annual report 2009 - Aer Lingus

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32 Directors’ Report Aer Lingus Group Plc – Annual Report 2009Directors’ Report [continued]Performance evaluationThe Board and its committees undertake an annual evaluation oftheir performance of how well they are functioning as an effectiveboard applying best principles of governance, whether each directorcontinues to contribute effectively and demonstrate commitmentto the role and to identify areas for development. The Chairman’sperformance is evaluated by the Senior Independent Director andthe non-executive Directors at least once a year. In addition to beingevaluated by the Chairman, the Directors are also obliged to assesstheir own performance. In 2009 an annual evaluation of the Board’sperformance was conducted with the assistance of external consultants.RemunerationDetails of remuneration paid to Directors is set out in the Reportof the Remuneration Committee on Directors’ Remuneration onpages 38 to 42.Share ownership and dealingDetails of the shares held by Directors are set out in Table 2.3 on page41. The Company has a policy on dealing in shares that applies to allDirectors and senior management. Under the policy, Directors arerequired to obtain clearance from the Chairman before dealingin company shares. Directors and senior management are prohibitedfrom dealing in company shares during designated prohibitedperiods and at any time at which the individual is in possessionof price-sensitive information.Board committeesThe Board has established five permanent committees to assist inthe execution of its responsibilities. These are the Audit Committee,the Remuneration Committee, the Appointments Committee, theSafety Committee and the Risk Committee. Ad hoc committees areestablished from time to time to deal with specific matters. Termsof reference for each of the permanent committees have beendocumented and approved by the Board. Copies are availableon request from the Company Secretary.All Chairmen of the committees attend the Company’s AGMand are available to answer questions from the shareholders.Audit CommitteeThe Board has established an Audit Committee consisting of threenon-executive Directors considered by the Board to be independent.In 2009 the Audit Committee consisted of Mr Ivor Fitzpatrick(Chairman), Mr Laurence Crowley and Ms Danuta Gray. Mr LaurenceCrowley is a Chartered Accountant. The Audit Committee met fourtimes during the year. Attendance at meetings held is set out in thetable on page 35.The main role and responsibilities of the Audit Committee are setout in written terms of reference, which encompass those set outin the Combined Code, including:(a) to monitor the integrity of the financial statements of theCompany and any formal announcements relating to theCompany’s financial performance and reviewing significantfinancial judgments contained therein;(b) to review the Company’s internal financial controls and itsinternal controls and risk management systems; (The reviewof internal financial control and risk management systemshas been delegated to the Risk Committee to complete.);(c) to monitor and review the results of the Company’s internalaudit function and the annual internal audit plan;(d) to make recommendations to the Board in relation to theappointment, re-appointment and removal of the externalauditors and to approve the terms of engagement of theexternal auditors;(e) to monitor and review the external auditors’ independence andobjectivity and the effectiveness of the audit process taking intoconsideration relevant professional and regulatory requirements;(f) to develop and implement policy on the engagement ofthe external auditors to supply non-audit services, taking intoaccount relevant ethical guidance regarding the provision ofnon-audit services by the external audit firm and to report tothe Board;(g) to report to the Board, identifying any matters in respectof which it considers action or improvement is needed andmaking recommendations as to the steps to be taken; and(h) to review the Company’s whistleblowing policy.The Audit Committee discharged its obligations throughout theyear as follows:• Reviewed internal and external audit plans and approvedinternal audit plans in advance of audit;• Met with and received reports from internal and externalauditors;• Monitored and reviewed internal and external auditorsperformance;• Reviewed the independence of the external auditors;• Considered whether or not to recommend the re-appointmentof the external auditors;• Reviewed the half-year report, the annual report and accounts;and• Reviewed reports of Risk Committee on Group CorporateRisk Assessment Process.
Directors’ Report Aer Lingus Group Plc – Annual Report 200933The committee has a process in place to ensure that theindependence of the audit is not compromised, which includesmonitoring the nature and extent of services provided by theexternal auditors through its annual review of fees paid to theexternal auditors for audit and non-audit work. Non-audit servicesduring the year related to taxation and work in connection withthe Defence Document for the second Ryanair bid. The committeebelieved that PwC were best placed to provide these services dueto their knowledge of the Group.The committee also reviews the safeguards, which the externalauditors have put in place to ensure their objectivity andindependence in accordance with professional and regulatoryrequirements.Remuneration CommitteeThe Remuneration Committee of the Board comprises fourindependent non-executive Directors. Until January 2009 theCommittee members were Mr Ivor Fitzpatrick (Chairman), Mr ColmBarrington and Ms Anne Mills. In January 2009 the compositionof the Committee was revised to include two additional members:Ms Danuta Gray was appointed as Chairman of the Committee andMr Tom Corcoran was appointed as a member of the Committee.Ms Anne Mills retired on 21 March 2010 upon the expiry of herterm of office as a director.The Remuneration Committee determines the conditions ofemployment of executive Directors and the senior managementteam. It met six times during the year. Attendance at meetingsheld is set out in the table on page 35.The Remuneration Committee’s principal duties in relationto Directors’ remuneration include:(a) to determine and agree with the Board the policy for theremuneration of the Chief Executive, the Chairman of theBoard, the executive Directors and the Company Secretary,and such other senior management members as it is designatedto consider;(b) to set remuneration policy so as to ensure that seniormanagement are provided with appropriate incentives toencourage performance and are rewarded for their individualcontributions to the success of the Company in a fair andresponsible manner;(c) to approve the design of, and determine targets for, anyperformance-related pay schemes operated by the Companyand approve the total annual payments made under suchschemes; and(d) to monitor and approve the total remuneration package of eachexecutive Director and relevant senior management members,within the terms of the agreed policy.Appointments CommitteeIn January 2009, the composition of the Appointments Committeewas revised when Mr Laurence Crowley was appointed as Chairmanof the Committee and Dr Colin Hunt and Mr Michael Johns wereappointed as members (in addition to the continuing members beingMr Colm Barrington and Mr Tom Moran). The role of the AppointmentsCommittee is to lead the process for considering Board appointments.The Appointments Committee may not be chaired by the Chairman ofthe Board on any matter concerning the succession to the chairmanshipof the Board. The Appointments Committee had five scheduledmeetings during the year. Attendance at the meetings held is setout in the table on page 35.The Appointments Committee’s terms of reference includethe following:(a) to review regularly the structure, size and composition (includingthe skills, knowledge and experience) required of the Boardcompared to its current position and make recommendationsto the Board with regard to any changes;(b) to give full consideration to succession planning for Directorsand senior management, taking into account the challengesand opportunities facing the Company; and(c) to be responsible for identifying and nominating, for the approvalof the Board, candidates to fill Board vacancies as and when theyarise.Before recommending an appointment, the Committee will evaluatethe balance of skills, knowledge and experience of the Board.Mr Laurence Crowley, Mr Leslie Buckley and Mr Christoph Muellerwere appointed to the Board in 2009 and Mr Montie Brewer andMs Nicola Shaw were appointed to the Board since the year-end.All were nominated for appointment based on the skills theywould bring to the Board. Detailed biographies of these Directorsare set out on pages 10 and 11. Neither external consultants noropen advertisements were used in the appointment of Mr LaurenceCrowley or Mr Leslie Buckley (who was appointed as a nominee ofthe Minister for Transport of Ireland). The Appointments Committeeundertook a process involving other members of the Board and anexternal consultancy for the appointments of Mr Christoph Mueller,Mr Montie Brewer and Ms Nicola Shaw.
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annual report 2009 - Aer Lingus

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