Bank of Ireland Group plc a Non-Executive Director of Elan Corporation plc. Qualifications Fellow Chartered

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  • Bank of Ireland Group plc Corporate Governance Statement 2018

    Enabling our customers, colleagues and communities to thrive

    HoldCo - Corporate Governace Statement 2018.qxp_Layout 1 28/03/2019 10:37 Page i

  • HoldCo - Corporate Governace Statement 2018.qxp_Layout 1 28/03/2019 10:37 Page ii

  • Index Page

    Senior Independent Director Report - Chairman Succession Process 2

    Chairman’s introduction 3

    Your Board 4

    Report of the Group Nomination and Governance Committee 19

    Report of the Group Remuneration Committee 22

    Report of the Group Audit Committee 24

    Report of the Board Risk Committee 28

    Attendance table 32

    Note: Page numbers and note references in the Corporate Governance Statement reference to the Bank of Ireland Group plc Annual Report year ended 31 December 2018.

    Governance Corporate Governance Statement

    1Business Review Governance Financial Statements Other Information

    Bank of Ireland Annual Report 2018

    HoldCo - Corporate Governace Statement 2018.qxp_Layout 1 28/03/2019 10:37 Page 1

  • 2

    Bank of Ireland Annual Report 2018

    Senior Independent Director Report Chairman Succession Process

    Patrick Haren (69) Senior Independent Director; Non-Executive Director

    Approximately one year ahead of Archie Kane’s anticipated retirement date, the Board approved a special purpose committee under my leadership to oversee the Chairman succession process. The Committee comprised unconflicted members of the Nominations and Governance Committee, augmented by the (then) chair of Audit and the immediate past-chair of Risk. The Committee considered the skills and experience on the Board and the challenges facing the business, taking account also of the Group CEO succession which was underway at that time. Based on this, the Committee developed a description of the role and capabilities required, for which we sought and obtained Board approval. The Committee engaged Egon Zehnder to advise on international benchmarking and to provide a full candidate assessment.

    In arriving at a recommendation, the Committee took account of a number of exceptional factors, including: • the anticipated very significant level of turnover

    on the Board, due to retirements, over the medium term;

    • the appointment in October 2017 of an externally recruited, previously UK-based Group CEO; and

    • the Board’s preference that the incoming Chairman should have a complementary knowledge of the Irish environment, embracing customers, regulators and Government, and knowledge and understanding of the Bank of Ireland Group, including its recent history, particularly of regulatory engagement, and the lessons learned during the recovery period.

    These factors led the Board and the Committee to prefer an Irish-based Non-Executive Director (NED) with some years’ experience on the Board, subject to meeting all other criteria and performing strongly in the benchmarking and assessment process.

    The Committee recommended Patrick Kennedy, who had served as Deputy Chairman since April 2015 and Chair of the Board Risk Committee since July 2016, and who is based in Ireland, as Chairman. In their assessment process, Egon Zehnder rated Mr Kennedy against their market benchmark as an exceptional candidate for the role.

    Mr Kennedy combines a deep knowledge of the Bank with exceptional commercial acumen gained from a highly successful career in national and international business. The Board believes Mr Kennedy brings very strong leadership to the Board, providing experience and local knowledge complementary to the skills and experience of the Group CEO and necessary continuity during a period of significant change.

    Patrick Haren Senior Independent Director

    22 February 2019

    HoldCo - Corporate Governace Statement 2018.qxp_Layout 1 28/03/2019 10:37 Page 2

  • Bank of Ireland Annual Report 2018

    3Strategic Report Risk Management Report Governance Financial Statements Other Information

    Dear Shareholders,

    I am pleased to present our Corporate Governance Report for 2018. This report sets out our approach to governance in practice, how the Board of Directors (the ‘Board’) operates, how it has spent its time during the year and how it has evaluated its performance. It includes reports from each of the Board’s committees and explains how the Group applies the principles of good governance. The role of the Board is to promote the long-term success of the Group, whilst contributing to wider society. In order to do this, we must have a robust corporate governance framework, providing systems of checks and controls to ensure accountability and drive better decision-making, and also policies and practices which ensure that the Board and its committees operate effectively.

    The Board is accountable to shareholders for the overall direction and control of the Group. It is committed to high standards of governance designed to protect the long term interests of shareholders and all other stakeholders while promoting the highest standards of integrity, transparency and accountability.

    A key objective of the Group’s governance framework is to ensure compliance with applicable legal and regulatory requirements.

    Strategic priorities The Board has responsibility for developing the Group’s strategic priorities. These priorities were set out at the Group Investor Day on 13 June 2018 and can be found in 'Our Strategy' on page 10.

    For the duration of the Transformation programme, a Group Transformation Oversight Committee (GTOC) has been set up to conduct deeper reviews and provide regular and timely reporting and ensure momentum is maintained on the Transformation programmes.

    The GTOC also oversee the Transformation spend and benefits against budget and targets agreed with the Board and performs deep dives on specific programmes.

    Board changes in 2018 The Nomination and Governance Committee is responsible for reviewing the composition of the Board and its Committees and assessing whether the balance of skills, experience, knowledge and independence is appropriate to enable them to operate effectively. It went through a rigorous process leading to a number of changes to the Board in 2018, including my appointment as Chairman and Chair of the GN&GC, succeeding Archie G Kane who retired in July 2018. Patrick Haren was appointed Deputy Chairman. Evelyn Bourke, Ian Buchanan and Steve Pateman were appointed as independent Non-Executive Directors (NEDs), bringing with them significant technology and business transformation, insurance, retail and corporate banking experience. Patrick Mulvihill was appointed Chair of the Group Audit Committee in April 2018 and Richard Goulding was appointed Chair of the Board Risk Committee in August 2018. Davida Marston retired from the Board in September 2018.

    I would like to thank each of the Directors for their commitment and support during 2018. I would also like to express the Board’s appreciation to Archie Kane as Chair for his contribution to the success of the Group and to Davida Marston for her contribution to the Group as NED over the years. I wish them well in all their future ventures.

    Looking ahead 2019 will be a year of focus on the execution of our strategic priorities, and I look forward to working closely with the boards and committees of the Group and its significant subsidiaries to ensure we have a strong framework for clear, effective and consistent corporate governance. Your board will continue to work effectively with executive management.

    We remain focused on working hard to execute the Group’s strategy in order to create sustainable long- term value for our shareholders.

    Patrick Kennedy Chairman

    22 February 2019

    Chairman’s Introduction

    Patrick Kennedy Chairman

    Appointed: August 2018

    Independent: Yes

    Irish Code1 - Comply fully

    UK Corporate Governance Code 2016 - Comply fully

    Irish Corporate Governance Annex2 - Comply fully

    EBA Guidelines on Internal Governance (2018) - Comply fully

    EBA Guidelines on Assessment of Suitability3 (2018) - Comply fully

    Corporate Governance Codes Compliance

    1 The CBI Corporate Governance Requirements for Credit Institutions 2015 (the ‘Irish Code’) - The Group’s primary banking subsidiary, The Governor and Company of the Bank of Ireland, was subject to the Irish Code, (which is available on www.centralbank.ie) throughout 2018. The Bank is also subject to the additio