The Audit Committee assists the Board of Directors with
oversight of the integrity of the company’s financial statements, the company’s
compliance with legal and regulatory requirements, the independent auditor’s
qualifications and independence, and the performance of the company’s internal
audit function and independent auditor. In performing these oversight functions,
the committee, among other things, reviews the company’s annual financial
statements; selects the company’s independent auditing firm,
PricewaterhouseCoopers LLP; approves all audit and nonaudit services and fees of
the independent auditor; reviews the firm’s independence and considers the scope
of its audits and audit results, including review of the auditor’s manage-ment
letter and the company’s response to that letter; considers the adequacy of the
company’s internal accounting control systems; reviews the staffing and audit
program of the internal auditing department; and reviews the adequacy of
company’s policies and procedures with respect to compliance with the Rohm and
Haas Company Code of Business Conduct. The Board of Directors, in its business
judgment, has affirmatively determined that all members of
Committee are independent and financially literate.
The purposes of the Audit Committee of the Board of Directors
(the “Board”) of Rohm and Haas Company (the “Company”) shall be to: (A) assist
the Board’s oversight of (1) the integrity of the Company’s disclosures,
including its financial statements and disclosure and financial accounting
controls and procedures, (2) the Company’s compliance with legal and regulatory
requirements, and (3) the performance of the Company’s internal audit function
and independent auditor; (B) engage the independent auditor and review and
oversee its qualifications, performance and independence; (C) prepare the report
required by the rules of the Securities and Exchange Commission to be included
in the Company’s proxy statement; (D) review the Company’s financial plans and
strategies, particularly its policies regarding capital structure, dividend
payments and return on assets; (E) recommend to the Board all dividend
declarations and payments; (F) review the Company’s foreign financial programs
and currency exposure policies and practices, including derivative and hedging
transactions; (G) oversee the function of the Company’s Benefits Investment
Committee; and (H) fulfill the other responsibilities set out herein.
In discharging its responsibilities, the Audit Committee is
not itself responsible for the planning or conduct of audits or for any
determination that the Company’s financial statements are complete or accurate
or in accordance with generally accepted accounting principles. This
responsibility is that of management and the independent auditor.
1. The Audit Committee shall be appointed by the Board and be
composed of at least three (3) directors, each of whom shall meet, as
affirmatively determined by the Board at least annually, the independence
requirements of governing law, rules, regulations and the listing standards of
the New York Stock Exchange.
2. The members of the Audit Committee shall be nominated and
recommended to the Board by the Nominating Committee. The Board shall designate
a member of the Audit Committee to serve as Chairperson. No member of the Audit
Committee shall be removed except by majority vote of the independent directors
of the full Board.
3. All members of the Audit Committee shall be financially
literate. The Board shall appoint at least one member with accounting or related
financial management expertise, and, to the extent possible, appoint at least
one member who it has determined is an “audit committee financial expert” as the
term is defined by SEC rules, and shall disclose the identity of any committee
member possessing those attributes in the Company’s annual proxy statement.
4. If an Audit Committee member simultaneously serves on the
audit committee of more than three public companies, the Board must determine
that, as a condition of such member serving on the Company’s Audit Committee,
such simultaneous service does not impair the ability of the member to serve
effectively on the Company’s Audit Committee, and shall disclose this
determination in the Company’s annual proxy statement.
Director’s fees are the only compensation an Audit Committee
member may receive from the Company for his/her service. Members of the Audit
Committee may receive additional director’s fees if, in the judgment of the full
Board, the time and effort they expend to fulfill their duties so warrants.
- The Audit Committee shall fix its own rules of procedure,
which shall be consistent with the Company’s Bylaws and this Charter.
- The Audit Committee shall meet as often as it may deem
necessary and appropriate in its judgment, and in no event less than four (4)
times per year, and members are encouraged to attend in person. A majority of
the members of the Audit Committee shall constitute a quorum, and a member may
participate in a meeting by telephone if necessary to constitute a quorum or
otherwise to conduct the business of the committee.
- The Chairperson of the Audit Committee or a majority of its
members may call a special meeting of the Audit Committee.
- An agenda, together with materials relating to the subject
matter of each meeting, should be sent the Audit Committee members prior to
each meeting. Minutes for all meetings shall be prepared to document the Audit
Committee’s discharge of its responsibilities. The minutes shall be circulated
in draft form to all Audit Committee members to ensure an accurate final
record, shall be approved at a subsequent meeting of the Audit Committee and
shall be distributed periodically to the Board. The approved minutes shall be
maintained with the books and records of the Company.
- The Audit Committee shall meet in separate executive
sessions with the independent auditor, with the Company’s director of internal
audit, with the general counsel and with management as often as it deems
necessary and appropriate in its judgment.
- The Audit Committee may form and delegate authority to
subcommittees when appropriate, or may delegate to one or more of its members
the authority to act on behalf of the Committee, subject to any requirements
under governing law, rule, regulation, listing standard or Company Bylaw
requiring such authority to be exercised or overseen by the Audit Committee as
- The Audit Committee may request that any directors,
officers or employees of the Company, or other persons whose advice and
counsel are sought by the Audit Committee, attend any meeting to provide such
information as the Audit Committee requests.
To fulfill its duties and responsibilities, the Audit
- Have the sole authority (with the input of management) to
retain, set compensation and retention terms for, oversee and review the
performance of, renew and terminate the Company’s independent auditor, and
shall approve in advance the retention of the independent auditor for the
performance of all audit services and non-audit services, all as required by
governing law and listing standards.
- In order to assess the auditor’s independence, annually
review all relationships between the independent auditor and the Company and,
at least annually, obtain and review a report by the independent auditor
describing: (i) the independent auditor’s internal quality-control procedures;
(ii) any material issues raised by the most recent internal quality-control
review or peer review of the independent auditor, or by any inquiry or
investigation by governmental or professional authorities, or private sector
regulatory board within the preceding five years, respecting one or more
independent audits carried out by the independent auditor, and (iii) any steps
taken to deal with any such issues.
- Discuss with management and the independent auditor the
annual audited financial statements, quarterly financial statements and any
other financial disclosures including the Company’s disclosures under
“Management’s Discussion and Analysis of Financial Condition and Results of
- Prepare the report required by the rules of the SEC to be
included in the Company’s annual proxy statement.
- Discuss earnings press releases, as well as the financial
information and earnings guidance provided to analysts and rating agencies.
These discussions may occur generally, at any time, as frequently and in as
much detail as is deemed appropriate by the Audit Committee.
- As appropriate and without the necessity of Board approval,
obtain advice and assistance from outside legal, accounting and other advisors
to carry out its duties and responsibilities. Funding for the retention of any
such advisors will be provided by the Company.
- Discuss policies with respect to risk assessment and risk
management, including discussion of the Company’s major financial exposures
and the steps management has taken to monitor and control such exposures.
- Meet separately, periodically, with management, with the
internal audit function and with the independent auditor.
- Review with the independent auditor any audit problems or
difficulties and management’s response, resolve any disagreements between
management and the independent auditor, and review any written communications
between the auditor and management, including any management letter and
schedule of unadjusted differences.
- Set clear hiring policies for employees or former employees
of the independent auditor, which at a minimum shall provide that the Company
may not hire as its CEO, CFO, Controller or equivalent function, any employee
or former employee of the auditor that participated in any capacity in the
audit of the Company during the one-year period preceding the date of
initiation of the audit.
- Review the financial plans and strategies of the Company,
particularly its policies regarding capital structure, dividend payments and
return on assets.
- Recommend to the Board all dividend declarations and
- Review the Company’s foreign financial programs and
currency exposure policies and practices, including derivative and hedging
- Oversee the function of the Company’s Benefits Investment
- Report regularly to the Board.
- Establish 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 auditing matters. Procedures for confidential and anonymous
reporting of complaints will be posted on the Company’s web site.
- Reassess on at least an annual basis, the adequacy of this
Charter and recommend any proposed changes to the Board for its approval.
- Perform an annual self-evaluation of its performance and
deliver a report to the Board setting forth the results of its evaluation.