The board acknowledges that its primary role is to create and safeguard shareholder value.
The board's functions include:
Under the company's constitution, the board can delegate any of its powers to the managing director (MD). Those powers can be withdrawn, suspended or varied at any time.
The MD, CFO and the other senior executives are authorised to make the day-to -day decisions required to fulfil their roles and to achieve the company's strategic and financial objectives.
The company's senior executives report to the board each month to update it on initiatives and issues. These reports include key performance indicators, (KPIs) which are the basis of executive performance evaluations.
The full board deals with all significant matters. To assist in its deliberations, the board has established a number of committees that act primarily in a review or advisory capacity. Regional operational committees are in place and include board directors, who use their knowledge and experience to help the senior executive and his or her key management personnel address issues that may arise.
Newly appointed board members and senior executives are given a practical induction into the group's operations, strategies and financial position through access to appropriate documentation and face-to-face discussions with existing board members and senior executives.
The board has a complementary mix of skills that provides the desired depth and experience. Currently, there are three non-executive directors (including the chairman) and one executive director, who is MD.
The MD is a board member but is not the board 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.
The directors' names and biographical details are provided in the annual report.
Flight Centre's remuneration committee includes all board members and also serves as the company's nomination committee. As such, the remuneration committee considers (per the charter) board composition to ensure it includes the appropriate blend of skills and competencies to oversee the company. In situations where additional skills may be required, the remuneration committee establishes whether to nominate a further director.
The board evaluates its overall performance and individual directors' performance.
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 all current non-executive directors are independent under the definition outlined in ASX Corporate Governance Principles and Recommendations. While businesses which the directors have an interest in supply product to Flight Centre, they are not of a material quantum to those businesses, nor to Flight Centre.
Flight Centre actively promotes a set of values designed to assist employees in their dealings with each other, competitors, customers and the community. These values set out standards expected of all employees. Values endorsed include: honesty, integrity, fairness and respect. These values are incorporated into the company core philosophies and are considered the equivalent of a Code of Conduct.
The board endorses Flight Centre's philosophies and they 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 philosophies are included in the annual report.
The company recognises its corporate social responsibility (CSR) and has committed to fulfilling this obligation by contributing to several charitable initiatives. The Flight Centre Foundation is a key element in Flight Centre's CSR platform.
Flight Centre maintains a position of impartiality with respect to party politics and, accordingly, does not contribute any funds in this regard.
The board has established guidelines governing trading in Flight Centre shares by directors, employees and contractors who may be aware of price sensitive information. Dealings in the company's shares are only permitted for 30 days following the public release of the company's price sensitive announcement. If new price sensitive information emerges 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 trading policy at www.flightcentre.com
Audit committee functions include:
Mr Barrow, the audit committee chairman, is a fellow of the Australian Institute of Chartered Accountants, a member of the Institute of Company Directors, the Taxation Institute of Australia, a tax agent and a registered company auditor.
The board has reviewed the committee's composition and is satisfied that, given the size of Flight Centre's board, the committee has appropriate financial representation. The audit committee chairman is not the board's chairman.
Refer to www.flightcentre.com for Audit Committee charter
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.
The MD and CFO certify that the company's accounts are a true and fair representation of the company's financial results and position.
In accordance with ASX Listing Rules, Flight Centre will immediately disclose publicly 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 Securities Exchange (ASX) is posted on the company website.
The annual report is available on the company's website and, on request, can be emailed or posted to shareholders.
Refer to www.flightcentre.com for the Communications and Disclosure Policy
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, ASX announcements and media releases. All such communications are placed on the company website, www.flightcentre.com.
Shareholders are encouraged to supply, prior to the annual general meeting (AGM), any questions of the board so that these can be addressed at the meeting. Flight Centre's investor relations manager is available at other times to address shareholder, analyst and media queries.
The external auditor attends the AGM to answer shareholder questions concerning the conduct, preparation and content of the audit report.
Refer to www.flightcentre.com for the Communications and Disclosure Policy
Flight Centre complies with Australian laws and laws applicable in the jurisdictions in which it operates.
The company continues to develop and improve an integrated business risk management and compliance framework. This provides the board and management with an ongoing program to identify, evaluate, monitor and manage significant risks to enhance, over time, the value of the shareholders' investments and to safeguard assets.
The company secretariat oversees risk management and compliance matters and includes the regulatory compliance, legal and global risk and audit teams.T he global risk and audit team is responsible for ensuring financial and non-financial risk management measures are adopted.
Audit and business reports are provided to the board on a continuing basis to ensure prompt action can be taken if any material issues are discovered.
The board regularly evaluates management's performance and requires senior management to formally address it on execution of strategy and associated issues.
To enhance communication, all senior executives have "one-on-one" meetings with the managing director. The board receives a monthly information pack including:
The board requests additional information as required.
The company secretary facilitates corporate governance and distributes agenda items and information papers.
The MD and CFO provide the board with a formal sign-off, in accordance with section 295A of the Corporations Act, regarding the group's financial statements and soundness of the risk management and internal controls.
Refer to www.flightcentre.com for the Internal Audit Charter
Risks to which Flight Centre is subject to include:
Flight Centre and its board continually assess emerging trends and associated risks and their possible affects on future profits.
The company has a proven retail formula based on standardised systems, a replicable business model and ongoing business growth. This business model has been, and continues to be, successfully adapted in response to world events and industry changes.
Full details of Flight Centre's remuneration policies and structures, including director and key management personnel information, are outlined in the remuneration report in the annual report and on www.flightcentre.com.
The company's fundamental remuneration policy is to link performance and accountability with reward. Accordingly, FLT's overall remuneration framework seeks to align executive reward with achievement of strategic objectives and the creation of shareholder value.
This framework conforms with market practice for reward delivery.
FLT's board delegates responsibility for remuneration practices to the remuneration committee. This committee consists of all the full board's and provides:
Committee member's attendance is disclosed in the annual report.
The MD, CFO, and the HR manager provide operational information to the committee.
Refer to www.flightcentre.com for the Remuneration Charter
Principles used to determine the nature and amount of remuneration
The remuneration committee ensures that executive reward satisfies the following key criteria for good reward governance practices:
Non executive directors' fees and payments reflect the position's demands and responsibilities and are reviewed annually by the board.
Fees are determined within an aggregate directors' fee pool limit, which is periodically recommended for shareholder approval. The maximum currently stands at $650,000 per annum, as approved by shareholders on 3 November 2008.
The chairman's fees are included in this pool and are determined independently from non executive directors' fees. The chairman is not involved in the approval of, or discussions relating to his remuneration package.
Directors have elected not to participate in the Flight Centre Limited Employee Option Plan and are not eligible to participate in the Flight Centre Limited Employee Share Plan.
Under FLT's remuneration framework, executives receive a mix of fixed and variable pay and a blend of short and long-term incentives. As executives gain seniority, the balance of this mix shifts to a higher proportion of at risk rewards.
Executive pay and reward is a combination of four factors:
All relevant governance charters and policies are available on www.flightcentre.com