GENERAL COMMUNICATION, INC.
AUDIT COMMITTEE CHARTER*
Purpose
The purpose of the Audit Committee is to act on behalf of the board of
directors ("Board") of General Communication, Inc. ("Company") and generally to
carry out the following and as further described in this charter:
o Independent Auditor Selection, Qualifications - Directly
responsible for appointment, compensation, retention,
oversight, qualifications and independence of the Company's
independent certified public accountants ("External Auditor").
o Internal Audit - To the extent the Company has an internal
audit operation, assist in Board oversight of its performance.
o Financial Statements - Assist in Board oversight of integrity
of the Company's financial statements.
o Financial Reports, Internal Control - Directly responsible for
oversight of audit by the External Auditor of the Company's
financial reports and the Company's reports on internal
control.
o Annual Reports - Prepare reports required to be included in
the Company's annual proxy statement.
o External Auditor Reports - Accept certain reports from the
External Auditor ("External Auditor Reports").
o Complaints - Receive and respond to certain complaints
("Complaints") relating to internal accounting controls and
auditing matters; confidential, anonymous submissions by
Company employees regarding questionable accounting or
auditing matters and performance of the Company's internal
audit operation, if any; or alleged illegal acts or
behavior-related conduct in violation of the Company's Code of
Business Conduct and Ethics ("Ethics Code"), all as described
in this charter.
o External Auditor Disagreements - Resolve disagreements between
the Company and the External Auditor regarding financial
reporting ("Auditor Disagreements").
o Non-Audit Services - Review and pre-approve all non-audit
services offered to the Company by the External Auditor
("Non-Audit Services").
o Attorney Reports - Address certain attorney reports ("Attorney
Reports").
o Related Party Transactions - Review certain related party
transactions ("Related Party Transactions").
o Shareholder Reports - Prepare certain shareholder reports
("Shareholder Reports").
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* As revised by the board of directors of General Communication, Inc. effective
as of February 3, 2005.
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o Annual Plan - Prepare an annual plan for Company audit-related
matters ("Annual Plan").
o Other - Carry-out other assignments as designated by the
Board.
Membership
The following are prerequisites for, and conditions on, membership on
the Audit Committee:
o Number, Qualifications - The Audit Committee shall consist of
at least three, and no more than six, Board members meeting
the following qualifications -
o Independent - Each member of the Audit Committee must
be an independent director as the term is defined in
this charter ("Independent Director").
o General Knowledge and Ability - Each Audit Committee
member shall have the following knowledge and
abilities -
o Knowledge of the primary industries in which the
Company operates.
o Ability to read and understand fundamental
financial statements, including a company's
balance sheet, income statement, and cash flow
statement.
o Ability to understand key business and financial
risks and related controls and control processes.
o Audit Committee Financial Expert, Attributes - At
least one Audit Committee member must meet the
prerequisites for an audit committee financial expert
("Audit Committee Financial Expert"), i.e., a person
who has all of the following attributes -
o Understanding of generally accepted accounting
principles and financial statements.
o Ability to assess the general application of such
principles in connection with accounting for
estimates, accruals and reserves.
o Experience in preparing, auditing, analyzing or
evaluating financial statements that present a
breadth and level of complexity of accounting
issues that are generally comparable to the
breadth and complexity of issues that can
reasonably be expected to be raised by the
Company's financial statements, or experience
actively supervising one or more persons engaged
in such activities.
o Understanding of internal control over financial
reporting.
o Understanding of audit committee functions.
o Acquiring Attributes of Audit Committee Financial
Expert - Examples of how one may determine whether a
person has acquired the attributes of an Audit
Committee Financial Expert are through any one or
more of the following -
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o Education and experience as a principal financial
officer, principal accounting officer,
controller, public accountant or auditor or
experience in one or more positions that involve
the performance of similar functions.
o Experience actively supervising a principal
financial officer, principal accounting officer,
controller, public accountant, auditor or person
performing similar functions.
o Experience overseeing or assessing the
performance of companies or public accountants
with respect to the preparation, auditing or
evaluation of financial statements.
o Other relevant experience.
o Financial Sophistication - At least one member of the
Audit Committee must have past employment experience
in finance or accounting, requisite professional
certification in accounting, or comparable experience
or background which results in the individual's
"financial sophistication," including being or having
been a chief executive officer, chief financial
officer or other senior officer with financial
oversight responsibilities. The Board may presume
that a person who meets the requirements for an Audit
Committee Financial Expert qualifies as a financially
sophisticated Audit Committee member.
o No Consulting Fee, Not an Affiliate - On an ongoing
basis, a member of the Audit Committee must not
accept any consulting, advisory, or other
compensatory fee from the Company other than for
Board service and must not be an affiliated person of
the Company.
o The term "affiliated person" as applied to the
Company means a person that directly, or
indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, the Company.
o An executive officer of an affiliate of the
Company or a director of an affiliate who
also is an employee of the affiliate is
deemed to be an affiliate of the Company.
o A person is deemed not to be in control of
the Company for these purposes if the person
is not the beneficial owner, directly or
indirectly, of more than 10% of any class of
voting securities of the Company and is not
an executive officer of the Company.
o Term - Subject to the terms of this charter -
o Member Appointment - Members of the Audit Committee
shall be appointed by the Board and shall serve at
the pleasure of the Board for such term as the Board
may determine, taking into account the
recommendations of the committee.
o Chair Selection - The Audit Committee chair shall be
selected by committee members or, if the Board
directs, by the Board, taking into account the
recommendations of the committee.
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o Effect of Designation As Audit Committee Financial Expert -
Designation or identification of a person as an Audit
Committee Financial Expert under this charter does not impose
on that person any duties, obligations or liability that are
greater than the duties, obligations, and liability imposed on
another person as a member of the Audit Committee and the
Board in the absence of that designation or identification.
The designation or identification of a person as an Audit
Committee Financial Expert under this charter does not affect
the duties, obligations or liability of any other member of
the Audit Committee or the Board.
o Independent Director - An Independent Director is one that
meets the definition of "independent director" as prescribed
by Nasdaq Stock Market Rule 4200(a)(15) ("Nasdaq Independence
Rule") which reads as follows -
"means a person other than an officer or employee of
the company or its subsidiaries or any other
individual having a relationship, which, in the
opinion of the company's board of directors, would
interfere with the exercise of independent judgment
in carrying out the responsibilities of a director.
The following persons shall not be considered
independent:
(A) a director who is, or at any time during
the past three years was, employed by the company or
by any parent or subsidiary of the company;
(B) a director who accepted or who has a
Family Member who accepted any payments from the
company or any parent or subsidiary of the company in
excess of $60,000 during any period of twelve
consecutive months within the three years preceding
the determination of independence, other than the
following:
(i) compensation for board or board
committee service;
(ii) payments arising solely from
investments in the company's securities;
(iii) compensation paid to a Family
Member who is a non-executive employee of
the company or a parent or subsidiary of the
company;
(iv) benefits under a tax-qualified
retirement plan, or non-discretionary
compensation;
(v) loans from a financial
institution provided that the loans (1) were
made in the ordinary course of business, (2)
were made on substantially the same terms,
including interest rates and collateral, as
those prevailing at the time for comparable
transactions with the general public, (3)
did not involve more than a normal degree of
risk or other unfavorable factors, and (4)
were not otherwise subject to the specific
disclosure requirements of SEC Regulation
S-K, Item 404;
(vi) payments from a financial
institution in connection with the deposit
of funds or the financial institution acting
in an agency capacity, provided such
payments were (1) made in the ordinary
course of business; (2) made on
substantially the same terms as those
prevailing at the time for comparable
transactions with the general public; and
(3) not otherwise subject to the disclosure
requirements of SEC Regulation S-K, Item
404; or
(vii) loans permitted under Section
13(k) of the . . . [Securities Exchange Act
of 1934 ("Exchange Act")]. Provided,
however, that in addition to the
requirements contained in this paragraph
(B), audit committee members are also
subject to
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additional, more stringent requirements
under [Nasdaq Stock Market
("Nasdaq")] Rule 4350(d).
(C) a director who is a Family Member of an
individual who is, or at any time during the past
three years was, employed by the company or by any
parent or subsidiary of the company as an executive
officer;
(D) a director who is, or has a Family
Member who is, a partner in, or a controlling
shareholder or an executive officer of, any
organization to which the company made, or from which
the company received, payments for property or
services in the current or any of the past three
fiscal years that exceed 5% of the recipient's
consolidated gross revenues for that year, or
$200,000, whichever is more, other than the
following:
(i) payments arising solely from
investments in the company's securities; or
(ii) payments under
non-discretionary charitable contribution
matching programs.
(E) a director of the listed company who is,
or has a Family Member who is, employed as an
executive officer of another entity where at any time
during the past three years any of the executive
officers of the listed company serve on the
compensation committee of such other entity; or
(F) a director who is, or has a Family
Member who is, a current partner of the company's
outside auditor, or was a partner or employee of the
company's outside auditor who worked on the company's
audit at any time during any of the past three years.
(G) In the case of an investment company, in
lieu of paragraphs (A)-(F), a director who is an
"interested person" of the company as defined in
section 2(a)(19) of the Investment Company Act of
1940, other than in his or her capacity as a member
of the board of directors or any board committee."
o Lack of Independence - The following conditions are
incompatible with a director being independent under the
Nasdaq Independence Rule, unless they have been absent for
three years -
o Company Employment, Family Member - Being employed by
the Company, any parent, or any subsidiary of the
Company, or having a "Family Member" who is employed
as an executive officer of any of those entities.
o The Nasdaq Independence Rule defines "Family
Member" as "a person's spouse, parents, children
and siblings, whether by blood, marriage or
adoption, or anyone residing in such person's
home."
o Company Payments - Receiving more than $60,000 in
payments from the Company (including any parent or
subsidiary of the Company) or having a Family Member
who received payments in that amount. The payments
referred to here exclude director and committee fees,
payments from investments in the Company's
securities, compensation to a family member who is
not an executive officer of the Company (or a parent
or subsidiary of the Company), loans permitted under
Section 13(k) of the Exchange Act, and pension or
other deferred compensation for prior service that is
not contingent on continued service.
Page 5
o Service on Compensation Committee - Being an
executive officer of another entity that has had any
of the Company's executive officers serve on its
compensation committee or having a family member who
was an executive officer of another entity under such
conditions.
o External Auditor Partner - Being a current partner of
the External Auditor or partner or employee of the
External Auditor who worked on the Company's audit
any time in the past three years or having a family
member who has such a relationship.
o Principal of Service Provider - Being a partner,
controlling shareholder, or executive officer of
another company that pays or receives from the
Company, in any single year, amounts exceeding the
greater of $200,000 or 5% of the recipient company's
consolidated gross revenues (or having a family
member that makes or receives such payments). The
requirement excludes payments from investments in the
Company's securities and payments under
non-discretionary charitable contribution matching
programs.
o Removal and Replacement - An Audit Committee member may be
removed or replaced by, and any vacancies on the committee may
be filled by, the Board, taking into account recommendations
of the committee.
Operating Principles
The Audit Committee shall fulfill its responsibilities within the
context of the following overriding principles:
o Meetings - The Chair of the Audit Committee, in consultation
with committee members, shall determine the frequency and
schedule of committee meetings, provided the committee will
meet at least two times per year. The Audit Committee meetings
and matters relating to them are subject to the provisions of
the Company's Bylaws ("Bylaws"). The Audit Committee may ask
members of management or others whose advice and counsel are
relevant to the issues then being considered by the committee
to attend any meetings and to provide such information as the
committee may request.
o Agenda - The Chair of the Audit Committee shall develop the
committee's agenda, in consultation with other committee
members. Each member of the Board and members of management
are free to suggest the inclusion of items on the agenda. The
agenda and information concerning the business which shall be
conducted at each Audit Committee meeting shall, to the extent
practicable, be distributed to committee members sufficiently
in advance of each meeting to permit meaningful review.
o Quorum - A majority of the authorized number of Audit
Committee members, regardless of possible vacancies, shall
constitute a quorum. The Audit Committee may act by a majority
of the members present at a meeting of the committee at which
at least a quorum is present.
o Delegation - The Chair of the Committee may, through the
Committee by resolution, delegate authority to act on behalf
of the Chair. The Committee may, by resolution, delegate
authority to subcommittees or individual members of the
Committee as it deems appropriate.
Page 6
o Communications - The chair and others on the Audit Committee
shall, to the extent appropriate, have contact throughout the
year with senior management, other committee chairs, other key
committee advisors, the External Auditor, etc., as applicable,
to strengthen the committee's knowledge of relevant current
and prospective business issues.
o Committee Education and Orientation - The Audit Committee,
with management, shall develop and participate in a process
for review of important financial and operating topics that
present potential significant risk to the Company.
Additionally, individual Audit Committee members are
encouraged to participate in relevant and appropriate
self-study education to assure understanding of the business
and environment in which the Company operates.
o Committee Meeting Attendees - The Audit Committee shall
request members of management, counsel, and the External
Auditor, as applicable, to participate in committee meetings,
as necessary to carry out committee responsibilities. The
External Auditor or counsel may, at any time, request a
meeting with the Audit Committee or its chair, with or without
management in attendance. In any case, the Audit Committee
shall meet separately with the External Auditor, at least
annually.
o Reporting to the Board of Directors - The Audit Committee,
through the committee chair, shall report periodically, as
deemed necessary, but at least annually, to the full Board. In
addition, summarized minutes from Audit Committee meetings
shall be available to each Board member at least one week
prior to the subsequent meeting of the Board.
o Committee Expectations and Informational Needs - The Audit
Committee shall communicate its expectations and the nature,
timing, and extent of its informational needs to management,
and external parties, including the External Auditor. Written
materials, including key performance indicators and measures
related to key business and financial risks, if not previously
distributed to the full Board, shall be received from
management, auditors, and others at least one week in advance
of meeting dates.
o Authority to Hire Legal Counsel and Others - The Audit
Committee shall have authority to engage an administrative
staff and outside advisors in such areas as law, accounting,
internal control, and information systems, and other advisors
necessary to carry out the committee's duties.
o Funding - The Company shall adequately fund the budget of the
Audit Committee, including funding to cover paying the
External Auditor for services in connection with preparing or
issuing audit reports, performing other audit functions,
reviewing and attesting services and providing other services
to the Company, paying Audit Committee member salaries or
fees, if any, paying committee staff and advisors, if any, and
paying ordinary administrative expenses of the committee.
Relationship with External Auditor
The following apply in the relationship between the Audit Committee and
the External Auditor:
o External Auditor Responsible To Audit Committee and Board -
The External Auditor, in its capacity as an independent public
accountant, shall be responsible to the Audit Committee and
the Board as representatives of the shareholders.
Page 7
o Audit Committee Oversight - In executing its oversight of the
External Auditor, the Audit Committee shall review the work of
the External Auditor. The External Auditor shall review
Company financial reports and shall report to the Audit
Committee. The External Auditor shall report all relevant
issues to the Audit Committee responsive to agreed-upon
committee expectations.
o Annual Performance Review - The Audit Committee shall annually
review the performance (effectiveness, objectivity, and
independence) of the External Auditor. The Audit Committee
shall obtain a formal written statement from the External
Auditor delineating all relationships between the External
Auditor and the Company consistent with standards set by the
Independence Standards Board. Additionally, the Audit
Committee shall discuss with the External Auditor
relationships or services that may affect auditor objectivity
and independence. In the event the Audit Committee shall not
be satisfied with the External Auditor's assurances of
independence, the committee shall take, or recommend to the
full Board, appropriate action which shall ensure the
independence of the External Auditor.
o Significant Issues Not Adequately Addressed - If the External
Auditor identifies significant issues relative to the overall
Board responsibility that have been communicated to management
but, in the External Auditor's judgment, have not been
adequately addressed, the External Auditor should communicate
these issues to the chair of the Audit Committee.
Primary Responsibilities
The Audit Committee shall have primary responsibility for the
following:
o Oversight - Exercising oversight of External Auditor and of
Internal Audit.
o Non-Audit Services - Addressing Non-Audit Services.
o Financial Reporting - Monitoring financial reporting and risk
control related matters.
o Complaints - Addressing Complaints on certain alleged illegal
acts and unethical behavior in violation of the Ethics Code,
and other matters.
o Attorney Reports - Addressing Attorney Reports.
o Related Party Transactions - Reviewing Related Party
Transactions.
o Annual Plans - Preparing Annual Plans.
o Shareholder Reports - Preparing Shareholder Reports.
o External Auditor Reports - Accepting External Auditor Reports.
o Performance Evaluations - Conducting Audit Committee
performance evaluations ("Audit Committee Performance
Evaluations").
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Exercising Oversight of External Auditors, Internal Audit
The Audit Committee is directly responsible for appointment,
compensation, retention, oversight, qualifications and independence of the
External Auditor. All audit services provided by the External Auditor must be
preapproved by the Audit Committee. To the extent the Company shall have, at any
time, an internal audit operation, the Audit Committee shall assist in the Board
oversight of the performance of that operation. The relationship between the
External Auditor and the Audit Committee is further described under
"Relationship with External Auditor."
Addressing Non-Audit Services
All Non-Audit Services, including tax services but excluding those
prohibited by federal securities law, must be pre-approved by the Audit
Committee, subject to the following:
o Limitations on Approval - A Non-Audit Service may be approved
by the Audit Committee only if it does not compromise
independence of the External Auditor.
o Audit Committee Judgment - The Audit Committee must use its
judgment to decide whether a service can be performed by the
External Auditor without impairing, either in fact or in
appearance, the independence of the External Auditor and
subject to the following -
o Starting Point - The starting point for rendering a
determination whether independence may be impaired shall
be the following three principles -
o An auditor cannot function in the role of
management.
o An auditor cannot audit the auditor's own work.
o An auditor cannot serve in an advocacy role for
the auditor's client.
o Factors To Consider - When approving Non-Audit Services,
the following factors shall be considered -
o Whether the service is being performed
principally for the Audit Committee.
o The effects of the service, if any, on audit
effectiveness or on the quality and timeliness of
the Company's financial reporting process.
o Whether the service would be performed by
specialists, e.g., technology specialists, who
ordinarily also provide recurring audit support.
o Whether the service would be performed by audit
personnel and, if so, whether it will enhance
their knowledge of the entity's business and
operations.
o Whether the role of those performing the service,
e.g., a role where neutrality, impartiality, and
auditor skepticism are likely to be subverted,
would be inconsistent with the auditor's role.
o Whether the audit firm's personnel would be
assuming a management role or creating a
mutuality of interest with management.
Page 9
o Whether the auditors, in effect, would be
"auditing their own numbers."
o Whether the project must be started and completed
very quickly.
o Whether the audit firm has unique expertise in
the service.
o The size of the fee for the service.
o Optional Approval Procedures - The Audit Committee has the
following options for approving Non-Audit Services -
o Full Audit Committee - The full Audit Committee can
consider each Non-Audit Service.
o Designee - The Audit Committee can designate one of its
members to approve a Non-Audit Service, with that member
reporting approvals to the full committee.
o Pre-Approval of Categories - The Audit Committee can
pre-approve categories of Non-Audit Services. Should this
option be chosen, the categories must be specific enough
to ensure that -
o The Audit Committee knows exactly what it is
approving and can determine the effect of such
approval on auditor independence.
o Management will not find it necessary to decide
whether a specific service falls within a
category of pre-approved Non-Audit Service.
o Prohibited Services - The nine services specifically
prohibited by federal securities law are as follows -
o Bookkeeping - Bookkeeping or other services related to the
accounting records or financial statements of the Company.
o Financial Information Systems - Financial information
systems design and implementation.
o Appraisal and Related Services - Appraisal or valuation
services, opinions, or contribution-in-kind reports.
o Actuarial Services - Actuarial reports.
o Internal Audit - Internal audit outsourcing services.
o Human Resources - Management functions or human resources.
o Broker-Dealer and Related Services - Broker or dealer
investment adviser, or investment banking services.
o Legal Services - Legal services and expert services
unrelated to the audit.
o Other Services - Any other service that the federally
established Public Company Accounting Oversight Board
determines is impermissible.
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o Limited Waiver - The pre-approval requirement as applied to a
Non-Audit Service may be waived for the Company should all of
the following be satisfied -
o Limit on Aggregate Amount - The aggregate amount of all
Non-Audit Services constitutes not more than 5% of the
total amount of revenues paid by the Company to the
External Auditor during the fiscal year in which the
Non-Audit Services are provided.
o Original Intent - The service is originally thought to be
a part of an audit by the External Auditor.
o Resulting Service - The service turns out to be a
Non-Audit Service.
o Notification of Audit Committee - The Non-Audit Service is
promptly brought to the attention of the Audit Committee
and approved prior to completion of the audit by the Audit
Committee or by one or more members of the Audit Committee
who are members of the Board to whom authority to grant
such approvals has been delegated by the Audit Committee.
o Disclosure to Shareholders - Approval by the Audit Committee
of Non-Audit Services shall be disclosed to Company investors
in periodic reports required by Section 13(a) of the Exchange
Act.
o Limited Delegation - The Audit Committee may delegate to one
or more designated members of the committee, who are
Independent Directors of the Board, the authority to grant
pre-approvals as described in this section. The decisions of
any member to whom such authority is delegated is to be
presented to the full Audit Committee at each of its scheduled
meetings.
Monitoring Financial Reporting and Risk Control Related Matters
The Audit Committee shall review and assess the following:
o Risk Management - The Company's business risk management
process, including the adequacy of the Company's overall
control environment and controls in selected areas
representing significant financial and business risk.
o Annual Reports and Other Major Regulatory Filings - All major
financial reports in advance of filing or distribution.
o Internal Controls and Regulatory Compliance - The Company's
system of internal controls for detecting accounting and
reporting financial errors, fraud and defalcations, legal
violations and noncompliance with the Ethics Code pertaining
to accounting, internal controls on accounting or audit
matters.
o Regulatory Examinations - Inquiries from the Securities and
Exchange Commission ("SEC") and the results of examinations by
other regulatory authorities in terms of important findings,
recommendations, and management's response.
o External Audit Responsibilities - External Auditor
independence and the overall scope and focus of the annual or
interim audits, including the scope and level of involvement
with unaudited quarterly or other interim-period information.
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o Financial Reporting and Controls - Key financial statement
issues and risks, their impact or potential effect on reported
financial information, the processes used by management to
address such matters, related External Auditor views, the
bases for audit conclusions and important conclusions on
interim and year-end audit work in advance of the public
release of financials.
o Auditor Recommendations - Important External Auditor
recommendations on financial reporting, controls, other
matters, and management's response; and the views of
management and the External Auditor on the overall quality of
annual and interim financial reporting.
Addressing Complaints on Certain Illegal Acts, Unethical Behavior, Other Matters
The Audit Committee shall have the following special duties:
o Complaints - The Audit Committee, from time to time, when it
shall receive a Complaint, i.e., an inquiry or complaint or
when the committee independently shall decide in accordance
with this charter, shall review and make a determination and
recommend appropriate action to be taken by the Board on the
Complaint, subject to the following -
o Specific Meaning - In this context, "Complaint" shall mean
any one or more of the following involving an officer,
director, or employee of the Company or any of its
directly or indirectly wholly-owned subsidiaries
("Employee" or, where the subject of the Complaint is
limited to a director on the board of directors of one or
more of those entities, "Director") -
o Allegation of illegal activity or unethical
behavior-related violation of the Ethics Code by
an Employee pertaining to a Company accounting,
internal control on accounting, or audit matter
("Accounting Violation").
o A confidential, anonymous or other submission by
an Employee of concern regarding an alleged
Company questionable accounting or audit practice
("Questionable Accounting Practice").
o Allegation of illegal activity or unethical
behavior-related violation of the Ethics Code by
an Employee pertaining to a matter other than an
Accounting Violation ("Unethical Conduct").
o Procedure - The following shall constitute the Company's
procedure for receipt, retention and treatment of Complaints
regarding Accounting Violations, Questionable Accounting
Practices or Unethical Conduct -
o Specific Allegations - Topics that may be addressed in
Complaints must relate to specific alleged Accounting
Violations, Questionable Accounting Practices or Unethical
Conduct.
o Accounting Violations and Questionable Accounting
Practices - A Complaint regarding Accounting Violations or
Questionable Accounting Practices must be directed to the
Audit Committee for response or investigation. Topics that
may be addressed in such Complaints include, but are not
limited to the following -
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o Allegations of fraud or deliberate error in the
preparation of the Company financial statements.
o Allegations of fraud or deliberate error in the
review or audit of Company financial statements.
o Allegations of fraud or deliberate error in
maintaining Company financial records.
o Deficiencies in internal control, or violations
of internal control policies.
o False statements by a senior officer or
accountant regarding matters included in
financial reports or records.
o False statements made to independent auditors.
o Other information that can have a material impact
on the fairness of the Company's financial
statements.
o Director Unethical Conduct Complaint - A Complaint
regarding Unethical Conduct by a Director must be directed
to the following committee for response and investigation,
if any, as conditioned -
o Audit Committee, should the Complaint relate to
an Accounting Violation by an Employee, with a
copy of the Complaint delivered to the chair of
the Nominating and Corporate Governance
Committee.
o Nominating and Corporate Governance Committee,
should the Complaint relate to Unethical Conduct
by the Director which does not involve an
Accounting Violation, with a copy of the
Complaint delivered to the chair of the Audit
Committee.
o Audit Committee and Nominating and Corporate
Governance Committee, should the Complaint relate
to both an Accounting Violation by an Employee,
and Unethical Conduct by the Director which does
not involve an Accounting Violation.
o Employee (Not Director) Unethical Conduct - A Complaint
regarding Unethical Conduct by an Employee who is not a
Director must be directed to the Employee's supervisor or
the Chief Financial Officer for response or investigation.
Should the Complaint be submitted to the Employee's
supervisor, a copy must be directed to the Chief Financial
Officer, unless the Complaint pertains to that officer, in
which case the copy must be directed to the Company's
Chief Executive Officer ("Chief Executive Officer").
o Written Complaint - A Complaint must be in writing,
contain sufficient detail to provide a basis for the
investigator to make an independent determination as to
whether an Accounting Violation, Questionable Accounting
Practice or Unethical Conduct has occurred.
o Signature, Date - A Complaint must be signed and dated by
the complainant-Employee in the case of an Accounting
Violation or Unethical Conduct-related Complaint.
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o Signature Not Required on Confidential or Anonymous
Questionable Accounting Practice Complaint - A
Questionable Accounting Practice-related Complaint need
not be signed, should the complainant be seeking
confidential or anonymous treatment of the Complaint.
However, it must be dated.
o Delivery of a Complaint To a Committee - A Complaint
directed to the Audit Committee or the Nominating and
Corporate Governance Committee must be addressed and
mailed or otherwise delivered to the chair of the
appropriate committee at the Company's corporate offices
as follows -
CONFIDENTIAL CONFIDENTIAL
ATTN: Chair, Audit or ATTN: Chair,
Committee Nominating and
(Complaint) Corporate Governance
General Communication, Committee (Complaint)
Inc. General Communication,
(Complaint) Inc.
2500 Denali Street, 2500 Denali Street,
Suite 1000 Suite 1000
Anchorage, Alaska 99503 Anchorage, Alaska
99503
o Delivery of a Complaint To the Chief Financial Officer - A
Complaint directed to the Chief Financial Officer must be
addressed and mailed or otherwise delivered to that
officer at the Company's corporate offices as follows -
CONFIDENTIAL
ATTN: Chief Financial Officer (Complaint)
General Communication, Inc.
2500 Denali Street, Suite 1000
Anchorage, Alaska 99503
o Other Forms of Delivery - The Chief Financial Officer, in
conjunction with the chairs of the Audit Committee and the
Nominating and Corporate Governance Committee, shall
review and, in the event they shall reach consensus,
recommend to the Board other possible means by which a
complainant shall deliver a Complaint to the Company,
including, but not limited to, an internet address or a
toll-free telephone number.
o Complaint Filing System - The Chief Financial Officer, in
conjunction with the chairs of the Audit Committee and the
Nominating and Corporate Governance Committee, shall
establish a procedure compatible with the charters of both
committees and the Ethics Code and providing for the
corresponding investigator of a Complaint to log the
Complaint into a filing system specifically established to
retain, process, and otherwise provide for the treatment
of Complaints ("Complaint Filing System").
o The Complaint Filing System will be used by each
of these three investigators in the separate
duties of each in addressing a Complaint.
o Processing of a Complaint - The recipient (investigator)
of the Complaint will log the Complaint into the Complaint
Filing System, subject to the following -
o Should the Complaint be in the nature of an
allegation of an Accounting Violation, a
Questionable Accounting Practice or Unethical
Conduct, the investigator must determine, based
upon the information provided in the
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Complaint and independent investigation which the
investigator, in the investigator's sole
discretion, deems appropriate given the nature of
the Complaint, whether there is a reasonable
basis for the allegation made in the Complaint,
investigate the Complaint, decide whether to hold
a hearing on the matter and, should the
investigator choose to hold such a hearing, give
notice of, and hold the hearing on, the
Complaint, request witnesses to appear at the
hearing, and otherwise gather evidence necessary
for the investigator to render a determination on
the Complaint and submit a written determination
to, and recommend appropriate action by, the
Board.
o Should the Complaint be in the nature of a
Questionable Accounting Practice where the
Complaint is unsigned or where the complainant
has otherwise indicated the Complaint is
presented as a confidential, anonymous submission
to the investigator, the investigator must
determine, based upon the information provided in
the Complaint and independent investigation which
the investigator, in the investigator's sole
discretion, deems appropriate given the nature of
the Complaint, whether there is a reasonable
basis for the allegation made in the Complaint,
render a determination on the Complaint and
submit a written determination to, and recommend
appropriate action by, the Board.
o Should the Complaint be in the nature of an
inquiry without allegation of an Accounting
Violation, Questionable Accounting Practice or
Unethical Conduct, the recipient may either
respond directly to the complainant or, in the
recipient's sole discretion, recommend to the
Board appropriate action.
o The investigator will, regardless of the nature
of the Complaint, seek to process it in a timely
manner.
o The investigator shall be informed of the receipt
of Complaints at least on a weekly basis. In the
event the Complaint shall be directed to a
committee, the chair of the committee shall be
informed of the receipt of the Complaint within
not more than two business days.
o A Complaint pertaining to one or more executive
officers or Directors must receive especially
timely review by the corresponding investigator.
o Each investigator will decide, upon initial
review of a Complaint, whether a formal
investigation shall be initiated and the extent
of it, including who shall carry out the
investigation, and the resources which shall be
deemed necessary to carry it out.
o All signed Complaints will be acknowledged as
received by the investigator. In the event the
signed Complaint shall be directed to a
committee, the chair of the committee, or the
chair's designee shall acknowledge receipt of the
Complaint.
o In the event the investigator shall conclude a
Complaint as not one subject to the scope of the
investigator's responsibilities under a committee
charter or otherwise but as one raising
legitimate issues, the
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investigator shall forward the matter to the
Chief Financial Officer for direct action or
referral to the appropriate person for review and
action.
o Annual Status Report - The Audit Committee, the Nominating
and Corporate Governance Committee, and the Chief
Financial Officer as investigators of Complaints, will at
least annually each provide reports to the Board on the
status of Complaints received during the year, including,
but not limited to, a brief description of each, the
status of each, and recommended action, if any, on each by
the Board (affirmative relief or closure of a file on a
Complaint for which the investigator has not received
additional requested information from the complainant
within a reasonable time which the investigator deems
necessary to make a determination in the matter).
o Retention of Closed File - A Complaint file, once closed,
will be retained for a time period of 10 years and in
accordance with the Company's appropriate records
retention policy, after which it will be destroyed. Unless
specifically provided otherwise in that policy, the Chief
Financial Officer or the officer's designee is the
custodian of a closed Complaint file.
o Confidential Treatment - An investigator will be
particularly sensitive to the confidential nature of
Complaints, especially ones where the complainant has made
the Complaint through a confidential or anonymous
submission. Complaint files will not be available
generally to Employees except with the permission of the
investigator and only in accordance with the Company's
policy on confidential records, if any, pertaining to the
subject matter of the Complaint.
o Committee Review - In the event the investigator shall be
the Audit Committee or the Nominating and Corporate
Governance Committee, a Complaint shall be reviewed
initially by the chair, or the chair's designee, and an
initial analysis submitted to the committee. Any formal
action taken by the committee on the Complaint must be at
a duly scheduled meeting at which at least a quorum of its
members is present, and a determination on the Complaint
must be by vote of at least a majority of the committee
present, subject further to the procedural requirements of
the Bylaws.
o Other Procedures - The Audit Committee shall adopt such
other procedures, subject to prior Board approval, as may
be necessary to carry out the committee's responsibilities
in addressing Complaints, Auditor Disagreements, and other
matters addressed in this section.
o Other Complaint-Related Matters - The Audit Committee shall
address other Complaint-related matters as designated by the
Board.
o Disagreements - The Audit Committee, when it shall receive
notice of, or when the committee independently shall become
aware of, an Auditor Disagreement, i.e., a disagreement
between Company management and the External Auditor regarding
financial reporting, shall, in accordance with this charter,
review and resolve the Auditor Disagreement.
o Timely Review - In this context, the Audit Committee shall
review the Auditor Disagreement in a timely fashion and
provide a written determination with supporting argument
for it, and the determination of the Audit Committee
regarding the Auditor Disagreement shall be final.
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Addressing Attorney Reports
The Audit Committee shall address an Attorney Report, i.e., a report of
evidence of a securities violation or other infraction involving the Company
subject to the following:
o Report Required - An attorney retained by, or otherwise
employed by, the Company and appearing and practicing before
the SEC on behalf of the Company who becomes aware of evidence
of a suspected material violation of securities law
("Reporting Attorney") is required to submit an Attorney
Report to the Company's Senior Vice President-Regulatory
Affairs ("Chief Legal Counsel"), or if the matter relates to
the Chief Legal Counsel, to the Company's Chief Executive
Officer ("Chief Executive Officer") for appropriate response
(collectively, the Chief Legal Counsel or the Chief Executive
Officer, "recipient") and subject to the following -
o Appearing and Practicing - An attorney is deemed to be
"appearing and practicing before the SEC" in the
representation of the Company, and therefore subject to
the provisions of this section on Attorney Reports, if the
attorney performs specific services (representing the
Company before the SEC, transacting business with the SEC
including communications in any form filed with the SEC,
or advising the Company on a filing with the SEC), but
only if the attorney provides those services in an
attorney-client capacity.
o Material Violation - A "material violation" includes a
material violation of federal or state securities law, a
material breach of fiduciary duty arising under federal or
state law, or a similar violation of any federal or state
law by an officer, director, employee or agent of the
Company.
o Content - The Attorney Report must contain details of the
suspected material violation and the relevant evidence
regarding the material violation.
o Appropriate Response - The recipient of the Attorney Report
must inquire into evidence contained in the report, and,
unless the recipient reasonably believes no material violation
has occurred, is ongoing, or is about to occur, the recipient
must take steps to initiate an appropriate response, i.e.,
take all reasonable steps to cause the Company to adopt an
appropriate response and subject further to the following -
o Referral To Audit Committee - The recipient may choose not
to make a determination on the matter or refer the
Attorney Report to the Audit Committee, in which case the
committee is responsible to inquire into the evidence and,
if necessary, formulate an appropriate response.
o Notice To Reporting Attorney - The recipient must within a
reasonable time advise the Reporting Attorney as to what
the recipient has done regarding the report.
o Receipt of Appropriate Response - Should the Reporting
Attorney receive what that attorney believes to be an
appropriate response within a reasonable time, the
responsibility of that attorney as to the Attorney Report
is complete.
o No Appropriate Response - Should the Reporting Attorney
not receive an appropriate response within a reasonable
time, that attorney must report the
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evidence directly to the Audit Committee. Once that report
is made to that committee, the responsibility of the
Reporting Attorney is complete.
o Specific Meaning - The "appropriate response" requirement
is met if, after receiving a response, the Reporting
Attorney reasonably believes that no material violation
occurred, is ongoing, or is about to occur, the Company
has adopted appropriate preventative or remedial measures,
or the matter has been referred to an attorney with the
consent of the Board, the Audit Committee, or the Chief
Legal Officer, who has investigated the evidence and the
Company has implemented any remedial recommendations made
by the attorney, or the Company has been advised by that
attorney that the attorney may assert a colorable defense
with regard to the evidence of a material violation.
o Other Procedures - The Audit Committee shall adopt such other
procedures, subject to prior Board approval, as may be
necessary to carry out the committee's responsibilities in
addressing Attorney Reports.
Reviewing Related-Party Transactions
The Audit Committee shall be responsible, in the context of Related
Party Transactions, for the following:
o Review - The Audit Committee shall review all Related Party
Transactions for possible conflict of interest situations on
an ongoing basis.
o Scope of Related Party Transactions - A Related Party
Transaction is a transaction required to be disclosed
pursuant to Item 404 of Regulation S-K adopted by the SEC.
o Approval - All Related Party Transactions must be approved by
the Audit Committee.
Preparing Annual Plans
The Audit Committee, with responses from management and other key
committee advisors, shall develop an Annual Plan, i.e., a plan for Company
audit-related matters addressing the Primary Responsibilities detailed in this
charter. The Annual Plan shall be reviewed and approved by the full Board.
Preparing Shareholder Reports
The Audit Committee shall make available to shareholders a Shareholder
Report, i.e., a summary report on the scope of its activities. The Shareholder
Report may be identical to the report that appears in the Company's annual
report.
Accepting External Auditor Reports
External Auditor Reports shall be subject to the following:
o Receipt of Report - The Audit Committee shall receive External
Auditor Reports directly from the External Auditor. The
External Auditor Reports shall be submitted at least annually
as shall be requested by the Audit Committee.
o Content of Report - The External Auditor Report shall include
the following:
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o Staffing, Scope - Audit staffing and supervision, and
scope of audit.
o Critical Accounting Policies - Critical accounting
policies and practices, alternative accounting treatments,
the reasons for selecting such policies, and their impact
on the fairness of the Company's financial statements.
o Significant Estimates - Significant estimates made by
management in the preparation of financial reports.
o Communications - Nature and content of communications
between the External Auditor and Company management.
o Off-Balance Sheet Transactions - Off-balance sheet
transactions, joint ventures, contingent liabilities, or
derivative transactions, and their impact on the fairness
of financial statements.
o External Auditor Proposed Adjustments - External Auditor
proposed adjustments, including those recorded by
management and those not recorded by management.
o Difficulties with Management - Difficulties encountered
with management during the audit.
o Disagreements with Management - Disagreements with
management regarding accounting and reporting issues.
o Legal Matters - Material legal matters that may impact the
financial statements.
o Overall Fairness - External Auditor's opinion on the
overall fairness of the financial statements.
o Written Record - The Audit Committee shall keep a written
record of all communications with the External Auditor. The
Audit Committee may request that the External Auditor put its
comments in writing.
o Deadline for Report - The Audit Committee must receive a
complete report from the External Auditor on the matters
addressed in the External Auditor Report prior to completion
of the annual audit.
o Regular Communications - The Audit Committee shall maintain
regular communications with the External Auditor on the topics
addressed in the External Auditor Report in connection with
Company quarterly reports and other Company financial reports.
Conducting Audit Committee Performance Evaluations
The Audit Committee shall each year conduct an Audit Committee
Performance Evaluation, i.e., it shall review, discuss, and assess its own
performance as well as the committee's purpose and responsibilities, seeking
responses from senior management, the full Board, and others. Changes, if any,
in the Audit Committee's purpose or responsibilities or, generally, changes to
this charter shall be recommended to the full Board for approval.
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Other Matters
The foregoing provisions of this charter are not intended to be
exhaustive. The Audit Committee may, in addition, perform such other functions
as may be necessary or appropriate for the performance of its purposes and
responsibilities.
Nothing in this charter is intended to, and must not be construed as,
creating any responsibility or liability of the members of the Audit Committee
except to the extent otherwise provided under applicable Alaska law which
continues to set the legal standard for the conduct of the committee members.
ADOPTED by the board of directors of General Communication, Inc.as of
this 3rd day of February, 2005.
/s/
John M. Lowber
Secretary
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