BP 2011 Annual Report Download - page 136

134 BP Annual Report and Form 20-F 2011
Corporate governance
Corporate governance practices
In the US, BP ADSs are listed on the New York Stock Exchange (NYSE).
The significant differences between BP’s corporate governance practices
as a UK company and those required by NYSE listing standards for US
companies are listed as follows:
Independence
BP has adopted a robust set of board governance principles, which
reflect the UK Corporate Governance Code and its principles-based
approach to corporate governance. As such, the way in which BP makes
determinations of directors’ independence differs from the NYSE rules.
BP’s board governance principles require that all non-executive directors
be determined by the board 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 BP board has determined that, in
its judgement, all of the non-executive directors are independent. In doing so,
however, the board did not explicitly take into consideration the independence
requirements outlined in the NYSE’s listing standards.
Committees
BP has a number of board committees that are broadly comparable in
purpose and composition to those required by NYSE rules for domestic
US companies. For instance, BP has a chairman’s (rather than executive)
committee, nomination (rather than nominating/corporate governance)
committee and remuneration (rather than compensation) committee.
BP also has an audit committee, which NYSE rules require for both US
companies and foreign private issuers. These committees are composed
solely of non-executive directors whom the board has determined to be
independent, in the manner described above.
The BP board governance principles prescribe the composition,
main tasks and requirements of each of the committees (see the board
committee reports). BP has not, therefore, adopted separate charters for
each committee.
Under US securities law and the listing standards of the NYSE,
BP is required to have an audit committee that satisfies the requirements
of Rule 10A-3 under the Exchange Act and Section 303A.06 of the NYSE
Listed Company Manual. BP’s audit committee complies with these
requirements. The BP audit committee does not have direct responsibility
for the appointment, re-appointment or removal of the independent
auditors – instead, it follows the UK Companies Act 2006 by making
recommendations to the board on these matters for it to put forward for
shareholder approval at the AGM.
One of the NYSE’s additional requirements for the audit
committee states that at least one member of the audit committee is to
have ‘accounting or related financial management expertise’. The board
determined that Brendan Nelson possessed such expertise and also
possesses the financial and audit committee experiences set forth in both
the UK Corporate Governance Code and SEC rules (see audit committee
report). Mr Nelson is the audit committee financial expert as defined in
Item 16A of Form 20-F.
Shareholder approval of equity compensation plans
The NYSE rules for US companies require that shareholders must be given
the opportunity to vote on all equity-compensation plans and material
revisions to those plans. BP complies with UK requirements that are
similar to the NYSE rules. The board, however, does not explicitly take
into consideration the NYSE’s detailed definition of what are considered
‘material revisions’.
Code of ethics
The NYSE rules require that US companies adopt and disclose a code of
business conduct and ethics for directors, officers and employees. BP has
adopted a code of conduct, which applies to all employees, and has board
governance principles that address the conduct of directors. In addition
BP has adopted a code of ethics for senior financial officers as required by
the SEC. BP considers that these codes and policies address the matters
specified in the NYSE rules for US companies.
Code of ethics
The company has adopted a code of ethics for its group chief executive,
chief financial officer, group controller, general auditor and chief accounting
officer as required by the provisions of Section 406 of the Sarbanes-Oxley
Act of 2002 and the rules issued by the SEC. There have been no waivers
from the code of ethics relating to any officers.
BP also has a code of conduct, which is applicable to all employees.
This was updated (and published) on 1 January 2012.