BP 2012 Annual Report Download - page 128

Corporate governance
BP Annual Report and Form 20-F 2012
126
The committee discussed the time commitment for non-executive
directors. The letters of appointment for BP non-executive directors do
not state a time commitment and this is explained annually as part of the
compliance statement with the UK Corporate Governance Code. The
committee took the view that it would be artificial to set such a metric.
The experience of the board over the past three years was that directors
had been required to spend such time as was necessary on the business
of the company. Whilst it was hoped that the work of the board and its
committees would not be as intense in coming years, it was important
that directors were able to respond promptly. The committee would keep
under review the attendance and commitment of board members.
The committee reviewed the periods of service of the non-executive
directors and noted the substantial refreshment of the board over the past
three years. The committee was strongly of the view that continuity of
service and corporate memory was important to the board’s working and
accordingly agreed with Antony Burgmans that he would remain as a
director for a further three-year period. In coming to this view the
committee considered his clarity of thought and his approach in evaluating
the events of the last few years and concluded that he remained
independent in his judgement. The committee further noted that since
2004 all directors on the board had been subject to annual re-election.
Sir William Castell stood down from the board and as senior independent
director in April 2012. The committee discussed Sir William’s successor as
SID on two occasions and made recommendations to the chairman’s
committee on appropriate candidates.
Committee evaluation
At the end of the year, the committee undertook an annual examination of
its effectiveness and performance, using a questionnaire. As part of its
evaluation, the committee considered its role and its task for the year. The
evaluation concluded that the committee had worked well and had
improved its focus on diversity. Going forward the committee wishes to
focus on agenda setting and papers with a view to improving time
management and workload.
Chairman’s committee
Committee members
Carl-Henric Svanberg – committee chair
Paul Anderson
Admiral Frank Bowman
Antony Burgmans
Cynthia Carroll
Sir William Castell (retired from the committee in April 2012)
George David
Ian Davis
Professor Dame Ann Dowling (joined the committee February 2012)
Brendan Nelson
Phuthuma Nhleko
Andrew Shilston (joined the committee January 2012)
The committee met eight times during 2012.
Committee role and structure
The committee is comprised of the chairman and all the non-executive
directors.
The main tasks of the committee are:
t Evaluating the performance and effectiveness of the group chief
executive.
t Reviewing the structure and effectiveness of the business
organization of BP.
t Reviewing the systems for senior executive development and
determining the succession plan for the group chief executive,
executive directors and other senior members of executive
management.
t Determining any other matter which is appropriate to be considered
by all of the non-executive directors.
t Opining on any matter referred to it by the chairman of any committee
comprised solely of non-executive directors.
Committee activities
The committee held private discussions between the non-executive
directors during the year on a number of key issues for BP.
The committee carried out the evaluation of the chairman and the chief
executive early in the year. The committee also set the parameters for
these evaluations to take place in early 2013.
The committee received a recommendation from the nomination
committee for the appointment of a senior independent director to replace
Sir William Castell who was to stand down in April 2012. The committee
agreed to recommend to the board that Andrew Shilston be appointed the
SID; however Antony Burgmans, as longest serving non-executive
director would act as the focal point for internal board matters and would
lead the evaluation of the chairman.
The committee reviewed the membership of the board committees and
agreed certain modifications.
In addition, during 2012 the committee considered:
t The views of some shareholders as relayed by the chairman and the
senior independent director.
t On several occasions, with the chief executive officer, the strategic
direction of the group.
t Again with the chief executive officer, the composition and evolution of
the top management team and the implications of the implementation
of the functional organization.
t The information available to the board.
UK Corporate Governance Code
compliance
BP complied throughout 2012 with the provisions of the UK Corporate
Governance Code, except in the following aspects:
B.3.2 Letters of appointment do not set out fixed time commitments
since the schedule of board and committee meetings is subject to
change according to the demands of business and other events.
All directors are expected to demonstrate their commitment to the
work of the board on an ongoing basis. This is reviewed by the
nomination committee in recommending candidates for annual
re-election.
D.2.2 The remuneration of the chairman is not set by the remuneration
committee. Instead the chairman’s remuneration is reviewed by
the remuneration committee which makes a recommendation to
the board as a whole for final approval, within the limits set by
shareholders. We believe this wider process lets all board members
discuss and approve the chairman’s remuneration (rather than
solely the members of the remuneration committee).
E.2.4 Printed copies of the BP Annual Report and Form 20-F 2011
completed mailing outside of the Governance Code period of 20
working days before the AGM (but within the UK Companies Act
notice period). This was due to printing being delayed following
revisions to the report in view of the class action settlements agreed
with the Plaintiffs’ Steering Committee (PSC) on 3 March 2012.