BP 2011 Annual Report Download - page 126

124 BP Annual Report and Form 20-F 2011
Corporate governance
Assurance
The board undertook a number of activities as part of its assurance
role, including assessing the effectiveness of the company’s system of
internal controls and risk management. The group’s financial performance
was considered, as was a review of BP’s technology function and the
performance and role of the technology group within the outlook for energy
demand and supply.
The board received an overview of BP’s activities in the US and
received several updates during the year on legal issues, in particular on
litigation and enquiries resulting from events in the Gulf of Mexico. The
board discussed the UK Bribery Act and the steps the company was taking
to comply with the Act; as a result of this discussion the board endorsed
the updated anti-bribery policy outlined in BP’s code of conduct.
L. Duane Wilson, the independent expert appointed by the board
to provide an objective assessment of BP’s progress in implementing the
recommendations of the BP US Refineries Independent Review Panel,
presented his fourth annual report to the board where he assessed BP’s
progress against the Panel’s 10 recommendations. Further details of
Mr Wilson’s work are outlined in the report of the SEEAC and his report is
published on BP’s website at bp.com/independentexpert.
Risk
The board discussed the progress and outcome of the review of BP’s
risk management system over the year. The outcome of the review has
resulted in clearer and more consistent reporting, definitions and templates
for BP’s risk management activities, as well as greater alignment of these
risk management activities with existing BP business processes.
The board and its monitoring committees (audit, SEEAC and Gulf
of Mexico) monitored the group risks which had been allocated following
the board’s review of the annual plan at the end of 2010. The annual plan
and the group strategy are central to our risk management programme as
they provide a framework for the board to consider significant risks and
manage the group’s overall risk exposure as well as underpin the model
of delegation and assurance for the board in its oversight of executive
management and other activities.
Reputation
The board considers reputation from two perspectives – the reputational
risks to the group and the processes the company has in place to manage
these risks. During the year, the board reviewed external reputation data
which looked at BP’s reputation in the UK and US. It also discussed the
group’s communications strategy and its reputation management plan.
BP’s group-wide renewed values were launched in 2011 as part
of a programme of change called ‘We are BP’, by which the renewed
values will be reflected in how employees’ performance is assessed and
rewarded. The renewed values were also embedded within the updated
code of conduct.
Governance
As described above, over the year the board reviewed its system of board
governance and established a working group to assist in this process. The
main outcomes of the review were strengthened board processes around
information, risk and revisiting the role and tasks of the board and its
committees.
The board seeks to understand the views of its shareholders, and
feedback from investors is given to the board – either directly following
meetings with the chairman or other board members or indirectly through
an annual investor audit undertaken by a third party. Following our AGM in
April 2011, the board examined the voting results for each resolution and
considered the comments received from institutional investors to explain
their voting position.
Governance
• Board governance
review
• Investor audit
• Board evaluation
Assurance
• Independent expert’s
annual report
• Legal update
• Technology review
• US overview
• Corporate reporting
• UK Bribery Act
Reputation
• Group reputation review
• Communications
• Reputation management
• Crisis management
Risk
• Risk management review
• Group risk: upstream capability
• Group risks for 2012
Strategy
• Russia
• Strategy: group
• Strategy: biofuels;
Canadian heavy oil
• Annual plan
• Competitor analysis
• Disposal programme
• Group financial outlook
BP board
activities
in 2011
Shareholder engagement
The company continued its open dialogue with shareholders. Our
executive directors and members of our executive management team held
investor meetings following our strategy and financial results. We also held
meetings on operating and non-financial issues, including presentations
on BP’s Energy Outlook 2030, an update on BP’s activities in Canadian
oil sands, our Alternative Energy and Refining and Marketing businesses
and BP’s environmental and social requirements for new projects. These
events were intended to give shareholders a wider perspective on the
company’s thinking behind its strategy and an understanding of the
processes and standards we use to underpin our operations.
The chairman, senior independent director and chair of our
remuneration committee held a number of one-to-one meetings with
institutional investors to discuss strategy, the board’s view on the company’s
performance and governance and our remuneration structure. In addition
the chairman, with two members of our senior executive team, spoke at
group investor events in the US and UK to outline the company’s progress
on the Bly Report recommendations, the remit and work of the safety and
operational risk function and the work of the board. In March 2011 we held
our annual investor event with our chairman and the chairs of our board
committees. We continue to receive positive feedback on this event and find
it an effective way for our largest shareholders to hear about the work of our
board and our committees, and for our non-executive directors to engage in
dialogue with investors. We intend to hold a similar event in March 2012.
During the year we focused on enhancing communication with
our private shareholders, including a revision of dividend materials and
the shareholder information pages of our website. We continued our ‘lost
shareholder’ programme which returns shares and unclaimed dividends to
shareholders who have failed to keep their contact details up to date.
Materials from our investor presentations, including information on the
work of our board and its committees can be downloaded from the
investors page of our website.