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Committees of the Board of Trust

1. There shall be the following standing committees of the Board of Trust, together with such other standing and ad hoc committees as the Board may create from time to time:Academic Programs, Athletics, Audit, Budget, Compensation, Executive, Governance and Board Affairs, Investment, Medical Center Affairs and Student Affairs. [2009]

Effective as of the Spring meeting of 2010, all committee members, including community members, shall serve renewable three-year terms for a maximum of two terms after which the member is ineligible for re-election for one year. All committee chairs and vicechairs shall serve renewable three-year terms for a maximum of two consecutive terms and shall be ineligible for re-election for one year. Notwithstanding the foregoing, a member serving as chair or vice-chair at the expiration of said term as a member may be re-elected as a member in order to complete the maximum term of service as chair or vice-chair. Also notwithstanding the foregoing, a committee member’s term shall cease when his/her term as a Board member ends. Members of ad hoc Board committees shall serve at the pleasure of the Chairman of the Board. [2010]

A majority of the voting members of a committee shall constitute a quorum for the transaction of business. [2002]

2. The Academic Programs Committee shall be elected by the Board of Trust and be composed of the Chancellor and at least five additional members of the Board. The Chairman of the Board shall appoint the chair and vice chair of the Committee. The Committee shall meet semi-annually in conjunction with Board of Trust meetings. [2009] It shall facilitate interactions between the Board and members of the faculty, including the Faculty Senate, hear reports regarding the academic programs of the University, and assist in the enhancement of the quality of the academic programs. The Committee shall be advisory to the Board of Trust and shall report on its activities at the semi-annual meetings of the Board. [1998]

3. The Athletics Committee shall be elected by the Board of Trust and be composed of the Chancellor and at least five additional members of the Board. The Chairman of the Board shall appoint the chair and vice-chair of the Committee. The Committee shall meet semiannually in conjunction with the Board of Trust meetings. [2009]

It shall review the operation of the athletic programs of the University, and shall assist with public relations and fund-raising in support of those programs. The Committee shall be advisory to the Board of Trust and shall report on its activities at the semi-annual meetings of the Board. [2009]

C.4. The Audit Committee shall be elected by the Board of Trust and shall be composed of the Chairman of the Board, the Chairman of the Budget Committee, and at least five additional members of the Board who are not employed by the University. The Chairman of the Board shall appoint the Chair of the Committee. The terms of the members shall be staggered. [2012]

Audit Committee members should be independent of management and without business relationships that could interfere with the members’ exercise of good judgment. Officers, employees or employees’ families will be considered independent after three years of separation from employment. University management should not be represented on the compensation committee of Committee members’ employers. Each member of the Audit Committee should be financially literate, meaning they have (a) an understanding of generally accepted accounting principles and financial statements, (b) an understanding of internal controls and financial procedures for financial reporting, and (c) an understanding of audit committee functions. Additionally, at least one member should be an “audit committee financial expert” as defined by the Securities and Exchange Commission (attached herein as Appendix A).

The Audit Committee normally shall meet semi-annually. More frequent meetings may occur, as circumstances require. The Committee shall report on its activities and make recommendations, as appropriate, to the Board of Trust. The Committee’s role is one of oversight and it serves as the Board of Trust’s overall guardian of financial integrity. The committee has the authority and necessary funding to engage independent counsel and other advisers, as it determines necessary to carry out its duties.

The following shall be the recurring processes of the Audit committee in carrying out its responsibilities. These processes are set forth as a guide with the understanding that the committee may modify or supplement them as appropriate.

C. 4.1 EXTERNAL AUDIT PROCESSES

The Committee shall:

C.4.1.1 Exercise direct responsibility for appointing, compensating, and overseeing the external auditors. At least annually, the Audit Committee will report its assessment of the external auditors to the full Board. Special consideration will be given to periodic audit firm and audit partner rotation. Use of the external audit firm engaged to perform the annual financial statement audit will be limited, in addition to the performance of the financial audit, to Circular A-133 audit, NCAA agreed-upon procedures, affiliated entity financial statement audits, and tax return preparation. Any other use of the external audit firm with fees exceeding $25,000 in any year will require Audit Committee preapproval. The Committee may elect to delegate pre-approval responsibilities to 3 one or more of its independent members.

C.4.1.2 Discuss with the external auditors the overall audit plan and the qualifications of the assigned staff.

C.4.1.3 Review the management letter, the annual financial statements and schedule of unadjusted differences (passed adjustments) and determine whether the statements are consistent with the information known to Committee members.

C.4.1.4 Review the signed management representation letter

C.4.1.5 Review significant accounting and reporting policies and practices, including recent professional and regulatory pronouncements, and understand their impact on the University’s financial statements.

C.4.1.6 Discuss with the external auditor all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, the ramifications of alternative disclosures and treatments and the treatment preferred by the external auditors.

C.4.1.7 Obtain the external auditors’ judgment about quality, not just acceptability, of accounting principles, the reasonableness of significant judgments and the clarity of the financial statement disclosures.

C.4.1.8 Discuss independence issues with the external auditors and obtain a written statement from the external auditors delineating all relationships between the auditors and the University.

C.4.1.9 Review annual tax returns (Form 990 and 990T).

C.4.2 INTERNAL AUDIT PROCESSES

The Committee shall:

C.4.2.1 Review reports of Internal Audit activities including institutional risk management assessments and management’s follow-up actions, including follow-up on accounting, internal accounting control or auditing complaints received via hotline or other reporting mechanism, and assess the effectiveness of the internal audit function.

C.4.2.2 Discuss with the internal auditors the overall audit plan for the year and the staff’s qualifications.

C.4.2.3 Review the appointment and replacement of the Director of Internal Audit.

C.4.3 COMPLIANCE

The Committee shall:

C.4.3.1 Review the results of significant regulatory audits and management’s follow up actions.

C.4.3.2 Review reports of the University’s compliance efforts, including education, development of policies and standards of conduct, results of internal reviews, and summaries of the University’s responses to possible misconduct allegations received through the University hotline or other reporting system.

C.4.3.3 Review the adequacy and management of the University’s conflict of interest policies and provide oversight of compliance with those policies by members of the Board of Trust and General Officers.

C.4.4 COMMITTEE PROCESSES 
The Committee shall:

C.4.4.1 Discuss with management, the external auditors, and internal auditors the adequacy and effectiveness of the accounting and financial controls, and the processes for monitoring compliance with laws and regulations.

C.4.4.2 Coordinate with the Compensation Committee regarding incentive program provision for reimbursement of incentive compensation in the event of an accounting restatement.

C.4.4.3 Verify compliance with a one year waiting period for any member of the external audit team seeking either the CFO or Controller position within one year of participating in a Vanderbilt audit.

C.4.4.4 Meet with the external auditors, the internal auditors and management in separate executive sessions to discuss any matters that the Committee or these groups believe should be discussed privately.

C.4.4.5 At least annually evaluate the sufficiency of the Audit Committee Charter.

This charter was last reviewed by the Audit Committee on December 8, 2011

5. The Budget Committee shall be elected by the Board of Trust and be composed of the Chairman of the Board, the Chancellor, the Chairman of the Audit Committee, the Chairman of the Investment Committee, the Chairman of the Medical Center Affairs Committee, the senior Young Alumni Trustee elected to the Board under the provisions of Chapter I, Paragraph 5, Subparagraph d, with the longer term of service, and the senior Alumni Trustee elected under Chapter I, Paragraph 5, Subparagraph c, with the longer term of service, and at least six additional members of the Board. One of the six additional members shall be appointed chair by the Chairman of the Board; the Chairman of the Board shall also appoint the vice-chair. The Committee shall meet at least semi-annually. [2009]

It shall make recommendations to the Board concerning the annual University Budget and long-range policies governing University expenditures and other financial obligations. [1999]

6. The Compensation Committee shall be elected by the Board of Trust and be composed of the Chairman of the Board and at least three other members. The Chancellor shall not serve on the Committee. The Chairman of the Board shall appoint the chair and vice-chair of the Committee. The Committee shall make recommendations to the Executive Committee. [2007] The purpose of the Compensation Committee (Committee) of the Board of Trust (Trustees) of Vanderbilt University (Vanderbilt) shall be to oversee Vanderbilt’s general officer total compensation programs, and compensation programs of any other employees that would be considered disqualified pursuant to IRS regulations. The general officers of Vanderbilt include the Chancellor and all Vice Chancellors. General officer total compensation is defined as all remuneration paid and/or received, including all forms of current and/or deferred/direct and indirect base salary, short term incentive compensation, long term cash compensation, retirement benefits, severance payments, benefits, perquisites, and all fringe benefits. These programs’ objectives are to attract, retain and motivate the general officers who are needed to ensure the competitiveness and long term success of Vanderbilt. The purpose of the Committee is also to assist the Trustees in fulfilling oversight responsibilities with regards to general officer total compensation programs and to abide by Vanderbilt’s written Standards of Conduct guidelines.

Further, the Committee is to establish, manage, monitor, and modify the Executive Compensation Philosophy, as necessary, to meet the needs of Vanderbilt. These objectives should:

• Support Vanderbilt’s overall organizational strategy and objectives

• Attract, retain, and motivate general officers

• Link general officer total compensation programs to both financial performance and attainment of Vanderbilt’s strategic objectives

• Provide competitive executive and other total compensation opportunities – at a reasonable cost, relative to appropriate peer organizations – while enhancing Vanderbilt’s ability to fulfill its business objectives

• Protect stakeholders’ economic and risk interests at all times

Organization

• Committee shall hold regularly scheduled meetings in person/by teleconference as part of the annual Board calendar and as necessary

• Committee shall review all necessary materials, including agendas, presentations, documents, and supporting analysis sufficiently in advance of all meetings

• Committee meetings shall cover pre-established and Chair approved agenda items and agenda shall be relatively consistent from year to year

• Committee shall meet regularly in executive session without Vanderbilt Management

• Committee will vote on all matters after Committee members have had ample opportunity to discuss the question

• The Committee’s performance shall be evaluated periodically and that evaluation shall be included as part of the Trustee review

• Committee shall keep minutes of its proceedings that shall be signed by the Chair. The minutes of a meeting shall be approved by the Committee at its next meeting, be made available for review by the entire Board of Trust, and be filed as permanent record with the Secretary of Vanderbilt

• Committee minutes shall document goals/objectives of adopting proposed programs, summary of proposed agreements/programs, list of participants/positions and rationale for participation, estimated dollar amount of maximum benefits payable, and advice from outside consultants or experts as to industry/peer practices

• Chair shall report to the full Board of Trust annually on the matters considered each year by the Committee

• Committee shall review and reassess the adequacy of this Charter periodically and recommend any proposed changes to the Trustees for approval

Duties/Responsibilities The Committee shall:

• Assist Trustees in developing and evaluating current and potential candidates for executive/general officer positions, including Chancellor, and oversee the development of executive succession plans

• Annually review and approve Vanderbilt business performance standards and measures/alternative performance scenarios/range of outcomes with respect to total compensation for the Chancellor

• Evaluate, at least annually, the Chancellor’s performance in light of these established business performance standards and measures

• Set and approve Chancellor annual compensation, including base salary, short term incentive compensation, long term cash compensation, severance payments, benefits, perquisites, and all fringe benefits based on these evaluations

• Annually review and approve the evaluation process and total compensation structure of all Vanderbilt general officers

• Review the market competitiveness of general officer total compensation and other related plans and recommend changes to the Executive Committee, as needed

• Maintain regular contact with Vanderbilt leadership, including review of employee survey data and results of an annual leadership evaluation process • Approve material amendments to Vanderbilt’s general officer benefit plans

• In coordination with the Audit Committee or other committees, review and approve, in advance, the content of all regular filings relating to the executive and other senior officer total compensation matters

• Ensure that Vanderbilt’s general officer total compensation programs and practices are designed under full consideration of applicable tax, accounting, legal, and regulatory requirements and are of the highest quality

• Direct any special investigation deemed appropriate or necessary and retain independent expertise considered necessary to conduct these duties

Resources

• The Committee shall have the executive authority, at the expense of Vanderbilt, to retain and terminate any executive and other senior officer total compensation consultants/advisors/experts used to assist the Committee in the evaluation of general officer total compensation. The Committee shall also have the executive authority, at the expense of Vanderbilt, to retain and terminate such independent consulting, legal, benchmarking, educational, technical, accounting, and other experts/advisors/assistance – as it shall deem appropriate – without Vanderbilt management approval or consent. The Committee shall also have executive authority to commission special independent surveys/assessments as appropriate at any time. This executive authority includes the ability to approve all fees and other retention terms. • The Committee shall have direct and independent access, at the expense of Vanderbilt, of qualified administrative support, human resources, and or executive total compensation staff with reliable expertise and integrity. [2007]

7. The Executive Committee shall be elected by the Board of Trust and be composed of the Chairman of the Board, who shall serve as chair; the Vice-Chairmen of the Board; the Secretary of the Board; the Chancellor, who shall serve as Secretary; the chairman of the Audit Committee, the chairman of the Budget Committee; the chairman of the Compensation Committee; the chairman of the Governance and Board Affairs Committee, the chairman of the Investment Committee; the chairman of the Medical Center Affairs Committee; the chairman of any special University-wide fund raising campaign; the senior Young Alumni Trustee elected to the Board under the provisions of Chapter I, Paragraph 5, Subparagraph d, with the longer term of service, the senior Alumni Trustee elected under Chapter I, Paragraph 5, Subparagraph c, with the longer term of service, and up to eight additional members of the Board. At least two of the members of the Executive Committee shall reside outside of Nashville. [2009].

The Executive Committee shall be empowered to act upon all questions and transact business of every kind when the Board is not in session, and its action shall be final provided it shall be without authority to alter, modify, or rescind any affirmative action or policy taken or approved by the Board. All actions taken by the Committee shall be reported to the Board at its next regular meeting, or through the distribution of minutes of Executive Committee meetings. [1999]

8. The Governance and Board Affairs Committee shall be elected by the Board of Trust and be composed of the Chairman of the Board; the Chancellor of the University; the senior Alumni Trustee elected under Chapter I, Paragraph 5, Subparagraph c, with the longer term of service on the Board; and at least six additional members of the Board, one of whom shall be appointed chair by the Chairman of the Board. The Chairman of the Board shall also appoint the vice-chair of the Committee. At least one member of the Committee shall also be a member of the Investment Committee. [2009]

The Committee shall present nominations for membership of the Board, for officers of the Board, and for membership of the standing committees of the Board. The Committee shall periodically review the By-Laws and any proposed changes to the By-Laws. In accordance with Chapter III (Amendments), the Governance and Board Affairs Committee shall make recommendations to the Board regarding any proposed amendment. In accordance with Chapter I, A, 6, in the event the dismissal of a Trustee is warranted, the Committee shall make the recommendation to the Board. The Committee shall also periodically review the reasonableness and appropriateness of expenditures made by or for the General Officers and, where necessary, recommend policies or procedures for expense reimbursement of the General Officers. The Committee may also make recommendations on any other matters relating to Board affairs and the operations of the Board [2008]

9. The Investment Committee shall be elected by the Board of Trust and be composed of the Chairman of the Board, the Chairman of the Budget Committee, the Chancellor, at least five additional members of the Board, and up to three individuals not members of the Board who are chosen for their investment expertise. The Chairman of the Board shall appoint one of the additional members of the Board to serve as chair. The Chairman of the Board shall also appoint the vice-chair of the Committee. The Vice Chancellor for Investments shall serve as Secretary of the Investment Committee. The Committee shall meet at least quarterly. [2012]

The Committee shall be responsible, within any policies and subject to any specific instructions of the Board, for the management, investment and custody of the University's endowment assets, and of assets functioning as endowment, and for the investment of the assets of charitable remainder and other trusts where the University is named trustee. The Committee may delegate management and investment authority to the Vice Chancellor for Investments, provided that delegation is in writing, that the Committee receive and review regular reports from the Vice Chancellor for Investments, and that the Committee review the level of delegation and the policies and procedures of the Vice Chancellor for Investments on at least an annual basis. The Chancellor, and those acting on his authority, shall be responsible, within any policies and subject to any specific instructions of the Board, for the other assets of the University. [2008]

10. The Medical Center Affairs Committee shall be elected by the Board of Trust and be composed of the Chairman of the Board, the Chancellor, at least six additional members of the Board of Trust, and up to four individuals not members of the Board nor employed at Vanderbilt who are chosen for their health care expertise. The Chairman of the Board shall appoint the chair and the vice chair of the Committee. The Committee will meet at least quarterly. [2012]

The Medical Center Affairs Committee shall have the following powers, authority, and jurisdiction

• to study, review, and adopt the strategic plans of the Vanderbilt University Medical Center, including its Medical School, Nursing School, hospitals, clinics and related activities;

• to supervise the operations of said schools, hospitals, clinics and related activities;

• to authorize the employment and/or appointment of faculties and professional staff of said schools, hospitals, clinics and related activities, with the exception of appointments or promotions to positions of tenure, and appointments of general officers and deans of colleges and schools, which require Board of Trust approval on the recommendation of the Chancellor;

• to approve strategic plans, capital plans and capital budgets, and annual operating budgets for recommendation, review and any approval to the Budget Committee;

• to approve, on the recommendation of the Chancellor, capital expenditures less than or equal to $2 million provided the expenditures are within the capital plans approved annually by the Board of Trust and consistent with all university fiscal and budget policies;

• to approve for recommendation to the Executive Committee, on the recommendation of the Chancellor, capital expenditures greater than $2 million provided the expenditures are within the capital plans approved annually by the Board of Trust and consistent with all University fiscal and budget policies;

• to approve the By-laws of the Medical Center staff; and

• to approve medical staff terminations and curtailment of clinical privileges and to participate in corrective actions for medical staff.

The Chair, or in the Chair’s absence or unavailability, the Vice-chair of the Medical Center Affairs Committee, shall be authorized to act on behalf of the Committee when necessary to approve appointments and re-appointments of the medical staff; to participate in Corrective Actions under the Vanderbilt University Medical Center Medical Staff By-laws; and to approve such policies and procedures as necessary to comply with the Joint Commission on Accreditation of Healthcare Organizations or other regulatory agencies. [2008]

The Committee shall be regularly informed of and shall hold Medical Center administration responsible for the quality and safety of medical care provided by Medical Center hospitals, clinics and medical and professional staff. In this regard, the Committee is charged with assisting the Medical Center in complying with the standards of the Joint Commission on Accreditation of Healthcare Organizations relating to the delivery of high quality patient care. It shall review reports of the Medical Center Compliance Office and make recommendations and reports as are appropriate to the Audit Committee. The Committee shall regularly receive reports and recommendations from senior University administrators and others regarding all relevant academic, clinical, financial and compliance matters as are necessary for the Committee to execute its authority and responsibility for oversight of the Medical Center. The Committee shall make regular and complete reports of its proceedings to the Board of Trust. Notwithstanding any other provision in the By-laws, nothing shall be interpreted as interfering with or displacing the existing authority of Board policy committees in the exercise of their duties and fiduciary oversight. [2008]

12. The Student Affairs Committee shall be elected by the Board of Trust and be composed of the four Young Alumni Trustees and at least five additional members of the Board. The Chairman of the Board shall appoint the chair and the vice chair of the Committee. The Committee shall meet semi-annually in conjunction with Board of Trust meetings. [2009]

It shall assist in maintaining relations with students, hear reports from students and others regarding student life, and assist in the enhancement of the quality of student life. It shall be advisory to the Board and shall report on its activities at the semi-annual meetings of the Board. [2009]