Vodafone 2007 Annual Report Download - page 72

70 Vodafone Group Plc Annual Report 2007
Corporate Governance
continued
Under its terms of reference, the Audit Committee is required, amongst other
things, to oversee the relationship with the external auditors, to review the
Company’s preliminary results announcement, interim results and annual
financial statements, to monitor compliance with statutory and listing
requirements for any exchange on which the Company’s shares and debt
instruments are quoted, to review the scope, extent and effectiveness of the
activity of the Group Internal Audit Department, to engage independent
advisers as it determines is necessary and to perform investigations.
The Audit Committee reports to the Board on the quality and acceptability of
the Company’s accounting policies and practices, including without
limitation, critical accounting policies and practices. The Audit Committee
also plays an active role in monitoring the Company’s compliance efforts for
Section 404 of the Sarbanes-Oxley Act and receives progress updates at each
of its meetings.
At least twice a year, the Audit Committee meets separately with the external
auditors and the Group Audit Director without management being present.
Further details on the work of the Audit Committee and its oversight of the
relationships with the external auditors can be found under “Auditors” and
the “Report from the Audit Committee” which are set out on pages 72 and
74.
Nominations and Governance Committee
The members of the Nominations and Governance Committee during the
year, together with a record of their attendance at meetings which they were
eligible to attend, are set out below:
Meetings attended
Sir John Bond, Chairman 2/2
John Buchanan 1/2
Arun Sarin 2/2
Lord Broers 2/2
Professor Jürgen Schrempp 2/2
Luc Vandevelde (from 30 January 2007) 1/1
The Nominations and Governance Committee’s key objective is to ensure
that the Board comprises individuals with the requisite skills, knowledge and
experience to ensure that it is effective in discharging its responsibilities. The
Nominations and Governance Committee leads the process for identifying
and making recommendations to the Board of candidates for appointment as
directors of the Company, giving full consideration to succession planning
and the leadership needs of the Group. It also makes recommendations to
the Board on the composition of the Nominations and Governance
Committee and the composition and chairmanship of the Audit and
Remuneration Committees. It regularly reviews the structure, size and
composition of the Board, including the balance of skills, knowledge and
experience and the independence of the non-executive directors, and makes
recommendations to the Board with regard to any changes. It is also
responsible for the oversight of all matters relating to corporate governance,
bringing any issues to the attention of the Board.
The Nominations and Governance Committee meets periodically when
required. No-one other than members of the Nominations and Governance
Committee is entitled to be present at its meetings. Other non-executive
directors and external advisers may be invited to attend.
The Nominations and Governance Committee recommended Vittorio Colao
for appointment as an executive director and Alan Jebson and Nick Land for
appointment as non-executive directors during 2006. Since the end of the
2007 financial year it has recommended the appointment of Simon Murray
as a non-executive director with effect from 1 July 2007.
Remuneration Committee
The members of the Remuneration Committee during the year, together with
a record of their attendance at meetings which they were eligible to attend,
are set out below:
Meetings attended
Luc Vandevelde, Chairman 9/9
Dr Michael Boskin 9/9
Professor Jürgen Schrempp 6/9
Anthony Watson (from 26 September 2006) 4/5
Philip Yea 9/9
Sir John Bond (until 26 September 2006) 3/4
The Remuneration Committee determines, on behalf of the Board, the
Company’s policy on the remuneration of the Chairman, the executive
directors and the senior management team of the Company. The
Remuneration Committee determines the total remuneration packages for
these individuals, including any compensation on termination of office. The
Chairman and Chief Executive may attend the Remuneration Committee’s
meetings by invitation. They do not attend when their individual
remuneration is discussed and no director is involved in deciding his own
remuneration.
The Remuneration Committee is responsible for appointing any consultants
in respect of executive directors’ remuneration. Further information on the
Remuneration Committee’s activities is contained in “Governance – Board’s
Report to Shareholders on Directors’ Remuneration” on pages 78 to 87.
Executive Management
The executive directors, together with certain other Group functional heads
and regional chief executives, meet 12 times a year as the Executive
Committee under the chairmanship of the Chief Executive. The Executive
Committee is responsible for the day-to-day management of the Group’s
businesses, the overall financial performance of the Group in fulfilment of
strategy, plans and budgets and Group capital structure and funding. It also
reviews major acquisitions and disposals. The members of the Executive
Committee and their biographical details are set out on pages 64 to 66.
Statement on Internal Control
Introduction
The Board has established procedures that implement in full the Turnbull
Guidance, “Internal Control: Revised Guidance for Directors on the Combined
Code”, for the year under review and to the date of approval of the Annual
Report. These procedures, which are subject to regular review, provide an
ongoing process for identifying, evaluating and managing the significant risks
faced by the Group. See page 88 for Management’s Report on Internal
Control over Financial Reporting.
Responsibility
The Board has overall responsibility for the system of internal control. A
sound system of internal control is designed to manage rather than eliminate
the risk of failure to achieve business objectives, and can only provide
reasonable and not absolute assurance against material misstatement or
loss. The process of managing the risks associated with social, environmental
and ethical impacts is also discussed under “Governance – Corporate
Responsibility and Environmental Issues” on pages 75 to 76.
Control structure
The Board sets the policy on internal control that is implemented by
management. This is achieved through a clearly defined operating structure
with lines of responsibility and delegated authority. The Executive
Committee, chaired by the Chief Executive, manages this on a day-to-day
basis.