2003 Other Charter: AOS



The Investment Policy Committee (the "Committee") under a delegation of authority from the Board of Directors shall be responsible for the establishment of investment policies for all employee benefit funds deposited with any trustee or co-trustees by A. O. Smith Corporation (the "Company") or its subsidiaries and affiliated companies for which the Company has management responsibility.

Composition of the Committee
The Committee will be annually appointed by the Board and will consist of at least two directors. The directors appointed can be independent, employees, or non-management directors. The chairperson of the Committee shall be designated by the Board of Directors. The Board of Directors may at anytime remove one or more directors as members of the Committee.

Authority and Responsibilities
The Committee shall have the following authority and responsibilities:

1. Approve, amend or authorize termination of existing or new employee benefit plans (as defined by ERISA) and any associated trust agreements.

2. Authorize the treasurer and other officers of the Company as considered appropriate by the Committee to make contributions to the employee benefit plans referred to herein.

3. Appoint committee members as provided for in employee benefit and employee welfare plans.

4. The chairperson may designate individuals to perform administrative functions regarding the investment policies. Any trustee or other person, firm or corporation with whom such chairperson may act, shall be entitled to conclusively presume and rely upon such act as having been performed at the direction of the Committee.

5. Select and contract with trustees and investment counselors.

6. Approve employment extensions beyond an automatic retirement date.

7. Authorize financial transactions involving plan trust funds (whether pertaining to employee benefit plans or employee welfare plans) necessary or advisable under law, contract, or by virtue of prudent investment, but not including individual employee benefit or welfare payments or other appropriate expenditures approved by an appropriate plan committee.

8. Authorize the treasurer and other officers of the company to instruct investment managers to direct brokerage so long as the benefits of such direction accrue solely to the benefit of the appropriate plans.

9. In discharging its responsibilities the Committee shall periodically:

Receive and review a report from the officers on the administration of employee benefit and welfare plans, including the activity of the various retirement and other plan committees.

Review the Company's actuarial assumptions and arrangements.

Receive and review a report from the officers on the Company's policies and objectives for its benefit programs considering both personnel and financial aspects.

As requested by the Audit Committee review audit reports issued by the Company's internal auditors and independent auditors on the employee benefit and welfare plans of the Company. The selection of independent auditors and approval of the audit fees shall be the responsibility of the Audit Committee.

Report to the full board no less frequently than annually on the activities of the Committee and present to the Board an annual performance evaluation of the Committee.