Revised April 6, 2006
CHIQUITA BRANDS INTERNATIONAL, INC.
of the Board of Directors
The primary function of the Audit Committee is to review
the Company’s financial statements, accounting policies and internal controls.
The Audit Committee shall assist Board of Directors oversight of (1) the
integrity of the financial statements of the Company, (2) the qualifications
and independence of the independent registered public accounting firm
(“independent auditors”), (3) the performance of the Company’s internal audit
function and independent auditors, and (4) the Company’s programs for compliance
with laws, regulations and Company policies.
The Audit Committee shall prepare the Committee report as required by the
Securities and Exchange Commission (“SEC”) to be included in the Company’s
proxy statement for the annual meeting of shareholders.
The Audit Committee shall consist of no fewer than three
members. Members of the Audit Committee and its chairman shall be appointed
annually by the Board, which shall have the power to change the membership of
the Audit Committee at any time. Members of the Committee shall meet the
independence and “financial literacy” requirements, and at least one member
shall satisfy the “accounting or related financial expertise” requirements, of
the New York Stock Exchange (“NYSE”). In addition, members of the Committee
shall satisfy the independence requirements of, and at least one member shall
be an “audit committee financial expert” as defined under, the Sarbanes-Oxley
Act of 2002 (“Sarbanes-Oxley”) and SEC rules and regulations thereunder.
Director’s fees are the only compensation that an Audit Committee member may
receive from the Company. No Audit Committee member may serve on the audit
committee of more than two other publicly held companies without the approval
of the Board of Directors.
The Audit Committee has the following authority:
- To conduct whatever
investigations relating to the Company’s financial affairs, records,
accounts, reports or activities as the Committee in its discretion deems
desirable or as the Board of Directors may from time to time request.
- To have free and open
access to any officer or employee of the Company or the Company’s outside
counsel or independent auditor, or to request any of such individuals to
attend a meeting of the Committee or to meet with any members of, or
consultants to, the Audit Committee.
- To engage independent
counsel and any other advisors deemed by the Committee in its judgment to
be necessary to carry out its duties.
- To request any member
or members of the Committee to perform additional tasks, beyond normal
Committee service, deemed by the Committee in its judgment to be necessary
to carry out its duties. Any additional compensation paid to such member
shall be determined by the Company's Compensation Committee, approved by
the Audit Committee and reported to the Board.
The Company shall provide funding, as determined by the
Audit Committee, for payment of compensation to any independent auditor or
advisor engaged by the Committee and administrative expenses of the Committee
that are necessary or appropriate in carrying out its duties.
The Audit Committee shall meet as often as it determines
necessary to carry out its duties and responsibilities, but no less than
quarterly. The Audit Committee may form subcommittees for any purpose and with
such power and authority as it deems appropriate.
A majority of the members of the Committee present in person or by means of
conference call or other communications equipment shall constitute a quorum.
The committee shall maintain minutes of its meetings.
The Audit Committee has the following responsibilities:
- Meet periodically
with management, the internal auditors and the Company’s independent
auditors in separate sessions.
- Make regular
reports to the Board and review any significant issues that arise with
respect to the quality or integrity of the Company’s financial statements,
compliance with legal or regulatory requirements, the performance and
independence of the Company’s independent auditors, and related issues.
2. Independent Auditor
- Be directly
responsible for the appointment, compensation, retention and oversight of
the Company’s independent auditors, which shall report directly to the
- Approve all audit
engagement fees and terms and all non-audit engagements with the
independent auditor; provided, that in no event shall the non-audit
services include any of the prohibited services listed in Sarbanes-Oxley
and SEC rules. Pre-approvals of non-audit services may be delegated to a
single member of the Audit Committee and reported to the full Audit
Committee at its next meeting.
- Obtain and review
a report from the independent auditor at least annually regarding (a) the
firm’s internal quality-control procedures, (b) any material issues raised
by the most recent 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, (c) any steps taken to deal
with any such issues, and (d) all relationships between the independent
auditor and the Company.
- Evaluate the
qualifications, performance and independence of the independent auditor,
including a review and evaluation of the lead partner of the independent
- Reassess the
effectiveness of the independent auditor at least every four years.
- Ensure that the
lead audit partner of the independent auditor and the concurring audit
partner responsible for reviewing the audits are rotated at least every
five years, and that any other audit partners are rotated at least every
3. Financial Statements
- Meet to review and
discuss with management and the independent auditor the Company’s quarterly
financial statements and disclosures made under “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” to be
included in its Form 10-Q filings.
- Review earnings
press releases paying attention to any use of “pro forma” or non-GAAP
financial measures, as well as financial information and earnings guidance
provided to analysts and rating agencies.
- Meet to review and
discuss with management and the independent auditor the Company’s annual
financial statements, accounting policies and disclosures made under
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations” to be included in its Form 10-K filings.
- Regularly review
with the independent auditor any difficulties the auditor encountered in
the course of the audit work, including any restrictions on the scope of
the independent auditor’s activities or on access to requested
information, and any significant disagreements with management.
- Review and discuss
with management and/or the independent auditor, as applicable, (a) major
issues regarding accounting principles and financial statement
presentations, including any significant changes in the Company’s
selection or application of accounting principles, and major issues as to
the adequacy of the Company’s internal controls and any special audit
steps adopted in light of any material control deficiencies; (b) analyses
prepared by management or the independent auditor setting forth
significant financial reporting issues and judgments made in connection
with the preparation of the financial statements, including analyses of
the effects of alternative GAAP methods on the financial statements; (c)
any problems, difficulties or differences encountered in the course of the
audits, including any disagreements with management or restrictions on the
scope of the independent auditor’s activities and management’s response
thereto; and (d) the effect of regulatory and accounting initiatives, as
well as off-balance sheet structures, on the financial statements of the
- Discuss with
management the Company’s policies with respect to risk assessment and risk
- Recommend to the
Board whether the audited financial statements should be included in the
Company’s Form 10-K.
4. Internal Controls and Internal Audit Function
- Review with the
independent auditor, internal auditors and the Company’s financial
management the adequacy and effectiveness of the Company’s internal
controls, including internal control over financial reporting.
- Monitor management’s
assessment of the Company’s internal control over financial reporting
(Sarbanes Oxley Section 404).
- Ensure that the
Company maintains an internal audit function. Review the performance, and
any appointment or replacement, of the Vice President, Internal Audit.
Review with the independent auditor the adequacy and implementation of the
internal audit function.
5. Compliance Programs
- Provide oversight
of the Company’s programs for compliance with laws, regulations and
Company policies, including the Ethical and Legal Responsibilities section
of the Company’s Code of Conduct and periodically review such programs
- Review on a
continuing basis the Company’s compliance with the Foreign Corrupt
Practices Act of 1977 and the 1976 Final Judgment and related Consent and
- Consider any
requests for waivers from the Ethical and Legal Responsibilities section
of the Company’s Code of Conduct by executive officers or directors. Any
such waivers shall also be subject to approval of the Board of Directors.
procedures for (a) the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls
or auditing matters and (b) the confidential, anonymous submission by
employees of the Company of concerns regarding questionable accounting or
- Recommend to the
Board policies related to the Company’s hiring of employees or former
employees of the public accounting firm who were engaged on the Company’s
6. Annual Reports
Provide the Audit Committee report that is required by SEC
rules to be included in the Company’s proxy statement for its annual
7. Review Charter
Review the adequacy of its Committee charter annually and
recommend any proposed changes to the Board for approval.
8. Performance Evaluation
Review the Committee's performance annually.