The Board, as a whole, is responsible for the oversight of management on behalf of the Corporation's shareholders.
The principal functions of the Board are to oversee processes evaluating the adequacy of internal controls, risk management, financial reporting compliance with the law and the Corporation’s Code of Conduct; to evaluate and determine the compensation of the Chief Executive Officer; to review the Corporation's compensation and benefits programs and its succession planning and diversity programs; to review the major strategic, financial and other objectives of the Corporation; and to nominate Directors and evaluate the structure and practices of the Board to provide for sound Corporate Governance. The Board accomplishes these functions acting directly and through its committees.
Members of the Board
Principal Board Committees
Compensation & Management Development Committee
Nominating & Governance Committee
Risk Policy Committee
Audit Committee Charter
The Committee assists the Board in fulfilling its statutory and fiduciary responsibilities with respect to internal controls, accounting policies, and auditing and financial reporting practices. The Committee assists the Board in its oversight of (i) the integrity of the Company's financial statements and the financial reporting process (ii) compliance with legal and regulatory requirements, (iii) the independent public accountant's qualification and independence, (iv) the performance of the independent public accountants and (v) the Company’s internal audit activities.
The Committee will report its activities to the Board on a regular basis and make such recommendations, as the Committee deems necessary or appropriate.
The Committee is entitled to place reasonable reliance on (i) the integrity of those persons and organizations within and outside the Company from whom and from which it receives information and (ii) the accuracy of the financial and other information provided to the Committee by such persons or organizations, absent actual knowledge to the contrary which, will be promptly reported to the Board of Directors.
The Committee shall consist of at least five members. The Committee members and Chairman shall be recommended by the Chairman of the Board and appointed annually by the Board for terms of one year, or until their successors are duly elected and qualified. The Board, upon the recommendation of the Committee or otherwise, may remove any Committee member at any time.
The Committee shall meet as frequently as it deems necessary, but not less frequently than quarterly. The Committee shall review unaudited quarterly financial statements and the audited financial results statement and it shall consider any financial or accounting matters, as the Committee deems appropriate. Meetings may be called by the Chairman of the Committee or by the Chairman of the Board and may be held in person or by telephone. All meetings and other actions of the Committee shall be held or otherwise taken pursuant to PEFCO's bylaws, including bylaw provisions governing notices of meetings, waivers, the number of Committee members required to take actions at meetings or by written consent, and other related matters. As part of its meetings, the Committee, in its discretion, may meet separately, with or without senior management, or in executive session with the full Board or the independent auditors. The Committee, in its discretion, may meet separately with senior management.
In carrying out its mission, the Committee's policies and procedures should remain flexible, so that it may be in a position to react or respond appropriately to changing circumstances or conditions and to ensure that the corporate accounting and financial reporting practices, as well as the auditing process, are in accordance with all applicable requirements and appropriately tailored for PEFCO's specific business and financial risks. In carrying out this mission, the Committee shall have the following responsibilities and authorities. Unless otherwise authorized by an amendment to its Charter, the Committee shall not delegate any of its authority to any subcommittee or to any other person.
(a) Internal Controls
At least annually, the Committee shall evaluate, in conjunction with senior management and PEFCO's independent and internal auditors, the adequacy of PEFCO's financial reporting systems and business process controls and discuss significant risks and the actions senior management has taken to monitor and control these risks. In addition, the Committee shall review significant findings noted by the independent and internal auditors in the course of their audit functions, as well as management's responses.
(b) Financial Reporting Oversight
- Evaluate significant accounting and reporting issues identified in any analyses prepared by senior management or the independent auditors or otherwise identified in the course of the Committee's review of PEFCO's financial statements and discussions with its auditors, including recent professional and regulatory pronouncements provided to the Committee by PEFCO or its independent auditors as being particularly relevant, with due consideration of their impact on PEFCO's financial statements;
- Review with senior management and the independent auditors senior management's proposals regarding: new accounting pronouncements; the adoption of, and changes of choice regarding, material accounting and regulatory principles and practices to be followed when preparing PEFCO's financial statements; alternative principles and practices that could have been followed; the reasons for selecting the principles and practices to be followed; the financial impacts of the principles and practices selected as compared to those of the other alternatives available; and the provision of any "pro forma" or "adjusted" non-GAAP information; and
- Inquire as to whether the independent auditors have any concerns regarding: the possibility of significant accounting or reporting risks or exposures; the appropriateness and quality of significant accounting treatments and whether there has been any aggressive creativity in any such treatments; and business transactions that may affect the fair presentation of financial condition or results of operations; or any weaknesses in internal control systems.
(c) Annual Financial Statements
- Review with the independent auditors their proposed audit scope and approach, including staffing
- Review in private discussion whether there have been (and if so the nature of) any audit problems or difficulties and any related responses by management. This review shall include:
- Review any complex and/or unusual transactions and any matters requiring significant estimates of asset valuation allowances or liability reserves, and evaluate management's handling of proposed audit adjustments identified by the independent auditors.
- Review the independent auditor's judgments about the quality of the accounting principles applied to the financial statements.
- Review, with the President and CEO and management, legal matters that could have a significant impact on the financial statements.
(d) Quarterly Unaudited Financial Statements
- Review the unaudited financial statements and the various analyses accompanying the unaudited financial statements prepared by management; and
(e) Compliance with Laws and Regulations Relating to Financial Reporting and Tax Matters
- Periodically review the procedures for monitoring compliance with laws and regulations; and
(f) Compliance with PEFCO's Policies, Standards of Conduct, Code of Ethics and Approval of Related Party Transactions
- Confirm that the policies, Standards of Conduct and Code of Ethics are formalized in writing and that procedures are in place to communicate these policies, Standards and Code to all employees;
- Periodically review the policies, Standards of Conduct and Code of Ethics, with particular focus on related party transactions and conflicts of interest involving, directly or indirectly, any director or employee, and consider whether any changes are needed;
- Review the program for monitoring compliance with the policies, Standards of Conduct and Code of Ethics and periodically obtain updates from senior management regarding compliance;
- e responsible for evaluating, making decisions whether to approve, and monitoring on an ongoing basis any related party transactions covered by the policies, Standards of Conduct and Code of Ethics and for making decisions whether to grant any waivers of or approve any other deviations from the policies Standard of Conduct and Code of Ethics governing related party transactions and conflicts of interest, in each case if any director, employee or any entity for or in which any such person serves as a director or employee or has any other significant interest is involved, and also for documenting and monitoring any such approval or waiver; and
(g) Independent Auditors
- Have direct responsibility to select and appoint the independent public accountants. Annually, the Committee will recommend that the Board request ratification of the appointment of the independent public accountants. The independent public accountants are to report to the Committee.
- The Committee is responsible for setting the compensation of the independent public accountants, and the Committee shall periodically review the fees charged by the independent public accountants for all audit services and permitted audit-related, tax and other services.
- Meet with the independent auditors at least once a year in private sessions without any members of senior management being present to discuss matters that the Committee or the independent auditors believe should be discussed, including without limitation discussion items contemplated elsewhere in this Charter.
- Pre-approve allowable non-audit services to be provided by the independent auditors to PEFCO and take appropriate steps to ensure that the independent auditors are not providing prohibited non-audit services, including the receipt of a written certification from the independent auditor to that effect.
- Evaluate annually the experience, qualifications and performance of independent auditors, the partner in charge of performing or reviewing the audit, and other audit team personnel as appropriate. The evaluation should be based on all relevant circumstances known to the Committee, including, without limitation, the following:
(h) Internal Audit
- Have direct responsibility to select and appoint the internal auditors. The internal auditors are to report to the Committee.
- Review activities, organizational structure, and qualifications of the internal audit function.
- Review with the internal audit function the proposed audit plan for the coming year, staffing, audit procedures to be utilized and the coordination of the plan with the independent auditors. During this review the independence, objectivity, and authority of the internal audit function will be assessed.
- Periodically review with the internal audit director any significance difficulties, disagreements with management, or scope restrictions encountered in the course of the function’s work.
- Periodically review and recommend changes (if any) to the audit program.
(i) Litigation and Investigations and Other Matters
- Monitor major litigation and significant internal or external special investigations and review with the President and CEO, at least annually, any other legal matters that could have a material impact on PEFCO's financial statements or compliance with law;
- If deemed appropriate, initiate special investigations into matters within the Committee's scope of responsibilities or as delegated by the Board; and
- Perform such other duties and responsibilities as may be assigned to the Committee, from time to time, by the Board
(j) Self Evaluation
Perform an annual self-evaluation of the Committee’s performance and annually reassess the adequacy of and, if appropriate, propose to the Board any desired changes in, the Charter of, the Committee.
(k) Reporting Responsibilities
To contact any member of the Audit Committee regarding a particular concern regarding accounting, internal controls or auditing matters that you wish to bring to the attention of the Audit Committee of the Board of Directors, please contact:
Audit Committee of the Board of Directors
Compensation and Management Development Committee Charter
Executive Committee Charter
- Approves the terms of the Corporation’s secured note issues.
- Acts for the full board when it is not in session as specified by the By-laws of the Corporation.
- Review, at least annually, the Executive Committee Charter and recommend any proposed changes to the Board for approval.
- Review at least annually, various "risk factors" associated with the Corporation that is not taken into account in the other committees such as market risk, credit risk and operational risk. These other risk factors are referred to as "Business Risk". Some factors associated with "Business Risk" are:
- The Executive Committee has the power to:
- The Executive Committee also has the power to: