Aer Lingus 2012 Annual Report Download - page 43

DIRECTORS’ REPORT Aer Lingus Group Plc
ANNUAL REPORT 2012
41
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 twelve Directors – two Executive Directors
(Christoph Mueller, Chief Executive Officer and Andrew Macfarlane,
Chief Financial Officer) and ten Non-Executive Directors (including the
Chairman). Detailed biographies of current Directors are set out on pages
30 and 31 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 normally required by Aer Lingus in
order to comply with provision B.1.2 of the UK Corporate Governance
Code. The Minister has one unfilled vacancy at his disposal and therefore
the Board currently comprises twelve Directors. The Board considers
that the Board currently comprising twelve 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 30 to
31, 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 (three in the aviation sector), three Directors who are accountants,
one lawyer, an economist, a trade union leader 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. Mr Leslie Buckley retired from the Board
on 21 June 2012. The Board is committed to a policy of refreshment and
renewal in relation to the Board of Directors.
Board Independence
During 2012, of the Non-Executive Directors, Mr Montie Brewer, Mr
Laurence Crowley, Ms Mella Frewen, Ms Danuta Gray, Mr Thomas
Moran and Ms Nicola Shaw were considered to be independent by the
Board. During the entirety of 2012, at least half the Board, excluding the
Chairman comprised Non-Executive Directors determined by the Board to
be independent.
As at the date of this report, of the Non-Executive Directors, Mr Montie
Brewer, Mr Laurence Crowley, Ms Mella Frewen, Ms Danuta Gray, Mr
Thomas Moran and Ms Nicola Shaw are considered to be independent
by the Board. Therefore, as at the date of this report, at least half the
Board excluding the Chairman, is comprised of Non-Executive Directors
determined by the Board to be independent. It is the Company’s intention
to continue to review the composition of the Board to endeavour to
continue to comply with this requirement in the UK Corporate Governance
Code and to ensure the Directors bring the right range of skills, knowledge
and experience to the Board to discharge its obligations to the Company
and its shareholders.
External Directorships
The Board believes it is beneficial for Executive Directors to hold non-
executive directorships with other companies or industry associations
provided that such roles do not impact their ongoing obligation and
responsibility to the Company. The Board permits executives to accept
such positions and to retain any related fees. Mr Mueller serves as a non-
executive member of the Board of Tourism Ireland. Further details are set
out on page 30.
Chairman
Mr Colm Barrington was appointed as Chairman on 3 October 2008.
The Chairman was determined by the Board to be independent on his
appointment to the Board. The Chairman is responsible for the effective
working of the Board and the Chief Executive is responsible for running the
business of Aer Lingus Group plc. The division of responsibilities between
the Chairman and the Chief Executive is clearly established and has been
set out in writing and approved by the Board. Throughout 2012, the roles
of Chairman and Chief Executive were independent of each other.
The Chairman and the Company Secretary work closely together in
planning a forward programme of Board meetings and establishing their
agendas. During 2012, the Chairman ensured that the Board was supplied
in a timely manner with information in a form and of a quality to enable it to
discharge its duties and oversaw the roll out of a fully-packaged application
for the iPad tablet device to the Board to improve the efficiency of both
preparing and conducting Board meetings. The Chairman encourages
openness, debate and challenge at Board meetings. The Chairman holds
a number of other directorships and the Board considers that these do not
interfere with the discharge of his duties to Aer Lingus.
Senior Independent Director
Mr Laurence Crowley has been the Senior Independent Director (SID)
since his appointment on 9 January 2009. The role of the SID is clearly
established and has been set out in writing and approved by the Board.