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Appendix A - Audit Committee Charter
Effective February 25, 2003, the Committee is comprised solely of independent
directors, to serve at the pleasure of the Board.
MEMBERS
Heidi G. Miller, Chairperson*
Lawrence A. Bossidy
Thomas E. Shenk
Samuel O. Thier
The Chairperson of the Committee or, if not present, the senior outside Director
present shall preside at all meetings of the Committee and provide an oral report
to the Board on each meeting. The Committee shall hold a minimum of four meetings
annually. The Company shall provide the Committee with adequate staff support and
resources to discharge its responsibilities. The Committee may engage independent
legal counsel and other advisors as the Committee deems advisable to carry out its
responsibilities. The Company shall provide the Committee with full funding to engage
the Company’s independent public accountants as well as to retain independent counsel
and other advisors for the Committee.
The Committee shall meet privately with the internal auditors and the independent
public accountants at least quarterly and whenever else the Committee deems
advisable. The Committee shall ensure that the independent public accountants are
ultimately accountable to the Committee and the Board. The Committee’s performance
shall be evaluated annually by the Committee.
The Controller of the Company is the Secretary of the Committee. Minutes of each
meeting will be prepared by the Secretary and submitted to Committee members for
approval at the next meeting.
MEMBERSHIP REQUIREMENTS
The Committee must be comprised of at least three directors, each of whom is
independent and "financially literate," and at least one of whom is an
"audit committee financial expert," as such terms are defined in applicable New
York Stock Exchange (NYSE) and Securities and Exchange Commission (SEC) rules and
regulations.
Committee members may not simultaneously serve on the audit committee of more than
three public companies, including the Company, unless the Board determines that such
simultaneous service does not impair efficacy of Board service.
* Member is an "audit committee financial expert" as that term is defined in
Item 401 of Regulation S-K promulgated by the SEC and she is
"independent of management" as that term is defined in Item 7(d)(3)(iv) of
Schedule 14A promulgated by the SEC.
PURPOSE
- Assist in the Board oversight of:
- The integrity of the Company’s financial statements.
- The Company’s compliance with legal and regulatory requirements.
- The independent public accountants’ qualifications and independence.
- The performance of the Company’s internal audit function and the independent public accountants.
- The accounting and financial reporting processes of the Company and its audits.
- Prepare the Audit Committee report for inclusion in the proxy statement as required by the SEC.
DUTIES AND RESPONSIBILITIES
- Appoint, evaluate, and retain the Company’s independent public
accountants. Maintain direct responsibility for termination,
compensation and oversight of the Company’s independent public
accountants (including the resolution of disagreements between
management and the independent public accountants regarding
financial reporting). The Company’s independent public accountants
shall report directly to the Committee.
- Approve all services provided to the Company by the independent
public accountants and review all non-attest services to ensure they
are permitted under current law and regulation. Alternatively,
establish policies and procedures for the pre-approval of services
provided by the independent public accountants in a manner that
complies with current federal securities laws and NYSE regulations.
- Oversee the Company’s accounting, financial reporting process,
internal controls and audits. Consult with management, the internal
auditors and the independent public accountants on matters related
to the annual audit plan, audit procedures applied, audit and
nonaudit fees, status of federal tax returns and related reserves,
the published financial statements, the accounting principles
applied, and any material changes thereto. Meet with the independent
public accountants and internal auditors to discuss the results of
their examinations.
- Review at least annually a report of the independent public
accountants describing their internal control procedures, material
issues raised by such review and certain inquiries or investigations
by governmental or professional authorities, and all relationships
between the independent public accountants and the Company. After
reviewing the foregoing report and the independent public
accountants' work, the Committee shall evaluate the independent
public accountants’ qualifications, performance and independence,
including a review and evaluation of the lead partner of the
independent public accountants.
- Receive and review any other reports from the independent public
accountants that are required under Generally Accepted Auditing
Standards, other standards governing the independent public
accountants or by the federal securities laws or NYSE.
- Discuss the annual audited financial statements and quarterly
statements, including Management's Discussion and Analysis, with
management and the independent public accountants.
- Discuss with management earnings press releases and financial
information and earnings guidance provided to analysts and rating
agencies. Review for compliance with regulations governing the use
of non-Generally Accepted Accounting Principles financial measures
and related disclosure requirements.
- Engage independent legal, accounting and other advisors, as the
Committee determines necessary to carry out their duties, and obtain
appropriate funding from the Company, as determined by the
Committee, for compensating such advisors.
- Discuss policies with respect to risk assessment and management.
- Meet separately with management, internal auditors and independent
public accountants on a periodic basis.
- Review with the independent public accountants any audit issues
and management's response.
- Set clear policies for the Company’s hiring of employees or former
employees of the independent public accountants.
- Report regularly to the Board of Directors.
- Review any significant issues concerning litigation and
contingencies with management, counsel and the independent public
accountants.
- Review the insurance program of the Company and make
recommendations to the Board on insurance policy.
- Monitor compliance with the Foreign Corrupt Practices Act and the
Company's policies on ethical business practices and report on the
same to the Board.
- Establish procedures for the receipt, retention and treatment, on a
confidential basis, of complaints received by the Company, including
the Board and the Audit Committee, regarding accounting,
internal accounting controls or auditing matters, and the
confidential, anonymous submissions by employees of concerns
regarding questionable accounting or auditing matters.
- Review and reassess the adequacy of the Committee charter annually
and make changes as appropriate.
- Review and evaluate the performance of the Committee and its
members annually.
QUORUM
For the transaction of business at any meeting of the Committee, two members shall
constitute a quorum.
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