Audit Committee Charter

The Audit Committee of the Board of Directors of Expeditors is authorized by the Bylaws and was established by resolution of the Board adopted on May 17, 1984 some four months prior to the Company's initial public offering. The relevant portions of the resolution read as follows:

Historically, the Audit Committee has been composed exclusively of the non-employee Board members and has met in advance of quarterly earnings releases to review and approve the Company's financial results. This Charter is intended to satisfy SEC and NASD rules for audit committee charters and this document, which has been adopted by unanimous vote of the Board, supplements the resolution set forth above.

Membership

The Audit Committee shall consist of not less than three nor more than five members of the Board of Directors. No member of the Audit Committee shall be an active or retired employee of the Company, and all members shall be independent of management according to both the letter and spirit of the applicable SEC and NASD/Amex rules. In addition, each member shall be free from any relationship that, in the opinion of the Board of Directors, would interfere with that individual's exercise of independent judgment in carrying out responsibilities as a member of the Audit Committee.

In serving on the Audit Committee, each independent director represents that he or she is able to read and understand fundamental financial statements, including the balance sheet, income statement, and cash flow statement or will take steps to become able to do so within a reasonable period of time.

Meetings

The Audit Committee shall hold four regularly scheduled meetings each year, normally in the first week of February, May, August and November, for the purpose of approving the contents of the Company's draft earnings release. Special meetings of the Committee may be called from time to time upon notice issued by any two directors, whether or not such directors are members of the Committee, or as otherwise provided pursuant to the Company's Bylaws.

A majority of the members shall constitute a quorum of the Committee. A majority of those members in attendance shall decide any question brought before any meeting of the Committee.

Responsibilities

The Audit Committee serves as the representative of the Board for the general oversight of Company affairs in the area of financial accounting and reporting and the underlying internal controls as well as the financial aspects of the Company's funded benefit plans. Through its activities, the Committee will facilitate open communication among directors, the Company's independent accountants, and corporate management.

The Audit Committee will assist the Board in discharging its fiduciary responsibilities to shareholders, providing assurance as to the independence of the Company's outside accountants and the adequacy of disclosure to shareholders and to the public.

Specifically, the Audit Committee will:

  1. Approve the contents of the Company's draft earnings release following consideration of the financial statements, supporting schedules and discussions with management and the reviewing independent public accountants.
  2. Recommend to the Board, annually, the appointment of a firm of independent public accountants as the Company's outside auditors and shall approve such other independent public accountants, if any, as may be selected to serve as statutory auditors of any foreign entity consolidated with the financial results of the Company.
  3. Designate one member of the Audit Committee as the "expert" as defined in the current NASD rules.
  4. Review with representatives of the independent accountants
    1. Any significant changes in the plan for and scope of its annual audit of the Company's financial statements.
    2. Written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 discussing and forming a judgment concerning the independent accountant's independence and confirm that the independent accountants are ultimately accountable to the Board and the Audit Committee.
    3. The results of the annual audit.
    4. Any recommendations with respect to internal controls and other financial matters, including any perceived weaknesses in the Company's internal controls, policies, and procedures.
    5. Any significant changes made by management in the basic accounting principles and reporting standards used in the preparation of the Company's financial statements.
    6. Discuss any other issue, including any matters covered by SAS 61, which the independent accountant may bring to the attention of the Committee.
  5. Recommend to the Board that the audited financial statements be included in the Company's Annual Report on Form 10-K by preparing the Audit Committee Report to be included with the proxy statement relating to the annual meeting of shareholders at which directors are elected.
  6. Review the extent of any services outside the audit area performed for the Company by its independent accountants.
  7. Review the fees proposed by the Company's independent accountants for their services.
  8. Review the work of the Company's internal audit function including management's plans for future audit coverage.
  9. Review whether management has sought a second opinion regarding a significant accounting issue, and, if so, obtain the rationale for the particular accounting treatment chosen.
  10. Review compliance by officers and employees with the Company's policies on business ethics and public responsibility.
  11. Make such other recommendations to the Board on such matters, within the scope of its functions, as may come to its attention and which in its discretion warrant consideration by the Board.
  12. Meet privately from time to time with representatives of the independent accountants and management.
  13. Review applicable SEC and NASD rules and reassess the adequacy of this Audit Committee Charter on an annual basis prior to or during the February meeting of the Committee and to make prompt recommendations to the Board in the event that changes are deemed necessary or desirable.