Audit and Finance Committee Charter

Chaired by Thomas Fanning, the Audit and Finance Committee provides independent oversight of the Company's accounting functions and internal controls and monitors the objectivity of the Company's financial statements.

I. Composition of the Committee

The Audit and Finance Committee (the "Committee") of the Board of Directors (the "Board") of The St. Joe Company (the "Company") shall be comprised of three or more directors, each of whom shall satisfy the applicable membership requirements under the rules of the New York Stock Exchange, Inc. and Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission (the "SEC"), as such requirements are interpreted by the Board in its business judgment. The Board shall also determine that each member is "financially literate", that at least one member has "accounting or related financial management expertise", and whether any member of the Committee is an "audit committee financial expert" as such qualifications are interpreted by the Board in its business judgment.

The members of the Committee shall be appointed by the Board and shall serve until such member's successor is duly elected and qualified or until such member's earlier resignation or removal. The members of the Committee may be removed, with or without cause, by a majority vote of the Board. The Board shall designate one member of the Committee as its Chairperson.

No director may serve as a member of the Committee if he or she serves on the audit committees of more than two other public companies unless the Board determines that such simultaneous service would not impair the ability of such director to effectively serve on the Committee, and discloses this determination in the Company's annual proxy statement.

II. Purposes of the Committee

The primary purpose of the Committee is oversight. The Committee shall assist the Board in fulfilling its responsibility to oversee:

1. Management's conduct of the financial reporting process.
   
   
2. The quality and integrity of the Company's financial statements.
   
   
3. The Company's compliance with legal and regulatory requirements.
   
   
4. The independent auditors' qualifications and independence.
   
   
5. The Company's system of internal accounting controls.
   
   
6. The performance of the Company's internal audit function and independent auditors.

The Committee is directly responsible for the appointment, retention, compensation and oversight of the work of the independent auditors (including resolving differences between management and the independent auditors regarding financial reporting). The independent auditors shall report directly to the Committee.

The Committee will prepare the Committee report required by SEC rules to be included in the Company's annual proxy statement.

The Committee will also monitor the present and future capital requirements of the Company and review and provide guidance to the Board and management about all proposals concerning the major financial policies of the Company.

The Company's management is responsible for the preparation, presentation and integrity of the Company's financial statements, including its system of internal controls. The independent auditors are responsible for planning and carrying out a proper audit of the Company's annual financial statements, reviews of the Company's quarterly financial statements, and other procedures. In fulfilling their responsibilities, it is recognized that members of the Committee are not full-time employees of the Company and are not performing the functions of auditors or accountants.

III. Meetings of the Committee

The Committee shall meet at least four times a year, with authority to convene additional meetings as circumstances require. The Committee may invite any officer or employee of the Company to attend meetings. The Company's General Counsel, or in the absence of the General Counsel such person as may be designated by the Chairperson of the Committee, shall serve as Secretary to the Committee and shall prepare minutes of the Committee meetings. The Committee shall establish its own rules of procedure. The Committee shall meet separately at least quarterly with the Company's management, its internal auditor and its independent auditors to discuss any matters the Committee or any of these persons or firms believe should be discussed confidentially. The Committee shall meet in executive session at least quarterly.

IV. Duties and Responsibilities of the Committee

To fulfill its purposes, the Committee shall undertake the following duties and responsibilities:

1. Appoint the independent auditors to audit the financial statements of the Company for the coming year and pre-approve all audit and non-audit services to be provided by the independent auditors. The Committee may adopt appropriate procedures to delegate authority to pre-approve such services to one or more of its members. The Committee will regularly review the pre-approved audit and non-audit services and the fees paid to the independent auditors for such services.
   
   
2. Obtain and review, at least annually, a report from the independent auditors describing (a) the independent auditors' internal quality-control procedures; (b) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditors, 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 independent auditors, and any steps taken to deal with any such issues; and (c) all relationships between the independent auditors and the Company. The Committee shall discuss with the independent auditors any issues or relationships disclosed in such report that, in the judgment of the Committee, may have an impact on the independent auditors' performance, qualifications or independence.
   
   
3. Regularly review and discuss with the independent auditors, and with management, as appropriate, (a) the arrangements for and the scope of each audit of the Company's financial statements by the independent auditors; (b) the results of any audit by the independent auditors, including any significant matters arising from any audit; (c) any audit problems or difficulties encountered by the independent auditors during the course of the audit engagement, including any restrictions on their activities or access to required information and of any significant disagreements with management, and management's response; (d) any significant deficiency in the design or the operation of the Company's internal accounting controls identified by the independent auditors or management, any special audit steps adopted in light of any material control deficiency, and any resulting recommendations; (e) all critical accounting policies and practices used by management; (f) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, including the ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors; and (g) any material written communications between the independent auditors and management, such as any management letter or schedule of unadjusted differences.
   
   
4. Review and evaluate the qualifications, performance and independence of the independent auditors, including the lead audit partner. The Committee shall take into account any non-audit services provided by the independent auditors, as well as the opinions of management, in such assessment.
   
   
5. Review and discuss with management the timing and process for implementing the rotation of the lead audit partner, the concurring partner and any other active audit engagement team partner and consider whether there should be a regular rotation of the audit firm itself.
   
   
6. Review and discuss with the independent auditors and management the audited financial statements to be included in the Company's Annual Report on Form 10-K, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Committee shall review and consider with the independent auditors the matters required to be discussed by Statement of Auditing Standards No. 61 ("SAS No. 61"), including any deficiencies in internal controls, fraud, illegal acts, management judgments and estimates, audit adjustments, audit difficulties, and the independent auditors' judgments about the quality of the Company's accounting practices.
   
   
7. Review and discuss with the independent auditors and management the Company's interim financial results to be included in each quarterly report on Form 10-Q, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations." Each such review shall include any matters required to be discussed by SAS No. 61, and shall occur prior to the Company's filing of the related Form 10-Q with the SEC.
   
   
8. Review and discuss with management earnings press releases, as well as financial information and earnings guidance provided to analysts and ratings agencies, it being understood that such discussions may, in the discretion of the Committee, be done generally (i.e., by discussing the types of information to be disclosed and the type of presentation to be made) and that the Committee need not discuss in advance each earnings release or each instance in which the Company gives earnings guidance.
   
   
9. Review and discuss with management and the independent auditors significant financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including (a) any significant changes to the Company's selection or application of auditing and accounting principles, policies, controls, procedures and practices proposed or contemplated by the independent auditors or management; (b) any analyses prepared by management or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements; and (c) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company. The Committee shall advise management and the independent auditors that they are expected to provide to the Committee a timely analysis of significant financial reporting issues and practices affecting the Company.
   
   
10. Review and discuss with management and the independent auditors the Company's internal control report and the independent auditor's attestation of the report prior to the filing of the Company's Annual Report on Form 10-K.
    
    
11. Review and discuss with management and the independent auditors the responsibilities, budget and staffing of the Company's internal audit function and the planned scope of the internal audit. The Committee shall also review the results of internal audits and any significant reports to management prepared by the internal auditor, together with any management responses.
    
    
12. Review and discuss with management and the independent auditors the Company's significant financial risks and exposures and the steps taken to monitor and minimize such risks, including any insurance policies and other policies with respect to risk assessment and risk management.
    
    
13. Obtain from the independent auditors assurance that any audit was conducted in a manner consistent with Section 10A of the Securities Exchange Act of 1934, as amended.
    
    
14. Discuss with the Company's General Counsel any significant legal matters that may have a material effect on the Company's financial statements and the Company's compliance policies, including any material communications with governmental agencies.
    
    
15. Review and discuss with management Company policies with respect to compliance with laws and regulations, ethics, conflicts of interest and the investigation of misconduct or fraud, including the Company's Code of Conduct. The Committee shall obtain periodic reports from management regarding the Company's compliance with its policies and applicable legal requirements.
    
    
16. Maintain and periodically review procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. The Committee shall periodically review with management and internal audit these procedures and any significant complaints received.
    
    
17. Set clear hiring policies for employees or former employees of the independent auditors.
    
    
18. Prepare any report or other disclosures, including any recommendations of the Committee, required by the rules of the Securities and Exchange Commission to be included in the Company's annual proxy statement.
    
    
19. Review and provide guidance to the full Board and management regarding the Company's significant financial plans, policies or transactions, including (a) policies relating to cash needs, shareholder distributions, share repurchases and investments; (b) adjustments to the capital structure; (c) the annual financial plan to be included as part of the annual business plan reviewed and approved by the Board; (d) tax planning and compliance; (e) proposed mergers, acquisitions, divestitures and strategic investments; (f) the spending authority approval process for officers and employees; and (g) other transactions or financial issues that management desires to have reviewed by the Committee.
    
    
20. Review this Charter at least annually and recommend any changes to the Board.
    
    
21. Report its actions to the Board on a regular basis and to make such recommendations with respect to the matters described in this Charter and other matters as the Committee may deem necessary or appropriate.
    
    
22. Conduct an annual performance evaluation of the Committee.
    
    
23. Take such other actions and do such other things as may be referred to it from time to time by the Board.

V. Resources and Authority of the Committee

The Committee shall have the resources and authority appropriate to discharge its responsibilities, including the authority to engage special or independent counsel, accountants or other experts and advisors.

 

Committee Members

Thomas A. Fanning
Dr. Adam W. Herbert, Jr.
Delores M. Kesler
John S. Lord
Walter L. Revell