Purposes
The purposes of the Audit Review Committee (the “Committee”) of the Board of
Directors (the “Board”) of Hamilton Beach Brands Holding Company (the
“Company”) are to:
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assist the Board in fulfilling its oversight responsibilities with respect
to (a) the integrity and audit of the Company’s consolidated financial
statements (b) the Company’s accounting, financial reporting and disclosure
processes and adequacy of the systems of disclosure and internal controls
established by management, (c) the Company and its subsidiaries’ compliance
with legal and regulatory requirements, (d) the qualifications and
independence of the registered public accounting firm designated by the
Company as the independent auditors of the consolidated financial statements
of the Company and its subsidiaries (the “independent auditors”), (e) the
Company’s cybersecurity and data privacy risks, controls and procedures, and
(f) the performance of the independent auditors and the Company’s internal
audit department;
- oversee the Company’s Corporate Compliance Program; and
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prepare the Committee’s report, made pursuant to the rules and requirements
promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”),
to be included in the Company’s annual proxy statement (the “Audit Review
Committee Report”).
Composition of the Committee
Number. The Committee shall consist of no fewer than three members.
Qualifications. Each Committee member shall have all of the following
qualifications:
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Each Committee member shall meet the independence criteria of (a) the
listing standards of the New York Stock Exchange, Inc. (“NYSE”), as such
requirements are interpreted by the Board in its business judgment in
accordance with the Company’s Corporate Governance Guidelines, and
(b) Section 301 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”)
and the rules and listing requirements promulgated thereunder by the
Securities and Exchange Commission (“SEC”), including Rule 10A-3 of the
Exchange Act, and the NYSE.
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Each Committee member shall be financially literate or shall become
financially literate within a reasonable period of time after his or her
appointment to the Committee. Additionally, at least one member of the
Committee shall have accounting or related financial management expertise
sufficient to meet the criteria of a financial expert within the meaning of
Section 407 of the Sarbanes-Oxley Act and any rules promulgated thereunder
by the SEC. The Board shall determine, in its business judgment, whether a
member is financially literate and whether at least one member has the
requisite accounting or financial management expertise. The Board will also
determine whether one or more members of the Committee meets the financial
expert criteria of Section 407 of the Sarbanes-Oxley Act and any rules
promulgated thereunder by the SEC and if so, identify at least one of such
members. A person who satisfies this definition of a financial expert will
also be presumed to have accounting or related financial management
expertise. The designation or identification of a person as an audit
committee financial expert shall not (a) impose on such person any duties,
obligations or liability that are greater than the duties, obligations and
liability imposed on such person as a member of the Committee and Board in
the absence of such designation or identification, or (b) affect the duties,
obligations or liability of any other member of the Committee or Board.
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Each Committee member shall receive as compensation from the Company only
those forms of compensation that are not prohibited by Section 301 of the
Sarbanes-Oxley Act and the rules and listing requirements promulgated
thereunder by the SEC and NYSE. Permitted compensation includes directors’
fees (which includes all forms of compensation paid to directors of the
Company for service as a director or member of a Board Committee).
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If a Committee member simultaneously serves on the audit committee of more
than three public companies (including the Company), the Board must
determine that such simultaneous service would not impair the ability of
such member to effectively serve on the Committee. The Company shall
disclose any such determination in its annual proxy statement.
Appointment. The Board will appoint the members and the Chairman of
the Committee in accordance with the Company’s bylaws. Committee members shall
serve at the pleasure of the Board and for such term or terms as the Board may
determine.
Duties and Responsibilities of the Committee
The Committee is responsible for overseeing the Company’s accounting and
financial reporting process on behalf of the Board. Management is responsible
for the preparation, presentation and integrity of the Company’s consolidated
financial statements and for the appropriateness of the accounting principles
and reporting policies that are used by the Company. The independent auditors
are responsible for auditing the Company’s consolidated financial statements
and for reviewing the Company’s interim consolidated financial statements.
The Committee is directly responsible for the appointment, compensation,
retention and oversight of the work of the Company’s 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 performing other audit, review or attest services
for the Company.
In performing its responsibilities, the Committee shall:
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Retain the Independent Auditors. The Committee has the sole authority
to (a) appoint, retain and terminate the Company’s independent auditors, (b)
approve all audit engagement fees, terms and services, and (c) approve any
non-audit services provided by the Company’s independent auditors, subject
to the following. The Committee will exercise this authority in a manner
consistent with Section 201, Section 202 and Section 301 of the
Sarbanes-Oxley Act and the rules and listing standards promulgated
thereunder by the SEC and NYSE. The Committee may delegate the authority to
grant any pre-approvals required by such sections to one or more members of
the Committee that it designates, subject to the delegated member or members
reporting any such pre-approvals to the Committee at its next scheduled
meeting. The independent auditors will report directly to the Committee.
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Review and Discuss the Independent Auditors’ Quality-Control. At
least annually, the Committee will obtain and review a report by the
independent auditors describing (a) the independent auditors’ internal
quality-control procedures and (b) any material issues raised by the most
recent internal quality- control review, or peer review, of the registered
public accounting firm, or by any inquiry or investigation by governmental
or professional authorities, within the preceding five years, with respect
to one or more independent audits carried out by the registered public
accounting firm, and any steps taken to deal with any such issues.
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Review and Discuss the Independence of the Independent Auditors. In
connection with the retention of the Company’s independent auditors, at
least annually the Committee will review and discuss the information
provided by management and the independent auditors relating to the
independence of the independent auditors, including, among other things,
information related to the non-audit services provided and expected to be
provided by the independent auditors. The Committee is responsible for (a)
ensuring that the independent auditors submit at least annually to the
Committee a formal written statement delineating all relationships between
the independent auditors and the Company consistent with applicable
independence standards, (b) 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 (c) taking appropriate action in response to the independent auditors’
report to satisfy itself of the independent auditors’ independence.
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Evaluation of Independent Auditors. At least annually, the Committee
will evaluate the independent auditors’ qualifications, performance and
independence. These evaluations should include the experience and
qualification of the lead partner of the independent auditors and the audit
team in general and confirm that all partner rotation requirements, as
promulgated by applicable rules and regulations, are executed. The Committee
will present its conclusions to the full Board.
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Set Hiring Policies. The Committee will set hiring policies for
employees or former employees of the independent auditors, which include the
restrictions set forth in Section 206 of the Sarbanes-Oxley Act and any
rules promulgated thereunder by the SEC and NYSE.
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Review and Discuss the Audit Plan. The Committee will review and
discuss with the independent auditors the plans for, and the scope of, the
annual audit and other examinations, including the independent auditors’
review of internal controls over financial reporting. The Committee will
receive and review any disclosure from the Company‘s CEO (Principal
Executive Officer) and CFO (Principal Financial Officer) made in connection
with the certification of the Company‘s quarterly and annual reports filed
with the SEC of: a) significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the Company‘s ability to record,
process, summarize, and report financial data; and b) any fraud, whether or
not material, that involves management or other employees who have a
significant role in the Company‘s internal controls.
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Review and Discuss Conduct of the Audit. The Committee will review
and discuss with the independent auditors the matters required to be
discussed by applicable Public Company Accounting Oversight Board auditing
standards and SEC requirements relating to the conduct of the audit, as well
as any audit problems or difficulties and management’s response, including
(a) any restriction on audit scope or on access to requested information,
(b) any disagreements with management, and (c) significant issues discussed
with the independent auditors’ national office. The Committee will decide
all unresolved disagreements between management and the independent auditors
regarding financial reporting.
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Review and Discuss Consolidated Financial Statements and Disclosures.
The Committee will review and discuss with appropriate officers of the
Company and the independent auditors the annual audited and quarterly
consolidated financial statements of the Company prior to the Company’s Form
10-K and 10-Q filings or release of earnings, including (a) the Company’s
disclosures under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” and (b) the disclosures regarding
internal controls over financial reporting and other matters required by
Sections 302 and 404 of the Sarbanes-Oxley Act and any rules promulgated
thereunder by the SEC. In consultation with the independent auditors and the
internal audit department, the Committee will review the integrity of the
Company’s internal and external financial reporting processes
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Review and Discuss Corporate Responsibility Disclosures. The
Committee will review and discuss with management the processes and controls
in place around corporate responsibility disclosures, which shall include
environmental, social and governance disclosures. The Committee will review
and discuss with management the general nature of such corporate
responsibility disclosures in the context of SEC requirements.
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Discuss Financial Information. The Committee will discuss in general
from time to time the types of information to be disclosed and the types of
presentations to be made with respect to the Company’s earnings releases and
other financial news releases as well as other financial information and
earnings guidance, if any, to be disclosed by the Company, paying particular
attention to any pro forma or adjusted non-GAAP information. In addition,
the Committee will review and discuss earnings news releases prior to
distribution. Such discussions may be in general terms (i.e., discussion of
the types of information to be disclosed and the types of presentations to
be made). The Committee will recommend to the Board that the audited
consolidated financial statements be included in the Company’s Annual Report
on Form 10-K.
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Internal Audit. The Committee will (a) review and advise on the
selection and removal of the Company’s Director of Internal Audit, (b)
review the activities and organizational structure of the internal audit
department, as well as the qualifications of its personnel, (c) annually,
review and recommend changes (if any) to the internal audit charter, (d)
periodically review, with the Director of Internal Audit, any significant
difficulties, disagreements with management, or scope restrictions
encountered in the course of the department’s work, (e) periodically review,
with the independent auditors, the internal audit department’s
responsibilities, budget, and staffing, (f) review and discuss with the
Director of Internal Audit the plans for and the scope of the ongoing audit
activities of the internal audit department, (g) review and discuss with the
Director of Internal Audit the regular internal audit reports to management
(or summaries thereof) prepared by the internal audit department, as well as
management’s response, (h) review and discuss with the Director of Internal
Audit the appropriateness of the CEO’s expenses at least on an annual basis.
The Director of Internal Audit will report administratively to the President
and Chief Executive Officer and functionally to the Committee.
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Review and Discuss the Systems of Internal Controls Over Financial
Reporting.
The Committee will review and discuss with the independent auditors, the
Director of Internal Audit and appropriate officers of the Company the
adequacy of the Company’s internal controls over financial reporting, the
Company’s financial, auditing and accounting organizations and personnel,
and the Company’s policies and compliance procedures with respect to
business practices which shall include (a) the disclosures regarding
internal controls over financial reporting and matters required by Sections
302 and 404 of the Sarbanes-Oxley Act and any rules promulgated thereunder
by the SEC, and (b) a review with the independent auditors of their opinion
on the effectiveness of management’s assessment of internal controls over
financial reporting and the independent auditor’s analysis of matters
requiring modification to management’s certifications pursuant to Section
302 of the Sarbanes-Oxley Act.
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Review and Discuss the Recommendations of Independent Auditors. The
Committee will review and discuss with the Director of Internal Audit
recommendations made by the independent auditors and the Director of
Internal Audit, as well as such other matters, if any, as such persons or
officers of the Company may bring to the attention of the Committee.
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Review and Discuss the Audit Results. The Committee will review and
discuss with the independent auditors (a) the report of their annual audit,
or proposed report of their annual audit, (b) the accompanying management
letter, if any, (c) the reports of their reviews of the Company’s interim
consolidated financial statements conducted in accordance with applicable
auditing standards and (d) the reports of the results of such other
examinations outside of the course of the independent auditors’ normal audit
procedures that the independent auditors may from time to time undertake.
The foregoing shall include the reports required by Section 204 of the
Sarbanes-Oxley Act and any rules promulgated thereunder by the SEC and, as
appropriate, a review of (a) major issues regarding (i) accounting
principles and financial statement presentations, including any significant
changes in the Company’s selection or application of accounting principles,
and (ii) the adequacy and effectiveness of the Company’s internal controls
over financial reporting and any special audit steps adopted in light of
significant deficiencies or material weaknesses, if any; (b) 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 consolidated financial statements, including analyses
of the effects and disclosures of alternative GAAP treatments on the
consolidated financial statements; and (c) the effect of regulatory and
accounting initiatives, as well as off-balance sheet structures, on the
consolidated financial statements of the Company
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Review and Discuss Certain Matters with Independent Auditors. The
Committee will review and discuss with the independent auditors (a) critical
accounting policies and practices, (b) alternative treatments of financial
information within GAAP related to material items that have been discussed
with management, ramifications of the use of such alternative disclosures
and treatments, and the treatment preferred by the independent auditors and
(c) other written communications between the independent auditors and
management, including, but not limited to, the management letter and the
schedule of unadjusted differences.
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Obtain Assurances under Section 10A(b) of the Exchange Act. The
Committee will obtain assurance from the independent auditors that in the
course of conducting the audit, there have been no acts detected or that
have otherwise come to the attention of the independent auditors that
require disclosure to the Committee under Section 10A(b) of the Exchange
Act.
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Discuss Risk Management Policies. The Committee has been delegated
the responsibility of financial risk by the Board. Consistent with this
responsibility, the Committee will discuss guidelines and policies with
respect to financial risk assessment and financial risk management,
including the risk of fraud, to assess and manage the Company’s financial
risk exposures and report as needed to the Board on these issues.
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Review of Cybersecurity and Data Privacy Risks, Controls and Procedures.
The Committee shall regularly review the Company’s cybersecurity and other
information technology risks, controls and procedures. The Committee shall
review with management the Company’s plans to mitigate cybersecurity risks
and the Company’s ability to respond to and remediate cyber and data privacy
incidents. The Committee shall also review with management any specific
cybersecurity issues that could affect the adequacy of the Company’s
internal controls.
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Obtain Reports Regarding Conformity With Legal Requirements and the
Company’s Code of Corporate Conduct.
The Committee will periodically obtain reports from management and the
Director of Internal Audit that the Company and its subsidiary/foreign
affiliated entities are in conformity with applicable legal requirements and
the Company’s Code of Corporate Conduct. The Committee will charge the
independent auditors to report to the Committee regarding any failure by the
Company and its subsidiary/foreign affiliated entities to be in conformity
with applicable legal requirements and the Company’s Code of Corporate
Conduct. The Committee should 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 Corporate Conduct.
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Review Possible Dualities of Interest and Conflicts of Interest. The
Committee will consider possible dualities of interest and conflicts of
interest of directors and management and make recommendations to the Board
to address any such duality of interest or conflicts of interest.
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Related-Person Transactions. The Committee will review all
relationships and transactions in which the Company and its directors and
executive officers or their immediate family members are participants to
determine whether such persons have a direct or indirect material interest
in the transaction. The Company’s legal department is primarily responsible
for the development and implementation of processes and controls to obtain
information from the directors and executive officers with respect to
related person transactions in order to enable the Committee to determine,
based on the facts and circumstances, whether the related person has a
direct or indirect material interest in the transaction. In the course of
its review of a related person transaction (as defined by the NYSE and Item
404 of Regulation S-K), the Committee will consider:
- the nature of the related person’s interest in the transaction;
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the material terms of the transaction, including, without limitation,
the amount and type of transaction;
- the importance of the transaction to the related person;
- the importance of the transaction to the Company;
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whether the transaction would impair the judgment of a director or
executive officer to act in the best interest of the Company; and
- any other matters the Committee deems appropriate.
Based on this review, the Committee will determine whether to approve any
related person transaction. The Committee shall prohibit any related
person transaction if it determines the related person transaction to be
inconsistent with the interests of the Company and its stockholders.
Any member of the Committee who is a related person with respect to a
transaction under review may not participate in the deliberations or vote
respecting approval of the transaction; however, such director may be
counted in determining the presence of a quorum at a meeting of the
Committee that considers the transaction.
The Committee will assure that the independent auditors have had access to
the Company's legal department and their evaluation of the Company's
identification of, accounting for, and disclosure of its relationships
with related parties.
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Establish Procedures for Complaints Regarding Financial Statements or
Accounting Policies.
The Committee will establish procedures for (a) the receipt, retention, and
treatment of complaints received by the Company regarding accounting,
internal controls over financial reporting, or auditing matters; and (b) the
confidential, anonymous submission by employees of the Company and its
subsidiaries of concerns regarding questionable accounting or auditing
matters as required by Section 301 of the Sarbanes-Oxley Act and the rules
and listing requirements promulgated thereunder by the SEC and NYSE.
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Discuss With General Counsel Matters Regarding Financial Statements or
Compliance Policies.
The Committee should 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.
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Review and Discuss Other Matters. The Committee should review and
discuss such other matters that relate to the accounting, auditing,
financial reporting and other information systems/cybersecurity practices
and procedures of the Company as the Committee may, in its own discretion,
deem desirable in connection with the review functions described above.
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Code of Business Conduct and Ethics. The Committee will review (a)
the Company’s General Counsel’s oversight and management of the Company’s
Code of Business Conduct and Ethics, (b) the investigation of alleged
violations of the Code of Business Conduct and Ethics involving directors or
executive officers, and (c) the enforcement of certain provisions of the
Code of Business Conduct and Ethics, in each case as provided therein.
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Make Board Reports. The Committee should report its activities
regularly to the Board in such manner and at such times as the Committee and
the Board deem appropriate, but in no event less than once a year. Such
report should include a review of any issues that arise with respect to the
quality or integrity of the Company's consolidated financial statements, the
Company’s compliance with legal or regulatory requirements, the performance
and independence of the Company’s independent auditors and the performance
of the internal audit function.
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Adapt to Changing Conditions and Circumstances. The Committee, in
carrying out its responsibilities, policies and procedures, should
continually review its activities to ensure that it adapts to changing
conditions and circumstances.
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Other Delegated Duties or Responsibilities. The Committee will
perform any other duties or responsibilities delegated to the Committee by
the Board from time to time.
Meetings of the Committee
The Committee shall meet in person, telephonically or by any other interactive
means at least four times annually, or more frequently as it may determine
necessary, to comply with its responsibilities as set forth herein. The
Chairman of the Committee shall, in consultation with the other members of the
Committee, the Company’s independent auditors and the appropriate officers of
the Company, be responsible for calling meetings of the Committee,
establishing agendas therefor and supervising the conduct thereof. The
majority of the members of the Committee will constitute a quorum at any
meeting, and the act of a majority of the members present at a meeting at
which a quorum is present will be the act of the Committee, unless a greater
number is required by law, the Company’s Certificate of Incorporation or its
By-Laws. The Committee may also take any action permitted hereunder by
unanimous written consent.
The Committee may request any officer or employee of the Company or the
Company’s outside legal counsel or independent auditors to attend a meeting of
the Committee or to meet with any members of, or consultants to, the
Committee. The Committee shall meet with the Company’s management, the
Director of Internal Auditor and the independent auditors periodically in
separate private sessions to discuss any matter that the Committee,
management, the independent auditors or such other persons believe should be
discussed privately. The Committee will meet periodically in executive session
without members of management present.
Delegation
Consistent with applicable laws, rules and regulations, the Committee may, in
its discretion, delegate all or a portion of its duties and responsibilities
to one or more subcommittees of the Committee.
Resources and Authority of the Committee
The Committee shall have the resources and authority appropriate to discharge
its responsibilities as required by law, including the authority to engage
independent counsel and other advisors as the Committee deems necessary to
carry out its duties.
The Company will provide for appropriate funding, as determined by the
Committee, for payment of (a) compensation to the Company’s independent
auditors engaged for the purpose of rendering or issuing an audit report or
related work or performing other audit, review or attest services for the
Company, (b) compensation to independent counsel or any other advisors
employed by the Committee, and (c) ordinary administrative expenses of the
Committee that are necessary or appropriate in carrying out its duties.
Audit Review Committee Report
The Committee will prepare, with the assistance of management, the independent
auditors and outside legal counsel, the Audit Review Committee Report.
Annual Performance Evaluation
The Committee will conduct and review with the Board annually an evaluation of
the Committee’s performance with respect to the requirements of this Charter.
This evaluation should also set forth the goals and objectives of the
Committee for the upcoming year. The Committee may conduct this performance
evaluation in such manner as the Committee, in its business judgment, deems
appropriate.
Annual Review of Charter
The Committee will conduct and review with the Board annually an evaluation of
this Charter and recommend any changes to the Board. The Committee may conduct
this Charter evaluation in such manner as the Committee, in its business
judgment, deems appropriate.
Disclosure of Charter
Consistent with the listing standards of the NYSE, this Charter is included on
the Company’s website and is available free of charge upon request in writing
sent to the Secretary of the Company. The Company’s annual report to
stockholders shall state that this Charter is available on the Company’s
website and is available free of charge upon request in writing sent to the
Secretary of the Company.
August 2023