Audit Committee

 

Audit Committee Charter

 

Mission of Committee

 

The mission of the Audit Committee (the ďCommitteeĒ) of Tredegar Corporation (ďTredegarĒ) is to assist the Board of Directors in discharging its oversight responsibilities relating to the accounting, reporting, and financial practices of Tredegar and its subsidiaries by monitoring (i) the quality and integrity of the financial statements, the financial reporting processes and the systems of internal accounting and financial controls of Tredegar and its subsidiaries, (ii) Tredegarís (and its subsidiariesí) compliance with legal and regulatory requirements and (iii) the independence, qualifications and performance of Tredegarís registered independent public accounting firm (the "independent auditor"). The Committee also assists the Board of Directors in overseeing the performance of Tredegarís internal auditing function.

 

General Responsibilities

 

Management is responsible for the preparation of Tredegarís financial statements, and the independent auditor is responsible for auditing those financial statements. While the Committee has the responsibilities and powers set forth in this Charter, the Committee is not to be deemed to provide expert or special assurance as to Tredegarís financial statements or internal controls or any professional certification as to the activities of the independent auditor.

 

Committee Membership

 

The Committee shall be composed of at least three members. All Committee members shall be independent of management and free of any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment. Each Committee member shall also meet the independence, experience and financial literacy requirements for serving on an audit committee, and at least one member shall possess the requisite accounting or related financial management expertise, all as set forth in the applicable rules of the New York Stock Exchange (ďNYSEĒ) and the United States Securities and Exchange Commission (ďSECĒ), as in effect from time to time.

 

No member of the Committee may serve on the audit committees of more than three public companies, unless approved by a majority of independent directors of the Board of Directors after approval by the Nominating and Governance Committee. If a Committee member simultaneously serves on the audit committee of more than three public companies, the Board of Directors must determine that such simultaneous service would not impair the ability of such member to effectively serve on the Committee and disclose such determination in Tredegarís annual proxy statement.

 

The members of the Committee shall be appointed by the Board of Directors, at the Board of Directorís annual meeting, on the recommendation of the Nominating & Governance Committee, and may be removed by the Board of Directors. Unless a Chairman is elected by the full Board of Directors, the members of the Committee shall designate a Chairman by majority vote of the full Committee membership.

 

Committee Meetings & Reporting

 

The Committee shall meet separately, as often as may be deemed necessary or appropriate in its judgment, but at least quarterly. The Committee shall keep minutes of all its meetings.

 

As part of its oversight responsibilities, the Committee or the Chairman shall conduct private meetings separately, in person or by telephone, at least quarterly with (i) Tredegarís independent auditor, (ii) Tredegarís Vice President, Audit and (iii) Tredegarís Vice President & General Counsel. The Committee may elect, in its discretion, to meet with the Vice President, Audit and the Vice President & General Counsel concurrently.

 

The Committee shall report regularly, and in any event, not less than quarterly, to the Board of Directors on its meetings and discussions at Board meetings.

 

Oversight Responsibilities

 

In executing its oversight responsibilities, the Committee shall perform the following functions:

 

Oversight Activities Regarding Financial Reporting and Internal Controls

 

General: Periodically review (separately) with management, the independent auditor and the internal auditors (a) the process and results of the independent auditorís audit of Tredegarís financial statements, including any significant suggestions for improvements, (b) any audit problems or difficulties encountered by the independent auditor during the audit (including, without limitation, disagreements with management or restrictions on the scope or access to required information) and managementís response to those problems or difficulties, (c) any significant deficiencies in the design, adequacy or operation of Tredegarís internal accounting controls, including any related recommendations made by the independent auditor and any special audit steps adopted in light of material control deficiencies, (d) Tredegarís critical accounting and auditing policies and practices and the application thereof (including review and, where appropriate, approval of any significant changes to such policies and practices and the application thereof, with due consideration given to the effects of such changes), (e) all alternate accounting treatments of Tredegarís financial information within generally accepted accounting principles that the independent auditor has discussed with management, including managementís response to the discussion and the independent auditorís opinion as to the outcome of the discussion, (f) all other material written communications between the independent auditor and management, and (g) analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.

Accounting/Financial Reporting Proposals: Review and discuss with management and the independent auditor any accounting or financial reporting proposals that may have a significant impact on Tredegarís financial reports

Annual Financial Statements: Review the annual audited financial statements and discuss them with Tredegarís management and the independent auditor, including the matters required to be discussed under Statement of Auditing Standards No. 61 and due consideration of the quality of Tredegarís accounting principles as applied in its financial reporting. This review shall include a review of the specific disclosures to be made in the ďManagementís Discussion and Analysis of Financial Condition and Results of OperationsĒ section of Tredegarís Annual Report on Form 10-K. Based on this review and discussion, the Committee will make its recommendation to Tredegarís Board of Directors as to the inclusion of the audited financial statements in the Annual Report on Form 10-K.

Quarterly Financial Statements: Review and discuss with Tredegarís financial management and the independent auditor the quarterly financial statements, including the results of the independent auditorís review of the quarterly financial statements and the disclosures that will be included in Tredegarís Quarterly Report on Form 10-Q, including the specific disclosures to be made in the ďManagementís Discussion and Analysis of Financial Condition and Results of OperationsĒ section thereof. Such review shall occur prior to the filing of the Quarterly Report on Form 10-Q with the SEC.

Earnings Releases/Guidance: Review and discuss with management its policies and practices regarding earnings press releases, as well as financial information and earnings guidance given to analysts and ratings agencies, giving attention to any use of ďpro forma,Ē ďadjustedĒ or ďnon-GAAP financial measuresĒ or information.

Annual Report: Prepare and issue an annual report to be included in Tredegarís annual proxy statement, as required by SEC rules.

Other:

Review and discuss with management and the independent auditor: (i) any material financial or non-financial arrangements of Tredegar that do not appear on Tredegarís financial statements and (ii) any transactions or courses of dealing with parties related to Tredegar that are significant in size or involve terms or other aspects that differ from those that would likely be negotiated with independent parties and that are relevant to an understanding of Tredegarís financial statements.

Discuss with management Tredegarís major financial risk exposures and the steps management has taken to monitor and control such exposures, including Tredegarís risk assessment and risk management policies.

Discuss with management and the independent auditor the effect of regulatory and accounting initiatives, as well as any off-balance sheet structures on Tredegarís financial statements.

Oversight Activities Regarding Independent Auditor

 

The Committee shall be directly and solely responsible for the appointment, compensation, evaluation, oversight and, if appropriate, termination and replacement of Tredegarís independent auditor. In carrying out this responsibility, the Committee shall establish the scope of the independent auditorís engagement and determine an appropriate fee, all in accordance with procedures adopted by the Committee concerning the retention of the independent auditor. The Committee also shall be directly responsible for the resolution of any disagreements between management and the independent auditor regarding financial reporting.

Pre-approve all audit and permissible non-audit services to be provided by the independent auditor or establish policies and procedures for the pre-approval of such audit and permissible non-audit services. Any policies and procedures adopted by the Committee must be detailed as to the particular service in question and must not delegate any Committee responsibilities to management. Moreover, the Committee must be informed of each service.

Review with Tredegarís Board of Directors and management the qualifications, experience, independence and performance of the independent auditor, including the senior members of the independent auditor team, and, together with the Board of Directors, evaluate such qualifications, experience, independence and performance. When appropriate (as suggested by the foregoing review and evaluation), replace the independent auditor.

Obtain annually from the independent auditor the written disclosures and a formal written statement describing (i) the independent auditorís internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditor, 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 independent auditor, and any steps taken to deal with any such issues and (ii) (to assess the auditorís independence) all relationships between the independent auditor and Tredegar, consistent with Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committee), as may be modified or supplemented. The Committee will engage in an active dialogue with the independent auditor with respect to the independent auditorís independence, including discussing any relationships that may impact the objectivity or independence of the auditor and recommend that Tredegarís Board of Directors take appropriate action in response to the independent auditorís report to satisfy itself as to the independence of the auditor.

Establish procedures applicable to the hiring of employees and former employees of the independent auditor.

Discuss with the independent auditor its ultimate accountability to the Board of Directors through the Committee.

Assure the regular rotation of the lead and concurring audit partners as required by law, and consider whether there should be regular rotation of the independent auditing firm itself, in order to assure continuing independence of the independent auditor.

Oversight Activities Regarding Internal Audit Function

 

Review and discuss with management and the independent auditor (separately, if necessary):

The activities, organizational structure, budget and qualifications of the internal audit function.

The scope of work for the internal audit function planned for the upcoming year.

The quality and adequacy of Tredegarís systems of internal accounting controls.

Tredegarís financial reporting processes, including computerized financial systems.

The results of any examination of internal controls undertaken by the internal audit function where such examination (i) was initiated as a result of allegations of financial or accounting improprieties or (ii) resulted in a finding of either material inadequacies in Tredegarís internal controls or improprieties on the part of management or those responsible for the internal control systems of Tredegar or its subsidiaries.

Review and discuss with the independent auditor the performance of the internal audit function.

Review materials related to audits of projects and acquisitions and, where appropriate, request a formal Committee review of such results at a regular Committee meeting and/or recommend full review of such results by the Board of Directors.

Oversight of Legal and Regulatory Compliance and of Adherence to Code of Conduct

 

Obtain from the independent auditor assurance that Section 10A of the Securities Exchange Act of 1934 has not been implicated.

Review with counsel any legal or regulatory matters that could have a significant impact on Tredegarís financial condition or results of operations, including by way of example significant litigation and compliance issues.

Review with management, the independent auditor and counsel the significant findings of any examinations by regulatory agencies, such as the SEC.

Review the policies and procedures in effect for the review of officersí expenses and perquisites.

Review managementís monitoring of compliance with Tredegarís corporate conduct policies, including the Code of Conduct and the Antitrust Compliance Manual.

Establish and oversee the maintenance of procedures for the receipt, retention and treatment of complaints concerning accounting, internal accounting controls or auditing matters, including procedures for the confidential and anonymous submission of complaints by employees of Tredegar and its subsidiaries concerning questionable accounting or auditing matters.

Annual Performance Review, Annual Charter Review & Other Authority

 

The Committee shall conduct an annual self-evaluation of the Committeeís performance and report its findings to the Board of Directors.

 

The Committee shall review and reassess this Charter at least annually and recommend any proposed changes to the Nominating and Governance Committee for approval.

 

The Committee has the authority to retain and seek the advice of outside legal, accounting or other advisors as the Committee deems necessary or appropriate in fulfilling its duties and responsibilities under this Charter. The Committee shall have sole discretion in determining the terms and conditions (including compensation) of all such engagements without seeking further approval.

 

The Committee has the authority, if necessary, to institute special investigations into any matters within its scope of responsibilities, and, if appropriate, hire special counsel, other advisors or experts to assist in such investigations.

 

The Committee shall perform such other duties and functions as may be assigned by Tredegarís Board of Directors.

 

Conflicts

 

To the extent that any provision or section of this Charter may be inconsistent with any article, provision or section of Tredegarís Articles of Incorporation or Bylaws or any applicable law or regulation, the Articles of Incorporation, the Bylaws or the law or regulation, as appropriate, shall control.