Committee Charters
Audit Committee Charter
Compensation Committee Charter
Executive Committee Charter
Nominating and Corporate Governance Committee Charter
Audit Committee Charter
Adopted February, 2007
The Audit Committee is a committee of the Board of Directors and is responsible for over-seeing the financial integrity of the corporation. Its primary function is to assist the Board in fulfilling its oversight responsibilities by reviewing:
- the financial information that will be provided to the shareholders and others,
- the systems of internal controls and policies that management and the Board of Directors have established and the audit process.
In meeting its responsibilities, the Audit Committee is expected to:
1. Provide an open avenue of communication between the CFO, the independent registered public accounting firm, and the Board of Directors.
2. Review and update the Committee’s charter as needed, and at least annually.
3. Appoint the independent registered public accounting firm to be engaged as auditor for the company, approve the compensation of the independent registered public accounting firm, and review and approve the discharge of the independent registered public accounting firm.
4. Review and concur in the appointment, replacement, reassignment, or dismissal of the CFO.
5. Confirm and assure the independence of the independent registered public accounting firm, including a review of management consulting services provided by the independent registered public accounting firm and the fees associated with those services.
6. Inquire of management, the CFO and the independent registered public accounting firm about significant risks or exposures and assess the steps management has taken to minimize such risks to the company.
7. Consider, in consultation with the independent registered public accounting firm and the CFO, the audit scope and plan of the independent registered public accounting firm.
8. Consider with management and the CFO the rationale for employing audit firms other than the principal independent registered public accounting firm.
9. Review with the CFO and the independent registered public accounting firm the coordination of audit effort to assure completeness of coverage, reduction of redundant efforts, and the effective use of audit resources.
10. Consider and review with the independent registered public accounting firm:
a. The adequacy of the company’s internal controls including computerized information system controls and security.
b. Any related significant findings and recommendations with the independent registered public accounting firm with management’s responses thereto.
11. Review with management and the CFO at the completion of the annual examination:
a. The company’s annual financial statements and related footnotes.
b. The independent registered public accounting firm’s audit of the financial statements and their report thereon.
c. Any significant changes required in the independent registered public accounting firm’s audit plan.
d. Any serious difficulties or disputes with management encountered during the course of the audit.
e. Other matters related to the conduct of the audit that are to be communicated to the committee under generally accepted auditing standards.
12. Receive reports from the independent registered public accounting firm regarding, and review and discuss the adequacy and effectiveness of internal controls, significant deficiencies or changes in internal controls.
13. Review filings with the SEC and other published documents containing the company’s financial statements and consider whether the information contained in these documents is consistent with the information contained in the financial statements.
14. Review with management, the independent registered public accounting firm and the CFO interim financial reports before they are filed with the SEC or other regulators.
15. Review policies and procedures with respect to officers’ expense accounts and perquisites, including their use of corporate assets and consider the results of any review of these areas by the independent registered public accounting firm.
16. Establish procedures for the confidential, anonymous submission of concerns regarding questionable accounting or auditing matters, and procedures for their receipt, retention and treatment.
17. Review legal and regulatory matters that may have a material impact on the financial statements, related company compliance policies, and programs and reports received form regulators.
18. Meet with the CFO, the independent registered public accounting firm, and management in separate executive sessions to discuss any matters that the Committee or these groups believe should be discussed privately with the Audit Committee.
19. Report Committee actions to the Board of Directors with such recommendations as the Committee may deem appropriate.
20. The Audit Committee shall have the power to conduct or authorize investigations into any matters within the Committee’s scope of responsibilities. The Committee shall be empowered to retain independent counsel, accountants, or others to assist it in the conduct of any investigation.
21. The Committee shall meet at least four times per year of more frequently as circumstances require. The Committee may ask members of management or others to attend the meeting and provide pertinent information as necessary.
22. The Committee will perform such other functions as assigned by law, the company’s charter or bylaws, or the Board of Directors.
The membership of the Audit Committee shall consist of at least two independent members of the Board of Directors who shall serve at the pleasure of the Board of Directors. Audit Committee members and the Committee chairman shall be designated by the full Board of Directors upon recommendation of the Nominating Committee.
The duties and responsibilities of a member of the Audit Committee are in addition to those duties set out for a member of the Board of Directors.
Updated: February 2007
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Compensation Committee Charter
Adopted May 14, 2007
1. Membership
The board of directors (the “Board”) of Tully’s Coffee Corporation (the “Company”) will appoint from among its members a Compensation Committee (the “Committee”) and will designate one such member to serve as the chairman of the Committee. The Committee will consist of at least two members, each of whom must be determined by the Board to be independent under all applicable rules, including the Nasdaq listing standards. In addition, a person may serve on the Compensation Committee only if he or she is (a) a “Non-Employee Director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934 and (b) an “outside director” as defined in regulations under Section 162(m) of the Internal Revenue Code of 1986.
2. Purposes
The primary purposes of the Committee are to:
2.1. Assist the Board in fulfilling its responsibilities relating to the design, administration and oversight of employee compensation programs and benefit plans.
2.2. Discharge the Board’s duties relating to compensation of executive officers.
3. Duties and Responsibilities
The Committee shall:
3.1. Determine annual base and incentive compensation, equity incentives, benefit plans, perquisites and all other compensation for the chief executive officer and other executive officers. The chief executive officer may not be present during voting or deliberations regarding his or her compensation.
3.2. Establish annual performance goals to be used in the executive and Company bonus plans.
3.3. Evaluate the annual performance of the chief executive officer.
3.4. Review the design, administration and effectiveness of the Company’s compensation programs and benefit plans and recommend to the Board the adoption and amendment of employee compensation programs and benefit plans.
3.5. Exercise all authority delegated by the Board to the Committee under the Company’s compensation plans, including the authority to approve stock option grants and other equity awards.
3.6. Obtain advice and assistance from internal and external legal, accounting, and other advisors or consultants as necessary or advisable to assist in the evaluation of compensation and benefit plans.
3.7. Retain a consulting firm to assist in the evaluation of officer compensation if the Committee determines that the firm’s services are advisable and on terms and conditions the Committee determines.
3.8. Review and approve the Compensation Committee Report for the Company’s proxy statement.
3.9. Review and discuss with management the Compensation Discussion and Analysis disclosure required by Item 402(b) of Regulation S-K (the “CD&A”) and, based on the review and discussion, determine whether to recommend that the CD&A be included in the Company’s annual report on Form 10-K or proxy statement.
3.10. Perform other functions assigned by the Board from time to time.
3.11. Annually evaluate the performance of the Committee.
This Charter is intended to provide a set of flexible guidelines for the effective functioning of the Committee. The Committee may modify or amend this Charter and the authority and responsibilities of the Committee set forth herein at any time.
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Executive Committee Charter
Adopted May 14, 2007
1. Membership
The board of directors (the “Board”) of Tully’s Coffee Corporation will appoint from among its members an Executive Committee (the “Committee”) and will designate one such member to serve as the chairman of the Committee. The Committee will consist of at least two members.
2. Purpose
The primary purpose of the Committee is to assist the Board in fulfilling in its oversight responsibilities and other duties by reviewing matters requiring Board action and acting on behalf of, and with the authority of, the full Board when Board action is necessary or advisable but a timely meeting of the entire Board is not reasonably practicable.
3. Authority, Duties and Responsibilities
3.1 The Committee will meet as often as it deems necessary to fulfill its duties under this charter. The Committee will provide copies of the minutes of each of its meetings to the Board and will additionally make regular reports to the Board.
3.2 The Committee has the authority to exercise the power and authority of the entire Board between meetings of the Board, to the extent permitted by law and the Company’s articles of incorporation, bylaws, corporate governance guidelines and otherwise by this charter. All actions taken by the Committee in reliance on the authority provided by this provision shall be reported to the full Board at its next meeting.
3.3 The Committee has authority to obtain advice and assistance from internal or external legal, accounting or other advisers as necessary or advisable to assist in the performance of its duties.
3.4 The Committee may form and delegate authority to a subcommittee if authorized by the Board of Directors to do so on a given matter or issue.
3.5 The Committee will conduct an annual evaluation of the Committee’s performance against the requirements of this Charter, applicable law and Nasdaq listing standards. If appropriate, the Committee shall recommend to the Board proposed changes to this Charter.
This Charter is intended to provide a set of flexible guidelines for the effective functioning of the Committee. The Committee may modify or amend this Charter and the authority and responsibilities of the Committee set forth herein at any time.
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Nominating and Corporate Governance Committee Charter
Adopted May 14, 2007
1. Membership
The board of directors (the “Board”) of Tully’s Coffee Corporation will appoint from among its members a Nominating and Corporate Governance Committee (the “Committee”) and will designate one such member to serve as the chairman of the Committee. The Committee will consist of at least two members, each of whom is determined by the Board to be an “independent” director under all applicable rules, including Nasdaq listing standards.
2. Purposes
The primary purposes of the Committee are to:
2.1 Identify individuals qualified to become directors and recommend nominees to the Board to be presented for election by shareholders at the annual meeting of shareholders, and to fill any vacancies on the Board.
2.2 Consider and report periodically to the Board on matters relating to the identification, selection and qualification of nominees for election to the Board.
2.3 Develop and recommend to the Board a set of corporate governance principles.
3. Duties and Responsibilities
The Committee shall conduct meetings periodically as it deems necessary or advisable to fulfill its responsibilities. In particular, the Committee shall:
3.1 Develop and recommend to the Board specific guidelines and criteria for screening and selecting nominees for election to the Board.
3.2 Identify individuals qualified to become directors.
3.3 Review the qualifications of, approve the nominations of, and recommend to the Board those persons to be nominated for election to the Board and presented for shareholder approval at the annual meeting, and to be elected by the Board to fill vacancies, including vacancies created by an increase in the authorized number of directors.
3.4 Retain and terminate any search firm to assist in identifying potential nominees for election to the Board, including sole authority to approve the search firm’s fees and other retention terms.
3.5 Develop and recommend to the Board a set of corporate governance guidelines.
3.6 Review this Charter and the corporate governance guidelines annually, or more frequently if appropriate, and recommend any proposed changes to the Board.
3.7 Make recommendations to the Board concerning the size, structure and composition of the Board and its committees.
3.8 Annually review the Company’s code of business conduct and ethics and recommend any proposed changes to the Board for approval.
3.9 Oversee the evaluation of management, the Board and its committees, and develop and provide to the Board an annual report evaluating the performance of management, the Board and its committees, including the Committee.
3.10 Consider the performance of each incumbent member of the Board in determining whether to recommend to the Board that each member be nominated for reelection.
3.11 Obtain advice and assistance from internal and external legal, accounting, and other advisors or consultants as necessary or advisable to assist in the performance of its duties.
3.12 Perform any other functions assigned by the Board from time to time.
This Charter is intended to provide a set of flexible guidelines for the effective functioning of the Committee. The Committee may modify or amend this Charter and the authority and responsibilities of the Committee set forth herein at any time.
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