Board committees

permanent tsb Group Holdings plc (“PTSBGH”) is the holding company of the retail bank, permanent tsb plc (“PTSB”) which in turn is the parent company of a number of other subsidiary and associated undertakings (together the “Group”). On 28 February 2012, the Board of PTSB established Audit, Risk and Compliance, Nomination and Remuneration and Compensation committees in preparation for the legal separation of the Irish Life Group. Prior to this, the Board of PTSB had relied on the Group committee structure of the PTSBGH Board.

The current Group committee structure is set out below:

(c) – Denotes committee chair.

• Audit Committee

• The PTSB Audit Committee and the PTSBGH Audit Committee (hereinafter the “Audit Committee”) comprises Emer Daly (Chairman), Margaret Hayes and Pat Ryan. The Boards of PTSB and PTSBGH respectively ensure that the Chairman of the Audit committee has recent and relevant financial experience. The Audit Committees provides a link between the Board and the external auditors. The Audit Committee is independent of the Group’s management and is responsible for making recommendations in respect of the appointment of external auditors and for reviewing the scope of the external audit. The Audit Committee has responsibility for reviewing the annual report and financial statements and half-yearly accounts.

  The Audit committee monitors the effectiveness and adequacy of internal control, internal audit and IT systems and reviews the effectiveness of risk management procedures. The Audit committee reviews the arrangements by which staff of the Group may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The Audit Committee also monitors the integrity of the Group’s financial statements, reviewing significant financial reporting judgements contained therein, to ensure that they give a “true and fair view” of the financial status of the Group. The Audit committee meets at least annually with the external auditors in confidential session without management being present.

  The Audit Committee also reviews the non-audit services provided by the external auditors based on the policy approved by the Board in relation to the provision of such services. Other assurance services are services carried out by the auditors by virtue of their role as auditors and include assurance related work, regulatory returns and accounting advice. In line with best practice, the auditors do not provide services such as financial information system design and valuation work which could be considered to be inconsistent with the audit role.

• Risk and Compliance Committee

• The Risk and Compliance Committee comprises Pat Ryan (Chairman), Dominic Dodd, Emer Daly and Sandy Kinney. The Board ensures that the Chairman of the committee has relevant risk management and / or compliance experience. The Committee has responsibility for oversight and advice to the PTSB Board on risk governance, the current risk exposures of the Group and future risk strategy, including strategy for capital and liquidity management, the setting of compliance policies and principles and the embedding and maintenance throughout the Group of a supportive culture in relation to the management of risk and compliance.

  The Committee supports the PTSB Board in carrying out its responsibilities for ensuring that risks are properly identified, reported, assessed and controlled, and that the Group's strategy is consistent with the Group's risk appetite. The Committee is responsible for monitoring adherence to the Group risk appetite statement. Where exposures exceed levels established in the appetite statement, the Committee is responsible for developing appropriate responses. This is facilitated by the periodic review of a key risk indicators report calibrated to the risk appetite statement.

  The Committee, in turn, delegates responsibility for the monitoring and management of specific risks to committees accountable to it. These committees are the Enterprise Risk Management Committee, the Credit Committee and the Assets & Liabilities Committee. The terms of reference for each committee, whose members include members of Group senior management, are reviewed regularly by the Committee.
• Remuneration and Compensation Committee

• The Remuneration and Compensation Committee comprises Dominic Dodd (Chairman), Alan Cook, Ray MacSharry and Pat Ryan. This committee considers all aspects of the performance and remuneration of Executive Directors and Senior Executives and sets the remuneration of these Executives, having consulted with the Group Chairman, the Group Chief Executive Officer and the other Non-Executive Directors. The committee also has responsibility for setting the remuneration of the Group Chairman (without the Group Chairman being present) and the Group Chief Executive Officer. During 2012 the committee used the Executive Compensation Practice of Towers Watson for advice on Executive Director and Senior Management remuneration. Services provided to the Group by other Towers Watson practices include the valuation of the Irish Progressive Staff Pension Scheme and the TSB Staff Pension Scheme by its actuarial practice.

• Nomination Committee

• This Nomination Committee comprises Alan Cook (Chairman), Emer Daly, Pat Ryan and Ray MacSharry. The Committee is charged with responsibility for bringing recommendations to the boards of PTSB and PTSBGH regarding the appointment of new Directors and of a new Group Chairman. The Group Chairman does not attend the Committee when it is dealing with the appointment of a successor to the Group Chairman. Decisions on Board appointments are taken by the full Board. All Directors are subject to re-appointment by election by the shareholders’ at the first opportunity after their appointment.

  The Committee keeps under review the leadership needs of the Group, both Executive and Non-Executive, with a view to ensuring the continued ability of the Group to compete effectively in the marketplace. This Committee is also responsible for reviewing the effectiveness of the Board’s operations, including the Chairmanship and composition of Board committees.

  Subject to satisfactory performance and re-appointment by shareholders, Non-Executive Directors are typically expected to serve two three-year terms, although the Board, following rigorous review, may extend an invitation to serve a further three-year term. The remuneration of the Non-Executive Directors is determined by the Board within the parameters decided by the shareholders’ and on the advice of the Group Chairman and the Group Chief Executive Officer. The term of office of the Group Chairman is six years regardless of any previous term as a Director.

• Board Committee Meeting Attendance 2012

• Attendance at PTSBGH Board/Committee Meetings during the year ended 31 December 2012

  	Board		Audit		Risk and Compliance*		Remuneration & Compensation*		Nomination*
  	A	B	A	B	A	B	A	B	A	B
  Non-executive Directors
  Bernard Collins	4	4	-	-	-	-	3	3	-	-
  Alan Cook	6	6	-	-	-	-	3	3	-	-
  Dominic Dodd	-	-	-	-	-	-	-	-	-	-
  Emer Daly	6	5	6	6	3	3	-	-	-	-
  Margaret Hayes	6	6	6	6	-	-	-	-	-	-
  Sandy Kinney	6	5	-	-	3	3	-	-	-	-
  Ray MacSharry	6	6	-	-	-	-	3	3	-	-
  Pat Ryan	6	6	6	6	3	3	3	2	-	-
  Piotr Skoczylas	3	3	-	-	-	-	-	-	-	-
  Executive Directors
  Jeremy Masding	5	5	-	-	-	-	-	-	-	-
  David McCarthy**	4	4	-	-	-	-	-	-	-	-
  Kevin Murphy**	4	4	-	-	-	-	-	-	-	-

  
  *These committees ceased operation during March-June 2012.
  
  

  Attendance at PTSB Board/Committee Meetings during the year ended 31 December 2012

  	Board		Audit		Risk and Compliance		Remuneration & Compensation		Nomination
  	A	B	A	B	A	B	A	B	A	B
  Non-executive Directors
  Alan Cook	17	17	-	-	-	-	1	1	6	4
  Dominic Dodd	4	2	-	-	-	-	1	1	-	-
  Emer Daly	17	16	9	9	5	5	-	-	1	1
  Margaret Hayes	17	17	9	9	-	-	-	-	-	-
  Sandy Kinney	17	16	-	-	5	5	-	-	-	-
  Ray MacSharry	17	17	-	-	-	-	1	1	6	5
  Pat Ryan	17	17	9	9	5	5	1	1	6	6
  Executive Directors
  Jeremy Masding	16	16	-	-	-	-	-	-	-	-
  David McCarthy**	10	8	-	-	-	-	-	-	-	-

  
  ** David McCarthy and Kevin Murphy resigned as part of the sale of the Life Group on 29 June 2012.
  
  

  Column A: number of scheduled meetings held during the period the Director was a member of the Board and/or Committee.

  Column B: number of scheduled meetings attended during the period the Director was a member of the Board and/or Committee.

Terms of Reference of Board Committees

• Audit Committee

• 1. Role and Responsibilities

  The role and responsibilities of the Board Audit Committee are:

  • to fulfil all the responsibilities of the Audit Committee as set out in Section 42(2) of the Companies (Auditing and Accounting) Act 2003.
  • to provide a link between the Board and the Auditors, independent of the Company’s management. The external auditors will regularly attend Audit Committee meetings and the Committee will meet with them at least once a year without management being present to discuss their remit and any issues arising from the audit.
  • to liaise with the external auditors, particularly in relation to their audit findings.
  • to monitor the integrity of the financial statements of the Company, reviewing significant financial reporting judgements contained therein, to ensure that they give a “true and fair view” of the financial status of the Company.
  • to recommend to the Board whether to approve the Company’s annual accounts.
  • to review any formal announcements relating to the Company’s financial performance.
  • to review the integrity of the Company’s internal financial controls.
  • to monitor the effectiveness and adequacy of the Company’s internal control, internal audit and IT systems.
  • to make recommendations to the Board in relation to the appointment of the external auditor and to approve the remuneration and terms of reference of the external auditor.
  • to review and monitor the external auditor’s independence, effectiveness and objectivity and the effectiveness of the audit process, taking into account relevant professional and regulatory requirements.
  • to develop and implement policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external auditor firm.
  • to make recommendations to the Board on the appointment and / or removal of the Head of Internal Audit, following consultation with the Chief Executive.
  • to monitor and review the effectiveness of the internal audit function and activities. The Head of Internal Audit will regularly attend Audit Committee meetings and the Committee will meet with him at least once a year without management being present to discuss his remit and any issues arising from the internal audits carried out. In addition, the Head of Internal Audit shall have the right of direct access to the Chairman of the Board and to the Audit Committee.
  • to review arrangements by which staff may, in confidence, raise concerns about possible improprieties in matters of compliance, financial reporting or other matters.
  • to review the Committee's Terms of Reference and its own effectiveness each year and recommend any changes considered necessary to the Board.

  and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps to be taken.

  2. Composition

  The Board Audit Committee shall comprise at least three non-executive directors with an appropriate mix of skills and experience, all of whom are considered by the Board to be independent. Neither the Chairman of the Board nor the Chief Executive shall be a member of the Board Audit Committee.

  The quorum for a meeting of the Committee is a minimum of three members a majority of whom must be independent non-executive Directors. The Committee shall be provided with appropriate and timely training, both when new members are appointed and on an ongoing basis for all members.

  Each member of the Committee has an equal vote on matters that come before the Committee. Decisions of the Committee shall be made by a majority of votes. In the case of equality of votes, the Chairman of the Committee (or, in his absence, the chairman of the meeting) shall have a second or casting vote.

  At the invitation of the Committee, the Chief Executive, the Chief Financial Officer, the Chief Risk Officer and the Head of Internal Audit will regularly attend Audit Committee meetings. Other members of management may be invited to attend all or part of any meeting as and when appropriate.

  The Chairman of the Board Audit Committee shall be an independent non-executive director, will have recent and relevant financial experience, and will be responsible for leadership of the Committee and for ensuring its effectiveness. The chairman of the Board Audit Committee will be a member of the Board Risk & Compliance Committee, and the chairman of the Board Risk & Compliance Committee will be a member of the Board Audit Committee.

  The Group Secretary will act as secretary to the Committee.

  3. Meetings

  The Board Audit Committee shall meet five times a year, or more frequently as needed. Minutes shall be recorded at each meeting and retained for future reference.

• Risk and Compliance Committee

• 1. Role and Responsibilities

  The role and responsibilities of the Board Risk & Compliance Committee are:

  • to make recommendations to the Board on the adequacy of capital, both regulatory and economic, in the context of the Company's current and planned activities, including in relation to proposed mergers, acquisitions or disposals, and to oversee the allocation of capital to business units
  • to make recommendations to the Board in relation to:
    • the Company's risk appetite statement
    • the Company's Credit Policy
    • the Company's Funding and Liquidity Policy
  • to make recommendations to the Board on the appointment and / or removal of the Chief Risk Officer, following consultation with the Chief Executive
  • to monitor the performance of the Chief Risk Officer, to whom there shall be solid reporting lines from all risk management and compliance functions across the Company, and who shall have independence in reporting to the Board Risk & Compliance Committee through its Chairman
  • to provide qualitative and quantitative advice to the remuneration committee on risk weightings to be applied to performance objectives incorporated within the incentive structure for the Chief Executive and executive team
  • to approve Company-level risk policies and the risk management programme
  • to approve the development of significant new products and the commencement of other significant risk-assuming activities
  • to review, and make recommendations to the Board on, the Company’s risk profile, both current and emerging, including:
    • risks to solvency and mitigating actions
    • interest rate risk (including credit spread risk)
    • market and settlement risk
    • country and counterparty credit default risk, including name level monitoring
    • liquidity risk
    • customer credit risk, including review of credit quality and concentrations, large exposures, the developing arrears profile and the default profile of all the material lending portfolios and of the banking business in total
    • asset / liability risk
    • pension fund risk
    • operational risk and compliance, including behaviours that may create reputational risk
  • to review, and make recommendations to the Board on, the Company’s Internal Capital Adequacy Assessment Process (ICAAP)
  • to approve the Company Compliance Policy and Compliance Principles
  • to approve the Annual Compliance Plan
  • to review the Annual Compliance Report and other compliance reports and updates prepared by the Chief Risk Officer and to make consequent recommendations to the Board
  • to review, and make recommendations to the Board on, the risk management and compliance frameworks, ensuring their continued functioning and appropriateness
  • to provide oversight of risk and compliance specific committees and functions in the Company
  • to review legal and other statutory obligations of the Company
  • to carry out such other tasks as the Board may assign to it
  • to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps to be taken
  • to review the Committee's Terms of Reference and its own effectiveness each year and recommend any changes considered necessary to the Board.

  In carrying out its role, the Committee may commission independent risk / compliance experts to review, on behalf of the Committee, reports submitted to it.

  2. Composition

  The Board Risk & Compliance Committee shall comprise at least three non-executive directors with an appropriate mix of skills and experience, all of whom are considered by the Board to be independent.

  The quorum for a meeting of the Committee is a minimum of three members a majority of whom must be independent non-executive Directors.

  The Committee shall be provided with appropriate and timely training, both when new members are appointed and on an ongoing basis for all members.

  Each member of the Committee has an equal vote on matters that come before the Committee. Decisions of the Committee shall be made by a majority of votes. In the case of equality of votes, the Chairman of the Committee (or, in his absence, the chairman of the meeting) shall have a second or casting vote.

  At the invitation of the Committee, the Chief Executive, the Chief Risk Officer, the Chief Financial Officer, the Treasurer, the Customer Credit Director and the Head of Internal Audit will regularly attend the Board Risk & Compliance Committee. Other members of management may be invited to attend all or part of any meeting as and when appropriate.

  The Chairman of the Board Risk & Compliance Committee will have relevant risk management and / or compliance experience, and will be responsible for leadership of the Committee and for ensuring its effectiveness. The chairman of the Board Risk & Compliance Committee will be a member of the Board Audit Committee, and the chairman of Board Audit Committee will be a member of the Board Risk & Compliance Committee.

  The Group Secretary will act as secretary to the Committee. The Board Risk & Compliance Committee will meet with the Chief Risk Officer at least once a year without management being present to discuss his remit and any issues arising therefrom.

  3. Meetings

  The Board Risk & Compliance Committee shall meet four times a year, or more frequently as needed. Minutes shall be recorded at each meeting and retained for future reference.

• Nomination Committee

• 1. Functions of Committee

  The functions of the Nomination Committee are:

  • To review the effectiveness of the Board’s operations, including the Chairmanship and composition of Board Committees.
  • To manage cross committee membership to ensure that no one individual exercises excessive influence or control.
  • To review and consider the composition and membership of the Board where ongoing conflicts of interest arise.
  • To establish processes for the appointment, development and rotation of Non-Executive Directors and Chairman including, where appropriate, the use of external advice or open advertising.
  • To be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise. Candidates from a wide range of backgrounds will be considered in the context of a description of the role and capabilities required for a particular appointment.
  • In considering appointments, to prepare a comprehensive job description, taking into account for board appointments, the existing skills and expertise of the board and the anticipated time commitment required.
  • To satisfy itself as to a candidate’s independence prior to his or her nomination for approval to the Board (for Independent Non-Executive Director nominations).
  • In considering appointments, to assess and document the committee’s consideration of possible conflicts of interest, including, but not limited to personal relationships, business relationships and common directorships (appointments should not be recommended where possible conflicts of interest may emerge which are significant to the overall work of the board).
  • To review annually the structure, size and composition (including the skills, knowledge and experience) of the Board and make recommendations to the Board with regard to any changes. The frequency with which board membership is renewed shall be documented. The renewal frequency shall consider the balance of experience and independence sought.
  • To keep under review the leadership needs of the organisation both executive and Non-Executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace.
  • To ensure that on appointment to the Board, Non-Executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, Committee service and involvement outside Board meetings.
  • To recommend to the Board plans for succession for both executive and Non-Executive Directors.
  • To make recommendations to the Board as regards the re-appointment of any Non-Executive Director at the conclusion of his/her specified term of office or concerning the re-election by shareholders of any Director under the retirement by rotation provision of the Articles of Association.
  • To rigorously review on an annual basis the membership of the board of any person who is a member for six years or more and to document the rationale for any continuance. The Central Bank of Ireland shall be notified of instances of Board membership in excess of nine years.
  • To review the Committee’s Terms of Reference and its own effectiveness each year and recommend any changes considered necessary to the Board.

  2. Membership

  The Board Nomination Committee shall comprise at least three Non-executive Directors with an appropriate mix of skills and experience, all of whom are considered by the Board to be independent.

  The quorum for a meeting of the Committee is a minimum of three members a majority of whom must be independent Non-executive Directors. Each member of the Committee has an equal vote on matters that come before the Committee. Decisions of the Committee shall be made by a majority of votes. In the case of equality of votes, the Chairman of the Committee (or, in his absence, the chairman of the meeting) shall have a second or casting vote. The Committee shall be provided with appropriate and timely training, both when new members are appointed and on an ongoing basis for all members.

  3. Meetings of the Committee

  The Committee will meet with such frequency as it may consider appropriate. The Chairman of the Committee will give an oral report to the Board after each meeting on any pertinent issues that should be brought to its attention. The quorum for the meetings will be three members to include the Committee Chairman (unless the Chairman is unable to attend due to exceptional circumstances).

• Remuneration and Compensation Committee

• 1. Objectives of Committee

  • The purpose of the Committee is to set the remuneration policy of the Company and to determine the remuneration arrangements of the Executive Directors, and Senior Executives. In addition, the committee will take responsibility for the oversight of reward structures for the Company to ensure they are consistent with shareholder interest.
  • The purpose of the remuneration policy of the Company is to attract, retain and motivate the calibre of executives required to deliver the challenging objectives of the organisation.

  2. Membership

  • The Committee will comprise not less than three independent non-executive directors. The Board will also appoint additional non-executive directors to the Committee as it considers appropriate to ensure that relevant skills and experience are available to the Committee.
  • Each member of the Committee has an equal vote on matters that come before the Committee. Decisions of the Committee shall be made by a majority of votes. In the case of equality of votes, the Chairman of the Committee (or, in his absence, the chairman of the meeting) shall have a second or casting vote.
  • The Committee will be supported by the Head of Human Resources and by the Committee Secretary who will produce such papers and minutes as are appropriate and circulate them to all members of the Committee.
  • The Committee will obtain any legal, remuneration or other professional advice as it deems appropriate. It will also select and appoint remuneration consultants to assist it in its work.
  • The Committee shall be provided with appropriate and timely training, both when new members are appointed and on an ongoing basis for all members.
  • The Chairman of the Committee will be appointed by the Board.

  3. Meetings of the Committee

  • The Committee will meet with such frequency as it may consider appropriate having regard to the proper oversight of the remuneration agenda to be addresses. The Committee will meet separately as a Non Executive Director Committee at least once each year. It will also meet independently with the Chief Risk Officer once a year to discuss the management of risk and its link with rewards. All other meetings will be attended by the Chief Executive, the Head of Human Resources and the Company Secretary. The Chairman of the Committee will give an oral report to the Board after each meeting on any pertinent issues that should be brought to its attention.
  • The quorum for the meetings will be three members to include the Committee Chairman (unless the Chairman is unable to attend due to exceptional circumstances).

  4. Responsibilities of the Committee

  • To establish (and provide ongoing evaluation of) remuneration policies and procedures within the Company based on best practice and any requirements which the Central Bank of Ireland or the Department of Finance may issue.
  • To ensure that the institution’s remuneration policies and procedures do not promote excessive risk taking.
  • To determine and agree with the Board the framework or broad policy for the remuneration of the Chief Executive, the Chairman of the Board, Executive Directors, the Company Secretary and other senior executives reporting directly to the Chief Executive.
  • To ensure that Executive Directors and other senior executives are encouraged to enhance the Company’s performance through the use of incentive schemes with suitably challenging performance criteria and to determine targets for such performance-related incentive schemes.
  • To determine the policy for and scope of pension arrangements for each Executive Director.
  • To determine, within the terms of the agreed policy and giving due regard to the contents of the UK Corporate Governance Code (and Irish Corporate Governance Annex) and associated guidance, the total individual remuneration package of the Chairman, the Chief Executive and of each Executive Director and appropriate senior management including salary, bonuses, incentive payments and share options.
  • To comply with recognised best practice relating to the remuneration of Executive Directors and senior executives.
  • To determine all matters required under the rules of the Company’s Employee Share Option Schemes including the discretionary continuation of share options after termination of employment where allowed under the terms of the Schemes.
  • To determine on behalf of the Board offers to employees under the Company’s Profit Sharing Scheme following review of proposals and recommendations of management.
  • To be aware of and advise on any major changes in employee benefit structures throughout the Company.
  • To agree the policy for authorising claims for expenses from the Chief Executive and Chairman.
  • To ensure compliance with all disclosure requirements regarding remuneration.
  • To be exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Committee.
  • To review the performance of the Chief Executive on an annual basis (without the Chief Executive present).
  • To review the Chief Executive’s annual assessment of the performance of the top management.
  • Without limiting the generality of the Committee’s objectives, the Committee will have the following responsibilities, powers, authorities and discretion:
    • To determine the remuneration policy of the Company and its subsidiaries.
    • To review the performance of Executive Directors and make recommendations to the Board on Executive Director remuneration.
    • To take responsibility for oversight of all of the Company’s remuneration practices including pensions.
    • To ensure that the Human Resource policies of the Company, particularly those which govern the terms and conditions of employment, remuneration and retirement benefits which apply are fit for purpose and will be effective in attracting, retaining and motivating employees.
    • To review and approve performance based remuneration by reference to the Company’s goals as established by the Board.
    • To review the Remuneration Policy for publication in the Annual Report.
    • To review the powers, responsibilities and duties of any similar remuneration committees in subsidiary company and to ensure broad compliance with the Company policy as appropriate.
    • To ensure that any executive termination arrangements are not excessive having regard to contractual entitlements.
    • To take responsibility for the remuneration arrangements for any executive whose appointment requires Board approval.
    • To undertake on behalf of the Chairman or the Board any related tasks as may be entrusted to it from time to time.
    • To review the Committee’s Terms of Reference and its own effectiveness each year and recommend any changes considered necessary to the Board.