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Corporate governance
Corporategovernance
Indemnity and insurance
InaccordancewithBP’sArticlesofAssociation,directorsaregrantedan
indemnityfromthecompanyinrespectofliabilitiesincurredasaresultof
theirofce,totheextentpermittedbylaw.Inrespectofthoseliabilitiesfor
whichdirectorsmaynotbeindemnied,thecompanymaintaineda
directors’andofcers’liabilityinsurancepolicythroughout2010.Duringthe
year,areviewofthetermsandscopeofthepolicywasundertaken.The
policyhasbeenrenewedfor2011.Althoughtheirdefencecostsmaybe
met,neitherthecompany’sindemnitynorinsuranceprovidescoverinthe
eventthatthedirectorisprovedtohaveactedfraudulentlyordishonestly.
UKcompanylawpermitsthecompanytoadvancecoststodirectorsfor
theirdefenceininvestigationsorlegalactions.
Time commitment and outside appointments for directors
LettersofappointmenttotheBPboarddonotsetoutxedtime
commitmentsforboarddutiesasthecompanybelievesthatthetime
requiredbydirectorsmaychangedependingonbusinessevents(aswas
demonstratedduring2010).Membershipoftheboardrepresentsa
signicanttimecommitmentanditisexpectedthatdirectorswillallocate
sufcienttimetothecompanytoperformtheirdutieseffectively.The
nominationcommitteekeepsthisunderregularreview.
BPpermitsexecutivedirectorstotakeuponeexternalboard
appointment,subjecttotheagreementofthechairmanandreportedto
theBPboard.Feesreceivedforanexternalappointmentmaybe
retainedbytheexecutivedirectorandarereportedinthedirectors’
remunerationreport.
Non-executivedirectorsmayserveonanumberofoutsideboards,
providedtheycontinuetodemonstratetheircommitmenttodischargetheir
dutiestoBPeffectively.Thenominationcommitteekeepsunderreviewthe
natureofdirectors’otherintereststoensurethattheeffectivenessofthe
boardisnotcompromised.Thecommitteemaymakerecommendationsto
theboardifitconcludesthatadirectors’othercommitmentsare
inconsistentwiththoserequiredbyBP.
Board independence
Thegovernanceprinciplesrequireournon-executivedirectorstobe
independentincharacterandjudgementandfreefromanybusinessor
otherrelationshipthatcouldmateriallyinterferewiththeexerciseoftheir
judgement.Theboardhasdeterminedthatthosenon-executivedirectors
whoservedduring2010fullledthisrequirementandwereindependent.
Theboardalsosatiseditselfthatthereisnocompromisetothe
independenceof,orexistenceofconictsofinterestforthosedirectors
whoservetogetherasdirectorsontheboardsofoutsideentitiesorwho
haveotherappointmentsinoutsideentities.Theseissuesareconsidered
onaregularbasisatboardmeetings.
Board support and external advice
Supporttotheboardanditscommitteesisprovidedthroughthecompany
secretary’sofce,whichreportstothechairman.WithinBP,thecompany
secretaryhasnoexecutivefunctionandhisappointmentisdeterminedby
thenominationcommitteeandhisremunerationdeterminedbythe
remunerationcommittee.
UndertheBPboardgovernanceprinciples,anydirectorisentitledto
obtainindependent,professionaladvicerelatingtheirownresponsibilities
andtheaffairsofBP.Directorsarealsoexpectedtoobtainindependent
advicewherethereisconsiderationofanymatterinwhichadirectormay
haveaninterestthatcouldconictwiththeinterestsofthecompany.
Induction and board learning
Alldirectorsreceiveafullinductionprogrammewhentheyjointheboard,
includingasessiononBP’ssystemofgovernanceandthelegaldutiesof
directorsofalistedcompany.Non-executivedirectorsreceiveawider
programmethatcoversthebusinessofthegroupandistailoredaccording
toadirector’sownbackgroundandtheboardcommitteesonwhichthey
willserve.Duringtheyearweundertookinductionprogrammesforour
newnon-executivedirectors,whichinsomecasesarecontinuing.The
programmecoversBP’sbusiness,anoverviewofitsfunctions,the
company’sstrategicapproachandnancialframeworkandthegroup’s
approachtoriskmanagement.Eachnon-executivedirectorhadaseparate
inductionsessionontheboardcommittee(s)ofwhichtheyareamember
andallhadaprivatesessionwiththecompany’sexternalauditor.In2010
wealsocontinuedtheinductionprogrammeforthechairman–including
visitstoBPoperationsaroundtheworld.
Theeventsoftheyearresultedintheboardconcentratingonissues
intheupstreambusinessandintheUS,withplannedvisitstoother
locationssuchasajointventurepetrochemicalsplantinAsiaandtoBP’s
fuelandlubricantstechnologysite,beingpostponed.TheSEEACvisitedthe
TexasCityreneryinFebruary.Thereisafullprogrammeofvisitsfor2011.
Non-executivedirectorsareexpectedtoparticipateinatleastonesitevisit
peryear.
Theprogrammeofboardlearningeventswasamendedfollowing
eventsinApriltoincludedetailedbriengsonaspectsofdeepwaterdrilling
andtechnologyoptionsforkillingthewell.Theboardalsoreceivedverbal
andwrittenupdatesonlegalandregulatoryissues.
Board evaluation
BPconductsanannualevaluationoftheperformanceandeffectiveness
oftheboardanditscommittees.Theevaluationofindividualdirectors
isundertakenbythechairman,withthechairman’sownperformance
evaluatedbythechairman’scommittee(ledbythesenior
independentdirector).
Bybuildingontheresultsofthepreviousyear’sevaluation,the
boardtriestoachieveacontinuouscycleofevaluation,targetedactions
arisingfromthereviewandperformanceimprovement.Actionstakenby
theboardduringtheyearinresponsetotheoutcomeofthe2009review
includedtheschedulingofmoreinformalsessionsoutsideboardmeetings
tomaximizetheutilityofthetimeavailablefortheboardandanactive
planningofcommitteeandboardsuccessiontoensureappropriatecross
membershipbetweenrelatedcommittees.
Withtheevaluationoftheboard’sperformancebeinglargely
dominatedbyeventsintheGulfofMexico,itwasfeltthatthe2010
evaluationneededtobeundertakeninasrobustandrigorousamanneras
possible.Theboarddecidedtoappointanexternalfacilitator(adifferent
individualtotheexternalfacilitatorwhoundertookthe2009evaluation)to
workwiththecompanytoundertakethisyear’sreview.
Theevaluationoftheboardwasundertakenthroughone-on-one
interviewswitheachboardmember(withtheexceptionofFrankBowman
andBrendanNelsonwhojoinedtheboardlateintheyear).Evaluationofthe
boardcommitteeswasmanagedthroughtheuseofonlinequestionnaires.
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