Barclays 2011 Annual Report Download - page 34

Corporate governance report
Dear Shareholder
The fundamental purpose of any company is the creation and delivery of
long-term sustainable shareholder value in a manner consistent with its
obligations as a responsible corporate citizen. Corporate governance must
be seen in this context – it is not an objective in its own right but a vital
facilitator to the creation of long-term value for our owners. However, the
creation of shareholder value is influenced by many factors, both internal
and external and the Board and I are very conscious that the financial
crisis has resulted in Barclays shareholders suffering a large erosion in the
value of their holding. We continue therefore to review our corporate
governance processes and practices carefully to ensure they are fit for
purpose and have again conducted a rigorous, externally facilitated Board
Effectiveness Review during 2011.
So, how is the Barclays Board seeking to create and sustain value over the
long-term? We aim to achieve this by understanding the external factors
that present risks and opportunities for our business, thereby ensuring
our strategy is appropriate; building strong and stable relationships with
our customers, employees and suppliers; and ensuring that we manage
our risks and scarce resources, including capital, appropriately. Our
strategy is focused on four key priorities: Capital; Returns; Income Growth;
and Citizenship and we ensure our Board discussions are focused on
these issues.
External factors continue to have a significant impact on Barclays. The
demands and expectations of governments, regulators and of society as a
whole as to the role of banks and other financial institutions have resulted
in a number of changes in the regulatory environment that will have a
profound impact on our strategy and business model. Furthermore,
ongoing global economic uncertainty, particularly surrounding the
Eurozone, has led to continued weak market conditions. It is important
in such an environment that the Board meets regularly and is kept fully
informed. Consequently, in 2011, in addition to our eight scheduled
meetings, two of which were held overseas, we held eight additional
Board meetings to discuss, amongst other things, the uncertainty in the
Eurozone; market conditions; the findings and recommendations of the
Independent Commission on Banking (ICB), as published in both their
interim and final reports; and our commitments under Project Merlin, the
agreement between the UK Government and the four major UK banks on
commitment to lending in the UK.
Good corporate governance is vital in supporting the delivery of our
strategic priorities. Our Board Committees play an important role in
working with management to ensure our business is financially strong,
that it is well-governed and that any risks are identified and mitigated.
It is important that we generate income in a sustainable way and manage
our risks and costs properly, without eroding the controls we have in place.
The Board Audit Committee, chaired by Sir Michael Rake, has a key
oversight role in ensuring that our financial statements are a true and fair
representation of our financial position and strength and that our control
environment is robust and maintained. It is vital that our levels of capital,
funding and liquidity are regarded as rock solid, particularly in times of
economic dislocation, and the Board Risk Committee, chaired by David
Booth, provides oversight of and advice on both our risk appetite and
management and our capital and liquidity strategies. And it is essential
that we reward our people appropriately, that their pay reflects
performance and that we do not incentivise them to take inappropriate
levels of risk. The Board Remuneration Committee, chaired by Alison
Carnwath, provides direction and oversight of our remuneration policy.
Each of the Board Committee Chairmen reports personally later in this
report.
We must also demonstrate our wider value to society. To support the
delivery of this objective, in August 2011 we created a Board Citizenship
Committee, which I chair. I am joined on the Committee by Sir John
Sunderland and Dambisa Moyo, and we held its first meeting in late 2011.
Our remit is to have oversight of our conduct with regard to our corporate
and societal obligations and our reputation as a responsible corporate
citizen. We will oversee matters such as our progress against our Treating
Customers Fairly objectives and our conduct on matters relating to our
shareholders, clients, customers, employees, suppliers and the
communities in which we operate. More information on this Committee
can be found in its Terms of Reference on our website.
Of course, in order to deliver our strategy, we need the right people.
To this end, one of our priorities is to ensure that we have a Board and
an executive management team with the appropriate skills, knowledge
and experience to operate effectively in an ever challenging environment.
One way of ensuring that we continue to have the right people is to have
a rigorous appointment and an effective succession planning process
in place for Board and key management roles. The Board Corporate
Governance and Nominations Committee has a key role to play in
reviewing new appointments and succession plans and during the year
we specifically debated both Board composition and succession planning
for Executive Committee positions.
Board composition is critical in ensuring effective and value-adding
corporate governance. The debate about Board diversity and the
representation of women on company boards progressed at pace in 2011
and we welcomed and supported the recommendations in Lord Davies'
report into Women on Boards. However, diversity is much wider 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. Nevertheless,
while ensuring that all Directors are appointed on merit, we have set
ourselves the aspirational target of ensuring that at least 20% of our
Board is made up of women by the end of 2013 and for that position to
have exceeded 25% by the end of 2015. We are also continuing to support
initiatives to ensure that the pipeline of credible women candidates for
Board positions is strengthened, including my own personal participation
in the FTSE 100 Cross-Company Mentoring Programme and our
sponsorship of the Cranfield Female FTSE Board Report. More details of
our approach to diversity and inclusion may be found on page 53 and
I report in more detail on our Board appointment process and succession
planning initiatives in my report on the activities of the Board Corporate
Governance and Nominations Committee on page 38.
We continue to embrace the provisions and principles of the UK Corporate
Governance Code (the Code) and the rest of my report explains how we
applied those principles in 2011.
Marcus Agius
Group Chairman
7 March 2012
32 Barclays PLC Annual Report 2011 www.barclays.com/annualreport