BP 2012 Annual Report Download - page 104

Corporate governance
BP Annual Report and Form 20-F 2012
102
Your board has three goals for BP:
to operate safely, to earn people’s trust,
and to create sustainable value for
shareholders.
Governance overview
In my letter to shareholders at the front of this report, I stated that the BP
board is well balanced, with a broad range of skills and deep experience in
our industry. The governance report which follows describes the work of
this board and its committees over the past year. Here I give my own view
of the journey that the BP board has taken from April 2010 to the present
day.
Board evolution
In this period, the board has seen substantial change amongst both the
executive and non-executive directors. Eight out of the eleven non-
executives have served four years or less. The intense work undertaken
from 2010 has unified and strengthened the board. The team has stuck
resolutely to its tasks, and has worked together effectively to address a
number of tough challenges.
Board goals
The board has three goals for BP: to operate safely, to earn people’s trust,
and to create sustainable value for shareholders. The pursuit of these
goals has been the foundation of our work and will continue to be so for
years to come.
For some time the board has governed within a clear set of robust
principles and believes that good governance involves the clarity of roles
and responsibilities and the utilization of distinct skills and processes. This
has enabled us to carry out the fundamental tasks of strategy
development and performance monitoring and oversight, while also
responding to the challenges which arose from the Gulf of Mexico
accident and wider business events.
We evaluate our performance and effectiveness as a board each year. But
we continue to review and improve what we are doing, and how we are
doing it, as we move forward. It is important that the board evolves so it
can best support the company as it changes. Our work during the year to
support the fundamental reorganization of the company is one example of
this approach in action.
Inevitably, much of our work is focused on determining the company’s
approach to risk. Over the past three years we have reviewed our
governance and management of risk, and we have monitored and
assessed the group’s evolution of its systems. One of the key tasks of the
board is to review particular group-level risks; this review forms the basis
of the board’s annual forward agenda.
Board committees
The Gulf of Mexico committee, formed in August 2010, has done much of
the heavy lifting in terms of the board’s oversight of the Gulf response and
litigation. The work of this committee has been intense but invaluable in
drawing together the many strands of activity in the US. This has enabled
the board to focus on its other roles, including strategy and oversight of
the group’s operations.
When the board decided to pursue the sale of BP’s interest in TNK-BP, it
was clear that this would be a complex and concentrated process. Based
on the successful experience with the Gulf of Mexico committee, we
formed an ad hoc committee to advise and have oversight of the work of
executive management during the transaction. Antony Burgmans, our
longest serving non-executive director, chaired this committee. The
committee has proved its value in terms of monitoring and consultation.
The transaction is due to complete in the first half of 2013.
Board meetings and board skills
Our governance processes are designed to ensure that the board can
carry out all of its tasks effectively. Pressing matters have inevitably taken
an increased proportion of the board’s time over the past three years. We
have met much more often than we would normally. Events have meant
that our meetings have sometimes had to take place at short notice. The
attendance at these meetings is a reflection of the very strong
commitment of the directors to your company. The response of all the
directors has been excellent.
I believe the board is benefiting significantly from the balance of skills and
experience that I mentioned earlier. Here is an outline of the main areas of
expertise of our current board:
Director Key skills and experience
Paul Anderson Oil and gas industry experience
Admiral Frank Bowman Safety, technology and risk management
Antony Burgmans Food and consumer goods; leading a global
business
Cynthia Carroll Oil, gas and extractive industry experience;
leading a global business
Carl-Henric Svanberg Manufacturing and telecoms; leading a
global business
George David Technology and manufacturing
Ian Davis Strategy, advisory and consulting
Brendan Nelson Audit, financial services and trading
Phuthuma Nhleko Civil engineering, telecoms and banking
Andrew Shilston Oil and gas industry experience; finance
Professor Dame Ann Dowling Engineering, technology and education
Board support
BP is a global company and there are many challenges for the board to
address. One of the features of our system of governance is the
independent advice and support that the board receives from our
company secretarial team. Each committee has a dedicated secretary,
and this has assisted greatly in the organization of work.
During the year BP has benefited from the insight and expertise of our
international advisory board – a group of distinguished individuals with
deep knowledge of geopolitical issues and whose counsel has been
invaluable.