Corporate Governance

The Board formed a remunerations committee in February 2006 comprising its independent directors.

The committee determines the following as its key responsibilities and functions:

• The framework or the broad policy for the remuneration of the Chief Executive, the Chairman and other members of the executive management including the Company Secretary
• Targets for any performance-related pay schemes including the LTIP and AIB
• Pension arrangements for each executive director
• Contractual terms on termination
• Within the terms of the agreed policy, determine the total individual remuneration package of each director
• Agree the policy for authorising claims for expenses from the CEO and Chairman
• Fulfilment of appropriate disclosures as set out in the Directors' Remuneration Report Regulations 2002 and the Code
• Exclusively responsible for any inclusion of information from committee meeting in the Annual Report

The Board formed an audit committee in February 2006 comprising its independent directors.

The committee determines the following as its key responsibilities and functions:

• Monitor the integrity of the financial statements and formal announcements relating to the company's financial performance
• Review internal financial controls and risk management systems
• Review and monitor the effectiveness of the internal audit function
• Recommend to the Board the appointment of external auditors and to approve their remuneration and terms of engagement
• Review and monitor the independence, objectivity and effectiveness of the external auditors
• Develop and implement policy on the engagement of the external auditors to supply non-audit services, taking into account relevant ethical guidance.

The Board formed a nomination committee in August 2007 comprising its independent directors.

The committee determines the following as its key responsibilities and functions:

• Identifying and nominating for the approval of the Board candidates to fill board vacancies as and when they arise
• Reviewing annually the time required from Non-executive Directors to perform their duties and whether they are spending enough time on their duties and how this relates to their performance
• Reviewing the composition of their Board and the mix of skills, and reporting on the development of the board and succession planning at the senior level and advising the Board.
• At the end of the annual audit cycle, reviewing the effectiveness of the Board and its sub-committees, the Executive Directors and the Non-executive Directors, and reporting on these matters to the Board.

• The Board of Weatherly International plc is made up of:
  
  

  Chairman	Dr Wolf Martinick
  Chief Executive Officer	Rod Webster
  Non-Executive Director	Alan Stephens
  Non-Executive Director	John Bryant

• Board meetings are held according to an annual programme that is agreed in December each year. At other times the chairman can call a meeting as and when necessary and will give as much notice as possible.

• The Company Secretary is responsible for the preparation and circulation of agenda and supporting papers for Board Meetings. For meetings in the regular cycle a draft agenda will be circulated by e-mail to all Directors one week in advance of the meeting and Directors can bring forward items for the agenda and should notify the Company Secretary. The Agenda is agreed with the CEO and then the Chairman who is responsible for the agenda and the conduct of the meetings.

• Wherever possible the final agenda should be sent out (at least) 5 days before the board meeting and every item of substance should be supported by a written paper explaining the issues with recommendations outlining the course of action.

The Board can of course take decisions on all matters but the following matters are reserved to the Board and can only be done with the Boards approval.

Legal and regulatory

• Approval of Interim and preliminary results, Annual Report and accounts and /or summary financial statement or any document that is to be circulated to shareholders.

• Approval of any interim dividend or recommendation of any final dividend (to A.G.M.)

• Approval of any listing particulars or any document concerned with the sale or offering of shares.

Appointments

• Appointment and removal of the Company Secretary
• Appointment and removal of Directors in the circumstances envisaged by the articles. (Directors are voted for at A.G.M.)
• Receipt of declarations of Interest
• Appointment of any director as Chairman, Deputy Chairman or Senior Independent Non Executive
• Appointment and removal of the Chief Executive Officer
• Appointment of directors to the boards of all subsidiary companies or Joint Ventures
• Approval of the terms of reference of all board committees and all delegations of authority
• Approval of the policy on Executive Directors remuneration
• Appointment of any Bank, Nominated Adviser, Broker or Corporate adviser.

Management

• Approval of the Group Strategic Plan and budget
• Approval of the provision of non-audit services by the Auditors
• Approval of and significant changes to:
  1. Group policies and standards
  2. Insurance cover
  3. Group system of internal control

Transactions

• Approval of transactions in capital expenditure and Revenue expenditure and any transaction involving the exchange or grant of shares outside delegated authorities listed in the Internal Control Manual

Guarantees

• The approval of any guarantee or indemnity for whatever purpose
• Share Capital and Financing
• Approval of any increase/reduction in the issued share capital of the company within the authorised share capital
• Approval of any debts or loans or the repayment thereof

General

• Approval of any employee share scheme including share options schemes
• To consider annually:
  1. The effectiveness of the system of internal control and risk management
  2. The effectiveness of the communication between the company and its shareholders and stakeholders.
  3. The effectiveness of the Board and its sub-committees.
  4. The effectiveness of its executive and non-executive directors.
     
     Item a) will initially be considered by the Audit sub committee and reported to the Board for their consideration.
     Items c) and d) will initially be considered by the Appointments (or Nomination) Committee at the end of the annual audit cycle and reported to the Board.)

• Audit committee
• Remuneration Committee
• Nomination Committee

Terms of Reference of the Audit Committee

Members of the Audit Committee shall be appointed by the Board to include the two independent non-executive directors. The principal functions of the Committee are;

• To monitor the integrity of the financial statements of the company and any formal statements issued by the company about its financial performance (this would include its annual and interim reports and preliminary results announcements). It should review any significant financial reporting issues and judgements made in them
• To review the company’s internal financial control and risk management systems
• To make recommendations about the appointment of external auditors and their remuneration. They committee should review their performance, independence and objectivity
• Keep under review the provision of non-audit services by the external auditors

The Chairman of the committee is John Bryant with Alan Stephens as committee. The external auditor
and the Finance Director would expect to attend.

Terms of reference for The Remuneration Committee

Members of the Remuneration Committee shall be appointed by the Board to include the two independent non-executive directors. The principal functions of the Committee are;

• Determining and agreeing with the Board the remuneration policy for the Chairman, CEO and executive directors
• Setting the remuneration of all executive directors and the Chairman (including pension rights, compensation or severance payments.) Note - the board itself sets the level of remuneration for Non–Executive directors
•  Monitoring the level of senior management pay
• To ensure his independence setting the remuneration for the Company Secretary
• Agree performance targets for any performance related pay schemes operated by the company
• Ensure compliance with the disclosure requirements for directors’ remuneration and attendance at meetings

The Chairman of the committee is Alan Stephens with John Bryant as committee. The Chief Executive Officer may attend.

The Nomination Committee

Members of the Nomination Committee shall be appointed by the Board to include the two independenton-executive directors. The principal functions of the Committee are;

• Identifying and nominating for the approval of the board candidates to fill board vacancies as and when they arise
• Reviewing annually the time required from Non-Execs to perform their duties and whether they are spending enough time on their duties and how this relates to their performance
• Reviewing the composition of their board and the mix of skills and report on the development of the board and succession planning at the senior level and advise the board.
• At the end of the annual audit cycle reviewing the effectiveness of the Board and its sub-committees, the executive directors and the non-executive directors and report on these matters to the Board.

The Chairman of the committee is Wolf Martinick with Rod Webster and a Non Executive Director as committee

• Uphold the highest standards of integrity and probity.

• Set the agenda, style and tone of board discussions to promote effective decision making and constructive debate.

• Ensure that they are fully informed about all issues on which the board will have to make a decision, through briefings with the Chief Executive, the company secretary, and members of the executive management as appropriate.

• Ensure effective implementation of board decisions.

• Promote effective relationships and open communication between executive and non-executive directors both inside and outside the boardroom, ensuring an appropriate balance of skills and personalities.

• Build an effective and complementary board, and with the Nomination Committee, initiate change and plan succession in board appointments (except that of a successor as Chairman) subject to board and shareholder approval.

• With the assistance of the company secretary, promote the highest standards of corporate governance, seeking compliance with the Combined Code. If full compliance is not possible, ensure that the reasons for non-compliance are fully understood, agreed by the board and explained to shareholders.

• Ensure an appropriate balance is maintained between the interests of shareholders and other stakeholders (employees, customers, suppliers and the community).

• Ensure the long term sustainability of the business.

• Ensure the continual improvement in quality and calibre of the executives.

• Establish a close relationship of trust with the Chief Executive and Finance Director, providing support and advice while respecting executive responsibility.

• Provide coherent leadership of the Company, including, in conjunction with the Chief Executive, representing the Company to customers, suppliers, governments, shareholders, financial institutions and the media, the community and the public.

• The CEO is responsible for the executive management of the company. For this he will have in place a management team that will assist the management of the company. The CEO should report on the management of the company at the board meetings.

• This will be done through regular meetings at which the (Independent) Chairman has a right to attend and should receive a copy of the notes and actions arising from the meetings. In the event of any disagreement at such a meeting the notes should record this so the Chairman is aware of the matter.

• The director’s duties to the company are extensively dealt with and described in many books and guides. It is assumed that all directors are familiar with these. It is particularly important that a director discloses all his interests (and those of related parties) by way of directorships or shareholdings so that they can be recorded in the register of interests and referred to should a conflict or potential conflict arise at a board meeting or generally in the company’s business.

• In addition the Company has adopted the Model Code (this is attached at Appendix B) for dealing in the company’s securities and as a matter of law directors must comply with the restrictions that this imposes on their ability to deal in securities.