Advisory Committees

The Advisory Committees to the Board of Directors are the Audit and Control Committee and the Nomination and Remuneration Committee, which were created in 1999.

Both Committees comprise External Directors only, in accordance with the Board of Directors Regulations, and they have the power of information, advice, supervision and proposal in the matters of their respective authorities. Their powers of proposal do not preclude the possibility of the Board deciding on such matters on its own initiative, while duly consulting the corresponding Committee.

According to the Board Regulations, a decision that clashes with a Committee's recommendations can only be adopted with a resolution by the Board of Directors.

In accordance with the Board Regulations, the Chairmen of both Committees are Independent Directors. They also share the same limits as to minimum and maximum number of members, as established by the Board Regulations, which must be between four and six.

The minutes of the Advisory Committee meetings are distributed to all Directors. In addition, the matters they have discussed are reported on at the first Board meeting to be held after each meeting.

Responsibilities of the Audit and Control Committee

The main functions of this Committee are as follows:

As regards the external auditors:

  • To propose the appointment of the external auditors, as well as the conditions for engaging them, to the Board of Directors for subsequent presentation to the Shareholders' Meeting.

  • To decide the scope of the Company's group companies in relation to which the auditors must accept responsibility for auditing the accounts.

  • To act as a liaison between the Board of Directors and the external auditors, and assess the results of each audit. To receive regular information from them about their work, verifying that Senior Management adopts the auditors' recommendations. To maintain relations with the external auditors for receiving information from them on whatever issues may jeopardize their independence.

  • To establish measures for monitoring the provision of advisory and consultancy services by external auditing firms.

As regards financial information:

  • To be fully aware of the financial reporting process and internal control systems. To inform the Board of any changes in accounting criteria.

  • To supervise the information that the Board of Directors must approve and include in the Company's annual public documentation.

  • To assist the Board in its mission of ensuring the accuracy and reliability of periodic financial information.

As regards internal audit:

  • To propose the selection, appointment, re-appointment or replacement of the internal audit manager, as well as the budget for this.

  • To supervise internal audit services, approve and verify compliance with the audit plan. To be aware of the degree of compliance with corrective measures recommended to Senior Management by the internal audit.

Other functions:

  • To analyse and evaluate the main business risks and the systems established for managing and controlling them.

  • To establish and supervise a system that permits any employee to notify, in confidence and, if necessary, anonymously, any inefficient situations, inappropriate conduct or possible violations that could have particularly far-reaching effects.

  • To supervise compliance with internal regulations covering corporate governance and conduct in the security markets. In particular, to report on exemptions and authorizations in matters relating to Directors' duties, and also on Company transactions with shareholders, Directors and Senior Management that are subject to Board approval.

The Audit and Control Committee drafts an annual report on its activities that is included in the Company's Management Report.

Its Chairman also informs the Shareholders' Meeting of this Committee's activities.

The Audit and Control Committee held six (6) meetings in 2007.

Responsibilities of the Nomination and Remuneration Committee

Its main functions include:

  • Making proposals for the appointment of Independent Directors and informing about proposals for the appointment of the remaining Directors.

  • To advise on the appointment of the CEO and the Board Secretary.

  • To propose the members that must form part of each of the Committees.

  • To propose the Lead Director.

  • To propose the system and amount of annual remuneration for directors and report on the annual remuneration of the Executive Directors and other conditions of their contracts.

  • To advise on the appointment or dismissal of directors who report directly to the CEO.

  • To report on the contracts and remuneration system for Senior Management.

  • To analyse the process that permits the smooth transition from one Chairman to the next and from one CEO to the next.

The Nomination and Remuneration Committee held five (5) meetings in 2007.