Board Committees


This is an extract of the Corporate Governance Statement in the Annual Report for the year ended 31 December 2008.  The Full Annual Report can be downloaded as a pdf file HERE.

The Board has established Committees with defined terms of reference. The Board’s policy on the membership of its Committees is that all Non-Executive Directors should contribute, and to keep membership fresh, one member of each committee be changed every two years. The Nomination, Remuneration and Audit Committees each consist of three Non-Executive Directors. The Chairmen of the Audit and Remuneration Committees will be chosen from Directors who are independent under the terms of the Code. It is the Board’s intention that they will serve for three years. The inclusion of Dermot Jenkinson on the Remuneration and Nomination Committees and of Ian Harrison on the Audit Committee respectively does not comply with the Code; however, they provide valuable experience from their knowledge of the Group’s operations, and from their backgrounds in business.

The Board has also delegated operational and strategy implementation matters to the Operating Boards of Menzies Aviation and Menzies Distribution, both of which have two Executive Directors on them.

Nomination Committee

Composition:

Name
Title
Attendance
W Thomson
Chairman
2/2
D Jenkinson
Member
2/2
D Coltman
Member
2/2

The Nomination Committee has terms of reference modelled closely on those set out in the Code and its responsibilities include recommending new Board appointments and succession planning. A copy of the terms of reference is available HERE. The Board as a whole is responsible for making new appointments to the Board on the recommendation of the Nomination Committee and nominating recommended candidates for election by shareholders on first appointment and thereafter for re-election at relevant intervals.

During 2008 the Committee reviewed the structure, balance and composition of the Board and its Committees and concluded that an additional independent Non-Executive Director should be appointed. Iain Napier has joined the Board as an independent Non-Executive Director. Ian Harley has also been appointed as an independent Non-Executive Director and replaced Iain Robertson, who retired following the AGM in May 2009.


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Remuneration Committee

Composition:

Name
Title
Attendance
D Coltman
Chairman
5/5
D Jenkinson
Member
5/5
O Morley
Member
5/5
I Napier
Member
3/3

The Report on Directors’ Remuneration, summarised HERE details the constitution and role of the Remuneration Committee, and how the principles of the Code relating to Directors’ remuneration have been applied.

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Audit Committee

Composition:

Name
Title
Attendance
Notes
I. Robertson
Chairman
4/4
Retired 21/5/09
I. Harrison
Member
4/4
O. Morley
Member
4/4
I. Napier
Member
1/1
Chairman from 21/5/09

The Audit Committee assists the Board in the execution of its responsibilities for corporate governance and internal control, and has adopted terms of reference modelled on those set out in the Code. The Group Finance Director and certain senior financial executives as appropriate, together with representatives from the internal and external audit teams, attend each meeting. A copy of the terms of reference is available HERE.

The Committee has delegated authority from the Board for ensuring adherence to the Code provisions and related guidance concerning the following matters:

  • monitoring the integrity of the financial statements and reviewing significant accounting policies, judgements and estimates contained within them;

  • reviewing the effectiveness of the internal control and risk management systems, including control over financial reporting;

  • reviewing the effectiveness of the internal audit function, including the business risk programme;

  • reviewing the Group’s policies and practices concerning business conduct, ethics and integrity and whistleblowing; and

  • overseeing all aspects of the relationship with the external auditors, including their appointment, the audit process, the supply of non-audit services and monitoring their effectiveness and independence.

The Committee met four times in 2008 and a full report of its activities and of findings and recommendations from each meeting is given to the Board. During the year, the Committee formally reviewed and approved (prior to the Board) draft annual and interim reports (including the statements on internal control and the work of the Committee), associated preliminary and interim results announcements and the two Interim Management Statements made by the Company. This aspect of its work focused on key accounting policies and estimates and judgements, including significant or unusual transactions or changes to these. In doing so the Committee reviewed the reports of management and the controls assurance (internal audit) provider and took into account the views of the external auditors. The Committee also reviewed the Group’s internal control structure, approved the scope of work and fees for the controls assurance provider and debated whether the internal audit function should be brought in-house. It concluded that due to the complexity of the Group’s business and the international nature of the aviation business, the internal audit function was best served by continuing to be outsourced to Deloitte & Touche LLP, given their global spread and resources. Findings from the internal audit programme (on financial and key non-financial risks) and areas identified for improvement are reviewed by the Committee and prioritised for action by management. The Committee reviews follow-up reports from management to ensure that any weaknesses identified in internal audit reports submitted to it are fully addressed and that improved procedures are adopted.

The Committee also reviewed the work of management on updating the Group’s Business Risk register, which involved assessing key risks at Group and divisional level according to their significance, likelihood and impact, as well as the Company’s exposure to and management of these risks.

After taking into account reports from the controls assurance provider, the Committee was satisfied that management had appropriate risk management strategies and systems in place to address the Group’s key business risks. The Committee reviewed and approved the audit plan, as well as the findings of the external auditors from its review of the interim announcement and its audit of the annual financial statements. It also assessed the effectiveness of the external auditors and of the audit process through meetings and interviews with management and key finance staff. As part of this, it keeps under review the objectivity and independence of the external auditors and the nature and extent of the non-audit services which they provide. These services consist mainly of acquisition-related due diligence, where their knowledge of the Group’s business processes and controls makes them best placed to undertake this work cost-effectively on the Group’s behalf.

The external auditors do not deal with the Group’s tax affairs. The Committee believes that the level and scope of these non-audit services does not impair the objectivity of the auditors.

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Operating Boards - Menzies Aviation & Menzies Distribution

The Operating Boards of both Menzies Aviation and Menzies Distribution consist of senior executives from within each division, together with the Divisional Executive Managing Director and the Group Finance Director.  The Boards have responsibility for the day to day running of their division and the implementation of the strategy for their division agreed by the Group Board.  They also retain responsibility for approving divisional performance targets consistent with the strategic objectives set by the Group Board, and monitor achievement.  The Operating Boards also have responsibility to make recommendations to the Group Board and to monitor major initiatives.  Each Operating board normally meets 4 times per year.

The three executive directors also meet prior to each board meeting with the Chairman joining them as appropriate.  The meetings provide a forum for sharing ideas and experiences from within the Operating Divisions. It also allows the common financial control managed from Group, to be reviewed and discussed.

Click here for the composition of the Menzies Operating Boards.

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