Charter of the Audit and Risk Committee
The Audit and Risk Committee (the “Committee”) is appointed by the Board of Directors to assist the Board in monitoring (1) the integrity of the Company’s financial reporting, (2) the independent accountants’ qualifications, independence and performance, (3) the Company’s systems of internal controls, (4) the performance of the Company’s Internal Audit Department, (5) the Company’s Risk Governance Structure, and (6) the Company’s Compliance Risk Management Framework and compliance with legal and regulatory requirements.
The Committee’s responsibility is one of oversight, and it recognizes that the Company’s management is responsible for both preparing the Company’s financial statements and managing its risks.
In carrying out its oversight duties, it is not the Committee’s responsibility to plan or conduct audits or to determine that the Company’s financial statements are complete or accurate or in accordance with generally accepted accounting principles. The Committee recognizes that financial management (including the internal audit staff), as well as the independent accountants, have more knowledge of accounting and auditing requirements and more detailed information about the Company than do the members of the Committee; consequently, in carrying out its oversight responsibilities the Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the independent accountants’ work.
In carrying out its oversight duties, it is not the Committee’s responsibility to manage the Company’s risk functions nor report on their processes and assessments with respect to the Company's management of risk. The Committee recognizes that the Company’s risk management professionals have more knowledge of risk management requirements and more detailed information about the Company than do the members of the Committee; consequently, in carrying out its oversight responsibilities the Committee is not providing any expert or special assurances as to the Company's management of risk.
The Committee shall prepare the report required by the rules of the Securities and Exchange Commission (the “SEC”) to be included in the Company’s Annual Proxy statement.
The Committee shall consist of no fewer than three independent directors (in accordance with the independence standards adopted from time to time by the New York Stock Exchange (the “NYSE”), SEC and other regulatory requirements). The members of the Committee and the Chair of the Committee shall be appointed annually by the Board of Directors and may be removed by the Board of Directors. The members of the Committee shall be persons who are financially literate, in the judgment of the Board of Directors. At least one of the members of the Committee shall be a person who, in the judgment of the Board of Directors, has “accounting or related financial management expertise” in accordance with NYSE listing standards. At least one of the members of the Committee shall be a person who, in the judgment of the Board of Directors, is qualified to serve as an “audit committee financial expert” as defined by the SEC. At least one member of the Committee shall have experience in identifying, assessing and managing risk exposures of large, complex firms.
No member of the Committee may serve simultaneously on the audit committees of more than three public companies, including that of the Company, unless the Board of Directors determines that such simultaneous service would not impair the ability of such member to effectively serve on the Committee and such determination is disclosed in accordance with the listing standards of the NYSE.
Generally, the Committee shall hold formal meetings prior to each quarterly meeting of the Board of Directors and telephone meetings with the Company’s Chief Financial Officer and the independent accountants prior to the release of quarterly financial results. Additional meetings, either in person or by telephone, may be held from time to time as determined by the Chair of the Committee. In addition, members of the Committee are free to contact members of management including financial managers, compliance managers, the Chief Audit Executive, the Chief Risk Officer, the Chief Compliance Officer, the Company’s General Counsel, outside counsel and the Company’s independent accountants whenever they consider appropriate; the Committee may request reports or presentations at Committee Meetings from any of these individuals. The Committee shall meet periodically with senior management responsible for the Company’s financial reporting. Written minutes of the Committee meetings shall be maintained.
At all Committee meetings, a majority of the members of the Committee shall constitute a quorum for the transaction of business. The action of a majority of those members present at a meeting, at which a quorum is present (but in no event less than two members), shall be the action of the Committee. The Committee shall keep a record of its actions and proceedings.
a. The Company’s independent accountants are ultimately accountable to the Board of Directors, as representative of the Company’s shareholders. The Audit and Risk Committee exercises the responsibility of the Board of Directors in that oversight role.
b. The Committee shall be directly responsible for the appointment (subject to shareholder ratification in the Committee’s discretion as permitted by law), retention, compensation, and oversight of the work of the independent accountants employed by the Company (including resolution of disagreements between management and the auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. In that connection, the independent accountants shall report directly to the Committee and the Committee shall determine appropriate funding for payment of compensation to the Company’s independent accountants. The Committee shall have the sole authority to terminate the auditor in its discretion.
c. In connection with the appointment and reappointment of the independent accountants, the Committee shall review their independence and obtain written disclosures from them regarding all relationships with the Company that could affect their independence. In that connection at least annually the Committee shall obtain and review a report by the independent accountants describing: the 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; and (to assess their independence) all relationships between the independent accountants and the Company. The Committee shall also review and evaluate the lead partner of the independent accounting team.
d. The Committee shall approve in advance any audit and non-audit services, including tax services, to be performed for the Company by its independent accountants, except for services that were not recognized at the time of the engagement to be non-audit services and for which the compensation does not exceed 5% of the total revenues paid to the independent accountants by the Company during the fiscal year; provided, however, that such "de minimis" services are approved by the Committee or one or more members to whom authority has been granted to make such approval prior to completion of the services. In that connection, the Committee shall receive from the independent accountants, at least annually, a written statement setting out all relationships between them and the Company and the fees paid for those services.
e. The Committee shall direct the independent accountants to prepare and deliver annually a statement as to independence consistent with Rule 3526, Communicating with Audit Committees Concerning Independence, as adopted by the Public Company Accounting Oversight Board (the “PCAOB”) and amended from time to time, and shall discuss with the independent accountants any relationships or services disclosed in this statement that may affect their objectivity and independence.
f. The Committee shall meet with the independent accountants on a regular basis, as it determines appropriate. At least once a year, the Committee shall meet with representatives of the independent accountants without the presence of management representatives.
g. The Committee shall ensure the rotation of the audit partners as required by law. The Committee shall consider whether, in order to ensure continuing auditor independence, it’s appropriate to adopt a policy of rotating the independent accounting firm on a regular basis.
h. The Committee, or one of its members, shall meet with the representatives of the independent accountants prior to commencement of the annual audit to discuss planning, staffing, to review the audit scope and approach, and any specific areas of risk that the auditors propose to focus on.
i. The Committee shall review and discuss with the independent accountants the matters required to be discussed with the independent accountants under Auditing Standard No. 1301, as adopted by the PCAOB and amended from time to time.
j. Following conclusion of the year-end audit, but prior to release of the financial statements, the Committee, or one of its members, shall discuss with representatives of the independent accountants the financial statements and the results of the audit, including any disagreements with management regarding audit scope, access to requested information or accounting presentation.
k. Prior to release of the financial results and related press releases for each quarter and the fiscal year, the Committee, or one of its members, shall review them with management and representatives of the independent accountants, and shall review with them the "Management’s Discussion and Analysis" section of the Company’s filings with the SEC. The Committee shall also discuss financial information and any earnings guidance provided to rating agencies and analysts, as well as non-GAAP financial measures. Such discussions may be general (consisting of discussing the types of information to be disclosed of the types of presentations to be made). Any earnings release or each instance in which the Company provides earning guidance need not be discussed in advance.
l. At least annually, the Committee shall review with representatives of the independent accountants their judgments concerning the quality of the Company’s accounting principles as reflected in its financial reporting, whether those principles are consistent with industry standards or represent minority positions, and the clarity of disclosure of information. The Committee shall also review with the independent accountants their views regarding any significant estimates made by management which are reflected in the financial statements.
In connection with the foregoing, the Committee shall review with the independent accountants:
(1) All critical accounting policies and practices to be used;
(2) All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management officials of the Company, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent accountants; and
(3) Other material written communications between the independent accountants and the management of the Company, such as any management letter or schedule of unadjusted differences.
m. Based on the review and discussions described in sections (h), (i) and (j) herein, the Committee shall recommend to the Board of Directors whether the financial statements should be included in the Annual Report on Form 10-K.
n. The Committee shall discuss, at least annually, the adequacy of the Company's internal controls with the Internal Audit Department, the independent accountants and management, including, without limitation, reports regarding (a) significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting, and (c) recommendations to improve the Company's internal control structure and operational efficiency. The Committee shall review and discuss, as appropriate, any special audit steps implemented by management to address any deficiencies.
o. The Committee shall approve the Company’s policy for the hiring of employees or former employees of the Company’s independent accountants.
a. Review the appointment or replacement of the Chief Audit Executive, along with reviewing his or her performance and compensation annually.
b. Discuss with the independent accountants and management the Internal Audit department’s responsibilities, budget, staffing and any recommended changes in the planned scope of the internal audit.
c. The Committee shall have oversight responsibility with respect to the Company’s Internal Audit Department. In that connection, the Committee shall maintain regular contact with the Chief Audit Executive and meet with her/him as necessary without the presence of management representatives.
d. The Committee shall receive and review reports from the Internal Audit Department with respect to the results of audits undertaken and management’s response to recommendations from the Department. The Committee shall have the authority to direct the Internal Audit Department to undertake specific projects, including review of specific departments of the Company.
e. The Chief Audit Executive shall have access to the members of the Committee on a direct basis as necessary, and shall attend meetings of the Committee as requested by the Committee.
a. The Committee shall have oversight responsibility with respect to Management’s responsibilities to assess and manage the Company's key risks, including market, credit, liquidity, funding, operational, compliance, and reputational risk. The Committee’s role also includes oversight of the Company’s risk governance structure and the performance of the Company’s Chief Risk Officer and Chief Compliance Officer.
b. The Committee shall receive and review reports from the Chief Risk Officer regarding the major risk exposures of the Company and its business units. Specifically, the Committee shall review the Enterprise Risk Management Report, review the pertinent risk parameters for the Company’s most important risks and review and approve corporate risk assessment and management procedures.
c. The Chief Risk Officer shall have access to the members of the Committee on a direct basis as necessary and shall attend meetings of the Committee as requested by the Committee.
a. The Committee shall obtain from the independent accountants assurance that Section 10A(b) of the Securities Exchange Act of 1934, as amended (detecting illegal acts, identifying related party transactions and going concern evaluation) has not been implicated.
b. The Committee shall oversee the Company’s management of compliance risk and support a culture that encourages ethical conduct and compliance throughout the Company.
c. The Committee shall oversee the Compliance Risk Management Framework, as established by the Compliance Risk Policy. This includes reviewing and approving the Compliance Risk Policy and other elements of this Framework, as appropriate, and overseeing senior management’s work to establish this Framework.
d. The Committee shall also receive reports from the Company’s Chief Compliance Officer regarding compliance risks stemming from the Company’s activities. . At least quarterly, the Chief Compliance Officer shall submit reports to the Committee on activities undertaken, any regulatory problems encountered, and regulatory issues that may affect the Company in the future. The Committee shall also oversee the Company’s work to resolve significant compliance risk-related issues.
e. The Chief Compliance Officer shall have access to the members of the Committee on a direct basis as necessary and shall attend meetings of the Committee as requested by the Committee.
f. The Committee shall discuss with management and the independent accountants any correspondence with regulators or governmental agencies and any published reports that raise material issues regarding the Company’s financial statements or accounting policies.
g. The Committee shall discuss with the Company’s General Counsel any legal matters that may have a material impact on the financial statements or the Company’s compliance policies and internal controls.
a. The Committee shall establish and review procedures for:
(1) The receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and
(2) The confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
b. At least annually, the Committee shall receive reports from Senior Financial Officers of the Company regarding their compliance with the code of ethics for Senior Financial Officers. The Committee shall report material violations of the Code of Ethics that are brought to their attention to the Board of Directors with a recommendation for appropriate action.
c. At least annually, the Committee shall review with the Company’s Chief Executive Officer and Chief Financial Officer the certifications they sign in SEC reports regarding the Company’s disclosure controls, the design and operation of the Company’s internal control over financial reporting and any material weaknesses or significant deficiencies they have identified with respect thereto, or any fraud involving management or other employees identified during the course of their review of the Company’s controls, and any significant changes in internal control over financial reporting or in other factors that could significantly affect internal control over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses.
d. The Committee shall prepare an annual report to be included in the Company’s annual proxy statement to shareholders.
e. The Committee shall review and approve the Company’s enterprise-wide policies and other related documents, as appropriate.
a. In exercising its oversight responsibility, the Committee shall have access to members of management and material reports or inquiries received from, and any reports of examination submitted by, the various federal and state financial institution regulatory authorities and management’s responses to such reports or inquiries. The Committee may inquire into any issues that it considers to be of material concern to the Committee or the Board of Directors.
b. The Committee shall have authority to conduct or authorize investigations into any matters within its scope of responsibilities and to retain advisers, including counsel and other professionals, to assist in the conduct of any investigation and determine their compensation.
c. The Committee shall report regularly to the Board of Directors with respect to its activities.
d. The Committee shall annually review and reassess the adequacy of this Committee’s charter and recommend any proposed changes to the Board of Directors for approval.
e. The Committee shall participate in an annual performance evaluation of its activities by the Board of Directors.
As amended by the Board of Directors on March 1, 2019
Charter of the Corporate Governance, Nominating and Compensation Committee of the Board of Directors
The Corporate Governance, Nominating and Compensation Committee (the “Committee”) is appointed by the Board of Directors (“Board”) to discharge the Board’s responsibilities relating to the compensation of the Company’s executive officers, including the CEO, and reviewing and approving all employee compensation and benefit programs as they affect the executive officers. The Committee is also responsible for recommending corporate governance policies and practices to the Board, identifying and reviewing the qualifications and experience of proposed candidates for election to the Board, leading the Board in an annual review of its performance, and recommending to the Board director nominees for each committee.
The Committee shall consist of no fewer than three members. The Committee shall be comprised solely of “independent” directors, as determined in accordance with the independence standards adopted by the New York Stock Exchange and the Securities and Exchange Commission. At least two members of the Committee shall also qualify as “outside” directors within the meaning of Internal Revenue Code Section 162(m) and as “non-employee” directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, the “outside” director requirements of Internal Revenue Code Section 162(m) will apply only so long as there exists compensation intended to meet the “performance-based” exception under Section 162(m) with respect to which Committee action may be required. Members of the Committee and the Chair of the Committee shall be appointed annually, and may be removed, by the Board.
The Committee shall have the following duties, responsibilities and authority:
a. Compensation Responsibilities
(i) At least annually, review and approve the annual base salaries and annual incentive opportunities for executive officers, as defined by Rule 3b-7 under the Securities Exchange Act of 1934.
(ii) Annually review and approve corporate goals and objectives relevant to the compensation of the CEO, evaluate the CEO’s performance in light of such goals and objectives, and determine and approve the CEO’s compensation based on this evaluation. In determining the incentive components of CEO compensation, the Committee may consider a number of factors, including without limitation the Company’s performance and relative shareholder return, the value of similar incentive awards to CEOs at comparable companies and the awards given to the CEO in the past year.
(iii) Periodically review and approve the following as they affect the executive officers: (a) all other incentive awards and opportunities, including both cash-based and equity-based awards and opportunities; (b) any employment agreements and severance arrangements; (c) any change-in-control agreements and change-in-control provisions affecting any element of compensation and benefits; and (d) any special or supplemental compensation and benefits for current or former executive officers, including supplemental retirement benefits and the perquisites provided to them during and after employment.
(iv) Review, approve and administer all equity compensation plans and amendments thereto, including IRS qualified and non-qualified plans.
(v) Review and recommend for Board action the Company’s contributions to employee benefit plans.
(vi) Oversee the administration of the Company’s other employee benefit plans.
(vii) Serve as the policy-making body for issues that arise under any of the Company’s employee benefit, equity compensation or other employee plans.
(viii) Review and discuss with management the Compensation Discussion and Analysis (“CD&A”) section required to be included in the Company’s proxy statement and annual report on Form 10-K by the rules and regulations of the SEC, and, based on such review and discussion, determine whether or not to recommend to the Board that the CD&A be so included.
(ix) Produce the annual Compensation Committee Report on executive compensation for inclusion in the Company’s proxy statement, in accordance with SEC rules.
(x) Review management’s evaluation of the relationship between the Company’s compensation policies and practices and risks arising for the Company and, to the extent necessary, take steps to provide that such policies and practices do not encourage unnecessary or excessive risk-taking.
(xi) Oversee the Company’s compliance with SEC rules and regulations regarding shareholder approval of certain executive compensation matters, including advisory votes on executive compensation and the frequency of such votes, and the requirement under NYSE rules that shareholders approve equity compensation plans.
(xii) Undertake any and all actions necessary to comply with federal legislation or regulations relating to compensation, incentive programs or their relationship with risk management.
(xiii) In its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel, or other adviser.
(xiv) Be directly responsible for the appointment, termination, compensation and oversight of the work of any compensation consultant, independent legal counsel or any other adviser retained by the Committee.
(xv) In selecting a compensation consultant, legal counsel (other than in-house legal counsel) or other adviser, the Committee shall take into consideration all factors relevant to that person’s independence from management, including the following:
• the provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other adviser;
• the amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser;
• the policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
• any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee;
• any Company stock owned by the compensation consultant, legal counsel or other adviser; and
• any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with an executive officer of the Company.
b. Nominating and Corporate Governance Responsibilities
(i) Recommend to the Board the criteria to be used by the Committee to identify individuals qualified to become directors, including such specific minimum qualifications, if any, that the Committee believes are necessary for one or more of the Company’s directors to possess.
(ii) Identify potential nominees to the Board of Directors, including candidates recommended by management, consistent with criteria approved by the Board, review their qualifications and experience, and recommend nominees to the Board for consideration and presentation to the shareholders for election.
(iii) Review succession planning for the CEO and other senior management positions.
(iv) Develop and recommend to the Board a set of corporate governance policies, monitor compliance with those policies, and periodically review and reassess the adequacy of such policies and recommend any proposed changes to the Board for approval.
(v) Lead the Board in an annual review of the performance of the Board and each of the Board Committees.
(vi) Periodically review the Company’s ethics policy and make recommendations for changes to the Board when necessary.
(vii) Periodically review and make recommendations to the Board with respect to director compensation. Director compensation should be based on reasonable compensation to members of the Board for time spent in preparing for and attending meetings of the Board and Board Committees, as well as the time required for them to effectively perform their responsibilities and duties. In reviewing director compensation, the Committee will consider the impact of compensation levels and any contributions to charitable organizations with which any Director may be affiliated on Director independence.
(viii) Exercise sole authority to retain and terminate any search firm to be used to identify director candidates, including sole authority to approve the fees and other terms of such firm’s engagement.
(ix) Review and approve the Policies and Procedures with Respect to Related Person Transactions, and review, approve, disapprove or ratify these transactions.
(i) Report regularly to the Board of Directors with respect to the Committee’s activities.
(ii) Form and delegate authority to subcommittees, as the Committee deems appropriate.
(iii) Report to the Company’s shareholders in the annual proxy statement.
(iv) Annually review and reassess the adequacy of this Committee’s Charter, and recommend any proposed changes to the Board for approval.
(v) Retain outside advisers when it considers such services to be necessary.
The Committee shall meet as frequently as its responsibilities require. Generally, the Committee shall meet quarterly, prior to each meeting of the Board of Directors, and hold an additional meeting to review proposed incentive compensation awards for executive officers. The Committee Chair, or, in his or her absence, another designated member of the Committee, shall preside at each meeting. The Committee may meet in person or by telephone.
At all Committee meetings, a majority of the members of the Committee shall constitute a quorum for the transaction of business. The action of a majority of those members present at a meeting at which a quorum is present (but in no event less than two members), shall be the action of the Committee. The Committee shall keep a record of its actions and proceedings.
The Company shall provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a compensation consultant, independent legal counsel or any other adviser retained by the Committee.
As amended and restated by the Board of Directors on March 1, 2019
Charter of the Leader Independent Director
For any period during which the Chairman of the Board of Directors (the “Board”) is not deemed to be independent as defined by applicable stock exchange rules, the Board considers it to be useful and appropriate to designate an independent non-executive Director to serve in a lead capacity (the “Lead Director”). As set forth more particularly below, the Lead Director shall coordinate the activities of the other non-executive/independent Directors and perform such other duties and responsibilities as the Board may from time to time determine.
The specific responsibilities of the Lead Director shall be to:
1) Subject to any applicable provision of the By-laws, preside at meetings of the Board in the absence of the Chairman.
2) Preside over all executive sessions of non-executive / independent Directors and report to the Board, as appropriate, concerning such sessions.
3) Review and approve Board meeting agendas and schedules in collaboration with the Chairman, to ensure there is sufficient time for discussion, to recommend matters for the Board to consider and to advise on the information submitted to the Board by management.
4) Serve as a liaison and supplemental channel of communication between non-executive / independent Directors and the Chairman, without inhibiting direct communications between the Chairman and other Directors.
5) Serve as the principal liaison for consultation and communication between the non-executive / independent Directors and shareholders.
6) Work with the Corporate Governance, Nominating and Compensation Committee (“CGN&C Committee”) in facilitating the annual self-evaluation process for the Board and individual Directors and communicate the resulting individual performance feedback in a private meeting with each director.
7) Assist the work of the CGN&C Committee in conducting its evaluation of the performance of the Chief Executive Officer and conducting succession planning for the Chief Executive Officer.
The Lead Director shall be elected by a majority of the independent Directors of the Board for a renewable term of three (3) years (and until such time as his or her successor is elected) or until such earlier time as he or she ceases to be a Director, resigns as Lead Director, or is replaced as Lead Director by the vote of a majority of the independent Directors.
The Lead Director must:
1) qualify as an independent Director under securities laws, applicable stock exchange requirements or guidelines, and any other applicable rules or regulations;
2) be available to effectively work closely with, and in an advisory capacity to, the Chief Executive Officer and/or Chairman;
3) be available to effectively discuss with other Directors any concerns about the Board or the Company and to relay those concerns, where appropriate, to the Chairman and/or Chief Executive Officer or the Board;
4) help optimize the effectiveness of the Board and ensure that it operates independently of management; and
5) maintain familiarity with Board governance “best practices” and related procedures of the Company.
As adopted by the Board of Directors on March 1, 2019.