Annual report and accounts 2016

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64 Corporate Governance continued Board and committee evaluation Following the internal evaluations carried out in 2014 and 2015, an external evaluation was conducted this year facilitated by Dr Tracy Long from Boardroom Review Limited, who has no other connection with the Company. Dr Long also facilitated the 2013 evaluation and was re-appointed to provide a degree of continuity to this exercise, enabling the Board to better assess its development and progress since the incorporation of the Company. The overall conclusions of the review were positive. Over the last three years the Board was considered to have made meaningful progress and to have built on its strengths. The results of the evaluation show that the Board continues to adequately fulfil its responsibilities and that each of its committees continue to be effective and efficient. The key actions agreed by the Board following this year’s evaluation are set out in the table below. Strategy and business oversight Risk agenda Provide further context for Board strategy discussions, enhancing visibility of changing environment Enrich non-financial information reporting to the Board Implement suggestions to further improve the effectiveness of the annual strategy session Increase coverage and visibility of risk priorities across the Board forward agenda Board More dynamic management of the Board planning agenda, ensuring focus on agreed priorities, performance including training and development Continue to encourage site visits and other opportunities to engage with management, not only as an important source of information for non-executive directors but also as it provides context for succession planning and talent development discussions Succession Planning Succession planning at both Board and executive level should remain a priority Further formalise the process and reinforce the report to the whole Board Continue analysis of the Board skills matrix and discussions on future domain knowledge priorities At executive level, strengthen focus on talent development The Senior Independent Director met with the other directors to discuss the performance of the Chairman. Additionally, the Chairman met with each director individually to discuss their contribution to the Board, the functioning of the Board as a whole, as well as an assessment of performance against the objectives agreed for 2016. In general terms, good progress was made against these objectives, namely the improvements introduced regarding the Board agenda and time management, as well as the induction designed and completed this year for new members of the Audit and Compliance and Safety Committees. Relations with shareholders The Board is committed to maintaining an open dialogue with shareholders and recognises the importance of that relationship in the governance process. The Chairman is responsible for ensuring that an effective communication with shareholders takes place and that directors and executives understand and address investors’ concerns. The Board is briefed on a regular basis by the Group Head of Investor Relations and analysts’ reports are circulated to all directors. During 2016, the Board discussed shareholder matters on five different occasions, two of which included the Company’s corporate broker. IAG has a comprehensive investor relations programme which aims to help existing and potential investors understand the Group and its business. Regular shareholder meetings were held with executive directors, and the investor relations team during 2016. During May 2016, the Chairman, the Chair of the Remuneration Committee, along with the Group Head of Investor Relations, met with many of our largest shareholders to discuss, among other matters, governance and remuneration. The Group's medium to long term plans and targets were discussed in detail in a full day of presentations by the senior management team at the annual Capital Markets day that took place in London on November 4, 2016. Non-executive directors are invited to this meeting, giving major shareholders and investors the opportunity to discuss corporate governance matters with members of the Board. The event was broadcast live via webcast. The presentations are available in full on the Company’s website, along with the accompanying transcript. Both institutional and private shareholders may contact the Company through a dedicated website, via email and directly by telephone. The Board approved in January 2016 a Shareholder Communication Policy regarding communication and contacts with shareholders, institutional investors and proxy advisors, following the 2015 Spanish Good Governance Code recommendation. This policy is available on the Company’s website. INTERNATIONAL AIRLINES GROUP Annual Report and Accounts 2016
65 Other statutory information Directors’ conflicts of interests Directors must disclose to the Board any situation of direct or indirect conflict that they may have with the interests of the Company. In the event of conflict, the affected directors must abstain from participating in the transaction referred to by the conflict. The definition of conflict of interests is set out in the Board Regulations which are available on the Company’s website. Directors’ and Officers’ liability insurance The Company has purchased insurance against Directors’ and Officers’ liability for the benefit of the directors and officers of the Company and its subsidiaries. Share issues, buy-backs and treasury shares The Annual General Meeting held on June 16, 2016 authorised the Board, with the express power of substitution, for a term ending at the 2017 Annual General Meeting (or, if earlier, 15 months from June 16, 2016), to: (i) increase the share capital pursuant to the provisions of Article 297.1.b) of the Spanish Companies Law, by: (a) up to one-third of the aggregate nominal amount of the Company’s issued share capital as at the date of passing such resolution (such amount to be reduced by the amount that the share capital has been increased by and the maximum amount that the share capital may need to be increased by on the conversion or exchange of any securities issued by the Board under the relevant authorisation); and (b) up to a further one-sixth of the aggregate nominal amount of the Company’s issued share capital as at the date of passing such resolution in connection with an offer by way of rights issue (such amount to be reduced by the amount that the share capital has been increased by and the maximum amount that the share capital may need to be increased by on the conversion or exchange of any securities issued by the Board under the relevant authorisation). (ii) issue securities (including warrants) convertible into and/or exchangeable for shares of the Company, up to a maximum limit of one billion euros or the equivalent thereof in another currency, provided that the aggregate share capital that may need to be increased on the conversion or exchange of all such securities may not be higher than: (a) one-third of the aggregate nominal amount of the Company’s issued share capital as at the date of passing such resolution (such amount to be reduced by the amount that the share capital has been increased by the Board under the relevant authorisation); and (b) a further one-sixth of the aggregate nominal amount of the Company’s issued share capital as at the date of passing such resolution in connection with an offer by way of rights issue (such amount to be reduced by the amount that the share capital has been increased by the Board under the relevant authorisation). (iii) exclude pre-emptive rights in connection with the capital increases and the issuance of convertible or exchangeable securities that the Board may approve under the previous authorities for the purposes of allotting shares or convertible or exchangeable securities in connection with a rights issue or in any other circumstances subject to an aggregate maximum nominal amount of the shares so allotted or that may be allotted on conversion or exchange of such securities of five per cent of the aggregate nominal amount of the Company’s issued share capital as at June 16, 2016. (iv) carry out the acquisition of its own shares directly by the Company or indirectly through its subsidiaries, subject to the following conditions: (a) the maximum aggregate number of shares which is authorised to be purchased shall be the lower of the maximum amount permitted by the law and such number as represents 10 per cent of the aggregate nominal amount of the Company’s issued share capital on June 16, 2016, the date of passing the resolution; (b) the minimum price which may be paid for an ordinary share is zero; (c) the maximum price which may be paid for an ordinary share is the highest of: (i) an amount equal to five per cent above the average of the middle market quotations for the shares as taken from the relevant stock exchange for the five business days immediately preceding the day on which that ordinary share is contracted to be purchased; and (ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out at the relevant time; in each case, exclusive of expenses. The shares acquired pursuant to this authorisation may be delivered directly to the employees or directors of the Company or its subsidiaries or as a result of the exercise of option rights held thereby. For further details see note 29 to the financial statements. The IAG Securities Code of Conduct regulates the Company’s dealings in its treasury shares. This can be accessed on the Company’s website. No shares were purchased under the above mentioned authority during 2016. Strategic Report Corporate Governance Financial Statements Additional Information www.iairgroup.com
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INTERNATIONAL AIRLINES GROUP The be
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Strategic report “2016 was a chal
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3 Chairman’s letter A firm focus
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5 Q A And, importantly, we have to
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7 IAG combines the leading airlines
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9 Operating highlights British Airw
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11 Business model and strategy Maxi
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Page 17 and 18: 15 The performance indicators prese
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Page 21 and 22: 19 and additional summer aircraft a
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Page 25 and 26: 23 Aer Lingus Making the most of ou
Page 27 and 28: 25 IAG Cargo Resilient performance
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Page 31 and 32: 29 Risk Potential impact Management
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Page 35 and 36: 33 Financial overview A significant
Page 37 and 38: 35 However, continued weakness in t
Page 39 and 40: 37 Exchange impact before exception
Page 41 and 42: 39 By supplier cost category: Handl
Page 43 and 44: 41 Capacity 21% 11% 8% 60% Operatin
Page 45 and 46: 43 Cash flow € million 2016 2015
Page 47 and 48: 45 Sustainability Committed to our
Page 49 and 50: 47 UN Sustainable Development Goals
Page 51 and 52: 49 Aspect and link to SDGs Noise Wa
Page 53 and 54: 51 Air quality - electric tug trial
Page 55 and 56: “2016 has really tested the Group
Page 57 and 58: 55 I think we can be very proud tha
Page 59 and 60: 57 James Lawrence Non-Executive Dir
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Page 63 and 64: 61 The Board Secretary is Álvaro L
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Page 97 and 98: 95 The second performance condition
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Page 103 and 104: 101 Consolidated statement of other
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115 For the year to December 31, 20
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117 7 Auditors’ remuneration The
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119 For the year to December 31, 20
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121 c Reconciliation of the total t
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123 13 Property, plant and equipmen
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125 16 Intangible assets and impair
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127 Basis for calculating recoverab
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129 19 Trade and other receivables
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131 2 Floating rate euro mortgage l
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133 depending on whether the employ
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135 At December 31, 2016 the Group
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137 27 Financial instruments a Fina
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139 The carrying amounts and fair v
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141 December 31, 2015 Financial ins
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143 31 Other reserves and non-contr
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145 Defined benefit schemes i. APS
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147 d Fair value of scheme assets A
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149 e Present value of scheme liabi
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151 33 Contingent liabilities and g
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Spanish corporate governance report
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155 Indicate the most significant m
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157 Explain any significant changes
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159 B. SHAREHOLDERS’ MEETING B.1
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161 C.1.3 Complete the following ta
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163 Individual or corporate name of
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165 When reviewing board appointmen
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167 C.1.10 Indicate what powers, if
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169 Selection of directors In ident
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171 C.1.20 ter List any business re
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173 C.1.31 Indicate whether the con
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175 C.1.36 No Outgoing auditor Indi
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177 C.1.42 Indicate and, where appr
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179 C.2 Board committees C.2.1 Give
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181 f. To establish the appropriate
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183 F. Other responsibilities: a. T
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185 c) Steps taken during the year:
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187 C.2.2 b) Functions The main fun
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189 D.4 List any relevant transacti
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191 E.2 Identify the bodies respons
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193 Main risk Government interventi
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195 Audit and Compliance Committee
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197 The financial risk assessment i
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199 F.3.2 Internal control policies
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201 F.4.2 Mechanisms in standard fo
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203 6. Listed companies drawing up
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205 21. The board of directors shou
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207 37. When an executive committee
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209 52. The terms of reference of s
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211 IAG Remuneration Policy complie
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213 Director Enrique Dupuy de Lôme
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215 Strategic Report Corporate Gove
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217 Name and address Principal acti
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221 Strategic Report Corporate Gove
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223 Operating margin Overall load f
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225 In 2015, the definition of inve
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227 Sustainability indicators Indic
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Shareholder information Registered
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Annual report and accounts 2016

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