Bonus Plan, and in this capacity carry out the responsibilities that are conferred upon that committee by the terms of the Plan.
6. From time to time as the Committee deems appropriate or as requested by the Board of Directors, evaluate the Company’s director compensation arrangements, including the appropriate levels of director cash and stock compensation, and make any recommendations to the Board in this regard that the Committee deems appropriate.
7. Review annually, in conjunction with the CEO, the Company’s management succession plans, and make any recommendations to the Board of Directors that the Committee deems appropriate.
8. Prepare the disclosure required by Item 407(e)(5) of Regulation S-K promulgated by the Securities and Exchange Commission.
9. Review and discuss the Compensation Discussion and Analysis with the management of the Company, and recommend to the Board of Directors that the Compensation Discussion and Analysis, and any revisions thereto, be adopted and included in the Company’s annual Proxy Statement.
10. Generally keep abreast of current developments in executive compensation outside the Company, including any regulatory and legislative initiatives.
11. Review and assess this Charter annually and recommend any proposed changes to the Board of Directors.

In carrying out the foregoing responsibilities, the Committee, to the extent that it deems appropriate (and, in the case of any of the Company's employee benefit plans, to the extent permitted by the plan), may delegate the day-to-day administration of matters under its authority to employees of the Company, or a subcommittee, subject in all cases to the Committee's oversight responsibility.

The Committee, with the consent of the Board of Directors, may retain legal counsel, consultants, or other advisors to assist it in the discharge of its responsibilities under this Charter. However, if a compensation consultant is to be retained to assist the Committee in the evaluation of the compensation paid to directors, the CEO or any other senior executive, the Committee shall have sole authority to retain and terminate the consultant, including sole authority to approve the consultant’s fees and other retention terms.

MEETINGS AND MINUTES

The Committee shall hold meetings, in person or by telephone, at such times and with such frequency as it deems necessary to carry out its duties and responsibilities under this Charter. Special meetings of the Committee may be called by the Chairman of the Board or the President of the Company or by the Chairman of the Committee, with notice of any such special meeting to be given in accordance with the Company’s Bylaws. A majority of the members of the Committee shall constitute a quorum for the transaction of business by the Committee. At the discretion of the Committee, other members of the Board and any officer or employee of the Company may be invited to attend and participate in meetings of the Committee. The Committee also may act by unanimous written consent in accordance with the terms of the Company’s Bylaws.

If approved by the Board of Directors, the Committee may delegate any of its responsibilities under this Charter to a subcommittee composed solely of members of the Committee.

Minutes of each Committee meeting and records of all other Committee actions shall be prepared by a secretary of the meeting designated by the Committee, and shall be retained with the permanent records of the Company.

A report on each meeting of the Committee and on each action of the Committee taken by unanimous written consent shall be provided to the Board of Directors by the Chairman of the Committee (or, in the Chairman’s absence, by another member of the Committee) at the next regularly scheduled meeting of the Board of Directors or as otherwise requested by the Board of Directors.

ANNUAL PERFORMANCE EVALUATION

The performance of the Committee shall be reviewed and evaluated annually by the Board of Directors based on review criteria and procedures developed by the Corporate Governance Committee.