HORMEL FOODS CORPORATION
AUDIT COMMITTEE CHARTER
The purposes of the Audit Committee are to report to the Board of Directors in its
oversight of the integrity of the Corporation's financial statements, the Corporation's compliance
with legal and regulatory requirements, to select the independent auditor, and determine the
independent auditor's qualifications and independence, and the performance of the Corporation's
internal audit function and independent auditor; and to produce an annual report for inclusion in
the corporation's proxy statement, in accordance with applicable rules and regulations.
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The Committee will consist of three or more independent members of the Board
appointed from time to time by the Board. The Committee will consist solely of nonemployee
Directors who meet the independence and experience requirements of the Securities and
Exchange Commission and the New York Stock Exchange. Members of the Committee are
subject to removal at any time by a majority of the Board. Any resulting vacancy may be filled by
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The Committee is not responsible for preparing financial statements or performing
audits, and its members are not auditors or certifiers of the Corporation's financial statements.
The Committee will:
The Committee will provide regular reports of its activities to the Board,
specifically addressing any issues that arise with respect to the quality or integrity of the
Corporation's financial statements, the Corporation's compliance with legal or
regulatory requirements, the performance and independence of the Corporation's
independent auditors, or the performance of the internal audit function.
- Select the Corporation's independent auditor (subject to stockholder ratification of
the selection, if such ratification is required or sought), approve the fees to be paid to
such firm, and terminate such firm when circumstanceswarrant.
- Review and discuss with the independent auditor the scope and plans for its audit
examination, approve its services provided, its audit procedures, and the results of
the annual audit examination, including any accompanying management letters.
- Evaluate the independent auditor's qualifications, performance and independence on
an ongoing basis, but no less frequently than once per year.
- Establish policies and procedures for, and, as appropriate, approve the engagement
of, the independent auditor for any nonaudit service (to the extent such service is not
prohibited by Section 10A(g) of the Securities Exchange Act of 1934, as amended) and
the fee for such service, and consider whether the independent auditor's performance
of any nonaudit services is compatible with its independence.
- At least annually, obtain and review a report by the independent auditor describing:
Review and discuss with management and the independent auditor the
Corporation's annual audited financial statements and quarterly financial statements,
including the Corporation's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations," prior to the filing or
release of such financial statements.
- The independent auditor's internal quality-control procedures.
- Any material issues raised by the most recent internal quality-control review, or
peer review, of the independent auditor's firm, 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 firm, and any steps
taken to deal with such issues.
- All relationships between the independent auditor and the Corporation.
Recommend to the Board whether, based on the review and discussions described in
paragraphs (5) and (6) above, the annual audited financial statements should be
included in the Corporation's annual report on Form 10-K.
Regularly review with the independent auditor any audit problems or difficulties
and management's response (including any restrictions on the scope of the
independent auditor's activities or on access to requested information and any
significant disagreements with management), and resolve disagreements between
management and the independent auditor regarding financial reporting.
Review the means of safeguarding assets of the Corporation and verify the existence
of such assets.
Review operations and programs to ascertain whether results are consistent with
established goals and objectives.
Establish clear hiring policies for employees or former employees of the independent
Establish procedures for the receipt, retention and treatment of complaints received
by the Corporation regarding accounting, internal controls or auditing matters, and
the confidential, anonymous submissions by employees of concerns regarding
questionable accounting or auditing matters.
Meet at least quarterly with management, the internal auditors and the independent
auditor in separate executive sessions.
Generally discuss the types of information to be disclosed and the type of
presentation to be made with respect to earnings press releases and financial
information and earnings guidance provided to analysts and rating agencies.
Discuss policies with respect to risk assessment and risk management and generally
review processes established by management to manage and assess risk.
Oversee the Corporation's Code of Ethical Business Conduct, which will include (but
not be limited to) a code of ethics for senior financial officers as contemplated by
Section 406(c) of the Sarbanes-Oxley Act of 2002.
Produce an annual report for inclusion in the Corporation's proxy statement, in
accordance with applicable rules and regulations.
Approve the appointment and removal of the manager of the internal audit function,
and ratify the compensation of the manager of the internal audit function.
Review and reassess the adequacy of this Charter at least annually and recommend
any proposed changes to the Board for approval.
Conduct an annual performance evaluation of the Committee, in connection with
which the Committee will review on a retrospective basis:
As appropriate, obtain advice and assistance from outside legal, accounting or other
- Major issues regarding accounting principles and financial statement
presentations, including any significant change in the Corporation's selection or
application of accounting principles.
- Major issues as to the adequacy of the Corporation's internal controls and any
special audit steps adopted in light of material control deficiencies.
- Analyses prepared by management and/or the independent auditor 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 GAAP methods on the financial statements.
- The effect on the financial statements of regulatory and accounting initiatives and
off-balance sheet structures.
- Earnings press releases (paying particular attention to any use of "pro forma" or
"adjusted" non-GAAP information), as well as financial information and earnings
guidance provided to analysts and rating agencies.
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The Committee will meet four times annually, or more frequently as
circumstances dictate. A majority of the members of the Committee will constitute a
quorum for the transaction of business.
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The Committee will have the resources and authority to discharge its
responsibilities, including sole authority to:
In addition, the Committee will have authority to:
- Retain and terminate the independent auditor, which will be accountable to and
report to the Committee.
- Approve any nonaudit relationship with the independent auditor, other than
any relationship to provide services prohibited by Section 10A(g) of the
Securities Exchange Act of 1934, as amended.
- Approve all audit engagement fees and terms.
- Conduct or authorize investigations into any matters within its scope of
- Engage outside auditors for special audits, reviews and other procedures.
- Retain special counsel and other experts and consultants to advise the
- Approve the fees and other retention terms for such parties.
The Committee may request any officer or employee of the Corporation or the
Corporation's outside counsel or independent auditor to attend a meeting of the
Committee or to meet with any members of, or consultants to, the Committee. The
Committee has the authority to use other resources either within or outside the
Corporation to address special circumstances when appropriate.
The Committee may delegate its authority to subcommittees established by the
Committee from time to time, which subcommittees will consist of one or more
members of the Committee and will report to the Committee.
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This amended and restated Charter was adopted by the Board of Directors on November 21,
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