Charter of the Audit Committee of the Board of Directors of Con-way Inc.
I. PURPOSE OF THE COMMITTEE
The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Con-way Inc. (the “Corporation”) is:
(a) to assist the Board in its oversight of (i) the integrity of the Corporation’s financial statements, (ii) the Corporation’s compliance with legal and regulatory requirements, (iii) the Corporation’s independent auditors’ qualifications and independence, and (iv) the performance of the Corporation’s independent auditors and the Corporation’s internal audit function, and
(b) to prepare the report required to be prepared by the Committee pursuant to the rules of the Securities and Exchange Commission (the “SEC”) for inclusion in the Corporation’s annual proxy statement.
II. COMPOSITION OF THE COMMITTEE
The Committee shall consist of three or more directors, as determined from time to time by the Board based upon recommendations of the Governance and Nominating Committee. Each member of the Committee shall be qualified to serve on the Committee pursuant to, and the composition of the Committee shall otherwise comply with, the requirements of the New York Stock Exchange (the “NYSE”), and any additional requirements that the Board deems appropriate. No Committee member shall receive any compensation from the Corporation or any of its subsidiaries, other than compensation permitted to be paid to independent audit committee members under applicable law, regulations and NYSE requirements.
The chairperson of the Committee shall be designated by the Board, provided that if the Board does not so designate a chairperson, the members of the Committee, by a majority vote, may designate a chairperson.
Members of the Committee shall be appointed by majority vote of the Board, based upon recommendations of the Governance and Nominating Committee. No member of the Committee shall be removed except by majority vote of the Board.
The Corporation shall provide new Committee members with an orientation program to familiarize such directors with, among other things, the Corporation’s financial statements and accounting policies and procedures. Each Committee member shall keep the Governance and Nominating Committee informed of the number of public company audit committees on which he or she serves.
III. MEETINGS AND PROCEDURES OF THE COMMITTEE
The Committee shall meet as often as it determines necessary to carry out its duties and responsibilities, but no less frequently than once every fiscal quarter. The Committee, in its discretion, may ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as the Committee deems necessary. The Committee shall meet separately on a periodic basis with (i) management, (ii) the director of the Corporation’s internal auditing department or other person responsible for the internal audit function and (iii) the Corporation’s independent auditors, in each case to discuss any matters that the Committee or any of the above persons or firms believes warrant Committee attention.
A majority of the members of the Committee present in person or by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other shall constitute a quorum. The action of a majority of the members of the Committee present at a meeting at which a quorum is present shall be the action of the Committee. The Committee may act by unanimous written consent of all of its members in lieu of a meeting.
The Committee shall keep a record of its actions and proceedings which shall be maintained with the books and records of the Corporation. The Committee shall report regularly to the Board on its activities and make recommendations to the Board as it deems necessary or appropriate.
IV. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE
The Committee shall have the following duties and responsibilities as well as any other duties and responsibilities as may be assigned to the Committee from time to time by the Board:
Selection, Evaluation and Oversight of the Auditors
(a) To appoint, evaluate and compensate the Corporation’s independent auditors, which shall report directly to the Committee, and determine whether to retain or, if appropriate, terminate the independent auditors.
(b) To review and approve in advance the independent auditors’ annual engagement letter, including the scope of the audit for the fiscal year and the proposed fees contained therein, as well as any other audit and permitted non-audit engagements and relationships between the Corporation and such independent auditors.
(c) To obtain at least annually from the Corporation’s independent auditors and review a report describing:
(i) the independent auditors’ internal quality-control procedures;
(ii) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditors, or by any inquiry or investigation by any governmental or professional authority, within the preceding five years, respecting one or more independent audits carried out by the independent auditors, and any steps taken to deal with any such issues; and
(iii) all relationships between the independent auditors and the Corporation;
Oversight of Annual Audit and Quarterly Reviews
(d) To meet to review and discuss with management, the Corporation’s independent auditors and, if appropriate, the Vice President of the Corporation’s internal auditing department, the following:
(i) the Corporation’s annual audited financial statements and quarterly financial statements, including reviewing the Corporation’s specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and discussing any material issues related thereto; and
(ii) major issues regarding accounting principles and financial statements presentations, including any significant changes in the Corporation’s selection or application of accounting principles.
(e) To resolve all disagreements between the Corporation’s independent auditors and management regarding financial reporting.
(f) To review on a regular basis with the Corporation’s independent auditors any problems or difficulties encountered by the independent auditors in the course of any audit work and management’s response.
Oversight of the Financial Reporting Process and Internal Controls
(g) To review major issues as to the adequacy of the Corporation’s internal controls (including any special audit steps adopted in light of the discovery of material control deficiencies), including the responsibilities, budget, compensation and staffing of the Corporation’s internal audit function, through consultation with the Corporation’s independent auditors, management and director of the Corporation’s internal auditing department.
(h) To discuss the Corporation’s policies with respect to risk assessment and risk management.
(i) To review the type and presentation of information to be included in the Corporation’s earnings press releases (especially the use of “pro forma” or “adjusted” information not prepared in compliance with generally accepted accounting principles), as well as financial information and earnings guidance provided by the Corporation to analysts and rating agencies (which review may be done generally (i.e., discussion of the types of information to be disclosed and type of presentations to be made), and the Committee need not discuss in advance each earnings release or each instance in which the Corporation may provide earnings guidance).
Compliance Oversight Functions
(j) Periodically review with management the Corporation’s programs for compliance with laws, regulations and the Corporation’s Code of Business Ethics.
(k) Periodically receive reports from and review the Chief Compliance Officer’s findings with respect to adherence to corporate compliance policies, and review processes related to compliance training, monitoring, reporting and investigation of compliance issues.
The Committee shall meet in executive session with the Chief Compliance Officer periodically. The Chief Compliance Officer also has the authority to communicate directly with the Committee regarding compliance matters as needed.
While it is not the responsibility of the Committee to conduct investigations or to assure compliance with laws, regulations and the Corporation’s Code of Business Ethics, the Committee may take such actions with respect to such matters as it deems necessary or advisable in fulfilling its purposes, duties and responsibilities.
Miscellaneous
(l) To establish clear hiring policies by the Corporation for employees or former employees of the Corporation’s independent auditors.
(m) To prepare the report required by the rules of the SEC to be included in the Corporation’s annual proxy statement.
(n) To establish procedures for (i) the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, and (ii) the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.
(o) Determine appropriate funding for the payment of compensation to the independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Corporation and to any advisors employed by the Committee, as well as appropriate funding for the payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
V. EVALUATION OF THE COMMITTEE
The Committee shall, on an annual basis, evaluate its performance. In conducting this review, the Committee shall evaluate whether this Charter appropriately addresses the matters that are or should be within its scope and shall recommend such changes as it deems necessary or appropriate.
The Committee shall deliver to the Board a report, which may be oral, setting forth the results of its evaluation, including any recommended amendments to this Charter and any recommended changes to the Corporation’s or the Board’s policies or procedures. Any such recommended amendments and changes shall also be communicated to the Governance and Nominating Committee.
VI. INVESTIGATIONS AND STUDIES; OUTSIDE ADVISERS
The Committee may conduct or authorize investigations into or studies of matters within the Committee’s purposes, duties and responsibilities, and may retain, at the Corporation’s expense, such independent legal counsel, accountants or other consultants or advisers as it deems necessary. The Committee shall have the sole authority to retain, at the Corporation’s expense, and terminate any such outside consultant or adviser to assist the Committee in carrying out its responsibilities, including the sole authority to approve the consultant’s fees and other retention terms. The Corporation shall provide appropriate funding for the reasonable compensation of any such consultant or adviser as determined by the Committee.
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While the Committee has the duties and responsibilities set forth in this Charter, the Committee is not responsible for preparing or certifying the financial statements, for planning or conducting the audit or for determining whether the Corporation’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles.
In fulfilling their responsibilities hereunder, it is recognized that members of the Committee are not full-time employees of the Corporation, it is not the duty or responsibility of the Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards, and each member of the Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and outside the Corporation from which it receives information and (ii) the accuracy of the financial and other information provided to the Committee, in either instance absent actual knowledge to the contrary.
The Committee is not providing any expert or special assurance as to the Corporation’s financial statements or any professional certification as to the independent auditors’ work. Committee members are not deemed to have accepted a duty of care greater than the duty of other directors. Nothing contained in this Charter is intended to alter the operation of the “business judgment rule” as interpreted under Delaware law.
While the members of the Committee have the duties and responsibilities set forth in this Charter, nothing contained in this Charter is intended to create, or should be construed as creating, liability for members of the Committee.
