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AUDIT COMMITTEE CHARTER
(as Amended by the Board of Directors on June 17, 2009) Purpose
The purpose of the Audit Committee (the “Committee”) shall be to represent and assist the Board of Directors (the “Board”) in its oversight of (a) the Corporation’s accounting and financial reporting processes, including audits of the Corporation’s financial statements and the integrity of the financial statements; (b) the Corporation’s compliance with legal and regulatory requirements; (c) the independent auditor’s qualifications and independence; and (d) the performance of the Corporation’s internal audit function and independent auditor.
Membership
The Committee shall consist of no fewer than three members, each of whom shall meet the independence requirements of the NASDAQ Stock Market applicable to directors and audit committee members, as determined by the Board. It is the goal of the Committee that at least one member of the Committee shall be an “audit committee financial expert” as defined by the rules and regulations of the Securities and Exchange Commission (the “SEC”) and as determined by the Board. In addition, all members of the Committee shall have sufficient financial experience and ability to enable them to read and understand financial statements and at least one member of the Committee shall meet the financial sophistication standards established by the requirements of the NASDAQ Stock Market. No Committee member may have participated in the preparation of the financial statements of the Corporation or any of the Corporation’s current subsidiaries at any time during the past three years. In addition, no Committee member shall simultaneously serve on the audit committees of more than two other public companies, unless the Board determines that such service would not impair the member’s ability to effectively serve on the Committee. The members and chair of the Committee shall be appointed by the Board upon the recommendation of the Nominating and Corporate Governance Committee. The Board may remove any member from the Committee at any time with or without cause.
Operations
The Committee shall meet at least four times per year. Additional meetings may occur as the Committee or its chair deems advisable. The Committee will cause to be kept adequate minutes of its proceedings, and shall report regularly to the Board with respect to its activities.
The Committee shall meet periodically in executive session without management present. In addition, the Committee shall meet separately, periodically, with management, the internal auditors and the independent auditor, provided that the sessions with internal audit and the independent auditor shall occur at least quarterly.
Outside Advisors and Subcommittees
The Committee shall have the resources and authority necessary to discharge its duties and responsibilities. The Committee shall have sole authority to retain and terminate such outside counsel, experts or other advisors as it deems appropriate to assist it in carrying out its duties and responsibilities. The Committee shall have sole authority to approve related fees and retention terms. The Committee shall receive appropriate funding from the Corporation, as determined by the Committee, for payment of compensation to the independent auditor and any advisors retained by the Committee, and for ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
The Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Committee to perform certain of its duties on its behalf.
Responsibilities
The Committee’s duties and responsibilities shall include the following:
Relationship with Independent Auditor
- Being directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditor engaged for the purpose of preparing or issuing an audit report and performing other audit, review or attest services for the Corporation, including the authority to retain or to terminate the independent auditor, which shall report directly to the Committee.
- Establishing policies and procedures for pre-approving all auditing services and all permissible non-audit services provided to the Corporation by the Corporation’s independent auditor. The Committee has delegated to the Chair of the Committee the authority to approve any services which do not exceed $50,000, provided that the services are ratified by the Committee at its next scheduled meeting. The Committee may also, in its sole discretion, delegate to one or more of its members additional authority to pre-approve any audit or non-audit services to be performed by the registered public accounting firm, provided that any such approvals are ratified by the Committee at its next scheduled meeting.
- At least annually, obtaining and reviewing a report by the independent auditor describing: the audit firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues.
- At least annually, considering the independence of the independent auditor, obtaining and reviewing a report by the auditor describing any relationships between the auditor and the Corporation and any other relationships that may adversely affect the independence of the auditor, discussing the auditor’s independence with the auditor and taking appropriate action to oversee the auditor’s independence.
Financial Reporting
- Discussing the annual audited financial statements with management and the independent auditor, including the Corporation’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and recommending to the Board whether the audited financial statements should be included in the Corporation’s Form 10-K.
- Discussing the Corporation’s unaudited financial statements and related footnotes and the “Management Discussion and Analysis” portion of the Corporation’s Form 10-Q for each interim quarter with management and the independent auditor before the Corporation files its quarterly report on Form 10-Q with the SEC.
- Reviewing with the independent auditor the scope of the audit, the results of the annual audit examination and any audit problems or difficulties and management’s response, including any restrictions on the scope of the independent auditor’s activities or on access to requested information.
- Receiving reports from and discussing such matters with the independent auditor as are required by applicable SEC rules and professional standards.
- Discussing with the independent auditor the matters required to be discussed by SAS 61 [Communication with Audit Committees] and SAS 90 [Audit Committee Communications], as amended and adopted by the Public Company Accounting Oversight Board.
- Discussing earnings press releases, as well as financial information and earnings guidance provided to analysts and ratings agencies with management and the registered public accounting firm, as appropriate, prior to their release. Such discussions may be done generally, consisting of discussing the types of information to be disclosed and the types of presentations to be made. The Chair of the Committee, or his or her designee from the Committee, may represent the entire Audit Committee for purposes of reviewing earnings press releases.
Internal Controls and Disclosure Controls
- Receiving reports from the independent auditor and management regarding, and reviewing and discussing the adequacy and effectiveness of, the Corporation’s internal controls, including any significant deficiencies in internal controls and significant changes in internal controls reported to the Committee by the independent auditor or management.
- Receiving reports from management regarding, and reviewing and discussing the adequacy and effectiveness of, the Corporation’s disclosure controls and procedures.
Risk Assessment, Compliance and Other Matters
- Discussing policies with management and the independent auditor, as appropriate, with respect to risk assessment and risk management, including the Corporation’s major business and financial risk exposures and the steps management has taken to monitor and control such exposures.
- Setting clear hiring policies for employees or former employees of the independent auditors.
- Overseeing the Corporation’s compliance program with respect to legal and regulatory requirements, including the Corporation’s Standards of Conduct and Ethics for Employees, Officers and Directors, and overseeing the Corporation’s policies and procedures for monitoring compliance.
- Establishing and overseeing procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
Oversight of the Corporation’s Internal Audit Function
- Reviewing and concurring in the appointment, replacement, reassignment or dismissal of the senior internal auditing executive, and the compensation package for such person.
- Reviewing the significant reports to management prepared by the internal auditing department and management’s responses.
- Communicating with management and the internal auditors to obtain information concerning internal audits, accounting principles adopted by the Corporation, internal controls of the Corporation, management, and the Corporation’s financial and accounting personnel, and reviewing the impact of each on the quality and reliability of the Corporation’s financial statements.
- Evaluating the internal auditing department and its impact on the accounting practices, internal controls and financial reporting of the Corporation.
- Discussing with the independent auditor the internal audit department’s responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit.
Committee Matters
- Overseeing preparation of the report that SEC rules require be included in the Corporation’s annual proxy statement.
- Conducting an annual performance evaluation of the Committee, reviewing the adequacy of this Charter at least annually, and recommending changes as appropriate to the Board.
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NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
(as Amended by the Board of Directors on June 17, 2009) Purpose
The purpose of the Nominating and Corporate Governance Committee (the “Committee”) shall be to (a) recommend to the Board of Directors (the “Board”) the slate of director nominees for election to the Corporation’s Board at the annual shareholder meeting; (b) identify and recommend candidates to fill vacancies occurring between annual shareholder meetings; (c) take a leadership role in shaping the Corporation’s corporate governance policies and practices; and (d) oversee management development and succession planning.
Membership
The Committee shall consist of no fewer than two members, each of whom shall meet the independence requirements of The NASDAQ Stock Market, as determined by the Board. The members and chair of the Committee shall be appointed by the Board upon the recommendation of the Committee. The Board may remove any member from the Committee at any time with or without cause.
Operations
The Committee shall meet at least twice a year. Additional meetings may occur as the Committee or its chair deems advisable. The Committee will cause to be kept adequate minutes of its proceedings and shall meet periodically in executive session without management present. The Committee shall report regularly to the Board with respect to its activities.
Outside Advisors and Subcommittees
The Committee shall have the resources and authority necessary to discharge its duties and responsibilities. The Committee shall have sole authority to retain and terminate such outside counsel, experts or other advisors, including search firms to assist in identifying director candidates, as it deems appropriate to assist it in carrying out its duties and responsibilities. The Committee shall have sole authority to approve related fees and retention terms. The Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Committee to perform certain of its duties on its behalf.
Responsibilities
The Committee’s duties and responsibilities shall include the following:
Board Nominees
- Developing and recommending to the Board criteria for identifying and evaluating director candidates, and periodically reviewing those criteria with the Board.
- Recommending to the Board candidates for election to the Board at the annual meeting of shareholders.
- Recommending to the Board candidates to be elected by the Board as necessary to fill vacancies and newly created directorships.
- Reviewing candidates recommended by shareholders.
- Before recommending an incumbent, replacement or additional director, reviewing his or her qualifications, including capability, availability to serve, independence and other relevant factors.
- Identifying, interviewing and recruiting candidates for the Board.
Board Committees
- Annually reviewing the composition of each Board committee and presenting recommendations for committee memberships to the Board as appropriate.
- Annually reviewing the Board’s committee structure and charters, and recommending to the Board changes after consultation with the respective committee chairs.
Corporate Governance Matters
- Reviewing and assessing the adequacy of the Corporation’s policies and practices on corporate governance, developing and recommending corporate governance guidelines to the Board, and annually reviewing the Corporation’s governance practices and corporate governance guidelines and recommending changes to the Board as appropriate.
- Reviewing and recommending to the Board retirement and other tenure policies for directors.
- Reviewing directorships in other public companies held by or offered to directors and senior officers of the Company.
- Reviewing related person transactions, as defined in applicable SEC rules, and reviewing and assessing the Corporation’s policies and procedures for the review, approval and ratification of related person transactions.
Board Composition, Operations and Compensation
- Making recommendations to the Board concerning the size, structure, composition and functioning of the Board.
- Overseeing the annual performance self-assessment of the Board and its committees, and reporting to the full Board on the self-assessment.
- Annually reviewing and making recommendations to the Board regarding non-management directors' compensation.
- Reviewing and assessing the channels through which the Board receives information, and the quality and timeliness of information received.
Management Development and Succession Planning
- Reviewing and discussing with the Board at least annually plans for executive officer development and corporate succession plans for the Chief Executive Officer (the “CEO”) and other executive officers.
- Performing an annual assessment of qualitative aspects of the performance of the Corporation’s CEO and conferring with the Compensation Committee regarding the results of the assessment.
Committee Matters
- Conducting an annual performance evaluation of the Committee, reviewing the adequacy of this Charter at least annually, and recommending changes as appropriate to the Board.
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COMPENSATION COMMITTEE CHARTER
(as Amended by the Board of Directors on June 17, 2009) Purpose
The purpose of the Compensation Committee (the “Committee”) shall be to (a) determine the compensation of the Corporation’s Chief Executive Officer (the “CEO”) and other senior management; and (b) oversee and advise the Board of Directors (the “Board”) on the adoption of policies that govern the Corporation’s compensation and benefit programs.
Membership
The Committee shall consist of at least three directors, each of whom shall meet the independence requirements of The NASDAQ Stock Market, as determined by the Board. Additionally, each member shall be (a) “non-employee directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”); and (b) “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code. The members and chair of the Committee shall be appointed by the Board upon the recommendation of the Nominating and Corporate Governance Committee. The Board may remove any member from the Committee at any time with or without cause.
Operations
The Committee shall meet at least four times a year. Additional meetings may occur as the Committee or its chair deems advisable. The Committee shall meet periodically in executive session without management present. The Committee will cause adequate minutes of its proceedings to be kept, and shall report regularly to the Board with respect to its activities.
Outside Advisors and Subcommittees
The Committee shall have the resources and authority to discharge its duties and responsibilities. The Committee shall have sole authority to retain and terminate such outside counsel, experts or other advisors as it deems appropriate to assist it in carrying out its duties and responsibilities. The Committee shall have sole authority to approve related fees and other retention terms.
The Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Committee to perform certain of its duties on its behalf including, to the extent permitted by applicable law, the delegation to a subcommittee of at least two directors the authority to grant equity awards and approve performance-based compensation.
Responsibilities
The Committee’s duties and responsibilities shall include the following:
Compensation Programs and Plans
- Reviewing the effectiveness of the Corporation’s executive compensation programs.
- Reviewing trends in executive compensation, overseeing the development of new compensation plans, and approving the revision of existing plans as appropriate.
- Reviewing and approving the compensation structure for executives at the level of corporate vice president and above, and providing oversight of management’s decisions concerning the performance and compensation of other officers of the Corporation.
- Annually reviewing and approving goals and objectives relevant to the compensation of the Corporation’s CEO and other executive officers.
- Overseeing an evaluation of the compensation of the Corporation’s executive officers and based on this evaluation, and the evaluation of the CEO’s performance conducted by the Nominating and Corporate Governance Committee, approving the annual compensation, including salary, bonus, incentive and equity compensation, for the Corporation’s CEO. (The CEO may not be present during deliberations or voting concerning the CEO’s compensation.)
- Approving the annual compensation, including salary, bonus, incentive and equity compensation, for other executive officers of the Corporation, based on the recommendation of the CEO.
- Reviewing executive officer compensation for compliance with Section 16 of the Exchange Act and Section 162(m) of the Internal Revenue Code, and any other applicable laws, rules and regulations.
- Reviewing and approving, or reviewing, approving and recommending compensation packages for new executive officers and termination packages for executive officers.
- Reviewing and approving, or reviewing, approving and recommending employment agreements, severance arrangements and change in control agreements and provisions, and if applicable, any supplemental benefit programs.
Incentive Compensation and Equity Plans
- Reviewing the Corporation’s incentive compensation and other stock-based benefit plans and recommending changes in such plans to the Board as appropriate.
- Administering the Corporation’s stock-based benefit plans.
- Reviewing and approving grants of stock option awards through in-person or telephonic meetings of the Committee (or the full Board) but not by unanimous consent resolution.
Committee Matters
- If required under SEC rules and regulations, reviewing and discussing with management the Corporation’s Compensation Discussion and Analysis (“CD&A”) and related disclosures that Securities and Exchange Commission rules require be included in the Corporation’s annual report and proxy statement, recommend to the Board based on the review and discussions whether the CD&A should be included in the annual report and proxy statement, and prepare the annual compensation committee report required for inclusion in the Corporation’s annual report and proxy statement.
- Conducting an annual performance evaluation of the Committee, reviewing the adequacy of this Charter at least annually, and recommending changes as appropriate to the Board.
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