CONAGRA FOODS, INC.
AUDIT / FINANCE COMMITTEE CHARTER
Audit / Finance Committee Structure, Composition and Processes
The Audit / Finance Committee (the “Committee) is appointed by the Board of Directors (the “Board”) to assist the Board in fulfilling its oversight responsibilities by reviewing (1) the integrity of the financial statements of the Company, (2) the qualifications, independence and performance of the Company’s independent auditors and internal auditing department, (3) the compliance by the Company with legal and regulatory requirements, and (4) the Company’s perspectives on financing strategies and capital structure, in light of its strategic long range plans.
The Committee shall be comprised of at least three directors appointed by the Board, each of whom shall meet the independence and experience requirements of the New York Stock Exchange, as such requirements are interpreted by the Board in its business judgment, and the applicable rules and regulations of the Securities and Exchange Commission. At least one member of the Committee shall be a financial expert as defined by the Securities and Exchange Commission. The Committee shall have the responsibilities described in this Charter. This Charter has been adopted by the Board. The Committee shall make regular reports to the Board. The Committee shall review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. The Committee shall meet at least four times a year, or more frequently as the Committee considers necessary. The Committee shall annually evaluate the Committee’s performance.
The Committee’s function is one of oversight and it recognizes that the Company’s management is responsible for preparing the Company’s financial statements, the independent auditors are responsible for auditing those financial statements and the full Board retains authority to make significant capital allocation decisions on behalf of the Company. In carrying out its oversight responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements. The Committee has the authority to conduct investigations within the scope of its responsibilities.
Independent Auditor Selection and Evaluation
• The Committee shall have sole authority to appoint the independent auditors (subject to ratification by the stockholders). The independent auditor shall report directly to the Committee. The Committee shall be directly responsible for the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting).
• The Committee shall evaluate the performance of the lead audit partner and of the independent auditors and, if appropriate, replace the independent auditors.
Oversight of Matters Required in Annual Proxy Statement Report
• The Committee shall meet to review and discuss the annual audited financial statements, including reviewing the specific disclosures made in management’s discussion and analysis, with management and the independent auditors.
• The Committee shall discuss with the independent auditors certain matters regarding the conduct of the annual audit as required by the applicable auditing standards adopted by the Public Company Accounting Oversight Board, such as significant audit adjustments and significant accounting policies.
• The Committee shall receive periodic reports from the independent auditors regarding the auditor’s independence (including the disclosures required by the applicable requirements of the Public Company Accounting Oversight Board), discuss such reports with the auditors, and take appropriate action to oversee the independence of the auditors.
• The Committee shall determine whether to recommend to the Board that the audited financial statements be included in the Company's Annual Report on Form 10-K for filing with the Securities and Exchange Commission.
• The Committee shall prepare the report required by the rules of the Securities and Exchange Commission to be included in the Company’s annual proxy statement.
Independent Auditor Oversight
• The Committee shall meet with the independent auditors prior to the annual audit to review the scope, planning and staffing of the audit.
• The Committee shall review with the independent auditors any significant problems or difficulties that the auditors may have encountered in connection with the audit, and review significant issues raised by the auditors and the Company’s response to those issues.
• The Committee shall (1) ensure the rotation of the lead audit partner and other audit partners as required by law, and (2) establish policies for the Company’s hiring of employees or former employees of the independent auditor.
Internal Audit Oversight
• The Committee shall provide oversight of the Company’s internal audit function, including reviewing reports on the organizational structure, budget, plans and results of internal audit activities and adequacy of the Company’s internal controls.
• The Committee shall review the appointment and replacement of the senior internal auditing executive, and review significant issues identified by the internal auditing department.
Financing Strategy Actions
• The Committee shall annually review the Company’s financial condition (including matters such as liquidity, debt levels, credit ratings and interest rate risk exposure), capital structure (including sources and uses of capital), and long-term financing strategy.
• The Committee shall annually review the Company’s dividend policy and recommend dividend actions to the Board of Directors.
• The Committee shall annually review the Company’s plans for share repurchase prior to consideration by the full board.
• The Committee shall annually review the Company’s capital expenditure budget prior to consideration by the full board.
• The Committee will review and, as necessary, make recommendations to the Board regarding the continued appropriateness of standing Board-approved capital expenditure guidelines.
• The Committee shall periodically review actual performance of capital expenditure projects against approved authorizations.
• The Committee shall annually review the Company’s insurance program, including the credit quality of its insurance carriers and reinsurers, the scope and limitations of coverage.
• The Committee shall periodically review the performance and funding of the Company’s retirement and pension programs.
• The Committee shall periodically review reports from management with respect to the Company’s tax status and strategy.
Additional Committee Action
• The Committee shall pre-approve all auditing services and permitted non-audit services to be performed by the independent auditor. The Committee may form and delegate authority to subcommittees consisting of one or more members the authority to grant such pre-approvals. The Committee shall consider whether the provision of permitted non-audit services is compatible with maintaining the independent auditor’s independence.
• The Committee shall establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
• The Committee shall discuss with management the Company’s earnings press releases, including the use of any non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussion may be done generally (consisting of discussing the types of information to be disclosed and the types of presentations to be made).
• The Committee shall meet to review and discuss the Company’s quarterly financial statements, including reviewing the specific disclosures made in management’s discussion and analysis, with management and the independent auditors.
• The Committee shall review disclosures made by the Company’s Chief Executive Officer and Chief Financial Officer during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company’s internal controls.
• The Committee shall, as it determines necessary to carry out its duties, obtain advice and assistance from outside legal, accounting, or other advisors. The Company shall provide funding for such Committee actions and for compensation of any external auditor engaged by the Committee and for ordinary administrative expenses of the Committee.
Reports to the Audit / Finance Committee
• The Committee shall review reports from the independent auditors on (1) all critical accounting policies and practices to be used, (2) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor, and (3) other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.
• The Committee shall review a report from the independent auditor at least annually regarding (1) the independent auditor’s internal quality-control procedures, (2) any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or 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, (3) any steps taken by the independent auditor to deal with such issues, and (4) all relationships between the independent auditor and the Company.
• The Committee shall review reports from management and/or the independent auditor with respect to (1) major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, and (2) the effect of regulatory and accounting initiatives on the financial statements of the Company.
• The Committee shall review reports from management with respect to significant enterprise-wide risks facing the Company, including, but not limited to financial risks such as derivative and treasury risks and associated regulatory requirements, and operational risks, and how such risks are being identified and managed by the Company. At least annually the Committee will review and recommend for approval of the full Board the membership of the company’s Risk Oversight Committee.
• The Committee shall obtain reports from management, the Company’s internal auditing department, and/or the Company’s general counsel with respect to (1) the Company’s policies and procedures regarding compliance with applicable laws and regulations, (2) compliance with the Company’s Code of Conduct and the Company’s Code of Ethics for Senior Corporate Officers, (3) the results of Internal Audit reviews and (4) the status of significant legal matters.
• The Committee shall meet separately, periodically, with the Chief Financial Officer and Controller, the senior internal auditing executive and the independent auditors. The Committee may request any member of management to attend a meeting of the Committee.