BP 2007 Annual Report Download - page 77

chief executive designate on 1 February 2007. Andy Inglis joined the
board on 1 February 2007 as chief executive of the exploration and
production segment succeeding Dr Hayward. John Manzoni resigned as
an executive director and chief executive of refining and marketing and
left the company on 31 August 2007. Dr David Allen will retire from the
board and the company at the end of March 2008.
From the non-executive directors, Mr John Bryan retired in April 2007
and, at the 2008 AGM, Dr Walter Massey will retire from the board.
In June 2007, Mrs Cynthia Carroll and, in February 2008, Mr George
David were appointed as a non-executive directors. External recruitment
consultants were used to identify Mrs Carroll and Mr David as candidates
and the board believes that their skills and experience will complement
those of existing board members and enhance the efficiency and
effectiveness of the board as a whole, particularly from the aspect of
BP’s US operations.
The board remains actively engaged in orderly succession planning
for both executive and non-executive roles and manages this with the
assistance of the nomination committee. The committee assesses the
balance of executive and non-executive directors and the composition of
the board in terms of the skills and diversity required to ensure it remains
relevant and effective. Following an assessment by the nomination
committee, the board will continue its policy of regularly refreshing
board membership.
The board has also begun the process for the identification and
selection of the board’s chairman, as Peter Sutherland will step down at
the 2009 AGM. This is being led by Sir Ian Prosser, deputy chairman and
the board’s senior independent director. The board is using an external
adviser to evaluate the board’s mix of skills and experience and to assist
in defining the criteria to be used in identifying potential candidates.
The adviser has also been engaged to assist with the selection process.
Board independence
Part of the qualification for board membership of BP is the requirement
that non-executive directors be free from any relationship with the
company’s executive management that could materially interfere
with the exercise of their independent judgement. In the board’s view,
BP’s non-executive directors fulfil this requirement and the board has
determined that those who served during 2007 were independent. BP is
involved in a long-term business of global scale and scope. Membership
of the board needs to reflect that not only in terms of skills but also in
terms of tenure where artificial restrictions on the duration of tenure may
not be best for the company. It is for this reason that all non-executive
directors have been subject to annual re-election since 2004.
Sir Ian Prosser joined the board in 1997. It is the view of the board that
he remains independent. His experience and long-term perspective on
BP’s business have provided and continue to provide a valuable
contribution to the board and to the audit committee, which he chairs. As
deputy chairman and senior independent director, Sir Ian is leading the
board’s search for the successor to the current chairman. He has been
asked by the board to remain in post until April 2010 at the latest in order
that he may conclude both the chairman’s succession process and the
identification and appointment by the new chairman of a senior
independent director.
BP completed the merger with Amoco in December 1998. Dr Walter
Massey and Erroll Davis, Jr are the two remaining former Amoco
directors. Dr Massey will retire as a director at the 2008 AGM. Both
directors have continued to be determined by the board to be
independent during the past year, with Dr Massey chairing the safety,
ethics and environment assurance committee (SEEAC). Mr Davis will
remain on the board until such time as he steps down as part of the
implementation of the board’s succession policy. The board believes
Mr Davis continues to demonstrate his independence as a director
through his ongoing contribution and challenge at board and
committee discussions.
The board has satisfied itself that there is no compromise to the
independence of those directors who serve together as directors on the
boards of outside entities (or who have other appointments in outside
entities). Where necessary, the board ensures appropriate processes are
in place to manage any possible conflict of interest.
The board: terms of appointment
The chairman and non-executive directors of BP serve on the basis of
letters of appointment. Executive directors of BP have service contracts
with the company. Details of all payments to directors are described in
the directors’ remuneration report.
The service contracts of executive directors are expressed to expire
at a normal retirement age of 60 (subject to age discrimination), while
non-executive directors ordinarily retire at the AGM following their
70th birthday.
In accordance with the company’s Articles of Association, directors are
granted an indemnity from the company in respect of liabilities incurred
as a result of their office, to the extent permitted by law. In respect of
those liabilities for which directors may not be indemnified, the company
maintained a directors’ and officers’ liability insurance policy throughout
2007. During the year, a review of the terms and nature of the policy
was undertaken and has been renewed for 2008. Although their defence
costs may be met, neither the company’s indemnity nor insurance
provides cover in the event that the director is proved to have acted
fraudulently or dishonestly.
BP ANNUAL REPORT AND ACCOUNTS 2007 75