CORPORATE GOVERNANCE
Purpose
The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Anchor BanCorp Wisconsin Inc. (the “Company”) is to assist the Board in its oversight of: (1) the integrity of the financial statements of the Company and systems of internal control over financial reporting; (2) the Company’s compliance with legal and regulatory requirements relating to financial reporting and disclosure; (3) the independence and qualifications of the independent auditors; and (4) the performance of the Company’s internal audit function and independent auditors.
The Committee shall prepare a report or other disclosures required to be prepared by the Committee pursuant to the rules of the Securities and Exchange Commission (“SEC”) to be included in the Company’s proxy statement or annual report.
Committee Meeting
The Committee shall consist of three or more members of the Board, each of who the Board has determined to be “independent” under the rules of The Nasdaq Stock Market, as such rules may be modified from time to time, and all other requirements for audit committee members under the listing standards of The Nasdaq Stock Market, SEC, the Sarbanes-Oxley Act of 2002 and other applicable laws and regulations. In addition, at least one member of the Committee shall be a “financial expert” as defined by the rules of and regulations of the SEC.
Meetings
The Committee shall meet in person or telephonically at least four times per year at a time and place determined by the Committee chairperson, with further meetings to occur, or actions to be taken by unanimous written consent, when deemed necessary or desirable by the Committee or its chairperson. The Committee shall meet privately in executive session at least annually. The committee shall meet separately periodically with management, the internal auditors, and independent auditors to discuss issues and concerns warranting Committee attention. The Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the committee or to meet with any members of, or consultants to, the Committee.
Committee Duties and Responsibilities
The Committee shall have the sole authority and responsibility to appoint, retain or terminate the Company’s independent auditors. The Committee shall be directly responsible for the compensation and oversight of the work of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent auditors are to report directly to the Committee.
The Audit Committee shall pre-approve all audit, review and attest services to be performed for the Company. Permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor, that individually exceed $15,000 or collectively exceed $50,000 also require pre-approval by the Audit Committee. The Audit Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of permitted non-audit services, but excluding the authority to grant pre-approvals of audit, review or attest services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting and the delegation of such authority shall comply with the requirement of the Exchange Act and the rules and regulations of the Commission.
The Audit Committee shall have the authority, to the extent it deems necessary or appropriate, to retain independent legal, accounting or other advisors, The Company shall provide for appropriate funding, as determined by the Audit Committee, for payment of compensation to the independent auditor for the purpose of rendering or issuing an audit report or related work or performing other audit, review, or attest services for the Company and to any advisors employed by the Audit Committee.
The Audit Committee shall make regular reports to the Board. The Audit Committee shall review and reassess the adequacy of this Charter annually and recommended any proposed changes to the Board for approval.
The Audit Committee, to the extent it deems necessary or appropriate, shall:
Financial Statement and Disclosure Matters
1. Review and discuss with management and the independent auditor the annual audited consolidated financial statements, including disclosures made in management’s discussion and analysis and other financial disclosures in the Company’s Form 10-K and recommended to the Board whether the audited consolidated financial statements should be included in the Company’s Form 10-K.
2. Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s consolidated financial statements, including any significant changes in the Company’s selection or application of accounting principles any major issues as the adequacy of the Company’s internal controls, and any special steps adopted in light of material control deficiencies.
3. Review and discuss with management and the independent auditor the quarterly financial statements, including disclosures made in management’s discussions and analysis and the other financial disclosures in the Company’s Form 10-Q prior to the filing of its Form 10-Q, including the results of the independent auditor’s review of the quarterly consolidated financial statements.
4. Review and discuss quarterly reports from the independent auditors on:
A. All critical accounting policies and practices to be used.
B. All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor.
C. Other material written communications between the independent auditor and management such as any management letter or schedule of unadjusted differences.
5. Discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies, if any.
6. Discuss with management and the independent auditor the effect of regulatory and other accounting initiatives on the Company’s consolidated financial statements.
7. Discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
8. Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the auditor’s responsibilities under generally accepted auditing standards, the planned scope and timing of the audit, the auditor’s views about qualitative aspects of the Company’s significant accounting practices, including accounting estimates and financial statement disclosures, any difficulties encountered in the course of the audit work, uncorrected misstatements, other than those the auditor believes are trivial, any disagreements with management, other findings or issues, if any, arising from the audit that are in the auditor’s professional judgment, significant and relevant to those charged with governance regarding their oversight of the financial reporting process, material, corrected misstatements that were brought to the attention of management as a result of audit procedures, representations the auditor is requesting from management, management’s consultations with other accountants and significant issues, if any, arising from the audit that were discussed, or the subject of correspondence with management.
9. Review disclosures made to the Audit Committee by the Company’s CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls and disclosure controls and procedures or material weaknesses therein, and any fraud involving management or other employees who have a significant role in the Company’s internal controls.
Oversight of the Company’s Relationship with the Independent Auditor
10. Obtain and review a report from the independent auditor at least annually regarding (a) the independent auditor’s internal quality-control procedures, (b) 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, (c) any steps taken to deal with any such issues, and (d) all relationships between the independent auditor and the Company. Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor’s independence, and taking into account the opinions of management and internal auditors. The Audit Committee shall present its conclusions with respect to the independent auditor to the Board.
11. Ensure the rotation of the lead audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law.
12. Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit.
Oversight of the Company’s Internal Audit Function
13. Review the overall internal audit function of the Company including the independence and authority of its reporting obligations.
14. Discuss with the Company’s General Auditor the internal audit department responsibilities, budget and staffing, and any recommended changes in the planned scope of the internal audit.
15. Review the significant reports to management prepared by the internal audit department and management’s responses.
16. Ensure there are no unjustified restrictions or limitations, and review and concur in the appointment, replacement, or dismissal of the chief audit executive.
Compliance Oversight Responsibilities
17. Obtain reports from management, the Company’s senior internal auditing executive, and the independent auditor that the Company and its subsidiary/foreign affiliated entities are in conformity with the applicable legal requirements and the Company’s Code of Ethics for Directors and Executive Officers. Review reports and disclosures of related party transactions and approve all such related party transactions in accordance with the requirements of NASDAQ. Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Ethics for Directors and Executive Officers.
18. Discuss with Management and the independent auditor any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company’s consolidated financial statement or accounting policies.
19. Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls and auditing materials, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
20. Discuss with the Company’s General Counsel legal matters that may have a material impact on the consolidated financial statements or the Company’s compliance policies.
Limitation of Audit Committee’s Role
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 consolidated 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 independent auditor.
The Board of Directors (“Board”) of Anchor BanCorp Wisconsin Inc. and its subsidiaries (“Company”) adopted this Excessive or Luxury Expenditure Policy (“Policy”) in order to fulfill the requirements of the Emergency Economic Stabilization Act of 2008 (“EESA”), as amended by the American Recovery and Reinvestment Act of 2009 (“ARRA”). The ARRA requires each recipient of funds under the Capital Purchase Program of the Troubled Asset Relief Program (“TARP”) to have in place a company-wide policy regarding excessive or luxury expenditures, as identified by the Secretary of the United States Department of the Treasury (“UST”). The Board has determined that all directors and employees of the Company shall be subject to the policies set forth herein with respect to all Covered Expenditures (as defined below). Each director and employee of the Company is expected to read, understand and comply with the standards set forth in this Policy. This policy shall be posted on the Company’s website.
I. Prohibited Excessive or Luxury Expenditures
The Company prohibits excessive or luxury expenditures on (i) entertainment and events, (ii) office and facility renovations, (iii) aviation and other transportation services and (iv) other similar activities and events (collectively, “Covered Expenditures”) to the extent that such Covered Expenditures are not reasonable expenditures for staff development, reasonable performance incentives or other similar reasonable measures conducted in the normal course of the Company’s business operations.
The following are specific policies relating to Covered Expenditures:
Entertainment and Events
Entertainment. The use of Company funds by a Company director or employee or entertainment other than for business development purposes relating to current customers, prospective customers or to further the Company’s acquisition of customers, retention of customers or other revenue-generating efforts and other than for reasonable and appropriate purposes necessary to conduct the ongoing operations of the Company, is prohibited. Entertainment includes, but not limited to, trips, golf outings, meals, sporting events, concerts, performances and other similar activities that Company directors or employees or customers would find pleasurable. Periodically, it may be appropriate for a spouse to participate in entertainment activities with Company attendees. In such instances, the director or employee shall be financially responsible for covering the expenses incurred in connection with spouse travel to conferences or sponsored events. In the Company’s various markets, in connection with entering into sponsorship arrangements or separately, the Company enters into suite arrangements and/or acquires tickets. Designated Company managerial colleagues approve the sponsorship arrangements and acquisition of tickets and approve their usage within the Company. Documentation supporting the appropriate business development purpose is maintained.
Events. The Company’s directors and employees are encouraged to attend conferences that are appropriate educational opportunities. These conferences shall be related to the financial services industry and have a direct correlation to the duties and responsibilities of such director or employee. Periodically it may be appropriate for a spouse to travel to these conferences with Company attendees. In such instances, the director or employee shall be financially responsible for covering the expenses incurred in connection with spouse travel to conferences or sponsored events. Occasional retreats for educational or strategic business planning purposes are permitted under this Policy, so long as the expenses associated with such retreats are reasonable. Employee recognition events and holiday parties are an important part of the Company’s employee appreciation program. These events shall be reasonable in cost and scope.
There is no threshold amount at or above which an entertainment activity or event would be considered prohibited. All entertainment activities and events are to be considered on a case-by-case basis and are subject to the approval procedures listed below.
Office and Facility Renovations
Renovations of office space or facilities shall (i) be reasonable in scope and cost, (ii) relate to a project approved by management and (iii) be undertaken by the Properties Department. The Properties Department is responsible for compliance with all safety and code standards, including, but not limited to, fire codes, Americans with Disabilities Act requirements and environmental laws. The Properties Department is also responsible for complying with corporate standards for furniture, fixtures and equipment and office image standards. All office and facility renovations are subject to the capital and expense budgeting processes of the Company. An exception to this Policy will be made in the event that management, in its discretion, determines that it must make expenditures when confronted with an emergency, such as an act of nature, to make a Company facility operational for employee and customer use.
Aviation and Transportation Services
Transportation for directors and employees of the Company relating to travel associated with bank locations, board meetings, conferences, retreats, business development trips and merger and acquisition research, as applicable, shall be conducted in a cost appropriate manner, taking into account the efficiency and timeliness of such travel. Modes of transportation may consist of vehicle, commercial air or rail service. The Employee Expense Policy shall be followed in every instance.
Additional Restrictions
The following are prohibited:
- The reimbursement of any non-business related expenses incurred by directors or employees of the Company;
- The reimbursement of any expenses incurred by an immediate or extended family member of a director or employee of the Company, except for situations where a reasonable business purpose exists; and
- The reimbursement of any expenses incurred which would otherwise be prohibited under the Company’s Employee Expense Policy or Code of Conduct policy.
II. Approval Procedures
The following set forth the approval procedures relating to Covered Expenditures:
Entertainment and Events
Entertainment expenditures in excess of $5,000 per occurrence must be submitted in writing by the business unit senior executive officer (or his or her designee) and pre-approved by the submitting colleagues Executive Management Committee’s member and by the General Counsel or Chief Financial Officer.
Event expenditures in excess of $5,000 must be submitted in writing by the business unit senior executive officer (or his or her designee) and pre-approved by the submitting colleague’s Executive Management Committee’s member and by the General Counsel or Chief Financial Officer.
Office and Facility Renovations
All office and facility renovations must be submitted in writing by the business unit senior executive officer (or his or her designee) and pre-approved by the submitting colleague’s Executive Management Committee’s member and by the General Counsel or Chief Financial Officer.
Aviation or other Transportation Services
Commercial aviation and other transportation related services must be reviewed and approved by the employee’s immediate supervisor/manager and must be consistent with the relevant parts of the existing Employee Expense Policy.
Other Activities
Any other activities that may be deemed excessive or luxury expenditures should be discussed with the business unit senior executive officer (or his or her designee) or with the General Counsel.
Exceptions
Exceptions to this Policy shall only be granted with the pre-approval of the Chief Executive Officer, which will be reported to the Company’s Audit Committee. All exceptions will be documented.
III. Violations
Each employee shall report any violation of this Policy of which he or she is aware to his or her immediate supervisor, who shall report the matter to the Internal Auditor. Directors shall report violations of this Policy directly to the Internal Auditor. Failure to report actual or perceived violations of this Policy may result in disciplinary actions taken by the Company against any employee who knew of and/or participated in a violation of this Policy. Any violation of this Policy ultimately shall be reported promptly to the Company’s Audit Committee and General Counsel.
IV. Accountability and Periodic Review of Policy
The Audit Committee of the Board of Directors shall have oversight responsibilities relating to this Policy. The Internal Auditor shall review annually adherence to this Policy. In addition, at least annually, sufficient time will be allocated during one of the regular meetings of the Board for a general review of this Policy’s requirements in light of the requirements of EESA and ARRA, as the same may be amended from time to time. If it is determined that this Policy needs to be revised because of amendments to EESA or ARRA or other relevant regulatory agencies, or because of changes to the policies of Treasury or other regulatory agencies having jurisdiction over the Company, the Board, after consulting with counsel, may make the necessary changes to this Policy.
V. TARP Reporting Requirements
The Chief Executive Officer and Chief Financial Officer shall, within ninety (90) days of the completion of each fiscal year, any part of which is during any period in which the Company has an outstanding obligation to the UST, certify that the Company and its employees have complied with this Policy during any part of the most recently completed fiscal year and that any expenses requiring approval of the Board, a committee of the Board, a senior executive officer or an executive officer with a similar level of responsibility, were properly approved, in each case in accordance with the requirements under the Interim Final Rule released by the UST or any subsequent regulations promulgated by the UST.
VI. Amendment
Any amendment to this Policy shall be approved and adopted by the Board. Such an amendment shall be provided to the UST and the Office of Thrift Supervision and shall be posted on the Company’s website within ninety (90) days after adoption by the Board.
Effective as of September 14, 2009
Revised as of June 30, 2010
