Audit Committee Charter
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: (1) 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 qualifications of the Company’s external auditor, (d) the performance of the Company’s internal audit function and external auditor, and (2) oversee the preparation of the Committee’s report 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. Each member of the Committee shall be financially literate in accordance with NYSE listing standards in the judgment of the Board. 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.
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 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 the work of and terminating when appropriate, the principal firm of independent public accountants (“External Auditor”) to audit the consolidated financial statements of the Company. In this regard, the Committee shall evaluate the qualifications, independence and performance of the External Auditor, appoint and retain them (subject to ratification by the Company’s shareholders), and, if appropriate, replace the External Auditor. The External Auditor 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, respecting 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 (PCAOB), 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 earnings press releases, and financial information and earnings guidance provided to analysts and rating agencies.
7. Recommend to the Board whether the financial statements should be included in the annual report on Form 10-K.
8. Review and discuss with the External Auditor the matters required to be discussed by the External Auditor under applicable PCAOB standards as amended from time to time, including any audit problems or difficulties and management’s response.
9. Review policies and processes with respect to risk identification, assessment and management.
10. Review policies, processes and management’s plans and practices with respect to the information technology (IT) function and the systems it manages, including an assessment of IT and cybersecurity risks. The review will include a discussion of the controls implemented to monitor and mitigate these and other technology-related risks.
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 Auditor.
13. Review and approve periodically (at least annually) the internal audit organization 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 the External Auditor and 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. Oversee the Company’s compliance program with respect to legal and regulatory requirements, including the Company’s codes of conduct and the Company’s policies and procedures for monitoring compliance; and at least annually, meet to review the implementation and effectiveness of the Company’s compliance program with the Chief Legal and Compliance Officer, who shall have the authority to communicate directly to the Committee, promptly, about actual and alleged violations of law or the Company’s codes of conduct, including any matters involving criminal or potential criminal conduct.
16. Establish and oversee procedures regarding (a) the receipt, retention and treatment of complaints regarding the Company’s accounting, internal accounting controls, auditing and federal securities law matters and (b) the confidential and anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters and federal securities law matters.
17. Set policies for the hiring of employees or former employees of the External Auditor.
18. Oversee relevant related party transactions, if any, governed by applicable accounting standards (other than those addressed by the Governance Committee).
19. Review periodically (at least annually) the Committee charter and recommend to the Governance Committee any proposed changes to the charter.
20. Assess annually the Committee’s performance of its responsibilities and report on that assessment to the Board.
The Committee shall report regularly to the Board with respect to its activities, including by providing the following reports:
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 have the authority to appoint and retain such outside counsel, accountants, experts 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, and the Company shall provide for appropriate funding, as determined by the Committee, for the payment of compensation to any such advisors and for the payment of ordinary administrative expenses that are necessary or appropriate in carrying out the Committee’s duties.
The Committee shall have direct access to the External Auditor, the General Auditor, and the Chief Legal and Compliance Officer, each of whom shall also have direct access to members of the Audit Committee.