Corporate Governance

Purpose and Function

The purpose of the Audit & Finance Committee (the “Committee”) of the Board of Directors (the “Board”) of NIKE, Inc. (the “Company”) is to provide assistance to the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting, and internal controls of the Company and to oversee the financial policies and activities of the Company that may have a material impact on the results of operations or the financial position of the Company. The Committee’s purpose includes assisting the Board’s oversight of:

• the integrity of the Company’s financial statements;
• the Company’s compliance with legal and regulatory requirements;
• the independent auditor’s qualifications and independence; and
• the performance of the Company’s internal audit function and independent auditor.

The Committee’s purpose also includes preparing the report of the Committee that the Securities and Exchange Commission (“SEC”) rules require to be included in the Company’s annual proxy statement.

The function of the Committee is oversight. The management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements and for the effectiveness of internal control over financial reporting. Management and the internal auditing department are responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The independent auditors are responsible for planning and carrying out a proper audit of the Company’s annual financial statements and of the Company’s internal control over financial reporting, reviews of the Company’s quarterly financial statements prior to the filing of each quarterly report on Form10-Q, and other procedures. In fulfilling their responsibilities hereunder, it is recognized that members of the Committee are not full-time employees of the Company and are not, and do not represent themselves to be, performing the functions of auditors or accountants. As such, it is not the duty or responsibility of the Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards.

Membership

The Committee shall consist of at least three directors as determined by the Board. The Committee members shall meet the independence, financial literacy, and other requirements of the New York Stock Exchange (“NYSE”) Listed Company Manual and all other applicable rules, regulations, and statutes. At least one of the members must be an audit committee financial expert as defined by the rules of the SEC. The chair of the Committee shall be designated by the Board and shall have accounting or related financial management expertise. A member of the Committee may not simultaneously serve on the audit committee of more than two other public companies unless such service is approved by the Board upon its determination, based on the recommendation of the Corporate Responsibility, Sustainability & Governance Committee, that the simultaneous service would not impair the ability of the member to effectively serve on the Company’s Committee and such determination is disclosed in the Company’s annual proxy or on the Company’s website. A member of the Committee may not, other than in his or her capacity as a member of the Committee, the Board, or any other Board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company, or be an affiliated person of the Company or a subsidiary thereof. The chair and the members of the Committee shall be appointed by the Board of Directors.

Meetings

The Committee shall meet once every fiscal quarter or more frequently as it determines is necessary to carry out its duties and responsibilities. The Committee may permit attendance at meetings by management and such ex officio members as the Committee may determine appropriate or advisable from time to time. The Committee shall report regularly to the Board on matters within the Committee’s responsibilities, and shall maintain minutes of Committee meetings.

Duties and Responsibilities

The Committee will have the following duties and responsibilities:

1. The sole authority to retain, with shareholder ratification, and terminate the Company’s independent auditor, to approve all audit engagement fees, compensation and terms, and to directly oversee the work of the independent auditor with respect to the annual audit of the Company.
2. To be directly responsible for the appointment, compensation, retention and oversight of the work of any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or to perform audit, review or attestation services, which firm shall also report directly to the Committee.
3. To instruct the Company’s independent auditor that it is to report directly to the Committee.
4. The sole authority to approve in advance, or to adopt appropriate procedures to approve in advance, all audit and legally permitted non-audit services to be provided by the Company’s independent auditor, and audit services provided by others; provided, however, that advance approval of non-audit services by the independent auditor shall not be required if:
   1. the aggregate amount of fees for all such non-audit services provided to the Company constitutes not more than five percent of the total amount of revenues paid by the Company to its auditor during the fiscal year in which the non-audit services are provided;
   2. the services were not recognized by the Company at the time of the engagement to be non-audit services; and
   3. the services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the Board to whom authority to grant such approvals has been delegated by the Committee.
5. The sole authority to delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee. The Committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the independent auditors, provided that any such approvals are presented to the Committee at its next scheduled meeting.
6. At least annually, to obtain and review a report by the independent auditor describing: the firm’s internal quality control procedures; any material issues raised by the most recent internal quality control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm and any steps taken to deal with any such issues; and (to assess the auditor’s independence) all relationships between the independent auditor and the Company, including each non-audit service provided to the Company and the matters set forth in the letter from the independent auditors required by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”).
7. At least annually, to evaluate the independent auditor’s qualifications, performance, and independence, which evaluation shall include the review and evaluation of the lead partner of the independent auditor and a review of the report referred to in Section 6 above. In making its evaluation, the Committee shall take into account the opinions of management and the Company’s internal auditors. The Committee shall further ensure the rotation of the lead audit and review partners every five years, or more frequently as the Committee shall determine in its sole discretion. The Committee shall decide as to whether the Company is obtaining high quality audits and whether rotation of the auditor would be helpful. The Committee shall present its conclusions with respect to the independent auditor to the Board.
8. To discuss the annual audited financial statements and quarterly financial statements with management and the independent auditor, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
9. To review NIKE’s Annual Report to be filed with the SEC on Form 10-K, and recommend to the Board that the audited financial statements be included in the Form 10-K.
10. To discuss with the independent auditor any items required to be communicated by the independent auditor by applicable PCAOB or other standards.
11. To discuss with the Chief Executive Officer and the Chief Financial Officer the individual certifications required to be filed with the Company’s periodic reports to the SEC.
12. To discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.
13. To discuss policies with respect to risk assessment and risk management and to discuss the Company’s major financial and other risk exposures, including risks related to information security and data protection, and the steps management has taken to monitor and control such exposures.
14. To meet periodically with the chief information officer or chief information security officer to review risks related to information security and data protection.
15. To meet separately, at least quarterly, with management, with internal auditors, and with the independent auditor.
16. To review with the independent auditor any audit problems or difficulties and management’s response, including, but not limited to, any restriction on the scope of the independent auditor’s activities or on access to requested information, any significant disagreements with management, any accounting adjustments that were noted or proposed by the auditor but were passed as immaterial or otherwise, any communications between the audit team and audit firm’s national office respecting auditing or accounting issues presented by the engagement, and any “management” or “internal control” letter issued, or proposed to be issued, by the independent auditor to the Company. The review shall also include discussion of the responsibilities, budget and staffing of the Company’s internal audit function.
17. To resolve disagreements between management and the independent auditor regarding financial reporting.
18. To obtain from the Company’s independent auditor any information or communications required to be provided pursuant to federal securities laws or SEC rules.
19. To review and approve, if appropriate, the internal audit charter and any changes thereto.
20. To ensure that the chief internal auditor is independent of the Company’s management and to concur in the selection, retention, and dismissal of the chief internal auditor.
21. To review management’s assessment of the effectiveness of the Company’s accounting and internal control structure and procedures.
22. To establish procedures for (i) the receipt, retention, treatment, processing and resolution of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
23. To set hiring policies for employees or former employees of the independent auditor all in accordance with applicable legal requirements.
24. To meet periodically with the general counsel or other legal counsel to review legal and regulatory matters, including any matters that may have a material effect on the financial statements of the Company.
25. To meet periodically with the Company’s internal Clearance Director, who reviews and approves in advance all trades of NIKE common stock owned by the Company’s directors and officers who are subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
26. To receive reports from the Company’s internal Disclosure Committee, which is responsible for quarterly review of material issues regarding accounting, financial reporting, public disclosure, internal control, and fraud issues in respect of the financial statements of the Company.
27. To report regularly to the Board any material issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the Company’s independent auditor, or the performance of the internal audit function.
28. To direct the preparation of and approve the Committee Report for inclusion in the annual Proxy Statement that summarizes the Committee’s activities in compliance with Item 7 of Schedule 14A under the Exchange Act.
29. To direct the preparation and execution of the NYSE’s annual written affirmation of director independence and qualifications to serve on the Committee as required by the NYSE Listed Company Manual.
30. To review proposed capital expenditures, lease commitments and asset disposals within limits as established by Committee resolution, and recommend approval by the Board.
31. To review proposed mergers, acquisitions and business divestitures within the limits as established by Committee resolution, and recommend approval by the Board, unless delegated to a special Committee of the Board.
32. To review proposed capital market transactions and other financing arrangements within limits as established by Committee resolution, and recommend approval by the Board, unless delegated to a special Committee of the Board.
33. To review proposed dividend policy and recommend approval by the Board.
34. To review and approve management proposed programs for repurchasing shares of the Company's common stock.
35. To review and approve policies and procedures for managing the Company's financial (i.e. interest rate and foreign exchange), casualty and liability risks.
36. To review and approve the Company’s entry into all swap transactions, as defined in 7 U.S.C. § 1a(47) and the rules and regulations of the Commodity Futures Trading Commission thereunder; and
    1. approve, on a swap-by-swap and/or on an annual basis, any decision by the Company or its subsidiaries to enter into swaps that are exempt from the clearing and execution requirements of sections 2(h)(1) and 2(h)(8) of the Commodity Exchange Act for the purpose of satisfying the requirements necessary to elect the End-User Exception to such clearing and execution requirements as provided for by 17 C.F.R. § 39.6; and
    2. review, no less frequently than annually any such annual approval issued by the Committee.
37. To annually evaluate the performance of the Committee and report the results of the Committee performance evaluation to the Board.
38. To review and assess annually the adequacy of the Committee’s charter.
39. To perform such additional activities and consider such other matters within the scope of its responsibilities as the Committee or the Board deems necessary or appropriate.

Resources and Authority of the Committee

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate, and approve the fees and other retention terms of special or independent counsel, accountants or other experts and advisors, as it deems necessary or appropriate, without seeking approval of the Board or management.

The Company shall provide for appropriate funding, as determined by the Committee, in its capacity as a committee of the Board, for payment of:

1. Compensation to the independent auditors and any other public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company;
2. Compensation of any advisers employed by the Committee; and
3. Ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.