Purpose of Committee
The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Pitney Bowes Inc. (the “Company”) is to assist the Board in the oversight of (a) the integrity of the financial statements of the Company, (b) the Company’s compliance with legal and regulatory requirements, (c) the independence and qualification of the Company’s external auditors, (d) the performance of the Company’s internal audit function and external auditors and (e) the preparation of the report the Committee is required by Securities and Exchange Commission (“SEC”) rules to be included in the Company’s annual proxy statement.
Committee Structure and Operations
The Committee shall be composed of a minimum of three directors with all members of the Committee to be independent according to independence standards established by the Board consistent with applicable statutes regulations and listing standards of The New York Stock Exchange (“NYSE”). The Board shall appoint members of the Committee annually including a Director to serve as Committee Chair after consideration of nominations by the Governance Committee. In selecting members of the Committee the Board shall take into account compliance with applicable statutes, rules, regulations and the listing standards of the NYSE including requirements of independence. The Board shall determine that each member of the Committee is financially literate in accordance with NYSE listing standards. At least one member of the Committee shall in the judgment of the Board be an “audit committee financial expert” in accordance with the rules and regulations of the SEC and at least one member (who may also be the financial expert) shall in the judgment of the Board have accounting or related financial management expertise in accordance with NYSE listing standards.
As permitted by the Company’s Amended and Restated By-Laws, in the absence or disqualification of a member of the Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another independent Director to act as a member of the Committee at the meeting in place of any such absent or disqualified member. Any independent Director serving as an alternate member of the Committee must satisfy the standards for Committee membership as set forth above.
The Committee shall meet at least four times per year with additional meetings to occur as deemed necessary or desirable by the Committee or the Committee Chair. A majority of the members of the Committee shall constitute a quorum for action.
Committee Duties and Responsibilities
The following are the duties and responsibilities of the Committee:
1. To be directly responsible in its capacity as a committee of the Board for appointing and retaining, compensating, overseeing and terminating when appropriate the principal firm of independent public accountants ("External Auditors") to audit the consolidated financial statements of the Company. In this regard the Committee shall evaluate the qualifications independence and performance of the External Auditors, appoint and retain them (subject to ratification by the Company's shareholders) and if appropriate replace the External Auditors. The External Auditors shall report directly to the Committee.
2. Pre-approve all audit and non-audit services to be performed by the External Auditor and establish policies and procedures for the engagement of the External Auditor to provide those services.
3. Obtain and review at least annually a report by the External Auditor describing: the firm's internal quality-control procedures; 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 with respect to one or more independent audits carried out by the firm and any steps taken to deal with any such issues.
4. At least annually consider the independence of the External Auditor, and consistent with the rules of the Public Company Accounting Oversight Board obtain and review a report by the External Auditor describing all relationships between the External Auditor or its affiliates and the Company or individuals in financial reporting oversight roles at the Company that may reasonably be thought to bear on independence, and discuss with the External Auditor the potential effects of any such relationships on independence.
5. Meet to review and discuss with management and the External Auditor the annual audited financial statements and quarterly financial statements prior to filing, including reviewing the Company's specific disclosures under "Management's Discussion and Analysis of Financial Conditions and Results of Operations" and matters required to be reviewed by applicable legal regulatory or NYSE requirements.
6. Discuss with management and the External Auditors and review any significant issues regarding accounting principles, practices and judgments made in connection with the preparation of the Company's financial statements. Review a report from the External Auditors regarding all critical accounting policies to be used in the Company's financial statements, including major changes thereto. Review any major issues as to the adequacy of the Company's internal controls and any special audit steps adopted in light of material control deficiencies. Review the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the financial statements of the Company. The External Auditors shall also report to the Committee any other material written communications with management.
7. Discuss earnings and press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.
8. Recommend to the Board whether the financial statements should be included in the annual report on Form 10-K.
9. Review with the External Auditors any audit problems or difficulties and management's response.
10. Review policies and processes with respect to risk identification assessment and management.
11. Oversee the mitigation by management of specific Enterprise Risks as assigned by the Governance Committee and approved by the Board of Directors from among those identified by the Company's Risk Steering Committee and reported to the Audit Committee.
12. Meet separately and on a periodic basis with management, the lead internal auditor of the Company (the "General Auditor") and with the External Auditors.
13. Review and approve periodically (at least annually) the internal audit organisation and the objectives and scope of the internal audit function, and examinations including review and approval of the appointment of the General Auditor.
14. Review periodic reports from management assessing the effectiveness of the Company's internal controls and procedures for financial reporting, including reports on (a) all significant deficiencies or material weaknesses in the design or operation of internal controls, including any corrective actions and (b) any fraud whether or not material that involves management or other employees having a significant role in the internal controls.
15. Establish procedures regarding (a) the receipt retention and treatment of complaints regarding the Company's accounting, internal accounting controls or auditing matters and (b) the confidential and anonymous submission by Company employees regarding questionable accounting or auditing matters.
16. Set policies for the recruitment of employees or former employees of the External Auditor.
17. Review periodically (at least annually) the Committee charter and recommend to the Governance Committee any proposed changes to the charter.
18. Assess annually the Committee's performance of its responsibilities and report on that assessment to the Board.
The Committee shall produce the following reports and provide them to the Board:
1. An annual Report of the Audit Committee for inclusion in the Company's annual proxy statement in accordance with applicable rules and regulations.
2. An annual performance evaluation of the Committee. The performance evaluation should also recommend to the Governance Committee whether any improvements to this charter are deemed necessary or desirable. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate. The report to the Board may take the form of an oral report by the Committee Chair or any other member of the Committee designated by the Committee to make this report.
3. A summary of the actions taken at each Committee meeting which shall be presented by the Committee Chair to the Board at the next Board meeting.
Resources and Authority of the Committee
The Committee shall be provided with adequate resources and funding as determined by the Committee to satisfy its responsibilities.
The Committee shall have the authority to appoint and retain such outside counsel and other advisors as the Committee in its sole discretion deems appropriate. The Committee shall have the sole authority to approve the terms of any such retention and the fees to be paid.
The Committee shall have direct access to the External Auditors, the General Auditor and the General Counsel, each of whom shall also have direct access to members of the Audit Committee.
Effective September 2013