Board Committees

Terms of reference for all Board committees are regularly reviewed and are available by clicking on the appropriate links below or from the Company secretary on request.

Audit Committee
Brendan O’Neill is chairman of the Audit Committee. He is a chartered management accountant and the Board is satisfied that he has appropriate recent and relevant financial experience to lead the Committee in its duties and deliberations. His colleagues on the Committee during 2007 were Bernard Fournier and Leslie Van de Walle. Details of the members of the Audit Committee, all of whom are independent non-executive directors, can be found in the Annual Report and Accounts 2007.

At the invitation of the chairman, meetings of the Committee were also attended, in whole or in part, by the chief financial officer, the external auditors, the chief executive officer as well as the Group general counsel, Company secretary and Group risk manager. In addition, other members of senior management were invited to attend as necessary to provide updates and background information on matters considered by the Committee.

The chairman of the Committee regularly meets with the auditors without executive directors or management present.

The Board considers that, through the Audit Committee, it has an objective and professional relationship with the Company’s external auditors.

A priority for the Committee during the year was in connection with the issues arising from the fraud in Aegis Media Germany as reported in last year’s accounts. A special meeting of the Committee was held in July attended by the CEO of Aegis Media Germany, and the CFOs of Aegis Media Europe and Aegis Media Global. The meeting discussed the lessons that had been learned and the changes that had been instigated in control processes and procedures. These lessons and changes were also discussed with all of the Group’s operational finance functions at the Group’s annual Finance conference. An assessment of these controls has been integrated into the Group’s annual compliance certification process and will continue to be reviewed as part of the Group’s risk management and internal audit reviews going forward.

Other work carried out by the Committee during 2007, in accordance with its responsibilities, included:

monitoring the integrity of the Company’s financial statements and reviewing significant reporting judgements;
reviewing internal audit and risk management and controls, and considering progress reports from the Group Risk Committee and Group risk manager;
reviewing the Company’s internal financial controls and procedures;
reviewing the external auditors’ independence, objectiveness and effectiveness;
approving the external auditors’ terms of engagement, the scope of the audit and the applicable levels of materiality; and
prior to the release of the preliminary announcement of the annual results, reviewing the year’s results and audit findings.

In reviewing the half year and annual financial statements the Committee focused in particular on:

any changes in accounting policies and practices;
major judgemental areas;
issues resulting from the external audit;
the going concern assumption;
compliance with accounting standards and the Combined Code; and
compliance with stock exchange and legal requirements.

Based on written reports submitted to it, the Committee reviewed, with the external auditors, the findings of their audit work and confirmed that all significant matters had been satisfactorily resolved.

The Committee has responsibility for making recommendations to the Board in relation to the external auditors’ independence and implements policy on the engagement of the supply of non-audit services. Details of amounts paid to the external auditors in respect of audit and non-audit services are given in note 6 to the financial statements. The Committee has confirmed that the policy concerning rotation of audit partner complies with current guidance issued by the Institute of Chartered Accountants in England and Wales.

The Committee has considered the balance between fees for audit and non-audit work for the Group in the year and concluded that the nature and extent of the non-audit fees do not present a threat to the external auditors’ independence.

View the Audit Committee terms of reference (PDF, 18KB, opens in a new window)

Remuneration Committee
During the year the Remuneration Committee comprised Charles Strauss (chairman), Daniel Farrar and Lorraine Trainer. All three are independent non-executive directors.

Meetings of the Committee were also attended, in whole or in part, by the chief executive officer, the Group human resources director, the Company secretary and a senior representative from Kepler Associates, advisors to the Committee. The CEO does not attend meetings when the Committee discusses matters relating to his remuneration.

Although not a member of the Committee, the chairman of the Board may attend meetings and is consulted by the Committee on proposals relating to the remuneration of the chief executive officer.

The Committee meets three times a year and other times as required. It is responsible for:

overseeing policy regarding executive remuneration;
approving the remuneration packages for the Group’s executive directors;
reviewing incentive schemes for the Group as a whole; and
approving awards to be made under the 2003 Executive Share Option Scheme and the 2003 Performance Share Plan.

During the year the most significant issues addressed by the Committee were:

a review of the total compensation packages of the Group’s most senior executives relative to marketplace benchmarks;
the approval of annual bonuses for the executive directors and a small number of other senior executives from around the Group;
the continuing review and assessment of a broader range of external reward benchmarking data for an increased set of senior managers around the Group;
a review of the Group’s main annual bonus schemes to reflect revised financial targets; and
a self assessment review of how the Committee functioned and had performed during the year.

View the Remuneration Committee terms of reference (PDF, 18KB, opens in a new window)

Nomination Committee
The Nomination Committee comprises all of the non-executive directors together with the chief executive officer and is chaired by the chairman of the Board, Lord Sharman. The Committee meets as and when required but at least once a year.

The Committee is responsible for:

reviewing the Board structure, size and composition;
identifying and nominating to the Board candidates for appointment or reappointment as directors; and
reviewing the renewal or otherwise of terms of appointment for non-executive directors, with any individual in question not taking part in the discussion.

The Committee meets once a year, together with the Group human resources director, specifically to review the Group’s ongoing succession planning. This is key to ensuring that the Group maintains an appropriate balance of skills and experience across the Group and on the Board.

View the Nomination Committee terms of reference (PDF, 15KB, opens in a new window)