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Creating the Right Conditions for Growth.
Corporate Governance
High standards of corporate governance are a key priority for our Directors, providing the firm foundations that will ensure we are consistently accountable to our shareholders and enable us to achieve our global ambitions.
Donegal Investment Group bases our corporate governance policy on The UK Combined Code.
Here you’ll find everything you need to know about how the relevant main and supporting principles of the Combined Code have been applied within the Group.
The Chairman
The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda. The Chairman facilitates the effective contribution of all Directors and constructive relations between the Executive Directors and the other Directors, ensures that Directors receive accurate, timely and clear information and manages effective communication with shareholders.
The Managing Director
The Managing Director has direct charge of the Group on a day to day basis and is accountable to the Board for the financial and operational performance of the Group.
Nomination Committee
The Nomination Committee is comprised of three Non-Executive Directors: Geoffrey Vance, who acts as Chairman; Patrick Kelly and Norman Witherow.
Remuneration Committee
The Remuneration Committee is comprised of three Non-Executive Directors. Norman Witherow acts as Chairman of the Committee. When necessary, non-Committee members are invited to attend. The Committee’s principal responsibilities are:
Composition of Board and Remuneration Committee
It is the practice of the Company that a majority of the Board comprises Non-Executive Directors and that the chairman be Non-Executive. The Remuneration Committee consists solely of Non-Executive Directors. The Managing Director is fully consulted about remuneration proposals and outside advice is sought when necessary. The current members of the Remuneration Committee are Michael Griffin, Henry McGarvey and Norman Witherow (Committee Chairman). The terms of reference for the Committee are to determine the Group’s policy on Executive remuneration and to consider and approve salaries and other terms of the remuneration package for the Executive Directors and senior personnel.
Remuneration policy
The Group’s policy on senior personnel remuneration recognises that employment and remuneration conditions for senior personnel must properly reward and motivate them to perform in the best interest of the shareholders. Performance related rewards, in which targets are measurable, are a key consideration. The typical elements of the remuneration package for senior personnel are basic salary and benefits, incentive bonus, pensions and participation in the share option plan. It is policy to grant options to certain key management across all locations to encourage identification with shareholders’ interests.
Executive Directors’ basic salary and benefits
The basic salaries of the Executive Directors are reviewed annually having regard to personal performance, Group performance, changes in responsibilities and competitive market practice in the area of operation. Employment related benefits consist principally of a car allowance and participation in the share option scheme. No fees are payable to the Executive Directors.
Incentive plan
The Executive Directors are entitled to receive bonus payments as the Remuneration Committee may decide at their absolute discretion.
Share option scheme
At an extraordinary general meeting held on 27 July 2005 a share option scheme for full time Executives was approved by shareholders. The scheme permits the grant of options limited to 3% of the ordinary share capital of the Company in any three year period. No option is capable of exercise later than seven years after the date of grant. Options are granted at the discretion of the Remuneration Committee. Details of options granted to date and outstanding are set out in note 26 to the financial statements.
In 2015, a share performance plan was put in place that entitles key management and senior employees to a cash payment based on the difference between the deemed share price at the grant date and exercise date. No option is capable of exercise later than seven years after the grant date. Options are granted at the discretion of the Remuneration Committee. Details of options granted to date and outstanding are set out in group’s annual financial statements.
Directors’ Service Contracts
The Managing Director has a service agreement commencing on 1 January 2005 and continuing thereafter unless and until terminated by either party, giving not less than six months’ notice. This agreement automatically terminates on the Managing Director reaching the age of sixty five years.
None of the other Directors has a service contract with any member of the Group.
Directors’ remuneration and interests in share capital
Details of Directors’ remuneration, details of Directors’ share options and shareholdings and details of Directors’ pensions are set out each year in the annual report.
Pensions
Executive Directors are entitled to benefits under defined contribution scheme pension arrangements.
Audit Committee
The Audit Committee comprises of three Non-Executive Directors – Patrick Kelly Jnr (Chairman), Geoffrey McClay and Henry McGarvey. When necessary, Non-Committee members are invited to attend.
The Audit Committee monitors areas of risk and performance by the Group and ensures the integrity of the Group’s financial statements. The Audit Committee is also responsible for monitoring the effectiveness of the external auditor and audit process and makes recommendations to the Board in relation to the appointment, re-appointment and remuneration of the external auditors. This responsibility also ensures an appropriate relationship between the Group and external audit is maintained, including the review of all non-audit services provided. The audit committee performs a self evaluation annually and no issues were identified during the review. The engagement of the external auditor to provide any Non-audit services must be pre-approved by the Committee where the fee exceeds 20% of the audit fee. The Audit Committee reviews annually the Group’s systems of internal control and the processes for monitoring and evaluating the risks facing the Group. The Audit Committee meets with management as required and meets privately with the external auditor.
The Audit Committee discharged its responsibilities by:
• reviewing the Group’s financial statements, meeting and reviewing with the external auditor prior to Board approval of the financial statements;
• reviewing the appropriateness of the Group’s accounting policies;
• reviewing the potential impact in the Group’s financial statements of significant matters and changes arising during the year;
• reviewing and approving the audit fee and reviewing Non-audit fees that may be payable to the Group auditor;
• considered the external auditor’s plan for the annual audit of the Group’s financial statements annually:
• confirmation of the external auditor’s independence and terms of engagement;
• reviewing and redefining the Group’s system of risk identification assessment and control to ensure their robustness and effectiveness;
• reporting to the Board on its review of the Group’s systems and internal controls and their effectiveness to meet current, future and strategic requirements.