Amended and Restated Charter of the Audit Committee
The Audit Committee is a committee of the Board of Directors (the "Board") of Phibro Animal Health Corporation, a Delaware corporation (the "Company"). Its primary function is to assist the Board in fulfilling its oversight responsibilities. The Audit Committee oversees the Company's accounting and financial reporting processes, reviews its internal control systems, and oversees the audit of the Company's financial statements.
While the Audit Committee has the responsibilities and powers set forth in this Audit Committee 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 ("GAAP") and applicable rules and regulations. These are the responsibilities of management. The independent auditor is responsible for auditing the Company’s financial statements and for reviewing the Company’s unaudited interim financial statements.
The Audit Committee shall:
1. Oversee that management has maintained the reliability and integrity of the accounting policies and financial reporting and disclosure practices of the Company;
2. Oversee that management has established, documented, maintained and periodically re-evaluates its processes to assure that an adequate system of internal control is functioning within the Company; and
3. Be responsible for the appointment, compensation, independence and oversight of the work of the Company's outside accounting firm and auditors.
1. Each member of the Audit Committee shall be “independent” within the meaning of the applicable listing rules of The NASDAQ Stock Market (“NASDAQ”), Section 10A of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission (“SEC”), as determined by the Board and may not receive any fees (other than for service as a director and fixed amounts of compensation under a retirement plan, including deferred compensation, for prior service with the Company) including consulting and advisory fees from the Company or its subsidiaries, regardless of amount under those rules; provided, however, that (i) upon completion of the Company’s initial public offering of common stock (the “IPO”), only one member of the Audit Committee need be independent, (ii) within 90 days of completion of the IPO, a majority of the members of the Audit Committee shall be independent and (iii) within one year of completion of the IPO, all members of the Audit Committee shall be independent.;
2. Audit Committee members and the Audit Committee Chairman shall be designated by the full Board to serve at the pleasure of the Board;
3. Members of the Audit Committee shall have a familiarity with basic finance and accounting practices and shall be able to read and understand financial statements;
4. At least one member of the Audit Committee shall meet the financial sophistication standard as set forth in the applicable listing rules of NASDAQ, and shall be deemed an “audit committee financial expert,” as determined by the rules and regulations of the SEC; provided, however, that this requirement shall not be applicable to the Audit Committee until such time as is necessary to permit disclosure of the name of such member in the Company’s Annual Report on Form 10-K for fiscal year ended June 30, 2014. The existence of such member shall be disclosed in periodic filings as required by the SEC. The designation of the “audit committee financial expert” shall be made by the Board in its business judgment at least annually; and
5. Audit Committee members shall hold their offices until their successors are appointed and qualified, or until their earlier resignation or removal. All vacancies in the Audit Committee shall be filled by the Board. The Board shall designate one of the members as Chairman of the Audit Committee, and the Audit Committee shall keep a separate book of minutes of its proceedings and actions. The Audit Committee may form one or more subcommittees, each of which may take such actions as may be delegated by the Audit Committee. The Audit Committee shall report on its activities to the Board regularly, and otherwise shall report to the Board as it requests, and make such recommendations and findings as it deems appropriate.
The Audit Committee shall:
General Duties and Powers
1. Hold regular meetings each year and such special meetings as may be called by the Chairman of the Audit Committee or at the request of the independent auditors or management, and include in such meetings members of management to provide information as needed. The Audit Committee shall invite the independent auditors to attend the meetings as deemed necessary, but at least once annually, by the Audit Committee;
2. Meet with the internal auditing staff, the independent auditors, and management in separate executive sessions to discuss any matters that the Audit Committee or these groups believe should be discussed privately with the Audit Committee, and resolve any disagreements between the parties;
3. Provide independent, direct communication between the Board, management and the independent auditors;
4. Report to the Board following the meetings of the Audit Committee such recommendations as the Audit Committee deems appropriate;
5. Maintain minutes or other records of meetings and activities of the Audit Committee;
6. The Audit Committee shall determine and recommend to the Board appropriate funding for payment of:
7. Regularly report to the Board, including the results of the annual audit, and review with the full Board any issues that arise with respect to the quality or integrity of the Company's financial statements, the Company's compliance with legal or regulatory requirements, the performance of the independent auditor and the independence of the independent auditor and, to the extent an internal audit function is established, the performance of the internal audit function and the independence of the internal auditor. If requested by the Board, the Audit Committee shall invite the independent auditor to attend the full Board meeting to assist in reporting the results of the annual audit or to answer other directors' questions (alternatively, the other directors, particularly the other independent directors, may be invited to attend the Audit Committee meeting during which the results of the annual audit are reviewed);
8. Submit the minutes of all meetings of the Audit Committee to, or discuss the matters discussed at each Audit Committee meeting with, the Board;
Duties and Powers Related to the Company's Relationship with the Independent Auditors
9. Be directly responsible for the appointment, retention and termination (subject, if applicable, to stockholder ratification), evaluation, compensation, review and oversight of the work of the independent auditor, including resolution of disagreements between management and the independent auditor regarding financial reporting and receiving the report of the independent auditor;
10. The Audit Committee shall pre‑approve all audit and permissible non‑audit services provided by the independent auditor and shall not engage the independent auditor to perform the specific non-audit services proscribed by law or regulation. Alternatively, the Audit Committee may adopt pre-approval policies and procedures detailed as to particular services and delegate pre‑approval authority to a member of the Audit Committee. The decisions of any Audit Committee member to whom pre-approval authority is delegated must be presented to the full Audit Committee at its next scheduled meeting;
11. Review and approve the independent auditors' annual engagement letter;
12. Have the independent auditors report directly to the Audit Committee, and oversee audit partner rotation as required by law;
13. Review and discuss with the independent auditors all relationships they have with the Company which may impact the auditors' independence;
14. At least annually, obtain and review a report by the Company's independent auditors describing the firm’s internal quality-control procedures and any material issues raised by the most recent internal quality-control review, or peer review of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any issues;
15. Evaluate the qualifications, performance and independence of the Company's independent auditors, including considering whether the independent auditors' quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the independent auditors' independence. The Audit Committee shall present its conclusions with respect to the independent auditors to the Board at least once a year;
16. The Audit Committee shall set clear hiring policies for employees or former employees of the independent auditor and shall ensure that such policies meet SEC regulations and stock exchange listing standards;
Duties and Powers Relating to the Company's Internal Audit Procedures
17. Obtain from the independent auditors and management their recommendations regarding internal controls and other matters relating to the accounting procedures and the books and records of the Company and its subsidiaries and review the correction of controls deemed to be deficient;
18. The Audit Committee shall review and concur with management's appointment, termination or replacement of the head of the internal audit function;
Duties and Powers Relating to the Company's Financial Statements and Disclosure
19. Confer with the independent auditors and management concerning the scope of their examinations of the books and records of the Company and its subsidiaries; direct the attention of the auditors to specific matters or areas deemed by the Audit Committee or management to be of special significance; and authorize the auditors to perform such supplemental review or audits as the Audit Committee may deem desirable;
20. Discuss with the independent auditors their reports regarding (a) all critical accounting policies and practices used by the Company; (b) all material alternative accounting treatments within GAAP that have been discussed with management, including the ramifications of the use of the alternative treatments and the treatment preferred by the accounting firm, and (c) other material written communications between the accounting firm and management such as any management letter or schedule of "unadjusted differences";
21. Review with management and the independent auditors' significant risks and exposures, audit activities and significant audit findings;
22. Review management’s assertion on its assessment of the effectiveness of internal controls as of the end of the most recent fiscal year and the independent auditor’s report on management's assertion (if the preparation of such report is required by applicable law);
23. Discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information and any significant disagreements with management;
24. Review and discuss with management and the independent auditors the results of the annual audit and the Company's audited annual financial statements and the independent auditors' opinion rendered with respect to such financial statements, including reviewing the nature and extent of any significant changes in accounting principles or the application thereof;
25. Discuss with management and the independent auditors any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company's financial statements or accounting policies;
26. Prepare any reports that SEC rules require to be included by it in the Company’s annual proxy statement and other filings;
27. Review the Company’s disclosure in the proxy statement for its annual meeting of stockholders that describes whether the Audit Committee has satisfied its responsibilities under this Charter for the prior year;
28. Discuss the types of information to be disclosed and types of presentations to be made in earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies. The Audit Committee need not discuss in advance each release or each instance of guidance;
29. Review disclosures made by the Chief Executive Officer and Chief Financial Officer in connection with the certification of the Company’s annual and quarterly reports;
30. Cause the Company’s General Counsel to present to the Audit Committee any legal matters (including the status of pending litigation) that may have a material impact on the Company’s financial statements, and any material reports or inquiries from regulatory or governmental agencies;
31. Discuss with management and the independent auditor the financial statements and disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations to be included in the Company’s Annual Report on Form 10-K (or the annual report to stockholders if distributed prior to the filing of Form 10-K), including their judgment about the acceptability and quality of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements;
32. Discuss the interim financial statements and disclosures under Management's Discussion and Analysis of Financial Condition and Results of Operations with management and the independent auditor prior to the filing of the Company's Quarterly Report on Form 10-Q. Also, the Audit Committee shall discuss the results of the quarterly review and any other matters required to be communicated to the Audit Committee by the independent auditor under generally accepted auditing standards.;
Duties and Powers Relating to Compliance Oversight
33. Obtain assurance from the independent auditors that, in the course of their audit, the auditors have not become aware that any illegal act has occurred at the Company;
34. Review reports of attorneys or others with respect to evidence of material violations of securities laws or breaches of fiduciary duty;
35. Conduct or authorize investigations into any matters within the Audit Committee's scope of responsibilities with full access to all books, records, facilities, personnel of the Company and the independent auditor;
36. Establish procedures to receive, retain and treat complaints, including confidential, anonymous complaints, regarding accounting, internal accounting controls, or auditing matters;
37. Discuss with management, the internal auditors (if any) and the independent auditor the adequacy and effectiveness of the accounting and financial controls, including the Company’s policies and procedures to assess, monitor and manage business risk, and legal and ethical compliance programs (e.g., the Company’s Code of Business Conduct and Ethics and Code of Ethics for Senior Financial Officers);
38. Review and investigate any matters relating to the integrity of management, potential conflicts of interest and adherence to the Company’s policies
39. Engage independent legal, accounting or other outside advisors in circumstances where the Audit Committee determines that retaining outside advisors is in the best interests of the Company and its shareholders and determine the appropriate compensation for any advisors, which funding shall be paid by the Company; and
40. Consider such other matters in relation to the financial affairs of the Company and its accounts, and in relation to the internal and external audit of the Company as the Audit Committee may, in its discretion, determine to be advisable.
Each member of the Audit Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and outside the Company that it receives information from and (ii) the accuracy of the financial and other information provided to the Audit Committee by such persons or organizations, absent actual knowledge to the contrary (which shall be promptly reported to the Board). In connections with performing its responsibilities and duties, the Audit Committee is authorized to engage, at the expense of the Company, outside advisers to assist the Audit Committee as necessary or appropriate.
On an annual basis, the Audit Committee shall evaluate and discuss its performance relative to the Audit Committee’s purpose, duties and responsibilities, as described by this charter. The Audit Committee shall review and assess the adequacy of this charter at least annually and recommend any proposed changes to the Board for approval. This charter is effective as of the date indicated below and shall be reviewed and reassessed at least annually by the Audit Committee. Changes to this charter may only be made with the approval of the Board.
Adopted Effective as of April 1, 2014
E. Thomas Corcoran
E. Thomas Corcoran
E. Thomas Corcoran, Director. Mr. Corcoran has been a director since May 2008. Mr. Corcoran also serves as Chairman of the Audit Committee. Mr. Corcoran joined Fort Dodge Animal Health, a division of Wyeth, Inc., as its President in 1985. Wyeth was a research based corporation with businesses focused on human health and animal health. Mr. Corcoran served on the Management, the Operations, the Legal, and the Human Resources and Benefits committees of Wyeth until his retirement in March 2008. Mr. Corcoran also served as the Chairman of the Animal Health Institute, an industry organization advocating for animal health issues, including efficient and effective FDA, USDA and EPA regulatory and approval processes. Mr. Corcoran serves on the Board of Trustees of the University of South Alabama. Mr. Corcoran is a recipient of the Animal Pharm Lifetime Achievement Award, the Banfield Industry Leadership Award, the Lifetime Achievement Award from the American Veterinary Distributors Association and the Industry Leadership Award from the Kansas City Animal Health Corridor. Mr. Corcoran is a recipient of the Distinguished Alumni Award from the University of South Alabama. Mr. Corcoran is qualified to serve on our Board of Directors due to his extensive experience and executive leadership in the animal health industry.
Sam Gejdenson, Director. Mr. Gejdenson has been a director of Phibro since January 2004 and is a member of our Audit Committee and our Compensation Committee. Mr. Gejdenson is the Chairman of our Compensation Committee. Since 2001, Mr. Gejdenson has been involved in international trade through his own company, Sam Gejdenson International, where he has worked with various multi-national clients on projects in Europe, Asia and Africa. Mr. Gejdenson presently serves on the Board of the National Democratic Institute and was formerly a Commissioner on the U.S. Commission for International Religious Freedom. From 1981 to 2001, Mr. Gejdenson served eastern Connecticut as a Congressman in the U.S. House of Representatives where he was the senior Democrat on the House International Relations Committee. In 1974, he was elected to the Connecticut House of Representatives, serving two terms. He received an A.S. degree from Mitchell College in New London, Connecticut in 1968 and a B.A. from the University of Connecticut in Storrs, Connecticut in 1970. Mr. Gejdenson is qualified to serve on our Board of Directors due to his understanding of our business from his service on our Board and his extensive knowledge of global business and governments around the world.
Carol A. Wrenn
Carol A. Wrenn
Carol A. Wrenn, Director. Ms. Wrenn has been a director since July 2010. Ms. Wrenn also serves as a member of the Audit Committee and the Compensation Committee. She is the founder and owner of Whitewater Advisors LLC which provides consulting services to small businesses. She was the founder and owner of Sky River Helicopters, LLC, a company that provides helicopter charters, tours, commercial services and lessons, from January 2010 until September 2015. She previously served as an Executive Vice President and the President of the Animal Health Division at Alpharma Inc., a human and animal pharmaceutical company, from November 2001 to June 2009. From April 2007 to April 2009, Ms. Wrenn also held the position of Chairman of the Animal Health Institute, an industry organization advocating for animal health issues, including efficient and effective FDA, USDA and EPA regulatory and approval processes. From January 2002 to June 2009, she was an active member of the Board of Directors of the International Federation of Animal Health. Prior to joining Alpharma, Ms. Wrenn held various executive positions at Honeywell International Inc. (formerly, AlliedSignal Inc.) from 1984 to 2001. She served as Business Director of Honeywell’s Refrigerants, Fluorine Products Division from 2000 to 2001 and was the Commercial Director and Managing Director of Honeywell’s European Fluorochemical operations based in Haasrode, Belgium from 1997 to 2000. Ms. Wrenn also held a number of positions in sales, marketing, business development and finance during her tenure with AlliedSignal. Beginning in January 2013, Ms. Wrenn has served as a director of Heska Corporation. She holds a Bachelor’s Degree from Union College, an MBA from Lehigh University and a DBA from California Southern University. Ms. Wrenn is qualified to serve on our Board of Directors due to her relevant industry experience, strategic and problem-solving skills and strong interpersonal and negotiation skills.