Aer Lingus 2012 Annual Report Download - page 44

DIRECTORS’ REPORT Aer Lingus Group Plc
ANNUAL REPORT 2012
42
The SID is available to all shareholders who have concerns that cannot be
addressed through the normal channels of Chairman, Chief Executive or
Chief Financial Officer.
Terms of appointment
The Chief Executive Officer and the Chief Financial Officer have service
contracts with the Company which have notice periods of 12 months or
less.
The terms upon which each of the Non-Executive Directors has been
appointed are set out in letters of appointment which reflect the form
recommended by the UK Corporate Governance Code. Subject to the
requirement for annual election for all Directors as required by the UK
Corporate Governance Code, it is the Company’s policy that each Non-
Executive Director will be appointed for a fixed period not exceeding
three years (with the potential for a second three year term), subject to
satisfactory performance and re-election at any annual general meeting
where this is required. None of the Non-Executive Directors is a party to
any service contract with the Company that provides for benefits upon
termination.
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 three Directors. These rights may not comply with the
requirements in the UK Corporate Governance Code (June 2010) that
the Appointments Committee lead the process for Board appointments
and make recommendations to the Board regarding Board appointments
and that all Directors be submitted for re-election at regular intervals. The
Minister for Transport of Ireland is entitled to nominate up to three Directors
for appointment. The number of Directors eligible to be nominated by the
Minister for Transport of Ireland is dependent on the proportion of the
total issued ordinary share capital held by the Minister for Finance. From 1
January 2012 to 21 June 2012, the date of retirement of Mr Leslie Buckley,
the Minister for Transport of Ireland nominated his full entitlement of three
Directors (Mr Francis Hackett, Dr Colin Hunt and Mr Leslie Buckley). As of
21 June 2012, the Minister has one unfilled vacancy at his disposal.
Retirement and re-election
Under the Articles of Association, one-third of the Directors who are
subject to retirement by rotation retire from office at each AGM. However
in compliance with the UK Corporate Governance Code, all Directors,
with the exception of those nominated by the Minister for Transport of
Ireland (acting through the Minister for Finance of Ireland), will retire at
the forthcoming AGM and following review are being recommended for
re-election. Directors nominated by the Minister for Transport of Ireland
are not subject to these provisions in relation to retirement.
It is the Board’s policy to regularly review the Chairmanship of its
committees. Appointments to committees are for a period of up to three
years, which may be extended for a further three-year period provided the
Director is re-elected by shareholders and remains independent, or in the
case of some committees, a majority of the Directors on the committee
remain independent. A Director being a member of the same Board
committee for more than six years may be permitted only after review
by the Board. Recommendations to shareholders for the re-election of
Non-Executive Directors for terms beyond six years will be made only after
review by the Board.
Induction and development
New directors are comprehensively briefed on the Company and its
operations, including the provision of extensive induction materials on
appointment. An induction process is clearly established and has been set
out in writing and approved by Board. In addition, to aid their ongoing
development and understanding of the business, Directors engage with the
executive and senior management teams on a continuing basis.
A procedure is in place under which Directors, in furtherance of their
duties, are able to take professional advice, if necessary, at the Company’s
expense.
The Company Secretary is responsible for ensuring that Board procedures
are followed and all Directors have access to her advice and services. The
Company Secretary ensures that the Board members receive appropriate
training as necessary. The Company Secretary is responsible for advising the
Board on all corporate governance matters.
The Company has an insurance policy in place which insures the Directors
in respect of legal action taken against them in respect of their reasonable
actions as officers of the Company.
Meetings
The Board has a fixed schedule of meetings each year and may meet more
frequently as required. There were 8 scheduled Board meetings in 2012.
In addition there were 7 conference call meetings which were not pre-
scheduled and were convened at short notice. Therefore, there were a
total of 15 Board Meetings held in 2012. Details of Directors’ attendance at
these meetings is outlined in the table on page 47. In line with best practice
guidelines, all Directors, other than Mr Leslie Buckley who retired from the
Board on 21 June 2012, attended in excess of 75% of the pre-scheduled
Board meetings in 2012.
For regular Board meetings, the agenda will usually comprise of reports
from the Chief Executive Officer, Chief Financial Officer and executive
management. The practice is to have the agenda and supporting papers
circulated to the Directors seven days ahead of each meeting. It is inevitable
that there will be occasions when circumstances arise to prevent Directors
from attending meetings. In such circumstances, it is practice for the absent
Director to review the Board papers with the Chairman and convey any
views on specific issues. It should also be noted that the time commitment
expected of Non-Executive Directors is not restricted to Board meetings. All
of the Directors are to be available for consultation on specific issues falling
within their particular fields of expertise. The Chairman and Non-Executive
Directors meet at least annually as a group without the Executive Directors
present. In addition a further meeting each year consists of the Senior
Independent Director and the other Non-Executive Directors, without the
Chairman being present.
Performance evaluation
The Board and its committees undertake an annual evaluation of their
performance of how well they are functioning as an effective board
applying best principles of governance, whether each Director continues
to contribute effectively and demonstrate commitment to the role and to