Consolidated Financial Statements and Consolidated Management ...

5. The agreements between the company and its directors and managers or employees relating to compensation if they resign or are
unfairly dismissed, or if the employment relationship between them comes to an end as the result of a public acquisition offer.
The Company has agreed to set compensation for the CEO and four employees at an amount above that which could in fact apply to them
according to the terms of the Workers’ Statute or Royal Decree 1382/1985, of 1 August, which governs the special employment relationship for senior
executives in cases of unfair dismissal and changes of control.
6. Description of the main features of the internal risk control and management systems relating to the financial reporting process.
1. The company’s control environment
1.1. Bodies and/or functions responsible for: (i) the existence and maintenance of an appropriate and effective FICS; (ii) its implementation;
(iii) its supervision
The Financial Department is responsible for establishing the design, implementation and overall monitoring of the Group’s Internal Financial
Information Control System. This responsibility requires it to maintain the necessary control structure and ensure that it functions effectively
and continuously. The objective of this Internal Control System is to provide the entity with a reasonable level of security with regard to the
reliability of the financial information generated.
The entity’s Board of Directors is responsible for overseeing this control structure, in line with the provisions of Article 5 of the Regulation
of the Board of Directors.
In order to carry out this previously-described oversight function, the Board of Directors turns to the Audit and Control Committee, which
is obliged, through its internal auditing function, to implement measures and action plans to ensure that this oversight function is properly
fulfilled, as described in Article 25 of the Regulation of the Board of Directors.
1.2. Existence of the following elements, especially in relation to the financial information generation process:
1.2.1. Departments and/or mechanisms assigned: (i) to design and oversee the organisational structure; (ii) to clearly define areas of
responsibility and authority, with a suitable distribution of tasks and functions; and (iii) the existence of sufficient procedures
for these to be properly disseminated within the entity
Definition and reviewing of the Group’s organisational structure is the responsibility of the Management Committee. Any significant
changes in the organisational chart are approved by the Board of Directors after being submitted by the Appointments and
Remuneration Committee. The organisational chart is available for all employees to consult on the Group’s corporate intranet.
The lines of both hierarchical and operational responsibility are duly communicated to all the Group’s employees. Internal Group
communication channels are used to do this, some of the most important of which are the intranet, management meetings and the
notice boards in place in each hotel.
In order to fulfil the objectives and responsibilities relating to maintenance and supervision of the Financial Information Control
process, specific functions have been defined within the organisational structure, and these apply to those responsible for each
process involved with Financial Information. The objectives of these functions are to ensure compliance with the implemented
controls, analyse how they function, and provide information about any changes or incidents that may occur.
This structure includes, from the lowest to the highest levels of responsibility, the supervisors of each process defined within the
control area, the managers of each business unit and the managers of each corporate area directly related with Internal Financial
Information Control System processes. The Financial Department receives this information from the different managers, and it is also
responsible for ensuring the proper functioning of this internal control system.
1.2.2. Code of Conduct, approval body, level of dissemination and instruction, body responsible for analysing non-compliance and
for proposing corrective actions and penalties
The Board of Directors of NH Hoteles, S.A. is responsible for approving the Code of Conduct. This document applies to all NH group
employees, and applies not only to employees and members of the Board of Directors, but also, in certain cases, to its clients and
suppliers.
On 24 May 2011, the Board of Directors approved a new Code of Conduct, which has replaced the previous document that was
approved in 2003.
The Code of Conduct has been provided both offline and online to all the Group’s employees along with additional training material
(“Practical Guide For Employees”, “Frequently-Asked Questions”), and these documents are permanently available for employees
to consult on the Company intranet. A procedure has been put in place to send the new Code of Conduct to each employee with an
individual email address and ask them to sign it the signed document is them saved in a database maintained by the Human Resources
Department. Periodic communication campaigns have been carried out aimed at all other employees.
An action plan is in place to provide employees with online courses designed to ensure they have sufficient knowledge of the Code
of Conduct.
Any modification of the Code of Conduct must be previously approved by the Board of Directors, and employees and any other
people affected must be notified.
The Code of Conduct contains the following points specifically relating to financial information and the recording of transactions:
- Section 3.2.4 c) states that “NH Hoteles shall ensure that all records of financial and accounting activity are prepared in an accurate
and reliable manner, cooperating with and facilitating the work of the internal audit, inspection and intervention units and other
internal control units, as well as that of external auditors and competent authorities, in all cases collaborating with the Justice
department”.
- Section 3.2.7 a) expressly states that “the Group acts on the basis of the principle of transparency of information, understood as
the commitment to submit reliable information, both financial and of any other kind, to the markets. This means that the company’s
economic-financial information, both internal and external, must faithfully reflect its true economic, financial and asset-related
situation, in line with generally-accepted accounting principles”.
The same section stresses that “those who have the requirement to do so must provide financial information that is truthful, complete
and understandable. In no case shall they knowingly provide information that is incorrect, inaccurate, or imprecise, with the following
conduct being clearly and specifically prohibited:
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ANNUAL CORPORATE GOVERNANCE REPORT