BP 2013 Annual Report Download - page 84

BP Annual Report and Form 20-F 201380
Finally, the committee reviewed the current composition of the board and
independence of non-executive directors, and recommended to
shareholders all directors for re-election at the 2013 AGM.
Committee review
The committee undertook an annual evaluation of its effectiveness and
performance, using a questionnaire. The review concluded that there had
been an improvement in the timeliness of distribution of pre-read and that
the longer session focusing on board composition, skills and the fit with
the group’s strategy had been valuable and should be repeated annually.
Chairman’s committee
Role
To provide a forum for matters to be discussed amongst the non-executive
directors.
Tasks
• Evaluate the performance and the effectiveness of the group chief
executive (GCE).
• Review the structure and effectiveness of the business organization
of BP.
• Review the systems for senior executive development and determine
the succession plan for the GCE, the executive directors and other
senior members of executive management.
• Determine any other matter which is appropriate to be considered by all
of the non-executive directors.
• Opine on any matter referred to it by the chairman of any committees
comprised solely of non-executive directors.
Members
The committee comprises all the non-executive directors who join the
committee at the date of their appointment to the board. The chief
executive attends the committee when requested.
Activities
The committee met six times during the year.
The committee reviewed:
• The performance of the chairman and the chief executive early in the
year. Parameters were set for evaluations in 2014.
• The developing position in the US Courts in respect of the
implementation of the settlement with the Plaintiffs Steering
Committee, including the business economic loss claims and the
activities of the Claims Administrator, the federal judge and the appeals
court. The work of Judge Freeh was also considered.
• A number of issues relating to the company’s strategy in the light of the
views of shareholders and the market more generally.
• The chief executive’s succession plans for the executive team and senior
leaders. The committee also considered the organization and operation
of the executive team.
Members
Name Membership status
Carl-Henric Svanberg (chair) Member since September 2009;
committee chair since January 2010
Paul Anderson Member since April 2012
Antony Burgmans Member since May 2011
Cynthia Carroll Member since May 2011
Ian Davis Member since August 2010
Brendan Nelson Member since April 2012
Andrew Shilston, as the senior independent director, attends all meetings
of the committee.
Activities during the year
The committee met four times during the year. At the start of the year, the
committee reflected on the output of the annual evaluation and determined
a rhythm for their meetings during the year. This would include one longer
meeting which would review board composition and skills in the light of
the company’s strategy.
The committee considered the time commitment required from non-
executive directors and in particular chairs of committees in discharging
their responsibilities. The committee determined that the time
commitment of directors had increased and this should be made clear to
those who may join the board.
The membership of the board had been substantially refreshed over the
previous three years which has resulted in no director now being
scheduled to retire earlier than the 2016 AGM. Therefore the committee
during the year reviewed the current skills of the board and those required
by the board over the coming years as the company’s strategy is
implemented.
In conducting this review the committee initiated interviews with all
directors. The conclusion of the review was that whilst the current board’s
skills matched those presently required, in seeking future candidates there
should be a greater focus on the business of BP, US government relations
and, possibly, Russia. All of this was against the background of the board’s
clear aspirations on diversity and the work of the international advisory
board in supporting the chairman and the chief executive on geo-political
issues.
As part of the review, directors were asked to comment on how the board
should work in future given that the company had substantially emerged
from the crisis in the Gulf of Mexico. The main conclusions were:
• The board was moving towards a more normal rhythm. Its operation had
improved over the past three years. The goal should be simplification
and clarity in materials and discussion. Substantial progress had been
made.
• The board should continue its focus on strategy and performance, with
the committees taking the lead on monitoring. Tasks of the board and
committees and their agendas should be reviewed to ensure that the
board was addressing the relevant strategic challenges and the
committees were complete in their monitoring task.
• There should be further focus on major projects and capital investment
to ensure that value was being created.
Against this background, the committee continued to work with an
executive search firm to identify potential candidates and to engage with
them as appropriate. The committee was aware of the board’s aspirations
on gender diversity. It is important, in the committee’s view, that any
candidates have the requisite skills to join the board. Potential candidates
with a diverse background have been identified, and it is anticipated that an
appointment will now likely be made in 2014.