Charter for the Audit Committee
As of February 2, 2006
Purpose of the Committee
The purpose of
the Audit Committee (the "Committee") of the Board of Directors (the
"Board") of Yahoo! Inc. (the "Company") shall be to assist
Board oversight of (i) the integrity of the Company's financial statements,
(ii) the Company's compliance with legal and regulatory requirements, (iii) the
independent auditors' qualifications and independence, and (iv) the performance
of the Company's internal audit function and independent auditors.
Committee has the duties and responsibilities set forth in this charter, the
Committee is not responsible for planning or conducting the audit or
determining whether the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
The Company’s management is responsible for preparing the financial statements
and the independent auditors are responsible for auditing those financial
statements. The Committee does not itself prepare financial statements or
perform audits or auditing services, and its members are not auditors,
certifiers of the Company's financial statements or guarantors of the Company's
independent auditors' reports. It is not the duty or responsibility of the
Committee to ensure that the Company complies with all laws and regulations.
Each member of the Committee shall be entitled to rely on (a) the integrity of
those persons and organizations within and outside of the Company from which it
receives information, (b) the accuracy of the financial and other information
provided to the Committee by such persons or organizations absent actual
knowledge to the contrary (which shall be promptly reported to the Board) and
(c) representations made by management as to any audit and non-audit services
provided by the independent auditors to the Company.
auditors for the Company are accountable to the Board and the Committee, as
representatives for the stockholders. The Committee has the ultimate authority
and responsibility to retain and terminate the Company's independent auditors
(subject, if applicable, to stockholder ratification) in connection with the
provision of all audit and non-audit related services.
This Charter is
intended as a component of the flexible governance framework within which the
Board, assisted by its committees, directs the affairs of the Company. While it
should be interpreted in the context of all applicable laws, regulations and
listing requirements, as well as in the context of the Company's Certificate of
Incorporation and Bylaws, it is not intended to establish by its own force any
legally binding obligations.
Composition of the Committee
shall be comprised of at least three members of the Board each of whom has been
affirmatively determined in the business judgment of the Board to qualify as
independent directors ("Independent Directors") under (a) the rules
of the National Association of Securities Dealers' Nasdaq Stock Market
("Nasdaq"), including, as applicable, the standards set forth under
Rule 10A-3 ("Rule 10A-3") of the Securities Exchange Act of 1934 (the
rules of Nasdaq and Rule 10A-3, taken together, "Applicable Listing
Rules") and (b) the Company's Corporate Governance Guidelines. Such
members will be elected by and serve at the pleasure of the Board.
Each member of
the Committee shall be "financially literate" under the Applicable
Listing Rules, as such qualifications are interpreted by the Board in its
business judgment. At least one member of the Committee shall have
"accounting or related financial management expertise", under the
Applicable Listing Rules, as such qualifications are interpreted by the Board
in its business judgment. In addition, at least one member of the Committee
should be an "audit committee financial expert," as such term is
defined in the rules and regulations promulgated by the SEC. The name of the
person(s) designated as "audit committee financial expert" (or, if no
member of the Committee is an "audit committee financial expert", the
reasons why the Committee does not have a member who is an "audit
committee financial expert"), and whether such "audit committee
financial expert(s)" are independent of management shall be disclosed in
the Company's public filings and as otherwise required under Applicable Listing
Rules and applicable law.
No director may
serve as a member of the Committee if such director serves on the audit
committees of more than two other public companies unless the Board determines
that such simultaneous service would not impair the ability of such director to
effectively serve on the Committee.
the Committee shall be filled by majority vote of the Board at the next meeting
of the Board following the occurrence of the vacancy or by unanimous written
consent of the Board. No member of the Committee shall be removed except by
majority vote of the Board.
Meetings and Procedures of the Committee
may fix its own rules of procedure, which shall be consistent with the Bylaws
of the Company and this Charter. The Committee shall meet at least once each
quarter or more frequently as circumstances or such rules of procedure as it
may adopt require. The Committee will meet with the independent auditors and
the Company's internal auditor upon the completion of the annual audit to
review the independent auditors' examination and any management letter issued
by the independent auditors to the Company.
shall meet periodically with management, independent auditors and the Company's
internal auditor of the Company to discuss any matters that the Committee or
any of these persons or firms believes should be discussed privately.
The Board may
designate one member of the Committee as its Chairperson and in the absence of
any such designation by the Board, the Committee shall designate by majority vote
of the full Committee one member of the Committee as its Chairperson. The
Chairperson of the Committee or a majority of the members of the Committee may
also call a special meeting of the Committee. A majority of the members of the
Committee present in person or by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other shall constitute a quorum. In the event of a tie
vote on any issues being voted on by the Committee, the Chairperson's vote
shall decide the issue.
may request that any directors, officers or employees of the Company, or other
persons whose advice and counsel are sought by the Committee, attend any
meeting of the Committee to provide such pertinent information as the Committee
shall regularly report to the Board on Committee findings, recommendations and
other matters the Committee deems appropriate or the Board requests. The
Committee shall keep written minutes of its meetings, which minutes shall be
maintained with the books and records of the Company.
In carrying out
its duties and responsibilities, the Committee's policies and procedures should
remain flexible, so that it may be in a position to best react or respond to
changing circumstances or conditions. The following are within the authority of
the Independent Audit
- Appoint, compensate, retain,
terminate and oversee, in its sole discretion, (subject, if applicable, to
stockholder ratification), the work of any registered public accounting
firm engaged for the purpose of preparing or issuing an audit report or
performing audit, review or attest services for the Company and its
subsidiaries for each fiscal year and each such registered public
accounting firm must report directly to the Committee (the registered
public accounting firm engaged for the purpose of preparing or issuing an
audit report for inclusion in the Company's Annual Report on Form 10-K is
referred to herein as the "independent auditors").
- Review and, in its sole
discretion, approve the Company's independent auditors' annual engagement
letter, including all proposed fees contained therein, and pre-approve all
audit and, as provided in the Sarbanes-Oxley Act of 2002 (the
"Act") and the SEC rules and regulations promulgated thereunder,
all permitted non-audit engagements and relationships between the Company
and such independent auditors (which approval should be made after receiving
input from the Company's management).
- Obtain at least annually from
the Company's independent auditors and review a written report describing:
- (a) the independent auditors'
internal quality control procedures;
- any material issues raised by
the most recent internal quality control review, or peer review, of the
independent auditors, or by any inquiry or investigation by any
governmental or professional authority, within the preceding five years,
respecting one or more independent audits carried out by the independent
auditors, and any steps taken to deal with any such issues; and
- all relationships between the
independent auditors and the Company (including a description of each
category of services provided by the independent auditors to the
Company-including audit services and permitted non-audit services to be
performed for the Company by the independent auditor).
- Oversee the independence of the
Company's independent auditors by, among other things:
- review a formal written
statement from the independent auditor delineating all relationships
between the independent auditor and the Company, consistent with
Independence Standards Board Standard No. 1 (as modified or
- actively engaging in a
dialogue with the independent auditors with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the independent auditors, and taking appropriate action
to satisfy itself of the auditors' independence; and
- considering whether, in
addition to assuring the regular rotation of the lead audit partner as
required by law, there should be a rotation of the Company's independent
- Present to the Board its
conclusions regarding independence of the independent auditors and its
evaluation of the independent auditor's lead audit partner. In assessing
the qualifications, performance and independence of the lead audit partner
and the independent auditors, the Committee shall take into account the
opinions of management and the Company's internal auditor.
- Obtain and review the annual
audit plan of the Company's independent auditors, including the scope of
audit activities, and monitor such plan's progress and results during the
- Review the results of the
year-end audit of the Company, including any comments or recommendations
of the Company's independent auditors.
- Attempt to resolve any and all
disagreements between the Company's independent auditors and management
regarding financial reporting.
- Approve clear hiring policies by the Company for
hiring employees or former employees of the Company's independent
Oversee Internal Audit, Internal Controls and
- Review and discuss with
management and the independent auditors, periodically, the following:
- all significant deficiencies
in the design or operation of internal controls which could adversely
affect the Company's ability to record, process, summarize, and report
financial data, including any material weaknesses in internal controls
identified by the Company's independent auditors;
- any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company's internal controls; and
- any significant changes in
internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.
- the adequacy and effectiveness
of the Company's accounting and internal control policies and procedures
on a regular basis, including the responsibilities, budget and staffing
of the Company's internal audit function, through inquiry and discussions
with the Company's independent auditors, internal auditor and management
of the Company; and
- the yearly report prepared by
management, and attested to by the Company's independent auditors,
assessing the effectiveness of the Company's internal control structure
and procedures for financial reporting and stating management's
responsibility to establish and maintain such structure and procedures,
prior to its inclusion in the Company's annual report.
- Review with management the
Company's administrative, operational and accounting internal controls,
including any special audit steps adopted in light of the discovery of any
material weaknesses, and evaluate whether the Company is operating in
accordance with its prescribed policies, procedures and codes of conduct.
- Discuss the process by which
senior management of the Company and the relevant departments of the
Company assess and manage the Company's exposure to financial risk and the
steps management has taken to monitor and control such exposures.
- Establish procedures for (i) the receipt,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters, and (ii) the
confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
Oversee Financial Reporting
- Review with management, the
Company's independent auditors and the Company's internal auditor, the
- the Company's annual audited
financial statements and quarterly financial statements, including the
Company's disclosures under "Management's Discussion and Analysis of
Financial Condition and Results of Operations", and any major issues
related thereto; and
- critical accounting policies
and such other accounting policies of the Company as are deemed
appropriate for review by the Committee prior to the filing of any annual
or quarterly financial statements with the SEC or other regulatory body,
including any financial reporting issues which could have a material
impact on the Company's financial statements.
- major issues regarding
accounting principles and financial statements presentations, including
(A) any significant changes in the Company's selection or application of
accounting principles and (B) any analyses prepared by management and/or
the independent auditors setting forth significant financial reporting issues
and judgments made in connection with the preparation of the financial
statements, including analyses of the ramifications and effects of
applying alternative accounting treatments within generally accepted
accounting principles in the preparation of the Company's financial
- all alternative treatments of
financial information that have been discussed by the independent
auditors and management, ramifications of the use of such alternative
disclosures and treatments within generally accepted accounting
principles, and the treatment preferred by the auditors;
- all other material written
communications between the independent auditors and management, such as
any management letter or schedule of unadjusted differences; and
- the effect of regulatory and
accounting initiatives on the financial statements of the Company, as
well as any material financial or non-financial arrangements that are not
disclosed in the financial statements of the Company.
- Review on a regular basis with
the Company's independent auditors any problems or difficulties
encountered by the independent auditors in the course of any audit work,
including management's response with respect thereto, any restrictions on
the scope of the independent auditors' activities or on access to
requested information and any significant disagreements with management.
In connection therewith, the Committee may consider reviewing with the
independent auditors the following:
- any accounting adjustments
that were noted or proposed by the independent auditors but were rejected
by management (as immaterial or otherwise);
- any significant communications
between the audit team and the independent auditors' national office
respecting auditing or accounting issues presented by the engagement; and
- any "management" or
"internal control" letter issued, or proposed to be issued, by
the independent auditors to the Company.
- Receive periodic reports from
the Company's independent auditors and management of the Company to assess
the impact on the Company of significant accounting or financial reporting
developments that may have a bearing on the Company.
- Review the Company's earnings press releases, as
well as financial information and earnings guidance provided by the
Company to analysts and rating agencies (which review may be done
generally (i.e., discussion of the types of information to be disclosed
and type of presentations to be made), it being understood that the
Committee need not discuss in advance each earnings release or each
instance in which the Company may provide earnings guidance).
Oversee Legal & Ethical Compliance
- Meet periodically with the
General Counsel, and outside counsel when appropriate, to review legal and
regulatory matters, including any matters that may have a material impact
on the financial statements of the Company.
- Review the Company's program to monitor
compliance with the Company's Code of Business Conduct and Ethics and its
Code of Ethics for Senior Financial Officers, and meet periodically with
the Company's General Counsel to discuss compliance with such Codes.
Minutes and Reports
- The Committee will, to the
extent deemed appropriate, record summaries of its recommendations to the
Board in written form that will be incorporated as a part of the minutes
of the Board. In connection therewith, the Committee should review with
the Board any issues that arise with respect to the quality or integrity
of the Company's financial statements, the Company's compliance with legal
or regulatory requirements, the performance and independence of the
Company's independent auditors, or the performance of the internal audit
- The Committee will prepare the
report required by the rules of the SEC to be included in the Company's
annual proxy statement.
Evaluation of the Committee
shall, on an annual basis, evaluate its performance under this Charter and
evaluate whether this Charter appropriately addresses the matters that are or
should be within its scope. As part if its evaluation, the Committee shall
address all matters that the Committee considers relevant to its performance,
including at least the following: the adequacy, appropriateness and quality of
the information and recommendations presented by the Committee to the Board,
the manner in which they were discussed or debated, and whether the number and
length of meetings of the Committee were adequate for the Committee to complete
its work in a thorough and thoughtful manner.
The Committee shall
deliver to the Board a report, orally or in writing, setting forth the results
of its evaluations, including any recommended amendments to this Charter and
any recommended changes to the Company's or the Board's policies or procedures.
Delegation to Subcommittee
may form subcommittees for any purpose that the Committee deems appropriate and
may delegate to such subcommittees such power and authority as the Committee
deems appropriate; provided, however, that no subcommittee shall consist of
fewer than two members; and provided further that the Committee shall not
delegate to a subcommittee any power or authority required by any law,
regulation or listing standard to be exercised by the Committee as a whole.
Investigations anf Studies; Outside Advisers
may conduct or authorize investigations into or studies of matters within the
Committee's scope of responsibilities, and may retain, at the Company's
expense, such independent expert advice to the extent the Committee determines
it to be appropriate, including retaining, with or without Board approval,
independent counsel, accountants, consultants or others, to assist the
Committee in fulfilling its duties and responsibilities.
of the Board is established pursuant to Article 4.1 of the Company's Amended
Bylaws and Section 141 (c) of the Delaware General Corporation Law.