Committees of the Board of Trust

C. Committees of the Board of Trust

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. The following committees shall be the advisory committees: Academic Programs, Athletics, Buildings and Grounds, Medical Center Board, and the Medical Center Board Executive Committee, Public and Government Relations, and Student Life. The following committees shall be the policy committees: Audit, Budget, Compensation, Executive, Governance and Board Affairs, and Investment. [2007]

Effective as of the Annual (Spring) Meeting of 2007, all policy and advisory committee members shall serve renewable one-year terms for a maximum of five terms after which the member is ineligible for re-election for one year. All policy and advisory committee chairs shall serve renewable one-year terms for a maximum of five consecutive one-year terms and shall be ineligible for re-election for one year. Notwithstanding the foregoing, a committee member's term shall cease when his/her term as a Board member ends. [2007]

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

The Academic Programs Committee shall be composed of the Chancellor and at least five additional members of the Board. The Chairman of the Board shall appoint the chair of the Committee. The Committee shall meet semi-annually in conjunction with Board of Trust meetings.

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 the Chancellor and shall report on its activities at the semi-annual meetings of the Board. [1998]

The Athletics Committee shall be composed of the Chancellor and at least five additional members of the Board. The Chairman of the Board shall appoint the chair of the Committee. The Committee shall meet semi-annually, in conjunction with the Board of Trust meetings. [2001]

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 the Chancellor and shall report on its activities at the semi-annual meetings of the Board. [1998]

The Audit Committee shall be elected by the Board of Trust and shall be composed of at least six 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. The Audit Committee shall be composed of the chair of the Budget Committee and at least five additional members. The chair of the Budget Committee shall serve as a non-voting member. [2006]

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. A majority of the Audit Committee members should be "financially literate", as defined by the National Association of Securities Dealers and American Stock Exchange, as able to read and understand fundamental financial statements. At least one member should be an "audit committee financial expert" as defined by the Securities and Exchange Commission.

The Audit Committee shall normally 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. The processes are set forth as a guide with the understanding that the committee may modify or supplement them as appropriate.

EXTERNAL AUDIT PROCESSES
The Committee shall:

-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 will be limited to the annual financial statement audit, Circular A-133 audit, NCAA agreed-upon procedures, affiliated entity financial statement audits, and tax return preparation. In the event of extenuating circumstances, any other use of the external audit firm with fees exceeding $25,000 will require Audit Committee pre-approval. The Committee may elect to delegate pre-approval responsibilities to one or more of its independent members.
-Discuss with the external auditors the overall audit plan and the qualifications of the assigned staff.
-Review the management letter, the annual financial statements and schedule of unadjusted differences and determine whether the statements are consistent with the information known to Committee members.
-Review management representation letter signed by Chancellor and CFO.
-Review significant accounting and reporting policies and practices, including recent professional and regulatory pronouncements, and understand their impact on the University's financial statements.
-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.
-Obtain the external auditor's judgment about quality, not just acceptability, of accounting principles, the reasonableness of significant judgments and the clarity of the financial statement disclosures.
-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.

INTERNAL AUDIT PROCESSES
The Committee shall:

-Review reports of Internal Audit activities 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.
-Discuss with the internal auditors the overall audit plan for the year and the staff's qualifications.
-Review the appointment and replacement of the Director of Internal Audit.

COMPLIANCE
The Committee shall:

-Review the results of significant regulatory audits and management's follow up actions.
-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.
-Review the adequacy of the University's conflict of interest policies and monitor management's oversight of compliance with those policies by members of the Board of Trust and General Officers.

COMMITTEE PROCESSES
The Committee shall:

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.

Coordinate with the Compensation Committee regarding incentive program provision for reimbursement of incentive compensation in the event of an accounting restatement. [2005]

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.

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.

Annually evaluate the sufficiency of the Audit Committee Charter. [2004]

The Budget Committee shall 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 Board, the senior young alumni member elected to the Board under the provisions of Chapter I, Paragraph 6, Subparagraph d, with the longer term of service, and the senior alumni member elected under Chapter I, Paragraph 6, 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 Committee shall meet at least semi-annually. [2003]

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

The Buildings and Grounds Committee shall be composed of the Chancellor and at least five additional members of the Board. The Chairman of the Board shall appoint the chair of the Committee. The Committee shall meet semi-annually in conjunction with Board of Trust meetings. [2003]

The Committee shall hear reports on campus maintenance, facility planning, and construction and shall assist in the enhancement of the quality of the physical infrastructure and natural environment of the University. It shall be advisory to the Board and the Chancellor and shall report on its activities at the semi-annual meetings of the Board. [1999]

The Compensation Committee shall 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 one of the members to serve as 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

Authority
The Board of Trust (Trustees), based on the recommendation of the Governance and Board Affairs Committee, appoints the members of the Compensation Committee.

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 records 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]

The Executive Committee shall 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 Board; the chairman of any special University-wide fund raising campaign; the senior young alumni member elected to the Board under the provisions of Chapter I, Paragraph 6, Subparagraph d, with the longer term of service, the senior alumni member elected under Chapter I, Paragraph 6, 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. [2007].

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]

The Governance and Board Affairs Committee shall be composed of the Chairman of the Board; the Chancellor of the University; the senior alumni member elected under Chapter I, Paragraph 6, 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. [2007]

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 may also make recommendations on any other matters relating to board affairs and the operations of the Board. The Committee may also make recommendations on any other matters relating to board affairs and the operations of the Board. [2007]

The Investment Committee shall be composed of the Chairman of the Board, the Chancellor, at least three additional members of the Board, and at least 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 Vice Chancellor for Investments shall serve as Secretary of the Investment Committee. The Committee shall meet at least quarterly. [2008]

The non-Board members shall serve renewable one-year terms. 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]

The Medical Center Board shall be composed of the Chairman of the Board, the Chancellor, the Vice Chancellor for Health Affairs, at least twelve other members of the Board, and up to twenty members of the Nashville community at large. The Chairman of the Board shall appoint the Chairman of the Medical Center Board, who shall be a member of the Board of Trust. The Medical Center Board shall meet at least quarterly. [2008]

The Medical Center Board shall assist the Vanderbilt University Medical Center in developing a medical center of the highest quality and in generating community support. It shall review and encourage the efficient management of the Medical Center, exercise careful scrutiny of the financial affairs of the Medical Center, assist in Medical Center relations with state and local government and the local medical profession, and inform and advise the Board and the Chancellor about Medical Center affairs generally. It shall make recommendations for appropriations for renovations, construction projects, equipment purchases, and expenditures, and hear budget reports relative to the Medical Center. It shall report on its activities at the semi-annual meetings of the Board of Trust and at Executive Committee meetings.

The Medical Center Board Executive Committee shall be composed of individuals on the Medical Center Board who are members of the Board of Trust. The Chairman of the Medical Center Board shall be chair of the Committee. The Executive Committee will meet at least quarterly. [2008]

The Executive Committee assists 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. The Committee is charged with (i) approving by-laws of the hospital medical staff, (ii) approving medical staff appointments, terminations, and curtailments of clinical privileges, and (iii) participating in corrective actions for medical staff. It also receives reports and recommendations from standing and special committees of the Hospital and Clinic and the Medical Center Medical Board, as well as from the Chief Executive Officer and Executive Director of the Vanderbilt University Hospital, the Vice-Chancellor for Health Affairs, and the Chancellor. The Committee shall report to the Board on matters of Hospital and Clinic governance and operations at the semi-annual meetings of the Board, and at Executive Committee meetings. [1999]

The Public and Government Relations Committee shall be composed of the Chairman of the Board, the Chancellor, and at least five additional members of the Board of Trust. The Chairman of the Board shall appoint the chair of the Committee. The Committee shall meet semi-annually, in conjunction with the Board of Trust meetings, and on an as-needed basis. [2003]

It shall review the University's overall activities regarding communications with external audiences, both local and national, and relations with federal, state, and local governmental bodies. It shall advise the Board and the Chancellor on overall priorities and assist in evaluating the results of public and government relations initiatives. The Committee shall report on its activities at the semi-annual meetings of the Board. [1998]

The Student Life Committee shall be composed of the Chancellor and at least five additional members of the Board. The Chairman of the Board shall appoint the chair of the Committee. The Committee shall meet semi-annually in conjunction with Board of Trust meetings.

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 the Chancellor and shall report on its activities at the semi-annual meetings of the Board. [2001]