Committees

Audit Committee

Name of Director

 Position

Tim Score

 Chairman, Senior Independent Director

Sir Andrew Foster

 Non-Executive Director

Jackie Hunt

 Non-Executive Director (appointed 13 September 2012)

Chris Muntwyler

 Non-Executive Director

The role of the Audit Committee

The terms of reference of the Audit Committee comprise the duties and tasks delegated to it by the Board and include the following:

  • overseeing the process for selecting the external auditor, assessing the continuing independence of the external auditor and recommending approval of the audit fee to the Board;
  • responsibility for ensuring that provision of non-audit services does not impair the external auditor’s independence or objectivity;
  • liaising with the external auditor on matters relating to the nature and scope of the audit and any issues or concerns arising from the audit process;
  • reviewing effectiveness of the Company’s internal control and risk management systems, including the internal audit programme and major findings identified from internal audit investigations and reviews; and
  • reviewing the half-year and annual financial statements including accounting judgements and policies.


The Audit Committee routinely considers a number of standing items during the year such as consideration of the internal and external audit reports, review of the Annual Report and Accounts, review of the preliminary and half-year announcements, and review of the Corporate Governance Report.

The Committee met three times in 2012. Details of attendance at these meetings can be found here. Outside of the meeting process the Committee Chairman has regular contact with the Executive Directors, other Committee members and the auditors on a variety of topics. The Committee itself meets with the external auditor at least once a year without Executive Directors being present.

At the invitation of the Committee, and as appropriate to the matters under discussion, meetings may be attended by the Executive Directors and internal and external auditors. Full minutes are kept by the Secretary of the matters considered and decisions taken by the Committee.


Main activities during the year

During the year the Committee considered the following:

  • Review of compliance with the UK Corporate Governance Code
  • Review and approval of internal audit plan for 2012
  • Review of the Group Risk Register
  • Update on business continuity planning
  • Review of IT strategy
  • Approval of updated Treasury Policy
  • Review and update of Policy on Provision of Audit and Non-Audit Services
  • Consideration of the results of internal audit compliance testing of financial controls (Annual Fitness Checks) within the subsidiaries
  • Review of the external auditor’s fees
  • Review of financial statements and accounting policies


Tendering frequency of external auditor

The Committee currently has no set policy on the tendering frequency of their external auditor or of the tenure of their external auditor. The Committee will monitor developments in UK and European Union best practice regarding audit tendering with a view to ensuring compliance with any requirements going forward. Notwithstanding the above, the Committee regularly considers the marketplace, benchmarking the current level of audit services the Company receives along with the fees it pays and the value being delivered. The Company last put its external audit contract out to tender in 2011, following which Deloitte LLP were appointed as the Company’s auditor.

Re-appointment of auditor
As a result of its work with Deloitte LLP during the year, the Committee has concluded that it is satisfied with their performance and has recommended to the Board that Deloitte LLP be re-appointed.

Review of independence of external auditor
The Audit Committee assesses and reviews on a regular basis the independence of the external auditor. As part of their determination the Audit Committee considers a report by the external auditor on the firm’s independence which is required in order to carry out their professional duties and responsibilities as auditor.

Policy on auditor providing non-audit work
The Committee has an approved policy on the provision of non-audit services by its auditor for the following types of service:

  • services that are considered to have ‘general pre-approval’ by the Audit Committee, by virtue of the approval of the policy;
  • services that require ‘specific pre-approval’, on a case-by-case basis, before any work can commence; and
  • services that cannot be supplied by the external auditor (prohibited services).

 
The services that have general pre-approval are tax, transaction investigation and advisory and corporate finance services. The fees for these services are pre-approved up to £50,000 for each non-audit assignment undertaken and subject to an overall limit of 75% of the total fees paid to the external auditor. For services exceeding this limit specific pre-approval is required.

In deciding whether or not to grant approval for the provision of specific services by the external auditor, the Audit Committee includes in its consideration the following factors:

(i) whether the external auditor is best placed to provide an effective and efficient service, given its familiarity with the Company’s processes, systems and people; and
(ii) the level of non-audit fees paid to the external auditor in the year as a proportion of the annual external audit fee.

The majority of non-audit work undertaken by the external auditor during the year relates to advice in respect of tax advisory and other regulatory services. These items the Committee believes would be impractical and costly to provide through another party.

The split between audit and non-audit fees for the year ended 31 December 2012 appear in note 6 to the Consolidated Accounts.


Nomination Committee

Name of Director

  Position

Sir John Armitt

 Chairman (appointed 1 January 2013 and as Company Chairman on 1 February 2013)

Joaquín Ayuso

 Non-Executive Director (appointed 26 February 2013)

Jorge Cosmen

 Non-Executive Director

Sir Andrew Foster

 Non-Executive Director


The role of the Nomination Committee

The key responsibilities of the Nomination Committee are summarised below:

  • responsibility for identifying and nominating, for the approval of the Board, candidates to fill Board vacancies as and when they arise;
  • giving full consideration to succession planning, and keeping under review the leadership needs of the organisation, both Executive and Non-Executive;
  • reviewing the time required from and spent by a Non-Executive Director on fulfilling his or her duties; and
  • leading the process for Board appointments and making recommendations to the Board; and preparing a description of the role and requirements for any particular appointment based on its evaluation of the Board as a whole.


Succession planning
The Nomination Committee carried out a detailed review of talent management and succession planning across the Group, facilitated by the Group HR Director at a meeting in November 2012.

Diversity
Our goal at National Express is for our people to reach their full potential and to give of their best as individuals and in teams. In this context, we are committed to never discriminating on the grounds of race, veteran status, colour, creed, disability, religion, ethnic origin, sex, sexual orientation or age. While maintaining our existing policy of selecting the best available candidate for any position, National Express is content to set the aspirational target that by 2015, 30% of the Board will be women, in line with the recommendations of the Davies Report on Boardroom Diversity.

 

Main activities during the year

During the year the Committee:

  • evaluated the balance of skills, experience, independence, diversity and knowledge on the Board and then prepared a description of the role and capabilities required for the role of Non-Executive Director
  • appointed search consultants to identify a shortlist of candidates for the role of Non-Executive Director and interviewed candidates following which the appointment of Jackie Hunt was recommended to the Board
  • evaluated the experience and attributes required of a new Non-Executive Chairman and then prepared a description of the role and capabilities sought for the role specification of Non-Executive Chairman
  • appointed search consultants to identify a shortlist of candidates for the role of Non-Executive Chairman and interviewed candidates following which the appointment of Sir John Armitt was recommended to the Board
  • reviewed succession plans across the Group


Safety and Environment Committee

Name of Director

Position

Sir John Armitt

Company Chairman (appointed to the Board and Committee on 1 January 2013 and as Chairman on 1 February 2013)

Joaquin Ayuso

Non-Executive Director

Jorge Cosmen

Non-Executive Director

Sir Andrew Foster

Non-Executive Director

Jackie Hunt

Non-Executive Director (appointed 13 September 2012)

Chris Muntwyler

Chairman

Lee Sander

Non-Executive Director

Tim Score

Independent Director


The role of the Safety and Environment Committee

The key responsibilities of the Committee are as below.

  • responsibility for reviewing and challenging constructively the structure, content and operation of the safety management arrangements put in place by members of the executive management of the Group’s operating companies;
  • reporting periodically to the Board on its observations on the safety management arrangements in place and reviewing and making recommendations to the Board on any specific safety management issues relating to the Company or any subsidiary company; and
  • reviewing and monitoring the Company’s environmental performance and targets.

 

Main activities during the year

During the year the Committee:

  • monitored progress of implementation of the Group’s Global Safety Standards
  • assessed progress of the Group’s ‘Driving Out Harm’ safety programmes
  • reviewed the findings of the external audit of corporate governance of safety
  • visited Group locations to review safety practices and procedures
  • reviewed environmental management across the Group
  • approved safety and environmental targets for the Group


Remuneration Committee

Name of Director

  Position

Sir Andrew Foster

Chairman (appointed 10 May 2012)

Lee Sander

  Non-Executive Director

Tim Score

  Senior Independent  Director

Management attendees

 

Dean Finch

Group Chief Executive

Stephen Connock MBE

Group HR Director

Michael Hampson

General Counsel and Company Secretary

 

Role of the Remuneration Committee

The key responsibilities of the Committee are to:

  • determine the fees of the Chairman;
  • determine the remuneration and conditions of employment (including any termination arrangements) of the Executive Directors;
  • approve the remuneration and conditions of employment of the Divisional Heads and Company Secretary;
  • review the remuneration and conditions of employment of the senior management team; and
  • select and appoint any remuneration consultants who advise the Committee.


The full terms of reference of the Committee are available.

The members of the Committee who served during the year were all independent Directors. The Committee met four times in 2012. Details of attendance at these meetings can be found here.

The Committee members and management attendees did not participate in any discussions directly relating to their own remuneration or performance during the year.

 

Advisors to the Committee

The Committee has appointed independent remuneration consultants, New Bridge Street (NBS) to advise on all aspects of senior executive remuneration. NBS has no other connection with the Group other than in the provision of advice on executive and employee remuneration and nor does its ultimate parent, Aon plc. NBS is a signatory of the Remuneration Consultants’ Code of Conduct, which specifies the professional standards of conduct for consultants to Remuneration Committees of UK Listed Companies. From time to time, the Company submits the remuneration consultant function to tender.

 

Main activities during the year

During the year the Committee considered the following items of business:

  • Review of Executive Directors’ and senior executives’ salary levels
  • Annual bonus scheme terms for 2012
  • Review of the Chairman’s fee
  • Performance targets to apply to the 2012 Long Term Incentive Plan awards (including the total shareholder return comparator group used and the range of earnings per share targets set)
  • 2012 award levels under the Company’s share plans
  • Approval of a new remuneration arrangement for the Chief Executive and Finance Director
  • Recruitment packages for new senior executives
  • Testing of performance conditions and vesting of Long Term Incentive Plan awards granted in 2009
  • Outline of the Group’s 2012 bonus scheme
  • Long Term Incentive Plan entitlements upon