Tesco 1999 Annual Report Download - page 11

TESCO PLC ANNUAL REPORT 1999 9
Corporate governance
Statement of compliance with the principles in the
Combined Code
This statement sets out the manner in which the company has
applied the principles set out in Section 1 of the Combined
Code on Corporate Governance issued by the London Stock
Exchange in June 1998. Its purpose is to provide an explanation
which enables the company’s shareholders to evaluate how these
principles have been applied.
Directors
The Board of Tesco PLC comprises ten executive directors and
six independent non-executive directors. The Board is chaired
by Mr J A Gardiner, an independent non-executive director,
who has primary responsibility for running the Board. The
Chief Executive, Mr T P Leahy, has executive responsibilities
for the operations, results and strategic development of the
Group. Clear divisions of accountability and responsibility both
exist and operate effectively for these positions. In addition,
Mr G F Pimlott is the senior non-executive director. The Board
structure ensures that no one individual or group dominates the
decision-making process.
The full Board meets ten times a year and, in addition, annually
devotes two days to a conference with senior executives on
longer term planning. The Board manages overall control of
the Group’s affairs by the schedule of matters reserved for its
decision. Insofar as corporate governance is concerned, these
include the approval of financial statements, major acquisitions
and disposals, authority levels for expenditure, treasury
policies, risk management policies and succession plans for
senior executives. In order that the Board is able to make
considered decisions, a written protocol exists, and has been
communicated to senior managers, ensuring that relevant
information is presented to all Board members one week
before Board meetings. All directors have access to the
services of the Company Secretary and may take independent
professional advice at the company’s expense in the furtherance
of their duties.
The Board delegates day-to-day and business management
control to the Executive Committee which comprises the
executive directors. This meets formally every week and its
decisions are communicated throughout the Group on a
regular basis. The Executive Committee is responsible for
implementing Group policy, the monitoring and performance
of the business and reporting to the full Board thereon.
Appointments to the Board for both executive and non-
executive directors are the responsibility of the Nominations
Committee which is chaired by Mr J A Gardiner and whose
members are set out in the table on page 11.
The company’s Articles of Association ensure that on a
rotational basis one-third of the directors resign every year and,
if so desire and being eligible, offer themselves for re-election.
This is reflected in the section on ‘Directors and their interests’
within the Directors’ report on pages 7 and 8. Non-executive
directors are appointed for a period of three years.
Directors’ remuneration
The Board has a long-established Remuneration Committee
composed entirely of non-executive directors which is chaired
by Baroness O’Cathain, and whose members are set out in the
table on page 11. The responsibilities of the Remuneration
Committee, together with an explanation of how it applies the
Directors’ remuneration principles of the Combined Code, are
set out in the Report of the Directors on Remuneration on
pages 12 to 16.
Relations with shareholders
The Board attaches a high importance to maintaining good
relationships with all shareholders and, primarily through the
Investor Relations department, ensures that shareholders are
kept informed of significant company developments. During
the year, directors have met with more than 40 of our leading
shareholders representing over 45% of the issued shares of
the company.
While the focus of dialogue is with institutional shareholders
to whom regular presentations are made on company direction,
care is exercised to ensure that any price-sensitive information
is released to all shareholders, institutional and private, at
the same time in accordance with London Stock Exchange
requirements.
The Board regards the Annual General Meeting as an
opportunity to communicate directly with private investors
and actively encourage participative dialogue. The Chairman,
executive directors and chairpersons of the Audit and
Remuneration Committees attend the Annual General Meeting
and are available to answer questions from shareholders present.