Barclays 2012 Annual Report Download - page 40

Corporate governance report
How is good governance achieved?
Good and effective corporate governance is also very much dependent
on the skills and experience of individuals on the Board and how well
they work together as a whole to achieve long term value for
shareholders. A great deal is demanded and expected of our Directors,
particularly given the systemic importance of financial institutions such
as Barclays to the global economy and the impact we have on the
societies in which we operate. As Chairman, I am responsible for the
effective performance of the Board and, in that regard, one of my areas of
focus since joining the Board has been to ensure that we have a strong
and well-functioning Board, comprised of individuals not only with the
right abilities in terms of technical or business experience, but with the
personal qualities required to be effective stewards of the business and
the dedication and commitment to the company, particularly in times of
stress. I was closely involved in the process to appoint a new Chief
Executive and I am confident that, in appointing Antony Jenkins, we have
the right person to lead the company, to deliver our strategy of becoming
the 'Go-To' bank and to implement the significant cultural and
behavioural changes that we, as a Board, want to achieve. I have also
sought to reinforce the non-executive presence on the Board and to
ensure that the Board is both balanced and diverse. We have revisited the
range of skills and competencies that we require around the Board table
and these are set out on page 50 below. The Board needs to have
non-executive Directors with financial services experience but also
access to other skills and experiences, particularly in the management of
culture and cultural change. Tim Breedon and Diane de Saint Victor have
joined the Board as non-executive Directors since I joined the Board and
I anticipate that we will make further appointments during the course
of 2013.
How is risk management being enhanced?
In looking at the corporate governance structures in place, it is clear to
me that Barclays has been well served by having, for many years, a
Board Risk Committee focused on credit, counterparty, market, capital
and liquidity risk. However, a major source of losses for Barclays and all
banks in recent years has been from operational risk and, in particular,
mis-selling of financial products. We need to strengthen Board-level
governance over these areas in 2013 and accordingly, we have created
a Board Conduct, Reputation and Operational Risk Committee. Its
responsibilities will include governance over operational risk, conduct
risk, reputation matters and Barclays corporate responsibility strategy.
It will subsume the current Board Citizenship Committee.
How do Board Committees support good governance?
The report that follows describes how Barclays applied the principles of
the Code during 2012. Board Committees play a crucial role in the
effectiveness of our corporate governance framework and Sir Michael
Rake and David Booth report below on the activities of the Board Audit
Committee and Board Risk Committee respectively. And Sir John
Sunderland reports separately in the Remuneration Report on how the
Board Remuneration Committee has overseen remuneration policy, how
we link remuneration to our strategy and to long term outcomes and
how we ensure that we are not incentivising inappropriate risk-taking.
What are the priorities for 2013?
We are determined as a Board and as a company to make progress
during 2013 and to do everything in our power to regain the trust of our
stakeholders: our commitment to implementing the recommendations
of the Salz Review is affirmation of our determination.
Sir David Walker
Chairman
5 March 2013
Dear Shareholder
This is my first report to you, as Chairman, on corporate governance at
Barclays. I joined the Board with effect from 1 September 2012,
succeeding Marcus Agius as Chairman on 1 November 2012. The
context for my appointment was, as is well-known, the changes to the
Board in the wake of the announcement in June 2012 of penalties
relating to the industry-wide investigation into the setting of interbank
offered rates. That announcement, and the events that followed,
inevitably dominated the second half of the year and the after effects
continue to influence the Board’s agenda.
What is meant by corporate governance?
Taking a step back, what is meant by corporate governance? The UK
Corporate Governance Code (the Code) is based on the widely-accepted
definition of corporate governance as ‘the system by which companies
are directed and controlled. Boards of directors are responsible for the
governance of their companies.’ The Code makes clear that corporate
governance is about what the board of a company does and how it sets
the company’s values. That is something that has been brought into
sharp focus for Barclays during 2012. Barclays has a well-defined and
well-structured corporate governance framework in place to support the
Board’s aim of achieving long term and sustainable shareholder value.
But however robust the framework, it is imperative that it is supported by
the right culture, values and behaviours, both at the top and throughout
the entire organisation. In 2012, Barclays faced much criticism of the
values and behaviours it has demonstrated. We are unanimous as a
Board that we must accept this criticism and seek ways in which we can
do better in future, with the aim of achieving a leadership position
amongst our industry peers. I regard the independent review of Barclays
business practices, led by Anthony Salz, which we announced in July
2012, and the work instigated by Antony Jenkins on culture and values as
part of the Transform Programme, as providing a solid foundation on
which we can build and move forward to become best in class. You will
read more about each of these important initiatives elsewhere in the
Annual Report and, later in this corporate governance report, Sir Michael
Rake, Deputy Chairman and Senior Independent Director, reports on how
Board governance responded to the LIBOR announcement.
barclays.com/annualreport38 I Barclays PLC Annual Report 2012