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Corporategovernance
Corporate governance
Gulf of Mexico committee report
FollowingtheaccidentintheGulfofMexicoaseparatebusiness
organizationwassetuptomanagethegroup’slong-termresponsetothe
incident–theGulfCoastRestorationOrganization(GCRO).Theboard
subsequentlycreatedtheGulfofMexicocommitteeinrecognitionofthe
scaleofthelong-termresponseandtooverseetheactivitiesoftheGCRO,
therebyfreeingupmoreoftheboard’stimetodevotesufcientattention
totheoversightandstrategicdirectionofthegroupasawhole.
Thecommitteehasmetwithleadersandmanagementofthe
GCROonafrequentbasisin2010,inordertooverseetheirrunningofthe
organizationandtocovereachofthecommitteestaskslistedbelow,witha
particularfocusonlegalandclaims-relatedmatters.
Ibelievethecommitteehastakenarigorousapproachtoitswork–
maintainingadetailedviewofthecomplexissuesinvolvedintheaftermath
oftheincidentandprovidinganeffectiveoversightroleonbehalfofthe
boardforanumberofimportantareas.Thishasbeenreectedinthe
frequencyofmeetingsthecommitteehasheldsincethecommitteewas
formedinthesummer.Aswemoveintothenextphaseofthecompany’s
responseintheGulfofMexico,Iexpectthetimetableforthecommitteeto
stabilizeand,duringthecourseof2011,thecommitteewillcontinueto
reviewthefrequencyandstructureofitsmeetings.
Ian Davis
ChairoftheGulfofMexicoCommittee
Committee members
IanDavis–committeechair
PaulAnderson
SirWilliamCastell
GeorgeDavid
MembershipoftheGulfofMexicocommitteeincludestwoofour
US-basednon-executivedirectorsandchairoftheSEEAC.Twomembersof
thecommitteearealsoontheauditcommittee,whichhashelpedinform
discussionsatthelatterrelatingtotheprovisionforincident-relatedcosts.
EachmeetingofthecommitteeisattendedbyLamarMcKay,
PresidentoftheGCRO,andbyJackLynch,generalcounseltotheGCRO.
Ourchairman,groupchiefexecutiveandgroupgeneralcounseljointhe
meetingwheneverpossible.SeniormanagementfromGCROalsoattend
meetingsofthecommitteeasappropriate.Supportisprovidedtothe
committeebythecompanysecretary’sofce.
Committee role and structure
Thepurposeofthecommitteeistoprovidenon-executiveoversightofthe
GCRO,andtosupporteffortstorebuildtrustinBPandBP’sreputationin
theUS.
Theworkofthecommitteeisfullyintegratedwiththeworkofthe
boardonreputation,safety,strategyandnancialplanning,andtheboard
retainsownershipofthegroup’sresponsetotheincident.Theworkings
andconclusionsofthecommitteearetransparenttoanddiscussed
regularlywiththeboard,whoreceivebriengsonthecommittee’s
activitiesthroughthecirculationofminutes,andthroughverbalreportsthat
thecommitteechairprovidesatboardmeetings.
Thecommitteeundertakesthefollowingtasks:
• Monitoringtheremediationworktomitigatetheeffectsoftheoilspillin
thewatersoftheGulfofMexicoandontheaffectedshorelines.
• Overseeingaco-ordinatedresponseprogrammewithaffected
communitiesandstates,andoverseeingtheapproachforrelationships
withcommunities,statesandtheUSgovernmentonissuesrelatingto
theincident.
• Overseeingthelegalandcommunicationstrategyforlitigationinvolving
thecompanyoritssubsidiariesarisingfromtheincidentorits
aftermath,includinggovernmentclaimsfornesandpenalties.
• Overseeingthestrategyconnectedwithclaims,recognizingthe
independentnatureoftheconnectedGulfCoastClaimsFacility.
• OverseeingBP’sactivitiesandresponsibilitieswithrespecttotheGulf
CoastClaimsFacilityandtheDeepwaterHorizonOilSpillTrust.
• Overseeingtheprocessfordistributionofthegoodwillfundforrig
workerswhohavebeenimpactedbythedrillingmoratoriumimposed
bytheUSgovernment.
• Overseeingexpendituresandinvestmentsthatfalloutsidethe
establishedclaimsadministrationprocess,oranyredirectionof
resourcesoutsidethenormalcourseofbusiness.
• Reviewingandmonitoringmanagementstrategyandactionstorestore
thegroup’sreputationintheUSandsupportingmanagementinany
activitiesaimedatthatgoal.
ThecommitteealsoconsidersandreviewstheGCRO’smanagementof
operationalandstrategicrisksconnectedwiththeresponsetotheincident.
Thisincludespriorities,mitigationplans,resourcesandtheeffectiveness
ofactivities.
Thecommitteemetonnineoccasionsin2010afteritsformation
inJuly2010.
Committee processes
Informationandadvice
ThecommitteereceivesitsinformationfromtheleadershipoftheGCRO.
LegalbriengsareregularlyprovidedbythegroupandGCROgeneral
counsels,whoarejoinedonoccasionbyotherinternalandexternal
legalcounsel.
BP’sinternalauditfunctionhasconductedreviewsofcertainof
GCRO’sactivitiesandprocesses,andthesehavebeensummarizedforthe
committee’sreview.Primarymonitoringofthemanagementofnancial
riskisundertakenbytheauditcommitteewithmonitoringofthe
managementofsafety(andothernon-nancial)riskbytheSEEAC.
Trainingandvisits
ThehighfrequencyofmeetingssinceJuly2010hashelpedthecommittee
tobecomeeffectiveineachofitstasks.Threeofthesemeetingswereheld
intheUSandwereofextendedduration,providingtheopportunityforthe
committeetomeetmembersoftheGCROleadershipteam.
Committee activities
Thecommittee’sactivitieshaveincludedthefollowing:
Legal
LegalupdatesfromthegeneralcounseltotheGCROhaveformeda
signicantpartofthecommittee’sagenda,giventhebreadthandpaceof
activities.ThecommitteehasoverseentheGCRO’sintegratedlegal
approach,whichincorporatesallgovernment,civilandcriminal
investigations,themulti-districtlitigation,theNaturalResourcesDamages
Assessmentprocess,andlegalaspectsoftheclaimsprocesses.The
committeehasalsomonitoredengagementwithotherresponsibleparties,
contractorsandtheotherworkinginterestownersintheMacondowell.
Claims
Thecommitteehasmonitoredthestatusofclaimsfromindividualsand
businesses,whichsincelateAugusthavebeenadministeredbytheGulf
CoastClaimsFacility,andthestatusofclaimsfromgovernmententities,
whichcontinuetobeadministeredbyBP.
Assessmentsofpotentialfutureclaimsforprovisioningpurposes
arereviewedbytheauditcommittee.
Remediation
Thecommitteehasreceivedreportsontheprogressofclean-upand
remediationactivities,andonthephasedtransitionofactivitiesfromthe
UniedAreaCommandtoBP’scontrol.Thecommitteehasalsobeenbriefed
ontheresultsofindependentstudiesofair,waterandsedimentsamplesin
theGulfofMexico.Metricswillbeprovidedtothecommitteethrough2011
toenableremediationactivitiestobemonitoredrelativetotheplan.
BPAnnualReportandForm20-F2010 101