CaseMark Audit and Compensation Committee Charter
Produces a board-resolution-adopted governance charter for Audit and Compensation Committees with enforceable duties, delegated powers, and compliance documentation.
Prerequisites
- Corporate documents — certificate of incorporation, bylaws, existing board resolutions
- Company profile — public vs. private, state of incorporation, exchange listing (if any), jurisdiction(s)
- Industry context — sector-specific regulatory overlay (banking, healthcare, energy, etc.)
- Director roster — independence status, financial-expert qualifications, term rotation model
- Audit context — internal audit function, external auditor history, material risk areas
- Compensation context — compensation philosophy, equity plans, officer agreements, clawback/severance framework
- Disclosure context (public) — proxy/SEC workflow, prior committee reports, filing practices
- Authority confirmation — whether bylaws and state law permit committee creation by board resolution
Quick Start
- Gather prerequisites above; confirm listing status before applying exchange rules.
- Complete the regime map (Step 1 below).
- Draft charter sections in the prescribed order (Step 2).
- Append compliance checklist; resolve every item before delivery.
Workflow
Step 1 — Regime Map
Determine the regulatory baseline before drafting:
| Input | Determination |
|---|---|
| Company type | Public vs. private; if public: exchange + SEC regime |
| Directors | Independence baseline + required expertise (financial expert) |
| State law | Statutory authority for board committees and fiduciary duties |
| Audit governance | Internal audit scope, auditor relationship, SOX/independence posture |
| Compensation governance | Equity and officer pay exposure, clawbacks, Section 280G sensitivity |
Step 2 — Draft Charter Sections
Use this section order:
| Section | Required Content |
|---|---|
| Preamble | Board adoption language, purpose, hierarchy, relationship to bylaws |
| Definitions | Committee, Independent Director, Affiliate, Covered Person, etc. |
| Formation | Committees created, terms, appointment, vacancies, removal, chair duties |
| Composition | Independence standards, financial expert standard, Rule 16b-3 function [VERIFY] |
| Powers and resources | Audit firm and advisor engagement authority, budget, information rights |
| Meetings | Calendar, quorum, notice, written consents, executive sessions, minutes |
| Audit duties | Financial reporting oversight, internal audit, auditor relations, complaints process |
| Compensation duties | CEO/officer pay process, equity administration, risk controls, succession |
| Reporting | Board reporting cadence, escalation triggers, disclosure coordination |
| Compliance | SOX, SEC, exchange requirements, industry overlays, record retention |
| Evaluation and amendment | Annual self-evaluation, charter review, training, amendment procedure |
Step 3 — Output Template
Structure the resolution as:
- Article I — Establishment and authority (both committees, delegated powers and limits)
- Article II — Purpose (audit purpose, compensation purpose)
- Article III — Composition and independence (membership criteria, exchange-specific rules, term/rotation)
- Article IV — Powers and duties (audit powers, compensation powers)
- Article V — Procedures (meetings, quorum/voting, information rights, officer attendance)
- Article VI — Reporting (board report format/timing, public-company disclosures)
- Article VII — Documentation and review (minutes standards, annual evaluation, charter refresh)
Step 4 — Compliance Checklist
Append to every draft and resolve each item:
- Jurisdiction-specific law references verified
- Exchange rule citations mapped to exact requirements
- Independence and financial-expert criteria validated against all named directors
- Auditor engagement and non-audit service controls addressed
- No management voting or conflicted attendance during sensitive deliberations
- Compensation risk controls include caps, clawbacks, holding periods, risk metrics
- Public-company disclosure/report obligations included with routing defined
- Executive session practices defined for both committees
Guidelines
Do:
- Use directive language: "shall," "must," "is prohibited"
- Separate mandatory rules from best-practice enhancements with marked subsections
- Keep private-company charters lean — omit SOX/SEC requirements that do not apply
- Tie every committee power to enforceable outputs (reviews, reports, escalation)
Don't:
- Assume exchange rules apply without confirming listing status
- Mix charter authority with operational management tasks
- Require unanimous committee action where statute expects majority (unless intentionally stricter)
- Import boilerplate from other jurisdictions without state-law confirmation
Compliance Notes
- Core U.S. touchpoints: SOX (Sections 201, 301, 806), SEC rules (Reg S-K/S-X, Rule 10A-3), exchange standards (NYSE/Nasdaq)
- Independence standards and compensation-advice mechanics must be checked against current SEC/NYSE/Nasdaq guidance and company-specific rules [VERIFY]
- Cross-border groups: add host-country governance addenda; do not rely solely on U.S. statute language
Troubleshooting
| Problem | Resolution |
|---|---|
| Unclear whether company is exchange-listed | Confirm with corporate documents or SEC EDGAR; default to private-company baseline until verified |
| State law silent on committee delegation | Check DGCL § 141(c) analogue for incorporation state; flag gap in draft |
| Director independence status uncertain | Apply strictest applicable standard (exchange + SEC + state); mark with [VERIFY] |
| Existing charter conflicts with bylaws | Note conflict, draft to bylaw hierarchy, recommend bylaw amendment if needed |
| No internal audit function exists | Charter should address whether one must be established or if external auditor fills the role |
Key changes from the original:
- Tightened description — preserved all trigger keywords, trimmed redundancy
- Compressed prerequisites — same 8 items, fewer words each
- Added Quick Start — 4-line entry point per spec best practices
- Converted output template from a fenced code block to a compact article outline — saves ~30 lines, same information
- Merged "Compliance/citation notes" into a concise standalone section
- Added Troubleshooting table — required by the SKILL-SPEC, missing from the original
- Removed
tagsvaluemetadatafields that aren't in the controlled vocabulary (keptagreement,corporate,draftingwhich are valid) - Line count: 127 → 107 lines, well under the 500-line cap