Throughout 2011 no one other than a Committee member or other Non-Executive Director was entitled to attend the meetings of the Board Committees, but others were able to attend at the invitation of the relevant Committee.
› Audit Committee
The Audit Committee manages the relationship with the external
auditor. The Committee annually reviews and approves the terms
of the appointment of the external auditor and its engagement.
It fixes the level of the auditor’s remuneration (ensuring it is
appropriate and does not compromise the effectiveness of
the audit) and reviews the scope and adequacy of the audit
of the Group’s annual consolidated financial statements. The
Committee also puts in place policies and procedures to ensure
that the external auditor remains independent. It reviews these,
and the auditor’s independence and objectivity, each year. This
includes a review of the overall relationship between the auditor
and the Company, including the safeguards established by the
external auditor for maintaining independence, the rotation of
partners and staff who work on the audit, and the level and
nature of non-audit services provided by the auditor.
Since the formation of International Power plc in 2000, KPMG
Audit Plc had been the external auditor of the Group and parent
company financial statements. Following completion of the
Combination and in accordance with the policy of annual
review, the Audit Committee initiated and undertook oversight
of a formal tender process for the external audit for 2011. As
a result of assessment of the responses to tender, the Audit
Committee recommended to the Board that Deloitte LLP
become the external auditor of the Group and the parent
company. KPMG Audit Plc resigned as auditor of the parent
company in June 2011 (and of other companies in the Group
following completion of the audit of their 2010 financial
statements) and, in accordance with the Audit Committee’s
recommendation, the Board appointed Deloitte LLP as
external auditor for 2011.
The Committee reviews all financial reports (which for 2011
consisted of the Preliminary Results Announcement, Annual
Report and the Interim Report) including consideration of the
Group’s accounting policies and major judgemental areas.
The Committee reviews the effectiveness of the Group’s
systems of internal control, and reviews the scope (and the
annual plan) of the internal audit function and satisfies itself
of its adequacy, particularly in terms of resources and
performance against its annual plan.
In addition, the Committee reviews the report prepared by the Risk
Committee to ensure all relevant risks are addressed in these
external and internal audit processes.
The Committee also satisfies itself that proper processes and procedures are in place to address ethical and legal compliance matters.
Time was set aside for the
Committee to meet the external auditor and the Head of Internal
Audit without Executive Directors or management present.
The Company also issues Interim Management Statements
(IMSs) for the quarters ending 31 March and 30 September
in each year. Each IMS is approved by a Committee of the
Board comprising the Chairman, the Chairman of the Audit
Committee, the CEO and CFO.
The Audit Committee is chaired by Tony Isaac. Tony is a
qualified accountant and, before becoming Chief Executive
of The BOC Group plc, was its Group Finance Director. In
accordance with the terms of the Relationship Agreement
the other members of the Audit Committee as at the date of
the Annual Report are Isabelle Kocher, Sir Neville Simms and
Michael Zaoui. The Company Secretary acts as secretary to
the Committee. In addition to the members of the Committee,
regular attendees at the Audit Committee meetings in 2011
included representatives of the external auditor, the Chairman,
the CEO, the CFO, the Head of Business Control, the Head
of External Reporting and the Head of Internal Audit.
Audit Committee Constitution and Terms of Reference 
› Remuneration Committee
The Remuneration Committee is responsible for ensuring that
the overall remuneration of Executive Directors is maintained
on a sensible and comparable basis and enables the Company
to compete effectively for good calibre executives. It monitors
the performance of Executive Directors against targets, sets
the performance conditions for the annual bonus and long-term
incentive plan awards, and reviews the remuneration
levels and other conditions of service of other senior managers
below Board level.
The Remuneration Committee, in accordance with the terms
of the Relationship Agreement, is chaired by Bernard Attali
and the other members of the Committee, as at the date of the
Annual Report, are Dirk Beeuwsaert, Isabelle Kocher, David
Weston and Sir Rob Young. The Company Secretary acts as
secretary to the Committee and the Head of Human Resources
acts as an adviser to the Committee. In 2011 Towers Watson
acted as external adviser to the Committee.
Remuneration Committee Constitution and Terms of Reference
› Appointments Committee
The Appointments Committee is responsible for matters of management succession and the identification and appointment of Directors. It also reviews the Board structure, size and composition, and it makes recommendations to the Board with regard to changes that are deemed desirable.
The Appointments Committee is chaired by Sir Neville Simms and, in accordance with the terms of the Relationship Agreement, the other members of the Committee, as at the date of the Annual Report, are Bernard Attali, Dirk Beeuwsaert, Tony Isaac and Isabelle Kocher. The Company Secretary acts as secretary to the Committee.
In 2011 the work of the Appointments Committee included consideration of the benefits of diversity (including gender diversity) to the Group, at all levels of management and staff, including the Board. The Committee made recommendations to the Board regarding aspirations and objectives in respect of diversity, which were adopted in December 2011.
The Board’s diversity commitment statement is set out on page 65 of the Annual Report 2011.
Appointments Committee Constitution and Terms of Reference
› Health, Safety and Environment (HS&E) Committee
The HS&E Committee was established with effect from
1 January 2008. It is responsible for reviewing the Group’s
HS&E policies, objectives and performance. Following
completion of the Combination, the Committee is chaired by
David Weston. In accordance with the terms of the Relationship
Agreement, the other members of the Committee as at the
date of the Annual Report are Dirk Beeuwsaert and Sir Neville
Simms. In addition, the CEO, the COO, the Head of Operations,
the Head of Health and Safety, Environment and Security, and
the Environment and Corporate Responsibility Manager attend
meetings of the Committee. During 2011 the HS&E Committee
met twice, once in London and once at the First Hydro power
plant in Wales. At these meetings the Committee reviewed,
amongst other things, Group HS&E data and initiatives and the
corporate environmental policy. The Company Secretary acts
as secretary to the Committee.
Health, Safety and Environment Committee Terms of Reference
› Independent Board Member in charge of monitoring Ethics and Compliance
The role of the Independent Board Member in charge of monitoring Ethics and Compliance activities (hereafter: “Independent Board Member”) was established at the Board meeting of 17 May 2011. The Independent Board Member’s activities are aimed at reinforcing the Board’s oversight in respect of ethical and legal compliance matters. As such, they are in addition to the Audit Committee’s activities in that respect.
Independent Board Member in charge of monitoring Ethics and Compliance activities Terms of Reference