Aer Lingus 2011 Annual Report Download - page 36

Annual Report 2011
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DIRECTORS’ REPORT Aer Lingus Group Plc
Directors’ Report (continued)
Under Statutory Instrument 450/2009 European Communities
(Directive 2006/46/EC) Regulations 2009 and the Listing Rules of the
Irish Stock Exchange (ISE), the Directors are required in this statement
to describe how the principles of the Codes have been applied by the
Company in the year.
Acopy of the UK Corporate Governance Code (June 2010) can be
obtained from the Financial Reporting Council’s website,
www.frc.org.uk. A copy of the Irish Corporate Governance Annex can
be obtained from the ISE’s website, www.ise.ie.
Statement of compliance
Except as disclosed below, the Directors consider that the Company
has complied with all relevant provisions of the UK Corporate
Governance Code and the Irish Corporate Governance Annex
throughout the year.
Rotation of Directors: The Minister for Transport of Ireland (acting
through the Minister for Finance of Ireland in his capacity as
shareholder) has specific rights under the Company’s Articles of
Association in relation to the nomination and rotation of up to 3
Directors. These rights may not comply with the requirement under
the UK Corporate Governance Code that the Appointments Committee
lead the process for Board appointments and make recommendations
to the Board regarding Board appointments and the requirement under
the UK Corporate Governance Code that all Directors be submitted for
re-election annually.
BOARD OF DIRECTORS
Role
The duties of the Board and its committees are set out clearly in formal
terms of reference which are reviewed regularly and state the items
specifically reserved for decision by the Board.
The Board is responsible for the leadership, control and oversight of
the Company. There are matters formally reserved to the Board for
consideration and decision. The Board is responsible for establishing
overall group strategy. It approves the Group’s commercial strategy and
the operating budget and monitors performance through the receipt of
monthly operating information and financial statements. The approval
of acquisitions is also a matter reserved for the Board. Similarly, there
are authority levels covering capital expenditure which can be
exercised by the Chief Executive or by the Chairman and Chief
Executive jointly. Beyond these levels of authority, projects are referred
to the Board for approval.
Other matters reserved to the Board include treasury policy; internal
control, audit and risk management; remuneration of the non-
executive Directors; pension schemes; corporate governance;
corporate social responsibility and the appointment or removal of the
Company Secretary.
The Board has delegated responsibility for the management of the
Company, through the Chief Executive, to executive management. The
Board also delegates some of its responsibilities to Board Committees,
details of which are set out below.
Board Size and Membership
The Board currently comprises thirteen Directors – two executive
Directors (Christoph Mueller, Chief Executive Officer and Andrew
Macfarlane, Chief Financial Officer) and eleven non-executive
Directors (including the Chairman). Detailed biographies of current
Directors are set out on pages 24 and 25 together with a detailed
description of the skills, expertise and experience that each of the
Directors brings to the Board.
In circumstances where (a) the Minister for Transport of Ireland (acting
through the Minister for Finance of Ireland) is entitled to nominate
three Directors to the Board; and (b) there are two executive
Directors; a Board comprising thirteen Board members is the minimum
size required in order to comply with provision B.1.2 of the UK
Corporate Governance Code. The Board considers that the Board
comprising thirteen Directors is cohesive and that between them the
Directors bring the breadth and depth of skills, knowledge and
experience that are required to lead the Group. The Board also
considers that the Directors have sufficient time to discharge their
responsibilities.
As can be seen from the biographies of the Directors set out on pages
24 to 25, the Company has access to the skills, expertise and
experience it needs for its business. It can call upon four Directors
with expertise of the transport sector (3 in the aviation sector), three
Directors who are accountants, one lawyer, an economist, a trade
union official as well as directors with expertise in the technology,
communications and the European Union. In addition many of the
Directors hold or have held Chief Executive Officer positions in other
companies.
Board Refreshment and Renewal
The Board is committed to a policy of refreshment and renewal in
relation to the Board of Directors. During 2011, one new Director was
appointed to the Board (Ms Mella Frewen was appointed on 1 January
2011). In addition Mr David Begg was appointed to the Board on 28
January 2011 following the expiry of his term of appointment as a
director nominated by Aer Lingus ESOP Trustees Limited (“ESOT”). Mr
Michael Johns also retired from the Board as an ESOT nominated
Director on 28 February 2011. Mr Tom Corcoran retired from the