Vodafone 2008 Annual Report Download - page 72

US listing requirements
The Company’s ADSs are listed on the NYSE and the Company is, therefore,
subject to the rules of the NYSE as well as US securities laws and the rules of the
SEC. The NYSE requires US companies listed on the exchange to comply with
the NYSE’s corporate governance rules but foreign private issuers, such as the
Company, are exempt from most of those rules. However, pursuant to NYSE Rule
303A.11, the Company is required to disclose a summary of any significant ways
in which the corporate governance practices it follows differ from those required
by the NYSE for US companies. The differences are as follows:
Independence
NYSE rules require that a majority of the Board must be comprised of
independent directors and the rules include detailed tests that US companies
must use for determining independence.
The Combined Code requires a company’s board of directors to assess and
make a determination as to the independence of its directors.
While the Board does not explicitly take into consideration the NYSE’s detailed
tests, it has carried out an assessment based on the requirements of the Combined
Code and has determined in its judgement that all of the non-executive directors
are independent within those requirements. At the date of this Annual Report,
the Board comprised the Chairman, three executive directors and ten non-
executive directors.
Committees
NYSE rules require US companies to have a nominating and corporate
governance committee and a compensation committee, each composed
entirely of independent directors with a written charter that addresses the
Committees’ purpose and responsibilities.
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The Company’s Nominations and Governance Committee and Remuneration
Committee have terms of reference and composition that comply with the
Combined Code requirements.
The Nominations and Governance Committee is chaired by the Chairman of
the Board, and its other members are non-executive directors of the Company
and the Chief Executive.
The Audit Committee is composed entirely of non-executive directors whom
the Board has determined to be independent and who meet the requirements
of Rule 10A-3 of the Securities Exchange Act.
The Company considers that the terms of reference of these committees, which
are available on its website at www.vodafone.com, are generally responsive to the
relevant NYSE rules but may not address all aspects of these rules.
Corporate governance guidelines
Under NYSE rules, US companies must adopt and disclose corporate
governance guidelines.
Vodafone has posted its statement of compliance with the Combined Code on
its website at www.vodafone.com. The Company has also adopted a Group
Governance and Policy Manual which provides the first level of the framework
within which its businesses operate. The Manual applies to all directors and
employees.
The Company considers that its corporate governance guidelines are generally
responsive to, but may not address all aspects of, the relevant NYSE rules.
The Company has also adopted a corporate Code of Ethics for senior executives,
financial and accounting officers, separate from and additional to its Business
Principles. A copy of this code is available on the Group’s website at
www.vodafone.com.
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Report from the Audit Committee
The composition of the Audit Committee is shown in the table on page 67
and its terms of reference are discussed under “Board committees – Audit
Committee”.
During the year ended 31 March 2008, the principal activities of the
Committee were as follows:
Financial statements
The Committee considered reports from the Chief Financial Officer and
the Director of Financial Reporting on the half-year and annual financial
statements. It also considered reports from the external auditors, Deloitte
& Touche LLP, on the scope and outcome of the half-year review and
annual audit.
The financial statements were reviewed in the light of these reports and
the results of that review reported to the Board.
Risk management and internal control
The Committee reviewed the process by which the Group evaluated its
control environment, its risk assessment process and the way in which
significant business risks were managed. It also considered the Group Audit
Department’s reports on the effectiveness of internal controls, significant
frauds and any fraud that involved management or employees with a
significant role in internal controls. The Committee was also responsible for
oversight of the Group’s compliance activities in relation to section 404 of the
Sarbanes-Oxley Act.
The Committee also reviewed arrangements by which staff could, in
confidence, raise concerns about possible improprieties in matters of
financial reporting or other matters. This was achieved through using
existing reporting procedures and a website with a dedicated anonymous
email feature.
External auditors
The Committee reviewed the letter from Deloitte & Touche LLP confirming
their independence and objectivity. It also reviewed and approved the
scope of non-audit services provided by Deloitte & Touche LLP to ensure
that there was no impairment of independence.
The Committee approved the scope and fees for audit services provided by
Deloitte & Touche LLP and confirmed the wording of the recommendations
put by the Board to the shareholders on the appointment and retention of
the external auditors.
Private meetings were held with Deloitte & Touche LLP to ensure that there
were no restrictions on the scope of their audit and to discuss any items the
auditors did not wish to raise with management present.
Internal audit
The Committee engaged in discussion and review of the Group Audit
Department’s audit plan for the year, together with its resource
requirements. Private meetings were held with the Group Audit Director.
Audit Committee effectiveness
The Audit Committee conducts a formal review of its effectiveness
annually and concluded this year that it was effective and able to fulfil its
terms of reference.
Dr Michael Boskin
On behalf of the Audit Committee
70 Vodafone Group Plc Annual Report 2008
Vodafone – Governance
Corporate Governance continued