annual report 2009 - Aer Lingus

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30 Directors’ Report Aer Lingus Group Plc – Annual Report 2009Directors’ Report [continued]Board of DirectorsRoleThe duties of the Board and its committees are set out clearly informal terms of reference which are reviewed regularly and statethe items specifically reserved for decision by the Board.The Board is responsible for the leadership and control of theCompany. There are matters formally reserved to the Board forconsideration and decision. The Board is responsible for establishingoverall group strategy. It approves the Group’s commercial strategyand the operating budget and monitors performance through thereceipt of monthly operating information and financial statements.The approval of acquisitions is also a matter reserved for the Board.Similarly, there are authority levels covering capital expenditurewhich can be exercised by the Chief Executive or by the Chairmanand Chief Executive jointly. Beyond these levels of authority, projectsare referred to the Board for approval.Other matters reserved to the Board include treasury policy;internal control, audit and risk management; pension schemes;corporate social responsibility and the appointment or removalof the Company Secretary.The Board has delegated responsibility for the management of theCompany, through the Chief Executive, to executive management.The Board also delegates some of its responsibilities to BoardCommittees, details of which are set out below.MembershipThe Board currently comprises fourteen Directors – oneexecutive (Christoph Mueller, Chief Executive Officer) and thirteennon-executive (including the Chairman). Biographies of currentDirectors are set out on pages 10 and 11.During 2009, of the non-executive Directors, Mr Thomas Corcoran,Mr Laurence Crowley, Mr Ivor Fitzpatrick, Ms Danuta Gray, Ms AnneMills and Mr Thomas Moran were considered to be independent bythe Board. Following changes in the composition of the Board, attimes during 2009, at least half the Board, excluding the Chairmandid not comprise non-executive Directors determined by the Boardto be independent.As at the date of this report, of the non-executive Directors, MrMontie Brewer, Mr Thomas Corcoran, Mr Laurence Crowley, Mr IvorFitzpatrick, Ms Danuta Gray, Mr Thomas Moran and Ms Nicola Shaware considered to be independent by the Board. Therefore, as at thedate of this report, at least half the Board excluding the Chairman, iscomprised of non-executive Directors determined by the Board to beindependent. It is the Company’s intention to continue to review thecomposition of the Board to endeavour to continue to comply withthis Combined Code requirement.The Board considers that between them the Directors bring the rangeof skills, knowledge and experience necessary to lead the Group.ChairmanMr Colm Barrington was appointed as Chairman on 3 October 2008.The Chairman is responsible for the effective working of the Boardand the Chief Executive is responsible for running the business ofAer Lingus Group plc. The division of responsibilities between theChairman and the Chief Executive is clearly established and has beenset out in writing and approved by the Board. Throughout 2009,the roles of Chairman and Chief Executive were independent ofeach other. Mr Barrington assumed executive responsibility foran interim period in 2009 following the resignation of the previousChief Executive and until the appointment of Mr Christoph Muelleras Chief Executive.The Chairman and the Company Secretary work closely together inplanning a forward programme of Board meetings and establishingtheir agendas. As part of this process the Chairman ensures that theBoard is supplied in a timely manner with information in a form andof a quality to enable it to discharge its duties. Mr Barrington holdsa number of other directorships and the Board considers that thesedo not interfere with the discharge of his duties to Aer Lingus.Senior Independent DirectorMr Laurence Crowley has been the Senior Independent Director(SID) from his appointment on 9 January 2009. The role of the SID isclearly established and has been set out in writing and approved bythe Board. The SID is available to all shareholders who have concernsthat cannot be addressed through the normal channels of Chairman,Chief Executive or Chief Financial Officer.Terms of appointmentAll Board members have a service contract or letter of appointmentwith the Company. All service contracts with executive Directorshave notice periods of 12 months or less.The terms upon which each of the non-executive Directors has beenappointed are set out in letters of appointment which reflect the formrecommended by the 2008 FRC Combined Code. It is the Company’spolicy that each non-executive Director will be appointed for a fixedperiod not exceeding three years (with the potential for a secondthree year term), subject to satisfactory performance and re-electionat any annual general meeting where this is required. Recommendationsto shareholders for the re-election of non-executive Directors beyondsix years will be made only after review by the Board. None of thenon-executive Directors is a party to any service contract with theCompany that provides for compensation upon termination.
Directors’ Report Aer Lingus Group Plc – Annual Report 200931The Minister for Transport of Ireland (acting through the Ministerfor Finance of Ireland in his capacity as shareholder) and the ESOTeach have specific rights under the Company’s Articles of Associationin relation to the nomination and rotation of Directors. These rightsmay not comply with the requirement under the Combined Codethat the Appointments Committee lead the process for Boardappointments and make recommendations to the Board regardingBoard appointments and the requirement under the CombinedCode that all Directors be submitted for re-election at regularintervals. The Minister for Transport of Ireland is entitled tonominate for appointment up to three Directors. The ESOT isentitled to nominate for appointment up to two Directors. Thenumber of Directors eligible to be nominated by the Minister forTransport of Ireland and the ESOT is dependent on the proportionof the total issued ordinary share capital held by each of themrespectively. Up to 5 March 2009, the Minister for Transport ofIreland nominated his full entitlement of three Directors (Mr FrancisHackett, Dr Colin Hunt and Mr Chris Wall). Mr Chris Wall ceasedto be a Director on 5 March 2009 following the expiry of hisappointment as a “Minister’s Nominee”. Mr Leslie Buckley wasappointed as a “Minister’s Nominee” on 18 May 2009 andthroughout the remainder of the year there were three such“Minister’s Nominees” (Mr Leslie Buckley, Mr Francis Hackettand Dr Colin Hunt).During 2009 the ESOT nominated its full entitlement of twoDirectors (Mr David Begg and Mr Michael Johns) (the “ESOTNominees”). Further information is given in the biographies ofcurrent Directors on pages 10 and 11 of the skills and experienceof the Minister’s Nominees and the ESOT Nominees.Retirement and re-electionIn accordance with the Articles of Association, one-third of theDirectors who are subject to retirement by rotation retire from officeat each AGM. All Directors, with the exception of those nominated bythe Minister for Transport of Ireland (acting through the Minister forFinance of Ireland) or by the ESOT, are required to retire by rotationevery three years. All retiring Directors may offer themselves for reelection.Directors nominated by the Minister for Transport of Irelandor ESOT are not subject to these provisions in relation to retirement.It is the Board’s policy to regularly review the chairmanship of itscommittees. Appointments to committees are for a period of up tothree years, which may be extended for a further three-year periodprovided the Director remains independent, or in the case of somecommittees, a majority of the Directors on the committee remainindependent. A Director being a member of the same Board committeefor more than six years may be permitted only after review by theBoard. Recommendations to shareholders for the re-election ofnon-executive Directors for terms beyond six years will be madeonly after review by the Board.Induction and developmentNew Directors are provided with extensive briefing materials onthe Company and its operations. An induction process is clearlyestablished and has been set out in writing and approved by Board.There is in place a procedure under which Directors, in furtheranceof their duties, are able to take professional advice, if necessary, atthe Company’s expense.The Company Secretary is responsible for ensuring that Boardprocedures are followed and all Directors have access to his adviceand services. The Company Secretary ensures that the Board membersreceive appropriate training as necessary. The Company Secretary isresponsible for advising the Board on all corporate governance matters.The Company has an insurance policy in place which indemnifies theDirectors in respect of legal action taken against them in respect oftheir reasonable actions as officers of the Company.MeetingsThe Board has a fixed schedule of meetings each year and maymeet more frequently as required. There were nine scheduledBoard meetings in the year. In addition there were four unscheduledmeetings and six conference call meetings. Therefore, there were atotal of nineteen Board Meetings held in 2009. Details of Directors’attendance at these meetings is outlined in the table on page 35.For regular Board meetings, the agenda will usually comprise reportsfrom the Chief Executive, Chief Financial Officer and executivemanagement. The practice is to have the agenda and supportingpapers circulated to the Directors seven days ahead of each meeting.It is inevitable that there will be occasions when circumstances ariseto prevent Directors from attending meetings. In such circumstances,it is practice for the absent Director to review the Board papers withthe Chairman and convey any views on specific issues. It should alsobe noted that the time commitment expected of non-executiveDirectors is not restricted to Board meetings. All of the Directorsare to be available for consultation on specific issues falling withintheir particular fields of expertise. The Chairman and non-executiveDirectors meet at least annually as a group without the executiveDirectors present. In addition a further meeting each year consistsof the Senior Independent Director and the other non-executiveDirectors, without the Chairman being present.
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Page 5 and 6: Chairman’s Statement Aer Lingus G
Page 11 and 12: Operating and Financial Review Aer
Page 13 and 14: Board of Directors Aer Lingus Group
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Page 47 and 48: Financial Statements Aer Lingus Gro
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annual report 2009 - Aer Lingus

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