The Audit Committee (“Committee”) shall provide assistance to the Board of Directors of the Company in fulfilling its oversight responsibility to shareholders, potential shareholders and the investment community relating to (a) the accounting and reporting practices of the Company, (b) the effectiveness of the Company’s internal control over financial reporting, (c) the Corporation’s compliance with legal and regulatory requirements related to financial reporting, (d) the qualifications and independence of the Corporation’s independent auditor, (e) the performance of the Corporation’s independent auditor and (f) the quality and integrity of the financial reports of the Corporation.
1. Major Committee Responsibilities.
1.1. Providing an open avenue of communication between the independent auditor, Finance management, and the Board of Directors; reporting Committee actions to the Board of Directors with such recommendations as the Committee may deem appropriate.
1.2. Having sole authority to appoint, approve the compensation of, evaluate and provide oversight of the independent auditor, subject only to stockholder ratification of the appointment.
1.3. Pre-approving, by the Committee’s defined process, all audit and non-audit services provided by the independent auditor, confirming annually the independence of the independent auditor, reviewing quarterly the independent auditor’s non-audit services and related fees, and not engaging the independent auditors to perform specific non-audit services proscribed by law or regulation.
1.4. Reviewing with the independent auditor and Finance management the audit scope and plan, and
coordination of audit efforts to assure completeness of coverage, reduction of redundant efforts, the effective use of audit resources, and the use of independent public accountants other than the appointed independent auditor of the Company.
1.5. Considering and reviewing with Finance management the adequacy of the Company’s internal controls.
1.6. Reviewing with Finance management and the independent auditor at the completion of the annual
1.6.1 The Company’s annual financial statements and related footnotes.
1.6.2 Any significant changes required in the independent auditor’s audit plan.
1.6.3 Any significant changes in accounting policies.
1.6.4 Any difficulties encountered by the auditor in the course of their audit, including any restrictions on the scope of their work or access to required information, or disputes with management encountered during the course of the audit.
1.6.5 Other matters related to the conduct of the audit which are to be communicated to the
Committee under generally accepted auditing standards.
1.6.6 Significant findings during the year and management’s responses thereto.
1.7. Overseeing the financial reporting process and reviewing the periodic reports of the Company
including annual and quarterly reporting and press releases associated with such reports with Finance management and the independent auditor prior to filing of the reports with the Securities and Exchange Committee (“SEC”).
1.8. Establishing procedures for the receipt, retention and treatment of comments and complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the anonymous submission by employees regarding questionable accounting matters.
1.9. Participation by the Committee Chair in a meeting (in person or telephonic) among Finance
management and the independent auditor prior to earnings release.
1.10. Reviewing legal and regulatory matters that may have a material impact on the Corporation’s financial statements.
1.11. In connection with each periodic report of the Company, reviewing:
1.11.1 Management’s disclosure to the Committee under Section 302 of the Sarbanes-Oxley Act.
1.11.2 The contents of the Chief Executive Officer and the Chief Financial Officer certificates to be filed under Sections 302 and 906 of the Act.
1.12. Providing a report in the annual proxy that includes the Committee’s review and discussion of matters with management and the independent auditor.
1.13. Reviewing with Finance management any significant changes to Generally Accepted Accounting
Principles (“GAAP”) and/or other applicable financial policies and standards.
1.14. Reviewing with Finance management and the independent auditor at least annually the Corporation’s critical accounting policies and practices, and all alternative treatments of financial information within GAAP that have been discussed with management.
1.15. Meeting with the independent auditor in executive session to discuss any matters that the Committee or the independent auditor believes should be discussed privately with the Committee.
1.16. Meeting with Finance management in executive sessions to discuss any matters that the Committee or Finance management believes should be discussed privately with the Committee.
1.17. Conducting or authorizing investigations into any matters within the Committee’s scope of
responsibilities and in connection therewith, having full access to all books, records, facilities, and
personnel of the Company, and retaining independent counsel, accountants or others to assist it in the conduct of any investigation.
1.18. Performing such other functions as assigned by law, the Company’s Certificate of Incorporation or bylaws, or reasonably required by the Board of Directors.
1.19. Reviewing the adequacy of this Charter and recommending any changes to the Board of Directors for approval.
1.20. Review of the Code of conduct and any whistle blower complaints.
1.21. Review the Representation letter of management to the independent auditors
2. Committee Composition.
2.1. Size of Committee. The Committee shall be composed of at least three Directors.
2.2. Proportion of Independent Directors. All members of the Committee will be independent.
2.3. Definition of Independence. The definition of “independence” for members of the Committee shall
be the same as the definition of “independence” for Directors as contained in the Board of Directors
Charter, provided that in addition to such requirements, for a Committee member to be “independent,”
the Committee member must also satisfy the independence standards for audit committee members specified by Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
2.4. Term Limits. Committee members will serve for a term of one year or the unexpired portion of the
term of the Committee member who resigned or was removed if that unexpired portion is less than one
year. Committee membership will be reviewed and assigned, including based on the results of the annual
Committee and Director evaluations.
3. Selection of Committee Members.
3.1. Selection Criteria. In addition to the qualifications required of all Directors, the Committee
collectively should have experience with or knowledge of accounting, auditing, business, and SEC
requirements. At least one member will be a “financial expert” as defined by applicable SEC rules.
3.2. Commitment. Committee members must be able to commit the requisite time for preparation and
attendance at regularly scheduled Committee meetings, as well as be able to devote time and attention
to other matters deemed necessary for good corporate governance. Accordingly, each member should
have: (a) knowledge of the primary industries in which the Corporation operates; (b) the ability to read
and understand fundamental financial statements, including the balance sheet, income statement,
statements of cash flow and key performance indicators; and (c) the ability to understand key business
and financial risks and related controls and control processes.
3.3. Independence. The independence (as defined in Section 2.3) of each individual considered for
membership on the Committee shall be taken into account in order to satisfy Section 2.2.
3.4. Appointment; Removal. All members of the Committee shall be appointed by the Board of Directors.
The Committee Chair will be appointed by the Board of Directors. Any Committee member may be
removed by action of the Board of Directors at any time for any reason.
3.5. Resignations. Any member of the Committee may resign as a Committee member at any time. It is
expected that the resigning member will resign in writing and will give appropriate notice to the
Committee Chair of his or her intention to resign.
4.1. Compensation. The compensation for service on the Committee shall be determined by the Board of
4.2. Expense Reimbursement. Committee members will be reimbursed for all reasonable expenses
incurred while attending Committee meetings, training of the Committee or otherwise at the request of
the Board of Directors.
5. Committee Meeting Procedures.
5.1. Frequency and Length of Meetings. The Committee will meet at least once each quarter, either in person or telephonically. The length of the meetings will be determined by the agenda.
5.2. Setting Agendas. The Committee Chair will establish the agenda for each Committee meeting. Any
Committee member may suggest the addition of other items on the agenda.
5.3. Attendance Expectations. All Committee members are expected to attend all the meetings of the
5.4. Advanced Distribution of Committee Materials. Information that is important to the Committee’s
understanding of the specific matters to be discussed at the Committee meeting should be distributed
by the Committee Chair or management in writing to the Committee at least 48 hours prior to the Committee meeting. For highly sensitive matters, the content may be discussed at the meeting without any prior written materials.
5.5. Attendance by Non-Members. The Committee may, from time to time, invite other members of the
Board of Directors, senior management or other employees of the Corporation into Committee
meetings to provide additional insight into the matters being discussed because of personal
involvement in or knowledge about these matters.
5.6. Quorum. At all Committee meetings, a majority of the total number of the Committee’s members
shall constitute a quorum for the transaction of business.
5.7. Minutes. The Committee Chair will designate someone to record the minutes of each Committee
meeting. All minutes shall be filed with the Corporation’s records and maintained in the same manner
as the minutes of the meetings of the Board of Directors.
6. Committee Action Without a Meeting.
6.1. Written Consent. The Committee may take any action by unanimous written consent that the
Committee might take at a meeting.
6.2. Filing of Written Consent. Any written consent of the Committee pursuant to Section 6.1 shall be
filed with the Corporation’s records and maintained in the same manner as the minutes of the meetings
of the Board of Directors.
7. Committee Performance.
7.1. Assessment of Committee Effectiveness. The Governance and Nominating Committee will provide an
annual assessment to the Board of Directors of each Committee’s performance.
8. Committee Relationships.
8.1. Interaction with Management. The Committee will have complete access to the Corporation’s
management to discuss matters or requests information relating to the Committee’s responsibilities.
8.2. Access to Independent Auditors and Outside Legal Counsel. The Committee will have full access to
the designated outside counsel, outside auditors or to any other consultants deemed beneficial by the
9. Leadership Development.
9.1 Committee Development. In addition to training received as a member of the Board of Directors,
selected members of the Committee may receive targeted training. The Chair of the Board of
Directors will approve all training.
10. Amendments to Charter.
10.1. Amendments. This Charter may be amended or repealed by action of the Board of Directors at any time.
11. Limitation of Audit Committee Role.
11.1 While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the outside auditor.
1. Organization and Governance of the Nominating and Governance Committee. The Nominating and Governance Committee (the “Committee”) of CBA Florida, Inc. (the “Company”) shall consist of not less than three members of the Board of Directors (the “Board”), one of whom shall be the Chair of the Committee. The Committee and the Chair shall be appointed annually by the Board. The Committee shall be comprised of Directors such that the Committee complies with all independence requirements under the “NASDAQ Rules for Determining Whether a Member of the Board of Directors is Independent”. In order to fulfill its role, the Committee shall be organized and governed in the following manner:
a. Action may be taken by the Committee upon the affirmative vote of a majority of the members;
b. Any two members or the Chair of the Committee may call a meeting of the Committee upon due notice to each other member prior to the meeting;
c. Action may be taken by the Committee without a meeting if all of the members of the Committee indicate their approval in writing; and
d. No business may be transacted by the Committee at a meeting unless a quorum of the Committee is present. A majority of the members of the Committee shall constitute a quorum;
e. The Committee may delegate its authority to a subcommittee.
2. Statement of Purpose. The purposes of the Committee are (i) to identify individuals qualified to become members of the Board, (ii) to recommend Director nominees for election at the next annual meeting of shareholders, subject to approval by the Board, (iii) to develop and recommend to the Board a set of corporate governance principles applicable to the Company and (iv) to oversee the evaluation of the Board and its dealings with management and appropriate committees of the Board.
3. Goals and Responsibilities of the Committee. The responsibilities shall include the following:
01. Corporate Governance – The Committee shall:
a. develop and recommend to the Board a set of governance guidelines applicable to the Company (the “Governance Guidelines”);
b. from time to time, as it considers appropriate, review the Governance Guidelines as well as the Corporate Code of Ethics and Conduct (the “Code of Ethics”) and recommend to the Board any changes to the Governance Guidelines or Code of Ethics to which it considers appropriate;
c. make recommendations to the Board regarding disclosure policies with respect to matters not covered by mandated financial disclosure; and
d. make recommendations to the Board regarding proposals or amendments to the Company’s Charters and Bylaws, including those which may require shareholder approval.
02. Process for Nominating Directors – The Committee shall create a formal procedure for the appointment of new directors to the Board and as part of that process shall:
a. recommend to the Board for its approval the selection criteria to be used by the Committee in selecting candidates for nomination to the Board based on such considerations as the Committee may consider appropriate;
b. identify Director candidates who;
i. have a high level of professional integrity and demonstrated business ability; and
ii. who otherwise meet the selection criteria approved by the Board from time to time as potential nominees for election or appointment to the Board;
c. recommend to the Board the individuals to be nominated for:
i. election by shareholders, subject to approval by the Board; or
ii. appointment by the Board to fill any vacancy on the Board;
d. from time to time, as the Committee considers appropriate, examine the size and composition of the Board; and, if it considers appropriate recommend to the Board a program to replace or add members to the Board.
03. Identifying and Recommending New Nominees – The Committee shall identify the individuals qualified to become new Directors, consistent with the selection criteria approved by the Board, and ensure appropriate candidates with needed talents can be identified to fill planned or unplanned vacancies. The Committee shall consider any director candidates recommended by the Company’s stockholders consistent with any criteria or procedures set forth in the Governance Guidelines.
04. Orientation – The Committee shall develop and recommend to the Board a comprehensive orientation program for new Directors, which shall include assisting new Directors to understand:
a. the role of the Board and its committees;
b. the contribution individual Directors are expected to make; and
c. the nature and operation of the corporation’s business.
05. Position Descriptions – The Committee shall, together with the Chief Executive Officer, develop and recommend to the Board a position description for the Chair of the Board that the Chief Executive Officer and shall review and approve.
06. Director Independence Review – The Committee shall annually review the relationship that each Director has with the Company in order to satisfy itself that all applicable independence criteria have been met.
07. Code of Conduct Waivers – Either the Board or the Committee shall consider and, if it considers appropriate, approve the granting of waivers of the Company’s business code of conduct and ethics for the benefit of Directors or executive officers.
4. Powers of the Committee on Directors and Corporate Governance. In order to fulfill this role, the Committee shall have the sole authority to retain and terminate a search firm to assist in the identification of director candidates, and have the authority to approve the search firm’s fees and other retention terms. The Committee shall also have the authority to retain legal, accounting or other experts that it determines to be necessary to carry out its duties and to determine compensation for such advisors.
5. Reporting to the Board. The Committee shall report to the Board on significant matters at the next scheduled meeting of the Board and, otherwise, shall report to the Board at such other times as the Chair may determine is appropriate.
6. Related Party Transactions. The Committee shall be responsible for the review and approval of related party transactions.
7. Amendments to Charter. This Charter may be amended or repealed by action of the Board of Directors at any time.
Organization and Governance
The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of CBA Florida, Inc. (the “Company”) will be comprised of three or more members, one of whom will act as Chair and each of whom is determined by the Board to be “independent” in accordance with the provisions of Rule 10C-1(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules of NASDAQ or any stock exchange on which the Company’s shares may be listed or traded. Additionally, no director may serve unless he or she (i) is a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act and (ii) satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Internal Revenue Code.
The members of the Committee will be appointed by the Board based on recommendations from the Nominating and Governance Committee of the Board. The members of the Committee will serve for such term or terms as the Board may determine or until earlier resignation or death. The Board may remove any member from the Committee at any time with or without cause.
The Committee will act by a majority of the members present at a meeting. Meetings may be held in person or by telecommunications pursuant to which all members attending can communicate with each other. In lieu of a meeting, the Committee may act by unanimous written consent. In the event that one or more vacancies on the Committee temporarily reduces the number of members to two (2), actions taken by the two (2) members of the Committee will be deemed authorized actions of the Committee.
Statement of Purpose
The purpose of the Committee is to discharge the responsibilities of the Board with respect to the compensation of the Company’s executives.
Duties and Responsibilities
The Committee will:
1. Establish the Company’s executive compensation strategies, policies and programs to enable the Company to attract, retain, deploy and motivate executives necessary to meet current and future needs of the Company.
2. Review and make recommendations regarding the compensation of the Chief Executive Officer, including base salary, annual and other fiscal year incentives, long-term incentives, equity-based awards and all other executive benefits on an annual basis. In evaluating and making recommendations regarding the Chief Executive Officer’s compensation, the Committee will consider the results of the most recent stockholder advisory vote on executive compensation (“Say on Pay Vote”) required by Section 14A of the Exchange Act. The Chief Executive Officer cannot be present during any voting or deliberations by the Committee on his or her compensation. The Committee will submit its recommendation to the Board for final approval.
3. Review and make recommendations regarding the goals and objectives relevant to the variable compensation of the Chief Executive Officer, evaluate the Chief Executive Officer’s performance against those goals and objectives, and set the Chief Executive Officer’s variable compensation awards based on this evaluation on an annual basis. The Committee will submit its recommendation to the Board for final approval.
4. Review and make recommendations regarding compensation of the Company’s executive officers, including base salaries, annual and other fiscal year incentives, long-term incentives, equity-based awards and all other executive benefits on an annual basis. In evaluating and making recommendations regarding executive compensation, the Committee will consider the results of the most recent Say on Pay Vote. The Committee will submit its recommendation to the Board for final approval.
5. Review and make recommendations regarding long-term incentives and equity-based awards for all employees. The Committee will submit its recommendation to the Board for final approval.
6. Review and make recommendations regarding executive compensation and benefit programs, including the Company’s executive incentive compensation plans, equity-based plans and executive pension and welfare plans, and recommend to the Board proposals for adoption, amendment or termination of such plans. In reviewing and making recommendations regarding such plans, including whether to adopt, amend or terminate such plans, the Committee will consider the results of the most recent Say on Pay Vote. The Committee will submit its recommendation to the Board for final approval.
7. Review broad-based employee benefit programs, (e.g., major pension plans, employee savings plans and employee health and welfare plans), and recommend to the Board proposals for adoption, amendment or termination of such plans.
8. Exercise all powers and discretion vested in the Board under the Company’s equity compensation plans, including the authority to grant awards. The Committee will submit its recommendation to the Board for final approval.
9. Review and make recommendations regarding the content and issuance of any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, and change in control agreements for the Chief Executive Officer and other executive officers, which includes the ability to adopt, amend and terminate such agreements, arrangements or plans. The Committee will submit its recommendation to the Board for final approval.
10. Issue a report to the shareholders to the extent required by the Securities and Exchange Commission for inclusion in the Company’s annual general meeting proxy statement or Annual Report on Form 10-K.
11. To review on an annual basis the risks arising from the Company’s compensation policies and practices for its employees and determine whether or not such policies and practices are reasonably likely to have a material adverse effect on the Company.
12. The Committee shall establish, and from time to time, as it considers appropriate, review, director compensation guidelines and principles, which include a statement of principle that the Company’s Director compensation arrangements shall be competitive with director compensation at comparable companies; and a requirement that a portion of the Director’s compensation (as determined by the Committee from time to time) be paid in the form of equity.
13. Periodically review and make recommendations to the Board regarding the form and amount of the compensation of Board and Board Committee members.
14. Perform any other activities consistent with this Charter, the Company’s certificate of incorporation and governing law, as the Committee or the Board deems necessary or appropriate.
The Committee may select, retain and/or replace, or obtain advice of, as needed in its sole discretion, compensation and benefits consultants, independent legal counsel and any other adviser to provide advice to the Committee. In that connection, in the event the Committee retains any such adviser, the Committee will be directly responsible for compensation and oversight of the adviser and will have the sole authority to approve such adviser’s fees and other retention terms. The Company will provide funding, as determined by the Committee, for payment of compensation to such adviser.
Before selecting such an adviser, the Committee will undertake an independence assessment prior to selecting the adviser that will provide advice to the Committee, taking into account such factors as may be required by NASDAQ or any stock exchange on which the Company’s shares may be listed or traded from time to time. The Committee may retain, or receive advice from, any compensation advisor they prefer, including ones that are not independent, after considering the specified factors.
The Committee is not required to assess the independence of any compensation consultant or other advisor that acts in a role limited to consulting on any broad-based plan that does not discriminate in scope, terms or operation in favor of executive officers or directors and that is generally available to all salaried employees or providing information that is not customized for a particular company or that is customized based on parameters that are not developed by the consultant or advisor, and about which the consultant or advisor does not provide advice.
The Committee shall evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with Item 407(e)(3)(iv) of Regulation S-K. Any compensation consultant retained by the Committee to assist with its responsibilities relating to executive compensation shall not be retained by the Company for any compensation or other human resource matters.
The Committee will review on an annual basis the performance of compensation and benefits consultants, independent legal counsel and any other adviser engaged to perform such services.
Reporting to the Board
Report to the Board significant issues discussed and make recommendations to be acted upon by the Board, as appropriate.
Evaluation of Charter and Committee
The Committee will review at least annually the adequacy of this Charter and recommend any proposed changes to the Board for approval. The Committee will conduct an annual evaluation of its performance and will present the results of the evaluation to the Board. The Committee will conduct this evaluation in such manner as it deems appropriate.