BP 2011 Annual Report Download - page 123

BP Annual Report and Form 20-F 2011 121
Corporate governance
Corporate governance
Antony Burgmans who, given his length of service on the board, will
respond to any internal board matters, act as a sounding board for the
chairman and serve as an intermediary for other directors if necessary.
Sir William stepped down as chairman of the safety, ethics and
environment assurance committee (SEEAC) and Paul Anderson became its
chairman from 9 December 2011.
Ian Davis stepped down as a member of the audit committee on
3 February 2012 and Frank Bowman joined the Gulf of Mexico committee
on the same date.
Neither the chairman nor the senior independent director are
employed as executives of the group. The board maintains a succession
plan for the chairman and senior independent director, in addition to the
group chief executive and senior management.
Appointment and tenure
The chairman and our non-executive directors (NEDs) serve on the basis
of letters of appointment. BP does not place a term limit on director’s
service as we propose all directors for annual re-election by shareholders (a
practice we have followed since 2004).
Tenure of board directors as at 6 March 2012
8 NEDs8 NEDs
4-6 years 7-9 years0-3 years
3 NEDs3 NEDs 1 NED1 NED
The governance principles require our non-executive directors to be
independent in character and judgement and free from any business or
other relationship which could materially interfere with the exercise of their
judgement. The board has determined that those non-executive directors
who served during 2011 fulfilled this requirement and were independent.
The board also satisfied itself that there is no compromise to the
independence of, or existence of 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. These issues are considered
on a regular basis at board meetings. The nomination committee keeps
under review the nature of non-executive directors’ other interests to
ensure that the effectiveness of the board is not compromised. The
committee may make recommendations to the board if it concludes that a
director’s other commitments are inconsistent with those required by BP.
Time commitment and outside appointments
Letters of appointment for non-executive directors do not set out a fixed
time commitment for board duties as we believe that the time required
by directors may fluctuate depending on demands of the business and
other events. However, it is expected that directors will allocate sufficient
time to the company to perform their duties effectively. The chairman’s
appointment letter sets out the time commitment expected of him.
Following an approach from the Volvo Group, the chairman
discussed with the board, through the chairman’s committee, whether
to take an additional post as a part-time non-executive chairman of Volvo.
During this process, our senior independent director led a discussion of
non-executive directors without the chairman present to hear their views.
The board concluded that Mr Svanberg has sufficient time to carry out both
commitments and supported the chairman taking on this additional role.
The chairman will step down from his existing non-executive directorship
at Ericsson before assuming the chairmanship of Volvo in April 2012; he
also confirmed to the board that he does not intend to seek any additional
roles outside those at BP and Volvo.
Executive directors are permitted to take up one external board
appointment, subject to the agreement of the chairman and provided such
external appointment is reported to the BP board. Fees received for an
external appointment may be retained by the executive director and are
reported in the Directors’ remuneration report.
Diversity
BP recognizes the importance of diversity, including gender, at all levels
of the company as well as the board. The company is committed to
increasing diversity across our operations and has in place a wide range of
activities to support the development and promotion of talented individuals,
including women.
During the year, the board responded to Lord Davies’ report on
gender diversity and confirmed its goal to increase the number of women
on the BP board to three by 2013 and work towards the recommendation
of 25% female representation by 2015. With the appointment of Professor
Delegation
Accountability
Ernst & Young
Internal audit
Finance function
General counsel
External market
and reputation
research
Independent expert
• BP goal
• Governance process
• Delegation model
• Executive limitations
Delegation
Accountability
GCE’s delegations
Group chief executive
Executive management
Delegation of authority
through policy with
monitoring
Assurance through
monitoring and reporting
Safety & operational
risk function
Group compliance
offi cer
Independent advice
(if requested)
Monitoring,
information and
assurance
GORC
Group
operations risk
committee
GFRC
Group
financial risk
committee
GDC
Group
disclosures
committee
GPC
Group people
committee
RCM
Resource
commitments
meeting
BP Board Governance
Principles
Owners/shareholders
Board
Nomination
committee
Remuneration
committee
Chairman’s
committee
Audit
committee
Nomination
committee
Remuneration
committee
Chairman’s
committee
Audit
committee
SEEAC
Gulf of Mexico
committee
BP governance framework
Strategy/group risks/annual plan