The committee is comprised of five independent directors: Thomas C. Freyman, Roy V. Armes, Denise Gray, John Stroup and Jane L. Warner. All members meet the independence standards for audit committee membership under the NYSE listing standards and applicable SEC rules. Mr. Freyman serves as Chairman.
2. Financial Expertise
The Board of Directors has determined that the chairman of the committee, Messrs. Freyman, Armes and Stroup qualify as "audit committee financial experts," as defined in the SEC rules, and Mses. Gray and Warner satisfy the NYSE's financial literacy requirements.
The committee has the responsibility, among other things, to: (1) select and approve the compensation of the Company's independent public accountants; (2) review and approve the scope of the independent public accountants' audit activity and all non-audit services; (3) review with management and such independent public accountants the adequacy of the Company's basic accounting system and the effectiveness of the Company's internal audit plan and activities; (4) review with management and the independent public accountants the Company's certified financial statements and exercise general oversight over the financial reporting process; (5) review with the Company litigation and other legal matters that may affect the Company's financial condition and monitor compliance with business ethics and other policies; (6) review the independence, qualifications and performance of the Company's independent auditors; (7) provide an avenue of communication among the independent auditors, management, the internal auditors and the Board of Directors; and (8) prepare the audit-related report required by the Securities and Exchange Commission to be included in the Company's annual proxy statement.
By its Charter, the committee meets at least quarterly and additionally as often as the committee deems appropriate, usually the day before a full board meeting. In practice, the committee generally meets twice per quarter, before the Company's quarterly earnings release and before the Company files its Form 10-K or Form 10-Q, as applicable, with the SEC. Representatives of management, internal audit and the independent auditors are generally invited to attend committee meetings, and the committee periodically meets with these persons privately in executive session.
6. Process for Handling Accounting Matters and Comlaints
The committee has established a policy for the receipt, retention and treatment of complaints received by the Company and its subsidiaries regarding accounting, internal accounting controls or auditing matters.
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8. Shareholder Ratification
Although the committee has sole discretion in appointing the independent auditors, it has determined that it would be desirable to request that the stockholders ratify the appointment at each annual meeting.