Barclays 2010 Annual Report Download - page 151

Corporate governance
Corporate governance report
The corporate governance report is my opportunity, as Group Chairman,
to explain how our Company has been managed during the year; how
the Board has performed and how our systems of governance and control
have operated.
What shaped the Board’s agenda in 2010? First, as the world economy
started to recover from the most significant shock it has experienced in
generations, the focus of the Board has perceptibly shifted from dealing
with the immediacy of events to formulating and developing a long-term
strategy for the post-crisis world and, also, to identifying how we will meet
the challenges brought about by the new regulatory landscape. Under the
former, the critical issue is to improve the return on equity of the Group
and much work is being carried out in this regard. Under the latter, Board
discussions this year have been dominated by the regulatory environment:
how that regulatory environment is changing or is likely to change in the
future and the implications for our strategy and business model. Tying
these two themes together, discussions have focussed on how the Group
should respond to the uncertain regulatory environment and, in the light
of the substantial increase in the level of capital being held, how the Group
could improve its return on equity and, in particular, achieve returns above
the cost of equity. This focus will continue into 2011. The myriad of
different regulatory developments which have occurred in the UK, in
Europe and in the USA in recent years have generated a substantial volume
of work for Barclays and, to an extent, for its Board. We recognise and
support the need for a better system of regulation to emerge from this
process although shareholders should recognise the strain which is
imposed on Barclays, in common with other financial institutions, as
the multi-faceted, international debate takes place.
Second, the Board this year had the important job of identifying and
appointing a new Chief Executive to succeed John Varley, a task that
resulted in the appointment of Bob Diamond. The succession process,
which was led by me with the full involvement and support of both the
Board Corporate Governance & Nominations Committee and all the
non-executive Directors, was critical in ensuring that we have the
right leadership in place to deliver our strategy in the new regulatory
environment. I report in more detail on page 159 on how we managed
this succession process in 2010.
Away from the boardroom, corporate governance regimes themselves
were subject to much scrutiny in 2010 and we made a significant
contribution to the debate by ensuring that we responded to relevant
consultations during the year. It is important, in our view, that corporate
governance frameworks are structured in such a way that recognises that
there is no ‘one size fits all’ solution and that there is a degree of flexibility,
within broadly agreed principles, that allows boards to operate in a way
that suits the particular needs and challenges faced by their Company.
During the year, we contributed to the Financial Reporting Council’s
review of the Combined Code, which culminated in the new UK Corporate
Governance Code, and the associated review of the Higgs Guidance.
We also made a submission in response to the EU’s Green Paper on
Corporate Governance in Financial Institutions and contributed our views
on the Basel Committee’s Corporate Governance Guidelines.
There has been much debate this year on the subject of board diversity,
notably on the subject of gender and the representation of women on the
boards of companies. We were pleased to sponsor this year’s Cranfield
FTSE Female Report and we support the recommendation in the new
UK Corporate Governance Code that boards should consider the benefits
of diversity, including gender, when making board appointments. For
us, however, diversity is much more than the issue of gender: it is about
ensuring that there is an appropriate range and balance of skills,
experience and background on the Board. Achieving this balance is a
key determinant of any new Board appointments we make. In 2010 we
were fortunate to be joined on the Board by Dambisa Moyo and Alison
Carnwath, who were appointed with effect from 1st May 2010 and
1st August 2010 respectively. They both bring relevant, financial and
other experience to the Board and these appointments have widened
the range of perspectives brought to our Board deliberations.
2010 again saw us hold a number of additional Board and Board
Committee meetings over and above our regular, scheduled meetings.
Non-executive Directors have continued to make themselves available,
often at short notice, and each of them has been unstinting in the time
they are prepared to commit to Barclays. The work of our principal Board
Committees continued to provide valuable oversight of key issues affecting
the Group: 2010 saw significant debate and regulatory action with respect
to remuneration in the banking sector and Sir Richard Broadbent,
Chairman of the Board Remuneration Committee, reports to you on page
166 on the work of the Committee in 2010. Furthermore, capital and
liquidity and, in particular, the ability and capacity of banks to withstand
systemic shocks or stresses, were again in focus in 2010. Sir Michael Rake,
Chairman of the Board Audit Committee and David Booth, Chairman of the
Board Risk Committee, describe in more detail later in this report on the
work of those Committees in 2010 in this regard.
We are committed to reporting on our corporate governance framework in
an open and transparent way. We were pleased, therefore, that our 2009
report was nominated in the ICSA-Hermes Transparency in Governance
Awards in the categories of ‘Best Board Disclosure’ and Best Audit
Disclosure’, where we won the award for the latter. I trust that we are
maintaining that standard with the report that follows.
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 149
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