BP 2015 Annual Report Download - page 70

Institutional investors
Senior management regularly meets with institutional investors through
roadshows, group and one-to-one meetings and events for socially
responsible investors (SRIs).
During the year the chairman and remuneration committee chair held
individual investor meetings to discuss strategy, the board’s view on BP’s
performance, governance and remuneration. In March the chairman and all
board committee chairs held an annual investor event. This meeting
enabled BP’s largest shareholders to hear about the work of the board and
its committees and for NEDs to engage with investors.
In November the chairman and members of the executive team met with
socially responsible investors as part of BP’s annual SRI meeting. The
meeting examined a number of operational and strategic issues, including
how the board looks at risk and strategy, the group’s approach to
operational risk, context for the sector and BP in terms of oil price and
energy supply-demand, operating and energy performance in the
Upstream, and BP’s response to the shareholder resolution.
See bp.com/investors for investor presentations, including the group’s
financial results and information on the work of the board and its
committees.
Private investors
BP held a further event for private investors in conjunction with the UK
Shareholders’ Association (UKSA) in 2015. The chairman and head of
investor relations made presentations on BP’s annual results, strategy and
the work of the board. The shareholders asked questions on BP’s activities
and performance. Later in the year, the UKSA met with the company to
give feedback on BP’s 2014 financial reports.
AGM
Voting levels decreased slightly in 2015 to 62.28% (of issued share capital,
including votes cast as withheld), compared to 63.13% in 2014 and
64.24% in 2013. Each year the board receives a report after the AGM
giving a breakdown of the votes and investor feedback on their voting
decisions to inform the board on any issues arising.
UK Corporate Governance Code compliance
BP complied throughout 2015 with the provisions of the UK Corporate
Governance Code (the Code) except in the following aspects:
B.3.2 Letters of appointment do not set out fixed-time commitments
since the schedule of board and committee meetings is subject to
change according to the demands of business and other events. Our
letters of appointment set a general guide of a time commitment
between 30-40 days per year. All directors are expected to
demonstrate their commitment to the work of the board on an
ongoing basis. This is reviewed by the nomination committee in
recommending candidates for annual re-election.
D.2.2 The remuneration of the chairman is not set by the remuneration
committee. Instead the chairman’s remuneration is reviewed by the
remuneration committee which makes a recommendation to the
board as a whole for final approval, within the limits set by
shareholders. This wider process enables all board members to
discuss and approve the chairman’s remuneration, rather than solely
the members of the remuneration committee.
International advisory board
BP’s international advisory board (IAB) advises the chairman, group chief
executive and the board on geopolitical and strategic issues relating to the
company. This group meets once or twice a year and between meetings
IAB members remain available to provide advice and counsel when
needed.
The IAB is chaired by BP’s previous chairman, Peter Sutherland. Its
membership in 2015 comprised Kofi Annan, Lord Patten of Barnes, Josh
Bolten, President Romano Prodi, Dr Ernesto Zedillo and Dr Javier Solana.
The chairman and chief executive attend meetings of the IAB. Issues
discussed during the year included emerging geopolitical issues that could
impact BP’s business, developments in the Middle East and Latin America,
the effects of migration in Europe and the 2016 US election.
How the board works
The board operates within a system of governance that is set out in the BP
board governance principles. These principles define the role of the board,
its processes and its relationship with executive management.
This system is reflected in the governance of the group’s subsidiaries.
See bp.com/governance for the board governance principles.
Role of the board
The board is responsible for the overall conduct of the group’s business
and the directors have duties under both UK company law and BP’s
Articles of Association.
The primary tasks of the board include:
Active consideration and direction of long-term strategy and
approval of the annual plan.
Monitoring of BP’s performance against the strategy and plan.
Obtaining assurance that the principal risks and uncertainties to
BP are identified and that systems of risk management and
control are in place to mitigate such risk.
Board and executive management succession.
The board seeks to set the ‘tone from the top’ for BP by working with
management to agree BP values and considering specific issues including
health, safety, the environment and reputation.
Key roles and responsibilities
The chairman
Carl-Henric Svanberg
• Provides leadership of the board.
• Acts as main point of contact between the board and management.
• Speaks on board matters to shareholders and other parties.
• Ensures that systems are in place to provide directors with accurate,
timely and clear information to enable the board to operate effectively.
• Is responsible for the integrity and effectiveness of the BP board’s
system of governance.
The group chief executive
Bob Dudley
• Is responsible for day-to-day management of the group and executes
strategy.
• Chairs the executive team (ET), the membership of which is set out
on pages 60 to 61.
The senior independent director
Andrew Shilston
• Acts as an internal sounding board for the chairman.
• Serves as intermediary for other directors with the chairman when
necessary.
• Is available to shareholders if they have concerns that cannot be
addressed through normal channels.
• Leads the chairman’s evaluation.
Neither the chairman nor the senior independent director are employed as
an executive of the group.
Appointment and time commitment
The chairman and NEDs have letters of appointment; there is no term limit
on a director’s service, as BP proposes all directors for annual re-election
by shareholders (a practice followed since 2004).
While the chairman’s appointment letter sets out the time commitment
expected of him, letters of appointment for NEDs do not set a fixed-time
commitment, but instead set a general guide of between 30-40 days per
year. The time required of directors may fluctuate depending on demands
of BP business and other events, and they are expected to allocate
sufficient time to BP to perform their duties effectively and make
themselves available for all regular and ad-hoc meetings.
BP Annual Report and Form 20-F 201566