Board committees

The board has established a number of committees which operate within defined terms of reference. These committees are the Audit Committee, the Risk and Compliance Committee, the Remuneration and Compensation Committee and the Nomination Committee, all of which are committees of the board. All of these committees are composed of non-executive directors, all of whom are considered by the board to be independent. Membership and chairmanship of each committee is reviewed at least every two years. Detailed terms of reference for each of the committees are available on request and on the group’s website www.irishlifepermanent.ie. In accordance with the terms of the Code, the Chairman of the group is not a member of the Audit Committee.

• Audit Committee

• The Audit Committee comprises Emer Daly (Chairman), Margaret Hayes and Pat Ryan. The board ensures that the chairman of the committee has recent and relevant financial experience.

  The Audit Committee provides a link between the board and the external auditors, is independent of the group’s management and is responsible for making recommendations in respect of the appointment of external auditors and for reviewing the scope of the external audit. It also has responsibility for reviewing the group’s annual report and financial statements, preliminary announcement, half-yearly accounts, Interim Management Statements and the effectiveness of the group’s internal control systems and risk management process.

  The committee monitors the group’s internal audit, compliance and risk management procedures and considers issues raised and recommendations made by the external auditors and by the Group Internal Audit function. The committee meets at least annually with the external auditors in confidential session without management being present. The committee reviews the arrangements by which staff of the group may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters.

  The Audit Committee reviews the non-audit services provided by the external auditors based on the policy approved by the board in relation to the provision of such services. Fees paid in respect of audit, other assurance services, tax advisory services and nonaudit services are outlined in Note 48, Administration and other expenses to the financial statements. Other assurance services are services carried out by the auditors by virtue of their role as auditors and include assurance related work, regulatory returns and accounting advice. In line with best practice, the auditors do not provide services such as financial information system design and valuation work which could be considered to be inconsistent with the audit role.

  The amount of fees paid to external auditors for audit fees was €1.7m (including VAT) payable to KPMG, of which €1.6m (including VAT) was payable to KPMG Ireland and €0.1m (including VAT) was payable to KPMG overseas affiliates. €0.6m (including VAT) was paid to KPMG Ireland for other assurance services and €1.5m (including VAT) was paid in respect of tax advisory services and non-audit services (€1.2m (including VAT) to KPMG Ireland and €0.3m (including VAT) to KPMG overseas affiliates).

• Risk and Compliance Committee

• The Risk and Compliance Committee comprises Pat Ryan (Chairman), Emer Daly and Sandy Kinney. The board ensures that the chairman of the committee has relevant risk management and / or compliance experience.

  The Risk and Compliance Committee has responsibility for oversight and advice to the board on risk governance, the current risk exposures of the group and future risk strategy, including strategy for capital and liquidity management, the setting of compliance policies and principles and the embedding and maintenance throughout the group of a supportive culture in relation to the management of risk and compliance. The Risk and Compliance Committee supports the board in carrying out its responsibilities for ensuring that risks are properly identified, reported, assessed and controlled, and that the group’s strategy is consistent with the group’s risk appetite.

  The Risk and Compliance Committee is responsible for monitoring adherence to the group risk appetite statement. Where exposures exceed levels established in the appetite statement, the Risk and Compliance Committee is responsible for developing appropriate responses. This is facilitated by the periodic review of a key risk indicators report calibrated to the risk appetite statement.

  The Risk and Compliance Committee, in turn, delegates responsibility for the monitoring and management of specific risks to committees accountable to it. These committees are the Group Credit Committee, the Banking Assets and Liabilities Committee, the Life Assurance Assets and Liabilities Committee, the Group Operational Risk Committee, the Group Counterparty Credit and Market Risk Committee and the Group Compliance Committee. The terms of reference for each committee, whose members include members of group senior management, are reviewed regularly by the Risk and Compliance Committee.

• Remuneration and Compensation Committee

• The Remuneration and Compensation Committee comprises Bernard Collins (Chairman),
  Alan Cook, Ray MacSharry and Pat Ryan. This committee considers all aspects of the performance and remuneration of executive directors and senior executives and sets the remuneration of these executives, having consulted with the Chairman, the Group Chief Executive and the other non-executive directors. The committee also has responsibility for setting the remuneration of the Chairman (without the Chairman being present) and the Group Chief Executive. Senior management succession issues are also addressed by this committee.

  During 2010 the committee used the Executive Compensation Practice of Towers Watson for advice on executive director and senior management remuneration. Services provided to the group by other Towers Watson practices include the valuation of the Irish Progressive Staff Pension Scheme and the tsb Staff Pension Scheme by its actuarial practice.

• Nomination Committee

• This committee comprises Alan Cook (Chairman), Bernard Collins, Ray MacSharry and Pat Ryan. The committee is charged with responsibility for bringing recommendations to the board regarding the appointment of new directors and of a new Chairman. The Chairman does not attend the committee when it is dealing with the appointment of a successor to the Chairman. Decisions on board appointments are taken by the full board. The committee uses external consultants to assist in identifying and considering candidates from a wide range of backgrounds in the context of a description of the role and capabilities required for a particular appointment. All directors are subject to reappointment by election by the shareholders at the first opportunity after their appointment.

  The committee keeps under review the leadership needs of the group, both executive and non-executive, with a view to ensuring the continued ability of the group to compete effectively in the marketplace. This committee is also responsible for reviewing the effectiveness of the board’s operations, including the chairmanship and composition of board committees.

  Subject to satisfactory performance, non-executive directors are typically expected to serve two threeyear terms, although the board may extend an invitation to serve a further three-year term. The form of appointment letter for non-executive directors is available for inspection and is also included on the group’s website (www.irishlifepermanent.ie). The remuneration of the non-executive directors is determined by the board within the parameters decided by the shareholders and on the advice of the Chairman and the Group Chief Executive. The term of office of the Chairman is six years regardless of any previous term as a director. Under the Articles of Association directors are required to submit themselves to shareholders for re-appointment by election to the board every three years. However the board has adopted a practice of all directors submitting themselves for reappointment by election at each Annual General Meeting.

• Board Committee Meetings Attendance 2010

• Attendance at Scheduled Board and Board Committee Meetings during the year ended 31 December 2010

  	Board		Audit		Risk and Compliance		Remuneration & Compensation		Nomination
  	A	B	A	B	A	B	A	B	A	B
  Non-executive Directors
  Gillian Bowler	10	9	-	-	-	-	6	5	2	2
  Breffni Byrne	10	10	10	10	6	5	-	-	4	4
  Bernard Collins	9	8	-	-	5	4	-	-	-	-
  Danuta Gray	10	8	-	-	-	-	6	6	4	4
  Margaret Hayes	10	10	10	10	-	-	-	-	-	-
  Eamonn Heffernan	4	4	3	3	2	2	3	3	-	-
  Roy Keenan	10	10	10	10	5	5	2	2	4	4
  Sandy Kinney	4	4	-	-	-	-	-	-	-	-
  Ray MacSharry	10	10	-	-	-	-	6	6	4	4
  Liam O’Reilly	4	4	3	3	2	2	-	-	-	-
  Pat Ryan	10	10	10	10	6	6	5	5	-	-
  Executive Directors
  Kevin Murphy	10	10	-	-	-	-	-	-	-	-
  David McCarthy	10	10	-	-	-	-	-	-	-	-

  
  

  Column A: number of scheduled meetings held during the period the director was a member of the Board and/or Committee.

  Column B: number of scheduled meetings attended during the period the director was a member of the Board and/or Committee.

Please note this content represents the Company’s current Board Committees, to find out more about the Corporate Governance for the 2009-2010 financial year please access this PDF

Terms of Reference of Board Committees

• Audit Committee

• The role and responsibilities of the Audit Committee are:

  • To fulfill all the responsibilities of the Audit Committee as set out in Section 42(2) of the Companies (Auditing and Accounting) Act 2003;
  • To provide a link between the Board and the Auditors, independent of the Company’s management. The external auditors will regularly attend Audit Committee meetings and the Committee will meet with them at least once a year without management being present to discuss their remit and any issues arising from the audit;
  • To monitor the integrity of the financial statements of the Company and any formal announcements relating to the Company’s financial performance, reviewing significant financial reporting judgements contained therein;
  • To review the Company’s internal financial controls and the Company’s internal control and risk management systems;
  • To make recommendations to the Board in relation to the appointment of the external auditor and to approve the remuneration and terms of reference of the external auditor;
  • To review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process, taking into account relevant professional and regulatory requirements;
  • To develop and implement policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external auditor firm;
  • To appoint and / or remove the Group Head of Internal Audit, after consultation with the Group Chief Executive;
  • To monitor and review the effectiveness of the internal audit function and activities. The Group Head of Internal Audit will regularly attend Audit Committee meetings and the Committee will meet with him at least once a year without management being present to discuss his remit and any issues arising from the internal audits carried out. In addition, the Group Head of Internal Audit shall have the right of direct access to the Chairman of the Board and to the Audit Committee;
  • To receive and review the compliance programme and such risk and compliance reports as are prepared by the Group Head of Risk & Compliance. The Group Head of Risk & Compliance will regularly attend Audit Committee meetings and the Committee will meet with him at least once a year without management being present to discuss his remit and any issues arising there from;
  • To receive and review such reports as are prepared by the Chief Actuary in relation to the actuarial methods and assumptions underlying the financial statements of the Company and to consider whether, and to what extent, any such reports should be reviewed on behalf of the Committee by an independent actuary appointed by the Committee. The Chief Actuary will regularly attend Audit Committee meetings and the Committee will meet with him at least once a year without management being present to discuss his remit and any issues arising there from;
  • To review arrangements by which staff may, in confidence, raise concerns about possible improprieties in matters of compliance, financial reporting or other matters and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps to be taken.
• Remuneration and Compensation Committee

• The terms of reference of the Remuneration & Compensation Committee are:

  • To determine and agree with the Board, the framework or broad policy for the remuneration of the Group Chief Executive, the Chairman of the Board, Executive Directors, the Company Secretary and other senior executives reporting directly to the Group Chief Executive;
  • To ensure that Executive Directors and other senior executives are encouraged to enhance the Company’s performance through the use of incentive schemes with suitably challenging performance criteria and to determine targets for such performance-related incentive schemes;
  • To determine the policy for and scope of pension arrangements for each Executive Director;
  • To determine, within the terms of the agreed policy and giving due regard to the contents of the Combined Code and associated guidance, the total individual remuneration package of the Chairman, the Group Chief Executive and of each Executive Director and appropriate senior management including salary, bonuses, incentive payments and share options;
  • To comply with recognised best practice relating to the remuneration of Executive Directors and senior executives;
  • To determine all matters required under the rules of the Company’s Employee Share Option Schemes including the discretionary continuation of share options after termination of employment where allowed under the terms of the Schemes;
  • To determine on behalf of the Board offers to employees under the Company’s Group Profit Sharing Scheme following review of proposals and recommendations of management;
  • To be aware of and advise on any major changes in employee benefit structures throughout the Group;
  • To agree the policy for authorising claims for expenses from the Group Chief Executive and Chairman;
  • To ensure compliance with all disclosure requirements regarding remuneration;
  • To be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Committee;
  • To review the performance of the Group Chief Executive on an annual basis;
  • To review the Group Chief Executive’s annual assessment of the performance of the top management;
  • Without limiting the generality of the Committee’s objectives, the Committee will have the following responsibilities, powers, authorities and discretion:
    • To determine the remuneration policy of the Company and its subsidiaries;
    • To make recommendations to the Board on remuneration of Executive Directors;
    • To take responsibility for oversight of all of the Groups remuneration practices including pensions;
    • To ensure that the Human Resource policies of the Group, particularly those which govern the terms and conditions of employment, remuneration and retirement benefits which apply are fit for purpose and will be effective in attracting, retaining and motivating employees;
    • To review and approve performance-based remuneration by reference to the Group's goals as established by the Board;
    • To review the Remuneration Policy for publication in the Annual Report;
    • To review the powers, responsibilities and duties of any similar remuneration committees in subsidiary company and to ensure broad compliance with the Group policy as appropriate;
    • To ensure that any executive termination arrangements are not excessive having regard to contractual entitlements;
    • To take responsibility for the remuneration arrangements for any executive whose appointment requires Board approval;
    • To undertake on behalf of the Chairman or the Board any related tasks as may be entrusted to it from time to time;
    • To review the Committees Terms of Reference and its own effectiveness each year and recommend any changes considered necessary to the Board.
• Nomination Committee

• The functions of the Nomination Committee are:

  • To review the effectiveness of the Board’s operations, including the Chairmanship and composition of Board Committees;
  • To establish processes for the appointment, development and rotation of Non-Executive Directors and Chairman including, where appropriate, the use of external advice or open advertising;
  • To be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise. Candidates from a wide range of backgrounds will be considered in the context of a description of the role and capabilities required for a particular appointment;
  • To regularly review the structure, size and composition (including the skills, knowledge and experience) of the Board and make recommendations to the Board with regard to any changes;
  • To keep under review the leadership needs of the organisation both executive and Non-Executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace;
  • To ensure that on appointment to the Board, Non-Executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, Committee service and involvement outside Board meetings;
  • To recommend to the Board plans for succession for both executive and Non-Executive Directors;
  • To make recommendations to the Board as regards the re-appointment of any Non-Executive Director at the conclusion of his/her specified term of office or concerning the re-election by shareholders of any Director under the retirement by rotation provision of the Articles of Association.
• Risk and Compliance Committee

• The role and responsibilities of the Risk and Compliance Committee are:

  • To make recommendations to the Board on the adequacy of capital, both regulatory and economic, in the context of the Group's current and planned activities, including in relation to proposed mergers, acquisitions or disposals, and to oversee the allocation of capital to business units;
  • To make recommendations to the Board in relation to:
    • The Group's risk appetite statement;
    • The Group's Credit Policy;
    • The Group's Funding and Liquidity Policy.
  • To appoint and / or remove the Group Head of Risk & Compliance, after consultation with the Group Chief Executive;
  • To monitor the performance of the Group Head of Risk & Compliance, to whom there shall be solid reporting lines from all risk management and compliance functions across the Group including the actuarial risk management function, and who shall have independence in reporting to the Board Risk & Compliance Committee through its Chairman;
  • To provide qualitative and quantitative advice to the remuneration committee on risk weightings to be applied to performance objectives incorporated within the incentive structure for the Group Chief Executive and executive team;
  • To approve Group-level risk policies and the risk management programme;
  • To approve the development of significant new products and the commencement of other significant risk-assuming activities;
  • To approve the Group Compliance Policy and Compliance Principles;
  • To approve the Annual Compliance Plan;
  • To review the Annual Compliance Report and other compliance reports and updates prepared by the Group Head of Risk & Compliance and to make consequent recommendations to the Board;
  • To review, and make recommendations to the Board on, the Group’s risk profile, both current and emerging, including:
    • Risks to solvency and mitigating actions;
    • Liquidity risk;
    • Customer credit risk, including review of credit quality and concentrations, large exposures, the developing arrears profile and the default profile of all the material lending portfolios and of the banking business in total;
    • Country and counterparty credit risk, including name level monitoring;
    • Market and settlement risk;
    • Asset / liability risk;
    • Operational risk and compliance, including behaviours that may create reputational risk;
    • Risks resulting from the underwriting, sale and reinsurance of life insurance policies;
    • Other risks identified in Actuarial Financial Condition Reports or in Appointed Actuary Reports.
  • To review, and make recommendations to the Board on, the Group’s Internal Capital Adequacy Assessment Process (ICAAP);
  • To review the appointed Actuary’s Report and to make consequent recommendations to the Board;
  • To review the Actuarial Financial Condition Report and to make consequent recommendations to the Board;
  • To review, and make recommendations to the Board on, the risk management and compliance frameworks, ensuring their continued functioning and appropriateness;
  • To provide oversight of risk and compliance specific committees and functions in the Group;
  • To review legal and other statutory obligations of the Company;
  • To carry out such other tasks as the Board may assign to it;
  • To report to the Board, identifying any matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps to be taken.