The Cooper Companies,
Audit Committee Charter
This Audit Committee Charter (this "Charter") was adopted by the Board of Directors (the "Board") of The Cooper Companies, Inc. (the "Company") on December 16, 2003.
The Audit Committee (the "Committee") is appointed annually by the Board of the Company to provide assistance to the Board in fulfilling its oversight responsibilities relating to (i) the quality and integrity of the Company's financial statements, (ii) the Company's compliance with legal and regulatory requirements, (iii) the qualifications and independence of the independent accounting firm serving as auditors of the Company (the "Outside Auditors") and (iv) the performance of the Company's internal audit function and the Outside Auditors.
As further described in this Charter, the Committee's primary duties and responsibilities relate to:
Composition & Meetings
1. The members of the Committee will be appointed annually by the Board, taking into consideration the recommendation of the Committee, if any. Committee members may be removed from the Committee, with or without cause, by the Board, taking into consideration any recommendation of the Committee.
2. The Committee shall be comprised of at least three (3) Directors selected by the Board, each of whom shall meet the independence, experience and other requirements of the New York Stock Exchange ("NYSE"), the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations promulgated by the Securities and Exchange Commission (the "SEC").
3. All members of the Committee shall be (or shall become within a reasonable period after appointment) "financially literate" as determined by the Board in its business judgment. At least one member of the Committee shall be an "audit committee financial expert" as defined by the SEC. If at any time this requirement cannot be met, the Company shall disclose, pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"), the reasons why at least one member of the Committee is not an "audit committee financial expert".
4. No member of the Committee shall simultaneously serve on the audit committees of more than three (3) public companies, including the Company's, unless the Board determines that such simultaneous service would not impair the ability of such member to effectively serve on the committee. Such determination, if applicable, shall be disclosed in the Company's annual Proxy Statement.
5. No member of the Committee shall receive any compensation from the Company other than (i) the approved Director's fees, as paid in cash, stock, options, or other compensation or benefits available to all Directors, and (ii) a pension or similar deferred compensation from the Company for prior service which is not contingent on continued or future service to the Company. No member of the Committee, and no member's firm, may receive any direct or indirect compensation from the Company for services as a consultant or legal or financial advisor.
6. The Board will designate a Committee Chairperson (the "Chair") who shall have authority to act in certain circumstances on behalf of the Committee between meetings.
7. The Committee shall meet at least four times annually, or more frequently as circumstances dictate.
8. The Committee shall also periodically meet separately with management, the personnel responsible for overseeing the Company's internal controls and representatives of the Outside Auditors at such times and as often as the Committee deems necessary.
Duties & Responsibilities
To fulfill its duties and responsibilities, the Committee shall undertake the following:
1. The Committee shall discuss and reassess, at least annually, the adequacy of this Charter. To the extent believed appropriate by the Committee, the Committee shall make recommendations to the Board to update or otherwise modify this Charter. The Committee shall also perform a review and evaluation, at least annually, of the performance of the Committee and its members, including compliance with this Charter. The Committee shall conduct this evaluation in such manner as it deems appropriate.
2. The Committee shall review the Company's audited financial statements and quarterly financial statements with management and the Outside Auditors prior to filing with the SEC. Such review to include discussion of the results of the audit, significant issues regarding accounting principles, practices, and judgments, and all matters required by AICPA standards. In addition, the Committee will discuss (i) any items required to be communicated by the Outside Auditors in accordance with Statement on Auditing Standards ("SAS") No. 61, as amended by SAS No. 91, and (ii) the Company's disclosures in SEC filings under "Management's Discussion and Analysis of Financial Condition and Results of Operations."
3. The Committee, based upon its review and discussions, shall recommend to the Board whether or not the audited financial statements shall be included in the Company's Annual Report on Form 10-K.
4. The Committee shall provide a report to be included in the Company's annual proxy statement containing such information as may be required by applicable law or regulation, and at a minimum containing statements on management's responsibility for establishing and maintaining internal controls and procedures for financial reporting, the effectiveness of those controls, and a statement that the Outside Auditors have reported on, and attested to, management's evaluation of the Company's internal controls.
5. The Committee shall periodically discuss with management the Company's risk assessment and management policies and guidelines, including steps that management has taken to monitor and control such exposures.
6. The Committee shall discuss, in a general fashion the Company's earnings press release, the types of information to be publicly disclosed, and the type of presentation to be made, as well as other financial information which may be made available to the public from time to time.
7. The Committee shall have the sole authority to engage or dismiss the Outside Auditors, to approve compensation for audit services, and to authorize non-audit services other than "prohibited non-audit services" as defined by the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated by the SEC thereunder ("Permissible Non-Audit Services"), on behalf of the Company. All engagements of the Outside Auditors for any audit related or Permissable Non-Audit Services shall be subject to pre-approval by the Committee explicitly, or through policies and procedures developed by the Committee for this purpose.
8. The Committee shall receive from the Outside Auditors, at least annually, a formal written report as required by the NYSE.
9. The Committee shall maintain direct responsibility for oversight of work done on behalf of the Company. The Outside Auditors shall report to, and are ultimately accountable to, the Committee and the Board. The Committee shall annually review the qualifications, performance and independence of the Outside Auditors and assure rotation of the lead audit partner as necessary.
10. The Committee shall set clear hiring policies for present or former employees of Outside Auditors.
11. The Committee shall receive and review a report from the Outside Auditors with respect to their observations as to the adequacy of the Company's financial reporting processes, both internal and external, as required by §210.2-07 of the Exchange Act.
12. The Committee, in consultation with the Outside Auditors, shall review any problems or difficulties with audit activities and management's response. Also, the Committee shall either discuss with the Outside Auditors whether they have identified any issues of the type described in Section 10A of the Exchange Act, or the Committee shall obtain from the Outside Auditors assurances that no such issues have been identified.
13. The Committee shall be responsible for the development and implementation of formal guidelines and procedures for the receipt and handling of complaints regarding accounting, internal accounting controls, or auditing matters and for confidential submission by employees of concerns regarding questionable auditing or accounting matters
14. The Committee shall perform such other activities and make such other recommendations to the Board on such matters, within the scope of its functions and consistent with this Charter, as may come to its attention and which in its discretion warrant consideration by the Board, including any issues regarding the integrity of financial statements, compliance with legal and regulatory requirements, performance of the Outside Auditors, and performance of internal audit functions.
The Committee is responsible for the duties set forth in this Charter but is not responsible for either the preparation or the auditing of the financial statements. Management has the responsibility for preparing the financial statements and implementing internal controls. The Outside Auditors have the responsibility for auditing the financial statements and reporting on the Company’s attestation regarding the effectiveness of internal controls. The audit is conducted by the Outside Auditors. Each member of the Committee shall be entitled to rely on the integrity of those persons within the Company and of the professionals and experts (including the internal and Outside Auditors) from which the Committee receives information and, absent actual knowledge to the contrary, the accuracy of the financial and other information provided to the Committee by such persons, professionals or experts. Further, auditing literature, particularly SAS No. 100, defines the term "review" to include a particular set of required procedures to be undertaken by the Outside Auditors. The members of the Committee are not independent auditors, and the term "review" as used in this Charter is not intended to have that meaning and should not be interpreted to suggest that the Committee members can or should follow the procedures required of auditors performing reviews of financial statements.
Disclosure of Charter
This Charter shall: (i) be made available on the Company's website at http://www.coopercos.com and to any stockholder who otherwise requests a copy; and (ii) published in the Company's Proxy Statement at least every three years, in accordance with applicable law. The Company's Proxy Statement and Annual Report to Stockholders shall state the foregoing.
Approval of Auditor Engagements
All auditor engagements must be approved by the Committee as specified in this charter. All engagements with fees estimates above $150,000 shall require consideration and approval by the full Committee. The Chair of the Committee shall have and may exercise authority to approve all engagements on behalf of the Committee where the fees are estimated to be below $150,000. Management recommendations will be considered in connection with such engagements, but management will have no authority to approve engagements.