Purpose

The purpose of the Audit Committee is to represent and assist the Board of Directors in its oversight of (1) the integrity of the financial reporting of the Company, (2) the independence, qualifications and performance of the Company’s independent auditor, (3) the performance of the Company’s internal audit function, and (4) the Company’s compliance with legal and regulatory requirements. The Audit Committee also prepares the report required by the rules of the Securities and Exchange Commission to be included in the Company’s annual proxy statement.

Members

The Audit Committee shall consist of at least three members of the Board who satisfy the independence requirements under the rules of the New York Stock Exchange and the Securities and Exchange Commission. The Board shall designate one member as Chairperson or delegate authority to designate a Chairperson to the Audit Committee. Each member of the Audit Committee shall be financially literate and at least one member of the Audit Committee shall be an “audit committee financial expert” as defined by the Securities and Exchange Commission.

Outside Advisors

The Audit Committee shall have the authority to retain such outside legal, accounting or other consultants or advisors as it determines appropriate to assist it in the performance of its functions, or to advise or inform the Committee. The Committee may also meet with investment bankers, financial analysts or other advisors. The Audit Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee. The Audit Committee may also, from time to time as appropriate, delegate certain of the duties and responsibilities of the Audit Committee to one or more of its members. The Company shall provide for appropriate funding, as determined by the Audit Committee, for payment of compensation to the independent auditor and to any advisors retained by the Audit Committee.

Duties and Responsibilities

On behalf of the Board, the Audit Committee shall, among its duties and responsibilities:

1.      Review and discuss the annual audited 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, and recommend to the Board whether the financial statements should be included in the Form 10-K. The review of the annual audited financial statements also includes a review of any transactions as to which management obtained a letter pursuant to Statement on Auditing Standards No. 50.

2.      Review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to filing the Form 10-Q, including the results of the independent auditor’s review of them and the Company’s disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations.

3.      Review major changes to the Company’s auditing and accounting principles and practices as suggested by the independent auditor, internal auditors or management, significant issues and judgments regarding accounting and auditing principles and practices, and the effect of regulatory and accounting initiatives on the Company’s financial statements.

4.      Meet separately, periodically, with management, with internal auditors (or other personnel responsible for the internal audit function) and with the Company’s independent auditors.

5.      The Audit Committee shall be directly responsible, in its capacity as a committee of the Board, for the appointment, compensation and oversight of the work of the independent auditor for the purpose of preparing or issuing an audit report or related work. In this regard, the Audit Committee shall appoint, retain, compensate, evaluate, and terminate when appropriate, the independent auditor, which shall report directly to the Audit Committee.

6.      Preapprove all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor and establish policies and procedures for the engagement of the independent auditor to provide auditing and permitted non-audit services.

7.      Obtain and review, at least annually, a report by the independent auditor describing: the independent auditor’s internal quality-control procedures; and any material issues raised by the most recent internal quality-control review, or peer review, 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 auditor, 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.

8.      Receive at least annually and discuss with the independent auditor the auditor’s report regarding its independence.

9.      Meet with the independent auditor prior to the audit to review the scope and planning of the audit.

10.    Review with the independent auditor the results of the annual audit examination, and any issues the auditor may have encountered in the course of its audit work and management’s response. This review should include, among other things, any management letter, any restrictions on the scope of activities or access to required information, and changes required in the planned scope of the internal audit.

11.    Discuss the Company’s earnings press releases and corporate policies with respect to earnings releases and financial information and earnings guidance provided to analysts and rating agencies.

12.    Discuss with management the Company’s financial risks and policies with respect to risk assessment and risk management.

13.    Review the adequacy and effectiveness of the Company’s internal controls, including any significant deficiencies in internal controls and significant changes in such controls reported to the Audit Committee by the independent auditor, the internal auditor or management, and review the adequacy and effectiveness of the Company’s disclosure controls and procedures.

14.    Review with the independent auditor and the internal auditor the scope and results of the internal audit program, including responsibilities and staffing, and review the appointment and replacement of the director of the internal audit department.

15.    Review candidates for the positions of chief financial officer and controller of the Company.

16.    Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. Meet with management periodically to review complaint activity.

17.    Establish policies for hiring employees and former employees of the independent auditor.

18.    Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Business Conduct and Ethics.

19.    Review with the Company’s General Counsel and independent auditor (1) legal matters that may have a material impact on the financial statements, (2) accounting or compliance policies, and (3) any material reports or inquiries received from regulators, governmental agencies or employees that raise material issues regarding the Company’s financial statements and accounting or compliance policies.

20.    Review this Charter annually and recommend any changes to the Board for approval.

21.    Review the Audit Committee’s own performance annually.

Meetings

The Audit Committee shall meet at least four times per year, either in person or telephonically, and at such times and places as the Audit Committee shall determine. The Audit Committee shall meet with the chief financial officer, the controller, the director of the internal audit department and the independent auditor in separate executive sessions periodically. The Audit Committee shall report regularly to the Board.

1.       Members. The Board of Directors (the “Board”) of Regis Corporation (the “Company”) has established a Compensation Committee of at least three members, consisting entirely of independent directors, and designates one member as Chairperson. For purposes hereof, an “independent” director is a director who meets the definition of “independence,” as determined by the Securities and Exchange Commission and the New York Stock Exchange (NYSE). Additionally, members of the Compensation Committee must qualify as “non-employee directors” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and as “outside directors” for purposes of Section 162(m) of the Internal Revenue Code.

2.       Purposes, Duties, and Responsibilities. The purpose of the Compensation Committee is to discharge the responsibilities of the Board relating to compensation of the Company’s executive officers and directors and to produce the annual report on executive compensation for inclusion in the Company’s proxy statement. The duties and responsibilities of the Compensation Committee are to:

(a)     Oversee the Company’s executive officers’ compensation structure, policies and programs, and assess whether the Company’s compensation structure establishes appropriate incentives for such officers.

(b)      Approve the Company’s incentive-compensation and equity-based compensation plans.

(c)     Review and approve corporate goals and objectives relevant to the compensation of the Chief Executive Officer (CEO), evaluate the CEO’s performance in light of those goals and objectives and the feedback received from the annual review of the CEO conducted by the Chairman of the Board and the Nominating and Corporate Governance Committee, and set the CEO’s compensation level based on this evaluation.

(d)     Approve or make recommendations to the Board with respect to the compensation of other executive officers.

(e)     Approve stock option and other stock incentive awards for employees.

(f)     Review annually the compensation of directors for service on the Board and its committees and recommend changes in compensation to the Board.

(g)     Annually evaluate the performance of the Compensation Committee and the adequacy of the Committee’s charter.

(h)     Perform such other duties and responsibilities as are consistent with the purpose of the Compensation Committee and as the Board or the committee deems appropriate.

3.      Subcommittees. The Compensation Committee may delegate any of the foregoing duties and responsibilities to a subcommittee of the Compensation Committee consisting of not less than two members of the Compensation Committee.

4.      Outside Advisors. The Compensation Committee will have the authority to retain or to obtain the advice of such outside counsel, experts, and other advisors as it determines appropriate to assist it in the full performance of its functions, including any compensation consultant used to assist the Compensation Committee in the evaluation of director or executive compensation, and shall have sole authority to approve the advisor’s fees and other retention terms. Prior to any such engagement or retention, the Compensation Committee shall first take into consideration all factors relevant to the advisor’s independence from management, including those specified in the NYSE rules. The Compensation Committee will be directly responsible for the appointment, compensation and oversight of the work of the compensation advisors so retained, and shall be provided by the Company with appropriate funding, as determined by the Compensation Committee, for the payment of reasonable compensation to any such advisors.

5.      Meetings. The Compensation Committee will meet as often as may be deemed necessary or appropriate, in its judgment, either in person or telephonically, and at such times and places as the Compensation Committee determines. The majority of the members of the Compensation Committee constitutes a quorum. The Compensation Committee will report regularly to the full Board with respect to its activities.