BP 2011 Annual Report Download - page 132

130 BP Annual Report and Form 20-F 2011
Corporate governance
continued to make progress in addressing the main safety, ethical and
environmental challenges confronting it since it was formed in 2003. The
committee will continue to monitor progress regularly.
The committee continued to receive reports on the joint venture
operations in Iraq, and in particular was briefed by the company’s head of
security on the risks and management of security in Iraq. As mentioned
above, the committee reviewed the company’s shipping activities in 2011
and was briefed on the function’s response to the threat of piracy in the
waters off the Somali coast.
The committee also examined quarterly audit reports from BP’s
internal audit and safety and operational risk functions which highlighted
key findings and material actions arising from audits which had taken
place at segment, functional and regional levels and tracked their close
out. During the year the committee also received written reports from the
group ethics and compliance officer.
Activities from the executive-level group operations risk committee
(GORC) are reported to the SEEAC by the group chief executive and
executive vice president S&OR at each meeting. Improved co-ordination
of agenda planning was achieved to facilitate executive management level
review of key risk topics prior to board level review at SEEAC. The SEEAC
also received regular updates on the company’s interaction with regulatory
agencies.
Committee evaluation
For its 2011 evaluation, the SEEAC again used a questionnaire
administered by external consultants to examine the committee’s
performance and effectiveness. The committee responded to the same
questions as used in 2010 so that any change trends could be discerned.
The topics covered included the balance of skills and experience among its
membership, quality and timeliness of information the committee receives,
the level of challenge between committee members and management and
how well the committee communicates its activities and findings to the
board.
In 2010 the committee had concluded that it should increase its site
visits and training. In 2011, as reported above, the committee believed it
had increased these activities significantly and agreed it should continue to
do so in 2012. It also noted that given its broad remit across non-financial
risk, it would need to continue to balance that breadth with heightened
focus on specific risk and performance topics. It viewed its increased
use of member visits and briefings as important tool towards achieving
that heightened focus. Overall the committee considered that its current
membership provided a well-balanced and experienced resource, and also
noted the valuable contribution made by Mr Wilson in his capacity as the
independent expert.
Gulf of Mexico committee
Chairman’s introduction
The Gulf of Mexico committee was very active in 2011, meeting 16 times
over the course of the year. In addition to overseeing efforts to mitigate the
effects of the spill, the company’s strategy for resolving claims, and actions
to restore the group’s reputation, the committee focused a considerable
portion of its attention on legal matters. Some of these legal matters
included settlements reached with BP’s partners in the Macondo well and
various contractors, preparations for the upcoming trial in the Multi-District
Litigation and ongoing governmental investigations.
We have been joined in meetings by the leadership, management
and counsel of the Gulf Coast Restoration Organization (GCRO), which was
formed in mid-2010 to manage the company’s long-term response to the
tragic Deepwater Horizon oil spill. The committee members’ understanding
of the important issues and numerous interdependencies has been
facilitated by the frequency of meetings and the breadth of topics covered.
I believe the committee has maintained a rigorous approach to its
work, providing effective oversight on behalf of the board, to which reports
are provided following committee meetings. The report below summarizes
the activities of the committee in 2011. I anticipate 2012 will be an equally
demanding year but the committee is well prepared to conduct its tasks.
Ian Davis
Gulf of Mexico committee chair
Committee members
Ian Davis – committee chair
Paul Anderson
Frank Bowman (joined the committee 3 February 2012)
Sir William Castell
George David
In 2011 the membership of the Gulf of Mexico committee remained the
same as in 2010, including two US-based non-executive directors and the
previous and present chairmen of the SEEAC. There is cross-membership
with the audit committee, helping to inform discussions at the latter
regarding financial controls and incident-related costs. Frank Bowman
joined the committee in February 2012.
Each meeting of the committee is attended by Lamar McKay,
President and CEO of the GCRO, and by Jack Lynch, chief counsel to the
GCRO. The chairman, group chief executive and group general counsel join
the meeting whenever possible. Meetings also include private sessions
attended by non-executive members only.
Committee role and structure
The purpose of the committee is to provide non-executive oversight of the
GCRO and to support efforts to rebuild trust in BP and BP’s reputation with
a particular focus on the US.
The work of the committee is fully integrated with the work of the
board on reputation, safety, strategy and financial planning, and the board
retains ultimate accountability for oversight of the group’s response to the
incident.
Directors are invited to attend and observe committee meetings.
Committee meeting minutes are circulated to the board, and the
committee chairman provides verbal reports on the committee’s activities
at board meetings.
The committee met 16 times in 2011.
During the course of 2011, the committee has undertaken the
following tasks:
• Oversee and receive regular reports on work undertaken to mitigate the
effects of the oil spill in the Gulf of Mexico area.
• Oversee GCRO’s co-ordinated response programme for affected
communities and states, along with its strategies for managing external
relationships on issues relating to the incident.
• Oversee the legal strategy for litigation and investigations involving the
group arising from the incident or its aftermath.
• Oversee GCRO’s strategy for resolving claims, recognizing the
independent role of the Gulf Coast Claims Facility.