BP 2013 Annual Report Download - page 75

Corporate governance
BP Annual Report and Form 20-F 2013 71
Appointment and time commitment
The chairman and NEDs have letters of appointment; there is no term limit
on a director’s service as BP proposes all directors for annual re-election by
shareholders (a practice followed since 2004). While the chairman’s
appointment letter sets out the time commitment expected of him, the
letters of appointment for NEDs do not set a fixed time commitment as it
is anticipated that the time required of directors may fluctuate depending
on demands of BP business and other events. It is expected that directors
will allocate sufficient time to the company to perform their duties
effectively.
Executive directors are permitted to take up one external board
appointment, subject to the agreement of the chairman. Fees received for
an external appointment may be retained by the executive director and are
reported in the annual report on remuneration (see page 106).
Independence and conflicts of interest
NEDs are expected to be independent in character and judgement and free
from any business or other relationship which could materially interfere
with the exercise of that judgement.
Antony Burgmans joined the board in February 2004 and by the time of the
2014 AGM will have served ten years as a director. In 2012, the board
asked him to remain as a director until the 2016 AGM as it considered that
his experience as the longest serving board member provides valuable
insight, knowledge and continuity. The board has determined that he
continues to meet the board’s criteria for independence and will keep this
under review.
The board is satisfied that there is no compromise to the independence of,
and nothing to give rise to conflicts of interest for those directors who
serve together as directors on the boards of outside entities or who have
other appointments in outside entities. The nomination committee keeps
under review the other interests of the NEDs to ensure that the
effectiveness of the board is not compromised.
Succession
Dr Byron Grote, an executive director, retired from the board at the AGM in
2013. There were no other changes to the board or committee
membership during the year.
How the board works
Board governance in BP
The system of governance within which the BP board operates is set out in
the BP board governance principles. These define the role of the board, its
processes and its relationship with executive management. This system is
reflected in the governance of the group’s subsidiaries. The board
governance principles can be found at bp.com/governance.
Role of the board
The board is responsible for the overall conduct of the group’s business
and the directors have duties under both UK company law and BP’s articles
of association.
The primary tasks of the board include:
Active consideration and direction of long-term strategy, and
approval of the annual plan.
Monitoring of BP’s performance against the strategy and plan.
Obtaining assurance that the material risks to BP are identified and
that systems of risk management and control are in place to
mitigate such risk.
Board and executive management succession.
Specific tasks are delegated to the board committees (see the reports of
the committees on page 74). The board seeks to set the ‘tone from the
top’ for BP by working with management to agree the values of the
company and considering specific issues, including health, safety, the
environment and reputation.
Board composition
On 31 December 2013 the board had 14 directors – the chairman, three
executive directors and 10 independent, non-executive directors (NEDs).
The nomination committee keeps the balance and independence of the
board under review (see the report of the nomination committee on
page 79).
Key roles and responsibilities
The chairman
Carl-Henric Svanberg
• Provides leadership of the board.
• Acts as main point of contact between the board and management.
• Speaks on board matters to shareholders and other parties.
• Ensures that systems are in place to provide directors with accurate,
timely and clear information to enable the board to operate effectively.
• Is responsible for the integrity and effectiveness of the BP board’s
system of governance.
The group chief executive
Bob Dudley
• Is responsible for day-to-day management of the group.
• Chairs the executive team (ET), the membership of which is set out
on page 66.
The senior independent director
Andrew Shilston
• Is available to shareholders if they have concerns that cannot be
addressed through normal channels.
Antony Burgmans, BP’s longest serving non-executive director, acts as an
internal sounding board for the chairman and serves as intermediary for the
other directors with the chairman when necessary.
Neither the chairman nor the senior independent director is employed as
an executive of the group. The nomination committee keeps succession
plans for the chairman, senior independent director, group chief executive
and senior management under review.