CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
ORBITZ WORLDWIDE, INC.
ADOPTED AS OF JULY 19, 2007
(REVISED: FEBRUARY 20, 2013)
1. PURPOSE OF THE COMMITTEE
The purpose of the Audit Committee (the "Committee") of the Board of Directors
(the "Board") of Orbitz Worldwide, Inc. (the "Company") is to provide assistance
to the Board in fulfilling its legal and fiduciary obligations with respect
to matters involving the accounting, auditing, financial reporting, internal
control and legal compliance functions of the Company and its subsidiaries,
including, without limitation, (a) assisting the Board's oversight of (i) the
integrity of the Company’s financial statements, (ii) the Company’s compliance
with legal and regulatory requirements, (iii) the Company's independent auditors'
qualifications and independence, and (iv) the performance of the Company's independent
auditors and the Company’s internal audit function, (b) preparing the report
required to be prepared by the Committee pursuant to the rules of the Securities
and Exchange Commission (the "SEC") for inclusion in the Company’s annual proxy
statement and (c) reviewing and approving those transactions involving related parties (as described herein).
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2. COMPOSITION OF THE COMMITTEE
The Committee shall consist of three or more directors as determined from time
to time by the Board. Each member of the Committee shall meet the independence
and experience requirements of the New York Stock Exchange (the "NYSE"), and
any additional requirements that the Board deems appropriate.
No director may serve as a member of the Committee if such director serves on the audit committee 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. Any such determination must be disclosed in the Corporation's annual proxy statement or Annual Report on Form 10-K.
The chairperson of the Committee shall be designated by the Board, provided that if the Board does not so designate a chairperson, the members of the Committee, by a majority vote, may designate a chairperson.
Any vacancy on the Committee shall be filled by majority vote of the Board. No member of the Committee shall be removed except by majority vote of the Board.
A member of the Committee shall be automatically removed if the member (a) is no longer a director of the Company, (b) is determined by the Board to no longer be "independent" as that term is defined by the NYSE or the Sarbanes-Oxley Act of 2002 or (c) is ineligible because of other rules or requirements.
Each member of the Committee must be financially literate, as such qualification is interpreted by the Board in its business judgment, or must become financially literate within a reasonable period of time after his or her appointment to the Committee. In addition, at least one member of the Committee must be designated by the Board to be the "audit committee financial expert," as defined by the SEC pursuant to the Sarbanes-Oxley Act of 2002 (the "Act").
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3. MEETINGS OF THE COMMITTEE
The Committee shall meet as often as it determines necessary to carry out its
duties and responsibilities, but no less frequently than once every fiscal quarter.
The Committee, in its discretion, may ask members of management or others to
attend its meetings (or portions thereof) and to provide pertinent information
as necessary. The Committee should meet separately on a periodic basis with
(a) management, (b) the director of the Company's internal auditing department
or other person responsible for the internal audit function and (c) the Company's
independent auditors, in each case to discuss any matters that the Committee
or any of the above persons or firms believes warrant Committee attention.
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.
The Committee shall maintain minutes of its meetings and records relating to those meetings.
The Committee is authorized to have full access to all Company records including employee records and shall report regularly to the Board on its activities, as appropriate.
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4. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE
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 address,
react or respond to changing circumstances or conditions. The following duties
and responsibilities are within the authority of the Committee and the Committee
shall, consistent with and subject to applicable law and rules and regulations
promulgated by the SEC, NYSE, or any other applicable regulatory authority:
Selection, Evaluation, and Oversight of the Auditors
- Be directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, 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 in advance the Company's independent auditors' annual engagement letter, including the proposed fees contained therein, as well as all audit and, as provided in the Act and the SEC rules and regulations promulgated thereunder, all permitted non-audit engagements and relationships between the Company and such independent auditors. Approval of audit and permitted non-audit services will be made by the Committee or by one or more members of the Committee as shall be designated by the Committee/the chairperson of the Committee and the person[s] granting such approval shall report such approval to the Committee at the next scheduled meeting;
- Review the performance of the Company's independent auditors, including the lead partner and reviewing partner of the independent auditors, and, in its sole discretion (subject, if applicable, to stockholder ratification), make decisions regarding the replacement or termination of the independent auditors when circumstances warrant;
- Obtain at least annually from the Company's independent auditors and review a report describing:
- 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 and a list of the fees billed for each such category);
The Committee should present its conclusions with respect to the above matters, as well as its review of the lead partner and the reviewing partner of the independent auditors, and its views on whether there should be a regular rotation of the independent auditors, to the Board.
Evaluate the independence of the Company's independent auditors by, among other things:
- monitoring compliance by the Company's independent auditors with the audit
partner rotation requirements contained in the Act and the rules and regulations
promulgated by the SEC thereunder;
- monitoring compliance by the Company of the employee conflict of interest
requirements contained in the Act and the rules and regulations promulgated
by the SEC thereunder; and
- engaging in a dialogue with the independent auditors to confirm that
audit partner compensation is consistent with applicable SEC rules;
- Establish clear policies as to the hiring by the Company of employees or former employees of the Company’s independent auditors;
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Oversight of Annual Audit and Quarterly Reviews
- Review and discuss with the independent auditors their annual audit plan, including the timing and scope of audit activities, and monitor such plan's progress and results during the year;
- Review with management, the Company's independent auditors and the director of the Company's internal auditing department, the following information which is required to be reported by the independent auditor:
- all critical accounting policies and practices to be used;
- 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, and the treatment preferred
by the independent auditors;
- all other material written communications between the independent
auditors and management, such as any management letter and any schedule of
unadjusted differences; and
- any material financial arrangements of the Company which do not appear
on the financial statements of the Company;
- Review with management, the Company's independent auditors and, if appropriate, the director of the Company's internal auditing department, the following:
- 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;
- major issues regarding accounting principles and financial statements
presentations, including any significant changes in the Company's selection
or application of accounting principles;
- major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies;
- 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 effects of alternative generally accepted accounting principles methods
on the Company's financial statements; and
- the effect of regulatory and accounting initiatives, as well as off-balance
sheet structures, on the financial statements of the Company;
- Resolve all disagreements between the Company's independent auditors and management regarding financial reporting;
- 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 auditor's activities or on access to requested information, and any significant disagreements with management. In connection therewith, the Committee should review with the independent auditors the following:
- any accounting adjustments that were noted or proposed by the independent
auditors but were rejected by management;
- any communications between the audit team and the independent auditor's
national office respecting auditing or accounting issues presented by the
- any "management" or "internal control" letter issued, or proposed
to be issued, by the independent auditors to the Company;
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Oversight of Financial Reporting Process and Internal Controls
- the adequacy and effectiveness of the Company's accounting and internal
control policies and procedures on a regular basis, including the responsibilities,
budget, compensation and staffing of the Company's internal audit function,
through inquiry and periodic discussions with the Company's independent auditors
- the yearly report prepared by management, and attested to by the Company's
independent auditors, assessing the effectiveness of the Company's internal
control over financial reporting and stating management's responsibility for
establishing and maintaining adequate internal control over financial reporting
prior to its inclusion in the Company's Annual Report on Form 10-K; and
- the Committee's level of involvement and interaction with the Company's
internal audit function, including the Committee's line of authority and role
in appointing and compensating employees in the internal audit function;
- Review with the chief executive officer, chief financial officer and independent auditors, periodically, the following:
- all significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the Company's ability to record, process, summarize and report
financial information; and
- any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal control over
- Discuss guidelines and policies governing the process by which senior management of the Company and the relevant departments of the Company, including the internal auditing department, assess and manage the Company’s exposure to risk, as well as the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures;
- Review with management the progress and results of all internal audit projects, and, when deemed necessary or appropriate by the Committee, direct the Company's chief executive officer to assign additional internal audit projects to the director of the Company's internal auditing department;
- Receive periodic reports from the Company's independent auditors, management and director of the Company's internal auditing department to assess the impact on the Company of significant accounting or financial reporting developments that may have a bearing on the Company;
- Review and discuss with the independent auditors the results of the year-end audit of the Company, including any comments or recommendations of the Company's independent auditors and, based on such review and discussions and on such other considerations as it determines appropriate, recommend to the Board whether the Company's financial statements should be included in the Annual Report on Form 10-K;
- Establish and maintain free and open means of communication between and among the Committee, the Company's independent auditors, the Company's internal auditing department and management, including providing such parties with appropriate opportunities to meet separately and privately with the Committee on a periodic basis;
- Review the type and presentation of information to be included in the Company's earnings press releases (especially the use of "pro forma" or "adjusted" information not prepared in compliance with generally accepted accounting principles), 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), and the Committee need not discuss in advance each earnings release or each instance in which the Company may provide earnings guidance);
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Review and Approval of Related-Party Transactions
- The audit committee will also be responsible for the review, approval or ratification of Related Party Transactions. “Related Party Transactions” refers to those transactions, arrangements or relationships (or material modifications of existing transactions, arrangements or relationships) (i) in which the Company (including any of its subsidiaries) is a participant, (ii) in which the amount involved will (or may reasonably be expected to) exceed $120,000 in any calendar year and (iii) in which a Related Party has or will have a direct or indirect material interest. A “Related Party” is (i) a person or entity who is, or at any point since the beginning of the last fiscal year was, a director, executive officer, nominee for director or known to be the beneficial owner of 5% or more of the outstanding equity securities of the Company (and the immediate family members of such persons), or (ii) an entity (A) that receives more than $120,000 per year from transactions with the Company (including any of its subsidiaries) and (B) in which any of the persons described in the foregoing clause (i) own more than a 10% equity interest or is a general partner or an officer. The audit committee has a separate written policy regarding the approval of Related Party Transactions. The audit committee will apply the review procedures described in the Related Party Transaction policy as a part of its standard operating procedures. In the course of its review and approval or ratification of such transactions, the audit committee will consider:
- the nature of the related or interested party’s interest in the transaction;
- the material terms of the transaction, including the amount involved and type of transaction;
- the importance of the transaction to the Related Party and to the Company;
- whether the transaction would impair the judgment of a director or executive officer to act in the Company’s best interest and the best interest of the Company’s stockholders; and
- any other matters the audit committee deems appropriate.
Any member of the audit committee who is a Related Party with respect to a transaction under review may not participate in the deliberations or vote on the approval or ratification of the transaction. However, such a director may be counted in determining the presence of a quorum at a meeting of the audit committee at which the transaction is considered.
- Meet periodically with the general counsel, and outside counsel when appropriate, to review legal and regulatory matters, including (i) any matters that may have a material impact on the financial statements of the Company and (ii) any matters involving potential or ongoing material violations of law or breaches of fiduciary duty by the Company or any of its directors, officers, employees, or agents or breaches of fiduciary duty to the Company;
- Prepare the report required by the rules of the SEC to be included in the Company's annual proxy statement;
- Review the Company's policies relating to the ethical handling of conflicts of interest and review past or proposed transactions between the Company and members of management as well as policies and procedures with respect to officers' expense accounts and perquisites, including the use of corporate assets. The Committee shall consider the results of any review of these policies and procedures by the Company's independent auditors;
- Review and approve in advance any services provided by the Company's independent auditors to the Company's executive officers or members of their immediate family;
- 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;
- Secure 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, the cost of such independent expert advisors to be borne by the Company;
Report regularly to the Board on its activities, as appropriate. 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 function; and
Perform such additional activities, and consider such other matters, within the scope of its responsibilities, as the Committee or the Board deems necessary or appropriate.
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5. EVALUATION OF THE COMMITTEE
The Committee shall, on an annual basis, evaluate its performance. The evaluation shall address all matters that the Committee considers relevant to its performance, including a review and assessment of the adequacy of this Charter, and shall be conducted in such manner as the Committee deems appropriate.
The Committee shall deliver to the Board a report, which may be oral, setting forth the results of its evaluation, including any recommended amendments to this Charter.
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6. INVESTIGATIONS AND STUDIES; OUTSIDE ADVISERS
The Committee 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 counsel or other consultants or advisers as it deems
necessary to carry out its duties hereunder.
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While the Committee has the duties and responsibilities set forth in this charter, the Committee is not responsible for preparing or certifying the financial statements, for planning or conducting the audit, or for determining whether the Company's financial statements are complete and accurate and are in accordance with generally accepted accounting principles.
In fulfilling their responsibilities hereunder, it is recognized that members of the Committee are not full-time employees of the Company, it is not the duty or responsibility of the Committee or its members to conduct "field work" or other types of auditing or accounting reviews or procedures or to set auditor independence standards, and each member of the Committee shall be entitled to rely on (a) the integrity of those persons and organizations within and outside the Company from which it receives information and (b) the accuracy of the financial and other information provided to the Committee absent actual knowledge to the contrary.
Nothing contained in this Charter is intended to create, or should be construed as creating, any responsibility or liability of the members of the Committee, except to the extent otherwise provided under applicable federal or state law.
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