- Lay solid foundations for management and oversight
The Board acknowledges that its primary role is to create and safeguard shareholder value.
The Board's functions include:
- Charting the group's direction, strategies and financial objectives
- Overseeing and monitoring organisational performance
- Identifying risks and implementing appropriate control, monitoring and reporting mechanisms
- Appointment, performance assessment and, where appropriate, removal of the Chief Executive Officer, Chief Financial Officer and Company Secretary
- Ensuring the Board structure and composition is effective
- Approving and monitoring the progress of major capital expenditure, acquisitions and capital management
All significant matters are dealt with by the full Board. To assist in its deliberations, the Board has established a number of committees that act primarily in a review or advisory capacity.
- Structure the Board to add value
The Board has a complementary mix of skills that provide the desired depth and experience.Currently, there are three non-executive Directors (including the Chairman) and one executive Director.
The Managing Director is a Board member but does not hold the position of Chairman.
The Board meets monthly and on an ad hoc basis to consider time critical matters.
Directors may seek legal advice, at the company's expense, on any matter relating to the group, subject to prior notification to the Chairman.
Board Composition
The Directors' names and biographical details are provided in the annual report.
Nominations Committee
Due to the small size of the Flight Centre Limited Board, the full Board is considered a more effective and appropriate mechanism to deliberate selection, appointment and performance matters.
Independence and Materiality
An independent Director is independent of management and free of any business or other relationship that could materially interfere with the exercise of the Director's unfettered and independent judgment.
Materiality is assessed on a case-by-case basis from the perspective of both the Company and the Director concerned.
The Board believes the current non-executive Directors qualify as independent.
- Promote Ethical & Responsible Decision Making
Flight Centre actively promotes a set of values designed to assist all employees in their dealings with each other, competitors, customers and the community.The values endorsed include: honesty, integrity, fairness and respect. These values are incorporated into the company core philosophies. Flight Centre Limited's philosophies are considered the equivalent of a Code of Conduct as they set out the standards expected of all employees.
Company Philosophies
The company philosophies are included in the annual report.
Political Contributions
Flight Centre Limited maintains a position of impartiality with respect to party politics and, accordingly, does not contribute any funds in this regard.
Trading Policy
The Board has established guidelines governing the purchase or sale of securities in the company by Directors, employees and contractors who may be in possession of price sensitive information.The Board has resolved to confine any dealings in the company's shares to a period of 30 days following the public release of the company's financial results. Notwithstanding, should new price sensitive information emerge during this period, Directors, employees and contractors are not permitted to trade in the company's shares until the information has been publicly released.
For further details, refer to the policy at http://www.flightcentre.com
- Safeguard Integrity of Financial Reporting
Audit Committee
Audit committee functions include:
- Recommending the external auditor's appointment/removal, reviewing the auditor's performance and audit scope
- Helping the Board oversee the risk management framework, including determining the internal audit's scope, ratifying the Chief Internal Auditor's appointment/removal and contributing to the Chief Internal Auditor's performance assessment
- Reviewing the company's published financial results
- Reporting to the Board on matters relevant to the committee's role and responsibilities
Committee Composition
The Audit Committee includes three independent Directors, Peter Barrow (Committee Chairman), Bruce Brown and Howard Stack, who report to the full Board and have extensive experience and expertise in accountancy, financial management, risk management, legal compliance and corporate finance.Details of the Directors' qualifications and attendance are set out in the annual report.
The Board has reviewed the Committee's membership and is satisfied that, given the size of Flight Centre Limited's Board, the Committee has appropriate financial representation.The Chairman of the Audit Committee is not Chairman of the Board of Directors.
Refer to http://www.flightcentre.com for Audit Committee charter.
Auditor Appointment
The company and Audit Committee policy is to appoint an external auditor that clearly demonstrates quality and independence. The external auditor's performance is reviewed annually. PricewaterhouseCoopers (PwC), the current auditor, is obliged to rotate audit engagement partners at least every five years. The group has moved to have PwC appointed in each jurisdiction it operates in.
An analysis of fees paid to the external auditor, including fees for non-audit services, is provided in the annual report. The external auditor's policy is to provide the Audit Committee with an annual declaration of independence.
Certification of Financial Reports
The Chief Executive Officer and Chief Financial Officer certify that the company's accounts are a true and fair representation of the company's financial results and position.
- Make Timely and Balanced Disclosure
As per ASX Listing Rules, Flight Centre Limited will immediately publicly disclose any information that a reasonable person will expect to have a material effect on the value of its shares.
The company has written policies and procedures governing continuous disclosure and shareholder communication.
All information communicated to the Australian Stock Exchange (ASX) is to be posted on the company website.
In line with recent legislation changes in Australia, Flight Centre Limited has adopted a preferred policy of distributing the company's annual and half yearly reports electronically wherever possible. Shareholders can, however, request hard copy versions of these documents.
Refer to http://www.flightcentre.com for the Communications and Disclosure Policy.
- Respect Rights of Shareholders
Shareholder Communications
The Board aims to inform shareholders of all major developments affecting the group's activities and its state of affairs through distribution of the annual report, Australian Securities Exchange announcements and media releases. All such communications are placed on the company website, http://www.flightcentre.com
Auditor Communication
The external auditor is asked to attend the annual general meeting to answer shareholder questions concerning the conduct, preparation and content of the audit report.
Refer to http://www.flightcentre.com for the Communications and Disclosure Policy.
- Recognise and Manage Risk
Flight Centre Limited complies with the laws applicable in Australia and in the jurisdictions in which it operates.
The company is developing an integrated business risk management and compliance framework.This will provide the Board and management with an ongoing program to identify, evaluate, monitor and manage significant risks to enhance, over time, the value of shareholders' investments and to safeguard assets.
The Company Secretariat includes the Internal Audit and Legal divisions and oversees risk management and compliance matters. The Global Internal Audit division is responsible for ensuring the adoption of prudent financial and non-financial risk management measures.
Audit and business reports are provided to the Board.
The Managing Director and Chief Financial Officer have provided the Board with a formal sign-off regarding the soundness of the risk management and internal controls.
Refer to http://www.flightcentre.com for the Internal Audit Charter
Risk Profile
Factors representing general risks include:
- The general state of the Australian and international economies,
- Adverse currency and interest rate movements,
- The outlook of the tourism sector generally.
- Low barriers to entry and modest start-up costs
Factors which represent specific risks to Flight Centre include:
- Adoption of the internet as a distribution channel
- Adverse changes in commission arrangements or rates payable to the group
- The occurrence of significant international armed conflict
- A dramatic change in customer travel/leisure patterns and tastes
- Loss of key staff and staff turnover
- Adverse changes in government regulation
Flight Centre and its Board continually assess emerging trends and associated risks and their possible impacts on future profits.
Strategies are in place to drive future growth and to mitigate against the affects of the various risk factors. The company's specific goals for 2007/08 are included in the annual report's outlook section.
- Encourage enhanced performance
The Board evaluates its collective performance and considers various issues including; the quality of the Board's relationship with management, Board succession and complementary skill mixes, the Board's role, contribution and effectiveness.
The Board regularly evaluates management's performance against various criteria and requires senior management to formally address the Board on execution of strategy and associated issues.
All senior executives have “one-on-one” meetings with the Managing Director. The Board receives a monthly information pack including:
- Reports from respective Executive General Managers on financial and, operational issues;
- Divisional reports from National Leaders;
- Corporate governance reports; and
- Consolidated and divisional accounts
The Board requests additional information as required.
Board members are entitled to seek independent advice once notification has been made to the Chairman.
The Company Secretary facilitates corporate governance and distributes agenda items and information papers. The Company Secretary is accountable to the Board through the Chairman.
- Remunerate Fairly and Responsibly
Flight Centre Limited's fundamental remuneration policy is to link performance and accountability with reward.
The directors and the highest paid executives' remuneration details are outlined in the annual report.
The Board delegates responsibility for remuneration practises to the Remuneration Committee.
Remuneration Committee
The Remuneration Committee helps determine appropriate remuneration policies and consists of Flight Centre Limited's Managing Director, Chief Financial Officer, Company Secretary and HR Manager. The Board believes that, given its size, the existing committee satisfactorily addresses this function. The Board considers a remuneration charter is not necessary at this stage.
Equity Issuance
Executive remuneration consists of a retainer, a performance-based incentive and possible equity participation through the Employee Share Plan or Option Plan. Equity-based remuneration is issued in accordance with Corporations Act requirements.
Non-executives cannot participate in the Employee Share Plans and receive no additional retirement benefits other than the statutory requirements.
The Chairman is not involved in the approval of his own remuneration package.
The Remuneration Committee's attendance details are outlined in the annual report.
- Recognise Other Legitimate Interest of Stakeholders
Flight Centre Limited's company philosophies are endorsed by the Board and apply to all directors and employees.The philosophies require all company personnel to act with integrity and are supported by numerous policies relating to legal and ethical compliance.
The company's philosophies can be viewed in the annual report.
The company recognises its corporate social responsibility and has committed to fulfilling this obligation by contributing to several charitable initiatives. To coordinate its efforts in this area, Flight Centre Limited has moved to create a charitable foundation. The company expects to launch this foundation during 2007/08.