Aer Lingus 2011 Annual Report Download - page 41

DIRECTORS’ REPORT Aer Lingus Group Plc
Annual Report 2011 39
Directors’ Report (continued)
The Remuneration Committee’s principal duties in relation to
Directors’ remuneration include:
(a) to determine and agree with the Board the framework or board
policy for the remuneration of the Chief Executive, the Chairman
of the Board, the executive Directors and the Company Secretary,
and such other senior management members as it is designated to
consider;
(b) to set remuneration policy so as to ensure that senior management
are provided with appropriate incentives to encourage
performance and are rewarded for their individual contributions to
the success of the Company in a fair and responsible manner;
(c) to approve the design of, and determine targets for, any
performance-related pay schemes operated by the Company and
approve the total annual payments made under such schemes; and
(d) to monitor and approve the total remuneration package of the
Chairman, each executive Director and relevant senior
management members, within the terms of the agreed policy.
The Remuneration Report for year ended 31 December 2011 is set out
on pages 45 to 52. At the Annual General Meeting held on 6 May
2011, shareholders were asked to receive and consider the
Remuneration Report for year ended 31 December 2010. Shareholders
had similarly been asked to vote on the Remuneration Report for year
ended 31 December 2009 at the previous AGM. These resolutions are
often referred to as a ‘Say on Pay’ resolution. The resolutions were
passed by shareholders at each of the AGMs. While it was not
mandatory to put such a resolution to shareholders, it is now best
practice to do so and its inclusion reflected the Group’s commitment
to continuing to enhance its corporate governance practices. A ‘Say on
Pay’ resolution regarding the Remuneration Report for year ended 31
December 2011 will also be out to shareholders at the forthcoming
AGM.
Appointments Committee
The Appointments Committee of the Board comprises four non-
executive Directors, a majority of whom are independent non-
executive Directors. Until February of 2011 the Appointments
Committee consisted of Mr Laurence Crowley (Chairman), Mr Colm
Barrington, Dr Colin Hunt, Mr Thomas Moran and Mr Michael Johns.
Mr Johns ceased to be a member of the Appointments Committee
upon his retirement on 28 February 2011. The role of the
Appointments Committee is to lead the process for considering Board
appointments. The Appointments Committee may not be chaired by
the Chairman of the Board on any matter concerning the succession to
the chairmanship of the Board. The Appointments Committee met
twice during the year and also took a number of decisions by written
resolution in lieu of a meeting. Attendance at the meetings held is set
out in the table on page 42.
The Appointments Committee’s terms of reference include the
following:
(a) to review regularly the structure, size and composition (including
the skills, knowledge, experience and diversity) required of the
Board compared to its current position and make
recommendations to the Board with regard to any changes;
(b) to give full consideration to succession planning for Directors and
senior management, taking into account the challenges and
opportunities facing the Company; and
(c) to be responsible for identifying and nominating, for the approval
of the Board, candidates to fill Board vacancies as and when they
arise.
Before recommending an appointment, the Committee will evaluate
the balance of skills, knowledge and experience of the Board and has
regard to the issue of diversity, including gender diversity.
The following is a summary of the principal work undertaken by the
Appointments Committee during 2011:
• During 2011, one new Director was appointed to the Board. Ms
Mella Frewen was appointed on 1 January 2011. The
Appointments Committee undertook a process involving other
members of the Board and an external consultancy firm in respect
of this appointment. Mr David Begg was also 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”). The Appointments Committee undertook a
process involving other members of the Board in respect of the
appointment of Mr Begg but did not use an external consultancy
firm for the purposes of this appointment;
•the Appointments Committee reviewed the Committee structure of
the Board and made recommendations regarding changes to the
membership of Committees. These changes became effective in
October 2011;
• the Appointments Committee reviewed a report prepared by
external consultants on the Executive Team, addressing issues such
as the requirements placed on the team by the business, an
analysis of the skills and experience of the team, an analysis of the
manner in which the team worked with other stakeholders in the
Company and an analysis of professional development
requirements. The report also made recommendations regarding
appointments to the Executive Team;
•the Appointments Committee reviewed and approved changes to
the organisation structure and the following appointments to the
Executive Team: Mr Fergus Wilson (Chief Operating Officer), Mr
Donal Moriarty (Executive Counsel) and Mr Andrew Cornish (Chief
Customer and Brand Officer); and
•the Committee provided reports to the Board regarding the work
of the Committee.