CHASE CORPORATION
26 Summer Street
Bridgewater, Massachusetts 02324
Telephone (508) 279-1789
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the annual meeting of shareholders of
Chase Corporation will be held at 9:30 a.m., Tuesday, January 16, 2001 at the
Raynham Courtyard Marriott, 37 Paramount Drive, Raynham, Massachusetts 02767
for the following purposes:
(1) To elect the members of the Board of Directors of the corporation;
and
(2) To transact such other business as may properly come before the
meeting.
Only shareholders of record on the books of the corporation at the
close of business on December 1, 2000 are entitled to notice of and to vote
at the meeting.
The Board of Directors hopes that all shareholders who can
conveniently do so will personally attend the meeting.
By order of the Board of Directors,
GEORGE M. HUGHES
Clerk
December 18, 2000
SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN THE ACCOMPANYING
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
CHASE CORPORATION
26 Summer Street
Bridgewater, Massachusetts 02324
Telephone (508) 279-1789
PROXY STATEMENT
December 18, 2000
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Chase Corporation (the "Company") for the annual meeting of
the Company's shareholders to be held on January 16, 2001. The cost of
solicitation will be borne by the Company. In addition to solicitation by
mail, directors, officers and regular employees of the Company may solicit
proxies personally or by telephone.
The authority granted by an executed proxy may be revoked at any time
before its exercise by filing with the Clerk of the Company a written
revocation or a duly executed proxy bearing a later date or by voting in
person at the meeting. Unless the proxy is revoked, the shares represented
thereby will be voted as directed. If no specifications are made, proxies
will be voted to elect the directors nominated by the Board of Directors.
On December 1, 2000, the Company had outstanding 3,989,603 shares of
Common Stock, $0.10 par value (the "Common Stock"), which is its only class
of voting stock. Shareholders of record at the close of business on December
1, 2000 are entitled to vote at the meeting. With respect to all matters that
will come before the meeting, each shareholder may cast one vote for each
share registered in his or her name on the record date. A majority in interest
of the Company's Common Stock outstanding and entitled
to vote represented at the meeting in person or by proxy constitutes a
quorum for the transaction of business.
The approximate date on which this proxy statement and form of proxy
will be first sent or given to shareholders is December 18, 2000. The
Company's annual report for fiscal 2000 will be sent to shareholders on the
same date.
Principal Holders of Voting Securities
The following table sets forth certain information regarding ownership
of the Company's Common Stock as of December 1, 2000, by (i) all persons
known to the Company to be beneficial owners of more than 5% of the
Company's outstanding Common Stock and (ii) all officers and directors of
the Company as a group.
Number of Shares Percent of
Beneficial Owner(a) Beneficially Owned(b) Class
__________________ ____________________ _______
Edward L. Chase 1,528,407(c) 37.4%
39 Nichols Rd.
Cohasset, MA 02025
Peter R. Chase 471,534 11.5%
305 Grange Park
Bridgewater, MA 02324
All current officers and
directors as a group 2,112,404 51.5%
(8 persons)
_____________
(a) Information regarding ownership of the Company's Common Stock by
the directors of the Company is set forth on pages 2 and 3 under the
heading "Election of Directors."
(b) Includes shares subject to stock options exercisable within the
60-day period following December 1, 2000. See "Election of Directors."
(c) Includes 1,614 shares owned of record by Mr. Chase's spouse. Mr.
Chase has shared power to direct voting or disposition, or both, of such
shares. As to balance of the shares, Mr. Chase has sole voting and
investment power.
Arrangements Regarding the Election of Directors
The Company's by-laws provide that for so long as 10% of the Company's
outstanding voting stock is owned by Edward L. Chase or his spouse, issue,
or estate, or a trust for the benefit of his spouse and/or issue, then the
Nominating Committee will recommend to the Board of Directors that such
person or a lineal descendant of such person be elected to the Board of
Directors.
Election of Directors
Seven directors are to be elected at the annual meeting. The Board of
Directors recommends that the seven nominees named below be elected as
directors. The directors elected at the meeting will hold office until the
next annual meeting and until their successors are elected and qualified.
It is intended that proxies in the accompanying forms be voted in favor of
electing as directors the persons named in the table below. If any nominee
should become unavailable for election, the persons voting the accompanying
proxy may in their discretion vote for a substitute. The Board of Directors
is not presently aware of any reason that would prevent any nominee from
serving as a director if elected.
The affirmative vote by the holders of a majority of the securities
present, or represented, and entitled to vote at the meeting is necessary
to elect the nominees for election as directors. Abstentions will be
counted as present and entitled to vote and, accordingly, will have the
effect of negative votes. Broker non-votes will not be counted as present
or represented for this purpose. A "broker non-vote" occurs when a
registered broker holding a customer's shares in the name of the broker has
not received voting instructions on a matter from the customer, is barred
by applicable rules from exercising discretionary authority to vote on the
matter and so indicates on the proxy.
<TABLE>
<CAPTION>
No. of Common
Shares Owned
Business Experience Has Been Beneficially on Percent
During Past Five Years a Director December 1, of
Name Age and other Directorships Since 2000 (a) Class
<S> <C> <S> <C> <C> <C>
Edward L. Chase(c) 79 President Emeritus of the 1971 1,528,407(b) 37.4
Company since 1988;
President,Chief Operating
Officer, and Chief
Financial Officer of
the Company from 1971 to
September 1988; Treasurer
of the Company from 1984
to September 1988; from
1947 to September 1988,
Director and Treasurer
of Chase & Sons, Inc.
Peter R. Chase(c) 52 Chief Executive Officer 1993 471,534(g) 11.5
of the company since
September 1993 and
President of the Comp-
any since April 1992;
Chief Operating Officer of
the Company since September
1988.
Sarah Chase(c) 42 Shareholder, Ley & Young,P.C. 1997 11,870(d) 0.3
since 1993; Associate
Attorney, Ley & Young, P.C.
1990 - 1993
William H. Dykstra 72 Director of Reed and 1988 21,347(h) 0.5
Barton Corporation
From 1977 to April 1998;
Senior Vice President of
Finance from 1977
to January 1993.
Serves as an active member
on several boards.
George M. Hughes(e) 61 Through April 1996 Partner 1984 2,575(f) -
at Palmer & Dodge. As of
May 1996 Founder and
Principal of Hughes &
Associates.
Ronald Levy 62 Vice President of Arthur 1994 10,614(i) 0.2
D. Little, Inc., a
management and technology
consulting company, since
1987 and a Director of its
North America Management
Consulting Practice.
Ernest E. Siegfriedt,Jr.69Independent business 1990 10,090(h) 0.2
consultant since 1988;
Vice President and
General Manager of the
Fasteners Division of
T.R.W., Inc., a
manufacturing company,
from 1976 to 1988.
</TABLE>
(a) The beneficial owners of these shares have sole voting power and
sole investment power over such shares, except as otherwise indicated. On
December 1, 2000, the officers and directors of the Company as a group
owned beneficially 2,112,404 shares (51.5%)of the Company's outstanding
Common Stock.
(b) Includes 6,500 shares that may be acquired within 60 days of
December 1, 2000 pursuant to the exercise of stock options.
(c) Peter R. Chase, President and Chief Executive Officer of the
Company, is the son, and Sarah Chase is the daughter of Edward L. Chase.
(d) Includes 10,000 shares that may be acquired within 60 days of
December 1, 2000 pursuant to the exercise of stock options.
(e) Mr. Hughes is general counsel to the Company.
(f) Includes 70,955 shares that may be acquired within 60 days of
December 1, 2000 pursuant to the exercise of stock options.
(g) In Includes 2,500 shares that may be acquired within 60 days of
December 1, 2000 pursuant to the exercise of stock options.
Meetings of the Board of Directors
The Company's Board of Directors held five meetings during the fiscal
year ended August 31, 2000 and each director attended at least 75% of the
aggregate of all meetings of the Board of Directors and all meetings held
by committees of the Board on which they served.
Committees of the Board of Directors
The Board has standing audit, compensation and nominating committees.
All members of the committees serve at the pleasure of the Board of
Directors. The functions and current membership of each committee are as
follows:
Audit Committee. The Audit Committee recommends to the Board of
Directors the engagement of the Company's independent accountants, reviews
the scope and extent of their audit of the Company's financial statements,
and reviews the annual financial statements with the independent
accountants and with management, and makes recommendations to the Board of
Directors regarding the Company's policies and procedures as to internal
accounting and financial controls. The members of the Audit Committee are
Messrs. Dykstra, Siegfriedt and Levy. The Audit Committee held two
meetings during the fiscal year ended August 31, 2000.
Compensation Committee. The Compensation Committee advises the Board
of Directors on matters of management, organization, and succession,
recommends persons for appointments to key employee positions, and makes
recommendations to the Board of Directors regarding compensation for
officers and key employees. The members of the Compensation Committee are
Messrs. Levy, Siegfriedt and Hughes and Ms. Sarah Chase. The Compensation
Committee held eight meeting during the fiscal year ended August 31, 2000.
Nominating Committee. The Nominating Committee recommends persons for
election as directors of the Company, and makes recommendations to the
Board of Directors regarding the structure and membership of the various
committees of the Board of Directors, including the Nominating Committee
itself. The Nominating Committee will consider nominees recommended by
shareholders if such recommendations are made in writing to the Nominating
Committee. The members of the Nominating Committee are Messrs. Hughes, Levy
and Dykstra. The Nominating Committee held one meeting during the fiscal
year ended August 31, 2000.
Executive Compensation
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation(l) Long Term Compensation
______________________________ ______________________________
(a) (b) (c) (d) (e) (f) (g)
Restricted Securities
Stock Underlying LTIP All
Fiscal Award(s) Warrants/ Payout Other
Name & Principal Position Year Salary Bonus ($)(2) Options (#) ($) Comp(3)
________________________ ____ ______ ______ ______ ___________ ______ ______
<S> <C> <C> <C> <C> <C> <C> <C>
Peter R. Chase 2000 $304,948 $146,400 $ - - - $7,607
President and 1999 299,194 206,100 $ - - - 8,876
Chief Executive Officer 1998 298,350 257,700 - - - 8,950
Everett Chadwick, Jr 2000 142,309 86,390 - - - 4,269
Treasurer and 1999 139,624 96,180 - - - 4,189
Chief Financial Officer 1998 139,240 120,260 - - - 4,177
_____________
</TABLE>
(1) Annual compensation includes amounts earned in each fiscal year,
whether or not deferred. Compensation is deferred pursuant to the
provisions of the Chase Corporation Retirement Savings Plan. Aggregate
perquisite values do not exceed the lesser of $50,000 or 10% of the
reported base salary and bonus for each year. The Company does not have a
Long Term Incentive Plan (LTIP)or have a program to grant Stock Appreciation
Rights.
(2) As of August 31, 2000, Peter R. Chase, the Company's Chief Executive
Officer, held 250,000 shares of restricted stock having a value as of that date
of $2,281,000. The shares vest on the earlier to occur of September 6, 2004 or
the occurrence of a change in control as defined in the agreement between the
Company and Mr. Chase with respect to the shares. Dividends are payable upon
the shares when and as declared.
(3) The amounts represent the contribution by the Company on behalf of
the employees to the Chase Corporation Retirement Savings Plan.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
<TABLE>
<CAPTION>
Number of Value of
Unexercised Options Unexercised Options
@ fiscal year end @ fiscal year end
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($) Unexercisable Unexercisable(1)
_____ ______________ __________ __________________ _______________
<S> <C> <C> <C> <C>
Peter R. Chase 48,001 $552,011 54,355/197,500 $352,307/$1,283,750
Everett Chadwick, Jr. 7,081 81,874 11,400/ 8,600 $ 74,100/$ 55,900
(1) Market value of securities at August 31, 2000 close minus the exercise
price.
</TABLE>
Compensation Committee Report on Executive Compensation
Recommendations on compensation for the Company's executive officers are
made by the Compensation Committee of the Board of Directors (the
"Committee"). The Committee is composed of a majority of independent
non-employee directors who have no interlocking directorships as defined by
the Securities and Exchange Commission. Committee decisions are reviewed
and approved by the full Board of Directors.
The Company's executive compensation program is designed to accomplish
the following objectives:
- Reward key executives at levels which are competitive with those of
similar comparative companies.
- Provide incentives which are directly linked to the achievement of
Company strategies, profits and enhanced shareholder values.
- Assure that the objectives for corporate and business unit performance
are established and measured.
- Attract and retain executives who have the capabilities needed to assure
proper growth and profitability.
During the fiscal year ended August 31, 2000, the Company retained Wm. H
Mercer, Inc. to advise it on industry compensation norms for Directors,
Executive Officers and Divisional Managers. The Company, acting through the
Committee, employed three programs to compensate its senior management. These
included an annual base salary program, a stock option plan and a contingent
compensation program based on selected financial performance measures.
Following is a description of the manner in which each program was
administered during the year. It includes an explanation of the rationale for
the compensation paid to the Chief Executive Officer.
Annual Base Salary Program
Salary ranges are established for executive positions, including the
named executive officers, with range mid-points equal to the median salary
determined from appropriate comparative survey data provided by an
independent consultant. The actual salary of each individual holding an
executive position is determined using the Company's salary administration
program as a basis and by taking into consideration the individual's
qualifications, sustainedperformance and level of responsibility, as
evaluated by the Committee. Annual adjustments in base salary are made after
an analysis of the foregoing factors and aforementioned survey data showing
compensation trends externally.
The base salary for Peter R. Chase was set by the Committee using the
same policies and criteria used for other executive officers of the
Company. His base salary for the fiscal year ended 2000 was set at about the
median salary reflected in the aforementioned comparative survey data and
adjusted based on the Committee's evaluation of the criteria discussed
above. Corporate performance measures are used in determining bonuses
rather than base salary and accordingly were not considered by the
Committee in determining Mr. Chase's base salary.
Contingent Compensation Program
Each executive officer, including the named executive officers, was
eligible to earn additional contingent compensation under the Company's
management incentive plan equal to a designated percentage of annual base
salary. In the 2000 fiscal year, the target percentage was 30% of annual
base salary for each executive officer for achieving targeted operating
profit set with reference to the three prior years. Potential incentive
earnings could range from 0% to 100% of annual base salary, depending upon
the Company's actual performance during the year. The Company exceeded the
operating profit threshold established for payment of the targeted
incentive compensation in fiscal year 2000; therefore, in accordance with
the plan, incentive earnings for executive officers averaged 49% of annual
base salary in the last fiscal year.
Stock Options
The Company has in effect a Plan which is designed in part to retain and
provide incentives to the Company's Chief Executive and Chief Financial
Officers. The Committee believes that these executives are in a position to
make the most significant contribution to the Company's future success. The
program is designed to recognize significant contributions and provide
longer-term incentives to increase shareholder value. Under the 1995 Stock
Option Plan options for 400,000 shares were granted to Peter R. Chase and
50,000 shares to Everett Chadwick. The size and structure of the awards were
determined by the Committee in conjunction with advice from William H.
Mercer, Incorporated acting as consultants to the Committee and advising it
as to industry norms and the accomplishment of the objectives of the
Company's compensation program's goals. To ensure that high levels of
performance occur over the long term, the options granted vest over a period
of 10 years. All of the options have been granted with an exercise price
equal to 100% of the fair market value of the Company's common stock on the
grant date. Any value received from a stock option grant depends entirely on
increases in the price of the Company's common stock.
The Committee, in carrying out its responsibilities, has monitored the
performance progress during the years as it relates to the compensation
program.
By the Chase Corporation Compensation Committee,
Ronald Levy (Chairman)
Sarah Chase
George M. Hughes
Ernest E. Siegfriedt, Jr.
401(k) Plan. The Company has a deferred compensation plan and an excess
plan adopted pursuant to Section 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"). Any qualified employee who has attained age 21 and
has been employed by the Company for at least six months may contribute a
portion of their salary to the plan and the Company will match, at the rate
of 50% on the dollar, such contribution up to an amount equal to three
percent of such employee's yearly salary. Amounts contributed to the plan are
invested and income taxes on the amounts contributed and on the investment
yield are deferred until such amounts are paid to the employee upon their
departure from the Company. Both the 401(k) plan and the pension plan
described below were amended, effective January 1, 1989, to comply with
pertinent legislation.
Deferred Compensation; Termination of Employment Arrangements and
Amendment to Certain Arrangements.
The Company entered into an agreement with Peter R. Chase
pursuant to which the Company will continue to pay Mr. Chase the equivalent
of his annual compensation for two years following the termination of his
employment if such termination arises in connection with a change in
control of the Company. Any payments made to Mr. Chase after the first year
following his termination will be offset to the extent that he receives any
other compensation, through new employment or otherwise.
Pension Plan. The Company has a defined benefit Pension Plan that
covers substantially all of its employees who have attained the age of 21
and have completed six months of service. Benefits are determined based on
final average base earnings (excluding bonuses, overtime, and other
extraordinary amounts), covered compensation, and total years of service
with the Company (up to a maximum of forty years). Compensation covered by
the plan is annual compensation, less payments on account of overtime,
bonuses, or commissions, to a maximum of $170,000. Benefits are payable
upon the retirement of a participant at age 65, or upon the fifth
anniversary of employment, if later, or earlier if the participant is at
least 55 years old and has completed at least five years of service. The
plan offers the option for a participant to receive a lump sum distribution
upon attainment of age 65 and five years of employment even if the employee
elects to remain actively employed. Benefits may be paid in a variety of
forms, including a lump sum, at the election of the participant. The
following tables show estimates of annual benefits payable under the qualified
plan and non-qualified excess plan upon retirement at age 65 or upon the fifth
anniversary of employment, if later.
Table 1 relates to those participants who were employed prior to May 1,
1995 or are covered by a collective bargaining agreement and are in the
specified compensation and years-of-service classifications before an offset
of .6% of covered compensation at the time of retirement times the number of
years-of-service (up to a max of 35 years).
Table 1:
Average Remuneration Years of Service at Age 65
5 highest consecutive years 10 20 30 40
$ 50,000 $ 7,500 $15,000 $22,500 $28,250
100,000 15,000 30,000 45,000 56,500
170,000 25,500 57,000 76,500 98,050
200,000 * 30,000 60,000 90,000 113,000
250,000 * 37,500 75,000 112,500 141,250
300,000 * 45,000 90,000 135,000 169,500
350,000 * 52,500 105,000 157,500 197,750
400,000 * 60,000 120,000 180,000 226,000
Table 2 relates to those participants who became employed on or after May
1, 1995 and are not covered by a collective bargaining agreement and are in
the specified compensation and years-of-service classifications before any
offset of.3% of covered compensation at the time of retirement times the
number of years-of-service (up to a max of 35 years).
Table 2:
Average Remuneration Years of Service at Age 65
5 highest consecutive years 10 20 30 40
$ 50,000 $ 3,750 $ 7,500 $11,250 $14,125
100,000 7,500 15,000 22,500 28,250
170,000 12,750 25,500 38,250 48,025
200,000 * 15,000 30,000 45,000 56,500
250,000 * 18,750 37,500 56,250 70,625
300,000 * 22,500 45,000 67,500 84,750
350,000 * 26,250 52,500 78,750 98,875
400,000 * 30,000 60,000 90,000 113,000
*As required by Section 415 of the IRC, qualified plan payments may not
provide annual benefits exceeding a maximum amount, currently $135,000. For
the associate who is covered under the excess plans, amounts above this
maximum will be paid under the terms of the excess plans up to the amounts
shown in the table above. Pursuant to Section 401(a)(17) of the IRC, annual
compensation in excess of $170,000 (for 2000) cannot be taken into account in
determining qualified plan benefits.
Mr. Chase and Mr. Chadwick have approximately 29 and 12 years of service,
respectively.
Compensation of Directors. Directors who are not employees of the Company
are paid an annual retainer of $8,000 plus a fee of $1,000 for each Board
meeting they attend ($1,500 if they attend a committee meeting on the same
day). Non-employee directors who are committee members receive a fee of
$1,000 per committee meeting they attend. Non-employee directors also
are eligible to receive stock options. As authorized under the terms and
provision of the company's 1995 Stock Option Plan, each director,
exclusive of the Chief Executive Officer has received an option to
purchase 12,500 shares which would be fully vested by January 15, 2000.
Performance Graph
The following line graph compares the yearly percentage change in the
Corporation's cumulative total shareholder return on the Common Stock for
the last five fiscal years with the cumulative total return on the Standard
& Poor's 500 Stock Index ("the S&P 500 Index"), and a composite peer index,
weighted by market equity capitalization on companies with the Chase
Corporation Standard Industrial Classification (S.I.C.) code (the "Peer
Group Index"). The companies included in the Peer Group Index are American
Biltrite, Inc., Lamson & Sessions Co., Plymouth Rubber Company Inc.,
MacDermid Inc., Bairnco Corp., and Flamemaster Corp. Cumulative total
returns are calculated assuming that $100 was invested 8/31/95 in each of
the Common Stock, the S&P 500 and the Peer Group Index, and that all
dividends were reinvested.
Chase Corporation
Comparison of 1995/2000 Cumulative Total Return Performance
1995 1996 1997 1998 1999 2000
Chase 100.0 128.2 282.6 214.6 296.3 252.4
S&P 500 100.0 118.7 167.0 180.5 252.4 296.6
Peer Group 100.0 130.0 259.5 256.5 299.4 291.8
Audit Committee Report
The Audit Committee, in accordance with its charter (See Exhibit A), oversees
the Company's financial reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls. In fulfilling its
oversight responsibilities, the Committee reviewed the audited financial
statements in the Annual Report with management including a discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the
financial statements.
The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on conformity of those audited financial statements with
generally accepted accounting principles, their judgments as to the quality,
not just the acceptability, of the Company's accounting principles and such
other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors' independence from management and the Company
including the matters in the written disclosures required by the Independence
Standard Board.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their respective audits. The Committee met with the
independent auditors, with and without management present, to discuss the
results of their examinations, their evaluations of the Company's internal
controls and the overall quality of the Company's financial reporting. The
Committee held two meetings during fiscal 2000.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended August 31, 2000 for filing with the Securities and Exchange
Commission. The Committee has also recommended, subject to Board and
shareholder approval, the selection of the Company's independent auditors.
William H. Dykstra,
Chairman
Ronald Levy
Ernest Siegfriedt
Auditors
The Board of Directors has selected the firm of Livingston & Haynes, P.C. which
served as auditors for the Company for the most recently completed fiscal
year of the Company, to serve as auditors for the Company for the fiscal year
ending August 31, 2001. Representatives of Livingston & Haynes, P.C. are
expected to be present at the meeting of shareholders with an opportunity to
make a statement if they desire to do so. Such representatives will be
available to respond to appropriate questions.
Proposals of Security Holders for 2002 Annual meeting
Proposals of security holders intended to be present at the 2002 annual
meeting of the Company's shareholders must be received by the Company for
inclusion in its proxy statement and form of proxy relating to that meeting
not later than August 15, 2001.
Miscellaneous
The management does not know of any business that will come before the meeting
except the matters described in the notice. If other business is properly
presented for consideration at the meeting, it is intended that the proxies
will be voted by the persons named therein in accordance with their judgement
on such matters.
In the event that a quorum is not present when the meeting is convened, it is
intended to vote the proxies in favor of adjourning from time to time until a
quorum is obtained.
By order of the Board of Directors
George M. Hughes
Clerk
Chase Corporation
Audit Committee Charter EXHIBIT A
Organization
The Audit Committee of the Board of Directors of Chase Corporation shall
have a minimum of three members and be composed entirely of Directors who are
independent of the management of Chase Corporation. They should be free of any
relationship that in the opinion of the Board would interfere with their
exercise of independent judgment as Committee members. All Committee members
must be able to read and understand fundamental financial statements. At least
one committee member must have past or present employment experience in
finance or accounting with professional certification or have background as a
chief executive or financial officer or other senior officer status with
financial oversight responsibilities.
Statement of Policy
The Audit Committee shall assist the Board in fulfilling its
responsibilities to the shareholders and investment community relating to the
quality, completeness and objectivity of financial reporting, the
effectiveness and efficiency of operations and internal controls, and
compliance with applicable laws and regulations. The outside auditor is
ultimately accountable to the Board of Directors and the Audit Committee. The
Board and Committee have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the outside auditor.
Responsibilities
In carrying out its responsibilities, the
Audit Committee will:
- review and recommend to the Board the outside auditors to a selected,
including a review of the proposed fee to determine if it is appropriate
for the services they render;
- create direct and open lines of communications with the outside
auditors; meet with the outside auditors to review the scope of the
proposed annual audit and the audit procedure to be performed;
- meet with the outside auditors, at the conclusion of the audit, to review
the results of the audit including the form of opinion the auditors
propose to render quid any continents or recommendations of the outside
auditors, and report the results of the annual audit to the Board;
- secure at least annually a representation from the outside auditors as to
their independence from Management, taking into consideration whether the
auditors provide any consulting to Management;
- meet separately at least annually with the outside auditors, without
Management to discuss their evaluation of financial personnel and the
cooperation they received during the audit;
- submit to the Board the minutes of all Committee meetings and discuss the
matters considered at each meeting.
Authority
The Audit Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain special
counsel and other experts at the expense of the Company.
