Corporate Governance - Committee


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FORUM ENERGY TECHNOLOGIES, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
(Adopted as of 4.11.2012)

The Board of Directors (the “Board”) of Forum Energy Technologies, Inc. (the “Company”) has established the Audit Committee of the Board (the “Committee”) with authority, responsibility and specific duties as described in this Audit Committee Charter.

I. Purposes

The purposes of the Committee are to:

  1. Assist the Board in fulfilling its oversight responsibilities regarding the:
    • Integrity of the Company’s financial statements;
    • Company’s compliance with legal and regulatory requirements;
    • Qualifications, independence and performance of the independent 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 (the “independent registered public accounting firm”); and
    • Effectiveness and performance of the Company’s internal audit function;
  2. Annually, prepare an Audit Committee Report and publish the report in the Company’s proxy statement for its annual meetings of stockholders, in accordance with applicable rules and regulations; and
  3. Perform such other functions as the Board may assign to the Committee from time to time.

II. Membership

The Committee shall consist of not less than three independent directors (as defined by the rules of the Securities and Exchange Commission (“SEC”) and the listing requirements of the New York Stock Exchange (“NYSE”)). Each member of the Committee shall be financially literate, and at least one member of the Committee must have accounting or related financial management experience. Notwithstanding the foregoing membership requirements, no action of the Committee shall be invalid by reason of any such requirement not being met at the time such action is taken.

III. Authority and Responsibilities

  1. Authority

    The Committee shall have the authority to:
    1. Conduct or authorize investigations into any matter, including, but not limited to, complaints relating to accounting, internal accounting controls or auditing matters, within the scope of the responsibilities delegated to the Committee as it deems appropriate.
    2. Retain and determine funding for independent legal counsel, accounting experts and other advisors. The Committee may also utilize the services of the Company’s regular outside legal counsel or other advisors to the Company. The Company shall provide for appropriate funding, as determined by the Committee, for payment of (a) compensation to any independent registered public accounting firm engaged for the purpose of rendering or issuing an audit report or performing other audit, review or attest services for the Company; (b) compensation to any advisors employed by the Committee; and (c) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
    3. Delegate to its Chairman, any one of its members or any subcommittee it may form, the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances. However, subcommittees shall not have the authority to engage independent legal counsel, accounting experts or other advisors unless expressly granted such authority by the Committee. Each subcommittee shall keep minutes and regularly report to the Committee.
  2. Responsibilities

    The Committee’s responsibilities are limited to oversight. However, it is not the responsibility of the Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles (“GAAP”) and applicable laws, rules and regulations. These are the responsibilities of management, the internal auditor and the independent registered public accounting firm.
  1. Interaction with the Independent Registered Public Accounting Firm
    1. Appointment and Oversight. The Committee shall be directly responsible for the appointment, compensation, retention and oversight of the work of the independent registered public accounting firm hired for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company. The independent registered public accounting firm shall report directly to the Committee and the Committee shall routinely review such firm’s performance. In addition, the Committee shall oversee the resolution of any disagreements between the Company’s management and the independent registered public accounting firm regarding financial reporting.
    2. Pre-Approval of Services. Before the independent registered public accounting firm is engaged by the Company or its subsidiaries to render audit or non-audit services, the Committee shall pre-approve the engagement. Committee pre-approval of audit and non-audit services is not required if the engagement for the services is entered into pursuant to pre-approval policies and procedures established by the Committee. The Chairman of the Committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the Committee at a subsequent meeting.
  2. Independence of Registered Public Accounting Firm.
    1. The Committee shall, at least annually, review the independence and quality control procedures of the independent registered public accounting firm and the experience and qualifications of the independent registered public accounting firm’s senior personnel that are providing audit services to the Company. In conducting its review, the Committee shall obtain and review a report prepared by the independent registered public accounting firm describing (i) the firm’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, involving one or more independent audits carried out by the firm, and any steps taken to address and respond to any such issues.
    2. Discuss with representatives of the independent registered public accounting firm its independence from the Company, and obtain and review a written statement prepared by the independent registered public accounting firm describing all relationships between the independent registered public accounting firm and the Company.
  3. Annual Financial Statements and Annual Audit
    1. Meetings with Management, the Independent Registered Public Accounting Firm and the Internal Auditor.

      The Committee shall:
      1. Meet with management, the independent registered public accounting firm and the internal auditor in connection with each annual audit to discuss the scope of the audit, the procedures to be followed and the staffing of the audit.
      2. Review and discuss with management and the independent registered public accounting firm: (i) major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies; (ii) any analyses prepared by management or the independent registered public accounting firm setting forth significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including analyses of the effects of alternative treatments of financial information within GAAP on the Company’s financial statements; and (iii) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures (excluding operating leases entered into in the ordinary course of business), on the Company’s financial statements.
      3. Review and discuss the annual audited financial statements with management and the independent registered public accounting firm, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
    2. Separate Meetings with the Independent Registered Public Accounting Firm.

      The Committee shall:
      1. Review with the independent registered public accounting firm any problems or difficulties the independent registered public accounting firm may have encountered during the course of the audit work, including any restrictions on the scope of activities or access to required information or any significant disagreements with management and management’s responses to such matters.
      2. Discuss with the independent registered public accounting firm the report that such firm is required to make to the Committee regarding: (i) all accounting policies and practices to be used that the independent registered public accounting firm identifies as critical; (ii) all alternative treatments of financial information within GAAP for policies and practices related to material items that have been discussed among management and the independent registered public accounting firm, including the ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent registered public accounting firm; and (iii) all other material written communications between the independent registered public accounting firm and management of the Company, such as any management letter, management representation letter, reports on observations and recommendations on internal control over financial reporting, the independent registered public accounting firm’s engagement letter, the independent registered public accounting firm’s independence letter, schedule of unadjusted audit differences and a listing of adjustments and classifications not recorded, if any.
      3. Discuss with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 114, “The Auditor’s Communication With Those Charged With Governance,,” as then in effect.
    3. Recommendation to Include Financial Statements in Annual Report. The Committee shall, based on the review and discussions in paragraphs 1(c) and 2(c) of this “Annual Financial Statements and Annual Audit” Section, and based on the disclosures received from the independent registered public accounting firm regarding its independence and discussions with representatives of the firm regarding such independence pursuant to subparagraph 3(b) of the “Interaction with the Independent Registered Public Accounting Firm” Section, 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 the fiscal year subject to the audit.
  4. Quarterly Financial Statements
    1. Meetings with Management and the Independent Registered Public Accounting Firm. The Committee shall review and discuss the quarterly financial statements with management and the independent registered public accounting firm, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
  5. Internal Audit
    1. Appointment and Removal. The Committee shall review and advise the Board on the selection and retention of the internal audit director.
    2. Performance. Each year, the Committee shall review the activities and structure of the internal audit function.
    3. Separate Meetings with the Internal Auditor. The Committee shall periodically meet separately with the Company’s internal auditor to discuss the responsibilities, budget and staffing of the Company’s internal audit function and any issues that the internal auditor believes warrant the Committee’s attention. In addition, the Committee shall discuss with the internal auditor any significant reports to management prepared by the internal auditor and any responses from management.
  6. Codes of Conduct and Anti-Corruption Programs
    1. The Committee shall conduct an annual review of the Company’s Code of Business Conduct and its enforcement with the Company’s General Counsel.
    2. The Committee shall conduct an annual review of the Company’s Financial Code of Ethics and its enforcement with the Company’s General Counsel.
    3. The Committee shall meet separately with the Compliance Officer to discuss the nature of and the response to any complaints received through the Compliance and Ethics Hotline.
  7. Other Powers and Responsibilities
    1. The Committee shall review with management and the independent registered public accounting firm the Company’s earnings press releases as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussions may be in general terms (i.e., discussion of the types of information to be disclosed and the types of presentations to be made).
    2. The Committee shall discuss with management and the independent registered public accounting firm any correspondence from or with regulators or governmental agencies or any employee complaints that raise material issues regarding the Company’s financial statements, financial reporting process, accounting policies or internal audit function.
    3. The Committee shall review and discuss with management and the independent registered public accounting firm the Company’s report on internal control over financial reporting prior to filing the Company’s Annual Report on Form 10-K.
    4. The Committee shall discuss with management the Company’s guidelines and policies with respect to risk assessment and risk management.
    5. The Committee shall set clear hiring policies for employees or former employees of the Company’s independent registered public accounting firm.
    6. 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. The Committee shall also establish procedures for the confidential and anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
    7. The Committee shall approve procedures for the receipt, retention and treatment of complaints received by the Company regarding potential violations of applicable laws, rules and regulations or of the Company’s codes, policies and procedures. The Committee shall also approve procedures for the confidential and anonymous submission by employees of the Company of concerns regarding questionable compliance matters.
    8. The Committee shall prepare for inclusion in the Company’s proxy statement for its annual meeting of stockholders the report required by the rules of the Securities and Exchange Commission.
    9. The Committee shall make regular oral or written reports to the Board, directly or through its Chairman, of its actions and any recommendations to the Board.
    10. Each year, the Committee shall review and evaluate its own performance and shall submit itself to a review and evaluation by the Board.

IV. Procedures

  1. Meetings. The Committee shall meet at the call of its Chairman, two or more members of the Committee or the Chairman of the Board. The Committee shall meet on at least a quarterly basis (prior to the filing of the Company’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K with the SEC) and may meet more frequently as circumstances dictate. Meetings of the Committee may be in person, by conference call or by unanimous written consent, in accordance with the Company’s Bylaws. Meetings of the Committee shall be held at such time and place, and upon such notice, as its Chairman may from time to time determine. The Committee shall keep such records of its meetings as it deems appropriate.

    Meetings may, at the discretion of the Committee, include non-independent directors, members of the Company’s management, independent advisors and consultants, representatives of the Company’s independent registered public accounting firm, the Company’s internal auditor, any other financial personnel employed or retained by the Company or any other persons whose presence the Committee believes to be necessary or appropriate. Those in attendance may observe meetings of the Committee, but shall not participate in any discussion or deliberation unless invited to do so by the Committee, and in any event shall not be entitled to vote. Notwithstanding the foregoing, the Committee may also exclude from its meetings any persons it deems appropriate, including, but not limited to, any director that is not a member of the Committee.
  2. Quorum and Approval. A majority of the Committee’s members shall constitute a quorum. The Committee shall act on the affirmative vote of a majority of members present at a meeting at which a quorum is present. The Committee may also act by unanimous written consent in lieu of a meeting.
  3. Review of Charter. Each year, the Committee shall review the need for changes in this Charter and recommend any proposed changes to the Board for approval.
  4. Performance Review. Each year, the Committee shall review and evaluate its own performance and shall submit itself to a review and evaluation by the Board.

*     *     *

While the Committee members have the duties and responsibilities set forth in this Charter, nothing contained in this Charter is intended to create, or should be construed as creating, any responsibility or liability of the Committee members, except to the extent otherwise provided under applicable federal or state law.

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Committee Members
Committee MemberJohn Schmitz
ChairpersonEvelyn Angelle
Committee MemberJohn A. Carrig
Audit Committee Charter