EGC Corporate Governance Practices (May 2018)

A Survey and Related Resources PAGE D-6 internal auditors and the independent auditors; o review any audit problems or difficulties and management's response with the independent auditors; o set hiring policies for current or former employees of the independent auditor; and o report regularly to the board. For those companies that do not yet have an internal audit function (because they are relying on the one-year transition period), the charter must also provide that the committee must: • Assist with board oversight of the design and implementation of an internal audit function. • Meet periodically with the company personnel primarily responsible for designing and implementing the internal audit function. • Review with the independent auditors the company's plans for implementing the internal audit function, including management's plans for internal audit's budget, staff, and responsibilities. • Report regularly to the board regarding the design and implementation of internal audit. Compensation Committee Charter The charter must address the following rights and responsibilities: • The compensation committee may, in its sole discretion, retain or obtain advice of a compensation consultant, independent legal counsel, or other adviser. • The compensation committee must be directly responsible for the appointment, compensation, and oversight of any compensation adviser. • The listed company must provide appropriate funding for payment of reasonable compensation to a compensation adviser, as determined by the compensation committee. • In selecting compensation advisers, the compensation committee must take into consideration all factors relevant to that person's independence from management, including: o the provision of other services to the listed company by the person that employs the compensation adviser; o the amount of fees received from the listed company by the person that employs the compensation adviser, as a percentage of that person's total revenue; Each listed company must adopt a formal written charter (or board resolution) for its compensation committee that includes, among other provisions: • The scope of the compensation committee's responsibilities and how it will carry out its responsibilities. • The compensation committee's responsibility for determining, or recommending to the board of directors for determination, the compensation of the CEO and other executive officers. • A provision that the CEO may not be present during voting or deliberations on his or her compensation. • The specific compensation committee responsibilities and authorities set out in NASDAQ Listing Rule 5605(d)(3), which include: o The responsibility and authority to retain compensation consultants, legal counsel, and other advisors. o The provision that the listed company must provide appropriate funding for payment of reasonable compensation to a compensation advisor, as determined by the compensation committee.