Notes to the Financial Statements (cont'd) - Kenya Airways

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44 Kenya Airways Annual Report & AccountsCorporate Governance“Corporate governance is the process by which companies are directed,controlled and held to account”.The Kenya Airways Board of Directors is responsible for the overall management of thegovernance of the airline and is accountable to the shareholders for ensuring that thecompany complies with the law and the highest standards of best practices in corporategovernance and business ethics. The Directors are committed to the need to conduct thebusiness and operations of the airline and the group with integrity and in accordance withgenerally accepted corporate practice and endorse the internationally developed principlesof good corporate governance.Board of DirectorsThe full Board meets at least five times a year. The Directors receive all information relevantto the discharge of their obligations in accurate, timely and clear form so that theycan guide and maintain full and effective control over strategic, financial, operational andcompliance issues. Except for direction and guidance on general policy, the Board has delegatedauthority for conduct of day-to-day business to the Group Managing Director andChief Executive Officer. The Board nonetheless retains responsibility for establishing andmaintaining the airline’s overall internal control of financial, operational and compliance issuesas well as implementing strategies for the long term success of the airline.Nine out of the eleven members of the Board are non-executive including the Chairman ofthe Board, and all, other than the Group Managing Director, Group Finance Director andtwo KLM Directors are subject to periodic reappointment in accordance with the company’sArticles of Association. The Directors have a wide range of skills and experience and eachcontributes independent judgement and knowledge to the Board’s discussions.Committees of the BoardThe Board has three standing committees, which meet regularly under the terms of referenceset by the Board.Audit and Risk Management CommitteeThe Board has constituted an Audit and Risk Management committee which meets four timesa year or as necessary. Mr. Dinesh Kapila, an independent non executive Director chairs thissub committee whose other members include Mr. Joseph K. Kinyua, Mr. Jos Veenstra andMr A Makatiani . Its responsibilities include review of the integrity of the financial statementsand formal announcements relating to the group’s financial performance, compliance withaccounting standards, liaison with the external auditors, remuneration of external auditorsand maintaining oversight on internal control systems. The external and internal auditors,the Group Managing Director and the Group Finance Director attend all meetings of the committee.Other service line Directors attend as required to brief the committee.Staff and Remuneration CommitteeThere is a Staff and Remuneration committee of the Board. Its membership comprisesMr. Denis Afande, also an independent non executive Director and Chairman, Mr. Ron Schipperand Mrs Salma Mazrui - Watt. The committee meets quarterly or as required. The committeeis responsible for monitoring and appraising the performance of senior management,including the Group Managing Director, review of all human resource policies, determiningthe remuneration of senior management and making recommendations to the Board on theremuneration of non executive Directors. The Group Managing Director and the Director ofHuman Resources attend all meetings of the committee.Nominations CommitteeThere is a Nomination committee of the Board. Its membership comprises Mr. EvansonMwaniki (Chairman), Mr. Peter Hartman, Mr. Joseph Kinyua and Mr. Denis Afande. The committeemeets once a year or more if necessary. The committee is responsible for identifyingand nominating for the approval of the Board, candidates to fill Board vacancies asand when they arise. In so doing, consideration is given to succession planning, taking intoaccount the challenges and opportunities facing the company, and to ensure that the necessaryskills and expertise are available on the Board in the future. This committee also appraisesthe role, contribution and effectiveness of the non-executive Directors. The GroupManaging Director may also be invited to attend this meeting.Internal ControlsThe group has defined procedures and financial controls to ensure the reporting of completeand accurate accounting information. These cover systems for obtaining authorityfor major transactions and for ensuring compliance with laws and regulations that havesignificant financial implications. Procedures are also in place to ensure that assets aresubject to proper physical controls and that the organization remains structured to ensureappropriate segregation of duties. In reviewing the effectiveness of the systems of internalcontrol, the Board takes into account the results of all the work carried out to audit andreview the activities of the Group. A comprehensive management accounting system isin place providing financial and operational performance measurement indicators. Weeklymeetings are held by executive management to monitor performance and to agree on measuresfor improvement.Code of EthicsThe airline is committed to the highest standards of integrity, behaviour and ethics in dealingwith all its stakeholders. A formal code of ethics has been approved by the Board andis fully implemented to guide management, employees and stakeholders on acceptable behaviourin conducting business. All employees of the airline are expected to avoid activitiesand financial interests that could undermine their responsibilities to the airline.
Kenya Airways Annual Report & Accounts45Corporate Governance (cont’d)Communication with ShareholdersThe company is committed to ensuring that shareholders and the financial markets areprovided with full and timely information about its performance. This is achieved by thedistribution of the company’s annual report, the release of notices in the press of its halfyearly and annual results, and quarterly disclosures of operating statistics to the stockmarkets and capital markets authorities. There is also a minimum of two investor briefingsper annum for institutional investors.Periodically there are press releases announcing other major company developmentswhich could be considered price sensitive information. In this regard, the company alsocomplies with the continuing listing obligations of the Capital Markets Authorities and StockExchanges applicable in Kenya, Uganda and Tanzania.In line with management commitment at the 2009 Annual General Meeting, the AnnualReport will be published on the Company’s web site together with the notice and minutes ofthe Annual General Meeting.Directors Emoluments and loansThe aggregate amount emoluments paid to Directors for services rendered during the financialyear 2009/10 are disclosed in the notes to the financial statements. Neither at theend of the financial year, nor at any time during the year was there any arrangement towhich the company is a party, whereby Directors might acquire benefits by means of transactionsin the company’s shares.The Company has a strict insider trading policy to which the Directors and senior managementmust adhere.There were no Directors loans at any time during the year. Directors interests in the sharesof the company, the distribution of the company’s shareholding and analysis of the tenlargest shareholders as at 31 March 2010 were as follows:-Directors’ InterestsName of DirectorNumber of SharesPermanent Secretary to the Treasury 106,171,561Evanson Mwaniki 10,090Ayisi Makatiani 5,700Dinesh Kapila 4,036Cyrus Njiru 1,000Salma Mazrui1,000 (joint shareholding)
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Notes to the Financial Statements (cont'd) - Kenya Airways

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