EasyJet 2009 Annual Report Download - page 44

42 easyJet plc Annual report and accounts 2009
CORPORATE GOVERNANCE CONTINUED
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 2009. In order to
preserve auditor objectivity and independence, the Board has decided that
PricewaterhouseCoopers LLP will not be asked to provide consulting
services unless this is in the best interests of the Company. Clause 9 of
the Audit Committee’s terms of reference sets out the formal policy on
non-audit work. The auditors are asked on a regular basis to articulate the
steps that they have taken to ensure objectivity and independence. easyJet
monitors the auditors’ performance, behaviour and effectiveness during the
exercise of their duties. This included this year obtaining a report on the
auditors’ own quality control procedures and a consideration of their annual
audit, quality and transparency report. In the financial year, easyJet spent
£0.1 million with PricewaterhouseCoopers LLP (2008: £0.9 million) in
respect of non-audit services.
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. David Bennett has served as the Chairman of the Committee
during the year. David was until 31 July 2009 an Executive Director of Abbey
National plc prior to which he was Chief Executive Officer and Finance
Director of Alliance and Leicester plc, experience which the Board considers
to be recent and relevant for the purposes of undertaking the role as
Chairman of the Committee.
Nominations Committee
The Nominations Committee comprises at least three members. During
the year, the Nominations Committee members were Sir Colin Chandler
(Chairman until 30 June 2009), David Bennett, Professor Rigas Doganis,
Dawn Airey (until 31 December 2008) and Sir David Michels who took
over as Chairman on 1 July 2009. Sir Colin Chandler was not considered to
be independent as he was Chairman of the Group before his retirement.
However, the Board was satisfied that Sir Colin Chandler’s personal integrity
and experience made him a highly effective member of the Board and the
Nominations Committee. The Board is satisfied on the same grounds with
the appointment of Sir David Michels to the Nominations Committee.
This Committee is responsible for nominating candidates to fill Board
positions and for making recommendations on Board composition and
balance. In appointing Non Executive Directors, the Board’s practice is to
use an external recruitment agency.
The Nominations Committee has met three times during the year. The first
meeting was to consider and approve the appointment of Keith Hamill.
The second was to consider a long-term successor to Sir Colin Chandler as
Chairman of the Company and resulted in the recommendation to the
Board of Sir Michael Rake. The discussions at this meeting pertaining to the
appointment of Chairman were chaired by David Bennett, in accordance
with the provisions of the Combined Code. The third was to consider
and approve the appointment of Sir David Michels as Interim Chairman
and Sir Michael Rake as Deputy Chairman. The searches for Keith Hamill
and Sir Michael Rake both involved the use of independent recruitment
consultants. Sir David Michels was appointed Interim Chairman without the
involvement of independent recruitment consultants or open advertising
as his chairmanship is only intended to be short term until a new Chairman
is formally appointed. The Committee is utilising independent recruitment
consultants to identify a suitable successor to Jeff Carr as Group Finance
Director, and the search process is well advanced.
The terms of reference of the Nominations Committee are documented
and agreed by the main Board. The full text of the terms of reference is
available in the governance section of easyJet’s corporate website,
http://corporate.easyJet.com.
Before selecting new appointees, the Nominations Committee considers the
balance of skills, knowledge and experience on the Board to ensure that a
suitable balance is maintained. All job specifications prepared include details
of the time commitments expected in the role.
On joining the Board, new Board members receive a full and tailored
induction. Shareholders are offered the chance to meet new Directors.
Contracts and letters of appointment with Directors are made available at
the Annual General Meeting or on request.
Litigation Committee
As a result of the proceedings brought by easyGroup IP Licensing Limited
(a company under the ultimate control of Sir Stelios Haji-Ioannou) in 2008
in relation to the clarification of the brand licence, the Board continues to
operate a separate Litigation Committee to deal with the proceedings
and all matters related to them. Neither Sir Stelios Haji-Ioannou nor
Bob Rothenberg (as his nominee) sit on this Committee which comprises
every other Director of the Board. It is anticipated that the Committee shall
continue to exist until the proceedings and any related circumstances giving
rise to a conflict of interest between Sir Stelios Haji-Ioannou’s interests and
those of the Company have been resolved. In this respect, a date in or
around June 2010 for a High Court hearing to adjudicate the dispute is
expected to be confirmed in due course.
Relations with investors and the Annual General
Meeting (“AGM”)
The AGM gives all shareholders the opportunity to communicate directly
with the Board. There is also regular communication with institutional
investors on key business issues. easyJet has an investor relations department
which runs an active investor relations programme to facilitate engagement
with investors including one on one meetings, visits to easyJet’s operations
and presentations. The investor relations website was upgraded during the
year with the aim of improving the information available to shareholders
about easyJet. The website can be accessed at http://corporate.easyjet.com.
Internal control
The overall responsibility for easyJet’s systems of internal control and
for reviewing its effectiveness rests with the Directors of the Company.
The responsibility for establishing and operating detailed control procedures
lies with the Chief Executive. However, the internal control systems are
designed to manage rather than eliminate the risk of failure to achieve
business objectives and by their nature can only provide reasonable but
not absolute assurance against material misstatement or loss.
The Board has conducted an annual review of the effectiveness of the
system of internal control during the year under the auspices of the Audit
Committee. No significant failings or weaknesses were identified during the
course of this review.
The internal control regime is enhanced by the operation of a whistleblower
reporting function. The system is operated by a specialist external third-party
service provider and allows employees to report concerns in confidence on
a no-names basis. The Audit Committee has approved the processes and
reporting structure for the function and receives regular reports on the
operation of the function.