EasyJet 2008 Annual Report Download - page 31

easyJet plc
Annual report and accounts 2008
Corporate governance
continued
Board Committees
Remuneration Committee
At 30 September 2008, the Remuneration Committee comprised
five independent Non Executive Directors, namely Sir David Michels
(Committee Chairman), David Bennett, Professor Rigas Doganis, Dawn Airey
and Sven Boinet. This Committee, which meets at least twice per year,
has responsibility for making recommendations to the Board on the
compensation of senior executives and determining, within agreed terms
of reference, the specific remuneration packages for each of the Executive
Directors and the Chairman. In addition to meetings to allot shares under
the Company’s share option schemes, the Remuneration Committee
has met three times during the year.
The Board has reviewed the composition of the Remuneration Committee
during the year and at the end of June 2008, Sven Boinet was appointed
to the Remuneration Committee in place of John Browett who was
simultaneously appointed to the Audit Committee. The Board is satisfied
that the Directors who are currently members of this Committee are
those who are best able to contribute to the Committee’s objectives.
Shareholders are required to approve all new long-term incentive
plans. Further details of these plans can be found in the Report on
Directors’ remuneration.
Audit Committee
The Audit Committee comprises three Non Executive Directors, all of
whom are independent. As at 30 September 2008, the Audit Committee
members were David Bennett (Chairman), Sir David Michels and John
Browett. This Committee meets at least three times per year. The primary
function of the Audit Committee is to assist the Board in fulfilling its
oversight responsibilities by reviewing the financial reports and other
financial information in advance of publication, reviewing on a continuing
basis the systems of internal controls regarding finance and accounting
that management and the Board have established and reviewing generally
the auditing, accounting and financial reporting processes. The ultimate
responsibility for reviewing and approving the annual and other accounts
remains with the Board. The Audit Committee has met three times during
the course of the year.
The Audit Committee is charged with reviewing the effectiveness of internal
control, approving and monitoring the Internal Audit work plan, considering
issues arising from Internal Audit’s work, reviewing management’s response
to internal control issues, approving the external audit fee, considering the
external audit strategy and plans, reviewing the external auditors’ reports
and reviewing and approving the annual accounts. Both internal and external
auditors are given the opportunity to meet privately with the Audit
Committee without any member of management present.
The terms of reference of the Audit Committee are documented and
agreed by the main Board. The full text of the terms of reference is available
in the investor relations section of the easyJet website, www.easyJet.com.
The key terms set out that the Audit Committee will:
• Serve as an independent and objective party to monitor the quality
and timeliness of the financial reporting process and monitor the
internal financial control system;
• Review and appraise the audit efforts of the external auditors;
• Provide an open avenue of communication among the external auditors,
financial and senior management, and the Board;
• Confirm and assure the independence and objectivity of the
external auditor;
• Review and ensure the effectiveness of the risk management
processes of the Company;
• Review and monitor the effectiveness of the internal audit function
and the management responses to the recommendations.
The Audit Committee has the responsibility for appointing the external
auditors. PricewaterhouseCoopers LLP were reappointed auditors of the
Group at the Annual General Meeting, held in February 2008. The Audit
Committee recently reviewed its terms of reference. Following this review
and the receipt of advice from external advisers, the Committee
recommended certain changes to its terms of reference that were accepted
by the Board. These included the adoption of rules outlining the process
by which the Board of Directors would address conflicts of interest and
potential conflicts of interest of members of the Board. Potential conflicts
of interest are now required to be notified to and assessed by the Audit
Committee on behalf of the Board in line with the new Articles of
Association adopted at the last AGM of the Company following the
implementation of relevant provisions of the Companies Act 2006.
In order to preserve auditor independence, the Board has decided that the
auditor will not be asked to provide consulting services unless this is in the
best interests of the Company. Clause nine of the Audit Committee’s Terms
of Reference sets out the formal policy on non-audit work. The auditor is
asked on a regular basis to articulate the steps that it has taken to ensure
its independence. easyJet monitors the auditor’s performance and behaviour
during the exercise of its duties. In the financial year, easyJet spent £0.9 million
with PricewaterhouseCoopers LLP (2007: £0.6 million) in respect of
non-audit services and £1.6 million (2007: £2.4 million) with other parties
who are entitled to act as registered auditors.
29
OverviewDirectors’ reportReport on Directors’ remunerationFinancial informationOther information