Aer Lingus 2010 Annual Report Download - page 31

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Directors’ Report Aer Lingus Group Plc – Annual Report 2010
for the election of non-executive Directors beyond six years will be
made only after review by the Board. None of the non-executive
Directors is a party to any service contract with the Company that
provides for benefi ts upon termination.
The Minister for Transport of Ireland (acting through the Minister for
Finance of Ireland in his capacity as shareholder) has specifi c rights
under the Company’s Articles of Association in relation to the
nomination and rotation of up to three Directors. These rights may not
comply with the requirements in both the Combined Code on Corporate
Governance (June 2008) and the UK Corporate Governance Code (June
2010) that the Appointments Committee lead the process for Board
appointments and make recommendations to the Board regarding Board
appointments and that all Directors be submitted for re-election at
regular intervals. The Minister for Transport of Ireland is entitled to
nominate up to three Directors for appointment. The number of
Directors eligible to be nominated by the Minister for Transport of
Ireland is dependent on the proportion of the total issued ordinary
share capital held by the Minister for Finance Throughout 2010, the
Minister for Transport of Ireland nominated his full entitlement of three
Directors (Mr Francis Hackett, Dr Colin Hunt and Mr Leslie Buckley).
During 2010, Aer Lingus ESOP Trustee Limited had specifi c rights under
the Company’s Articles of Association in relation to the nomination and
rotation of up to 2 Directors and it exercised these rights by nominating
its full entitlement of two Directors (Mr David Begg and Mr Michael
Johns) (the “ESOT Nominees”). In December 2010, it ceased have any
of these rights when it ceased to hold 1% of the issued share capital
of the company.
Further information is given in the biographies of current Directors on
page 16 of the skills and experience of the Minister’s Nominees.
Retirement and re-election
In accordance with the Articles of Association, one-third of the Directors
who are subject to retirement by rotation retire from offi ce at each AGM.
Until the annual general meeting to be held in 2012, all Directors, with
the exception of those nominated by the Minister for Transport of Ireland
(acting through the Minister for Finance of Ireland), are required to
retire by rotation every three years. With effect from the annual general
meeting to be held in 2012, all Directors, with the exception of those
nominated by the Minister for Transport of Ireland (acting through the
Minister for Finance of Ireland), will be required to retire by rotation
every year. All retiring Directors may offer themselves for re-election.
Directors nominated by the Minister for Transport of Ireland are not
subject to these provisions in relation to retirement.
It is the Board’s policy to regularly review the chairmanship of its
committees. Appointments to committees are for a period of up to three
years, which may be extended for a further three-year period provided
the Director is re-elected by shareholders and remains independent,
or in the case of some committees, a majority of the Directors on
the committee remain independent. A Director being a member of the
same Board committee for more than six years may be permitted only
after review by the Board. Recommendations to shareholders for the
re-election of non-executive Directors for terms beyond six years
will be made only after review by the Board.
Induction and development
New Directors are comprehensively briefed on the Company and its
operations, including the provision and extensive induction materials on
appointment. An induction process is clearly established and has been
set out in writing and approved by Board. In addition, to aid their
ongoing development and understanding of the business, Directors
engage with the executive and senior management teams.
There is in place a procedure under which Directors, in furtherance of
their duties, are able to take professional advice, if necessary, at the
Company’s expense.
The Company Secretary is responsible for ensuring that Board procedures
are followed and all Directors have access to his advice and services.
The Company Secretary ensures that the Board members receive
appropriate training as necessary. The Company Secretary is responsible
for advising the Board on all corporate governance matters.
The Company has an insurance policy in place which insures the
Directors in respect of legal action taken against them in respect
of their reasonable actions as offi cers of the Company.
Meetings
The Board has a fi xed schedule of meetings each year and may meet
more frequently as required. There were 10 scheduled Board meetings in
the year. In addition there were 6 conference call meetings which were
not pre-scheduled. Therefore, there were a total of 16 Board Meetings
held in 2010. Details of Directors’ attendance at these meetings is
outlined in the table on page 34. For regular Board meetings, the
agenda will usually comprise reports from the Chief Executive, Chief
Financial Offi cer and executive management. The practice is to have the
agenda and supporting papers circulated to the Directors seven days
ahead of each meeting. It is inevitable that there will be occasions
when circumstances arise to prevent Directors from attending meetings.
In such circumstances, it is practice for the absent Director to review
the Board papers with the Chairman and convey any views on specifi c
issues. It should also be noted that the time commitment expected of
non-executive Directors is not restricted to Board meetings. All of the
Directors are to be available for consultation on specifi c issues falling
within their particular fi elds of expertise. The Chairman and non-
executive Directors meet at least annually as a group without the
Directors’ Report (continued)