Tesco 2001 Annual Report Download - page 11

TESCO PLC 9
Statement of application of principles
of the Combined Code
The Group is committed to high standards of corporate governance.
This statement describes the manner in which the company has
applied the principles set out in the Combined Code on Corporate
Governance.
Directors
The Board of Tesco PLC comprises eight Executive Directors
and six independent Non-executive Directors. The Chairman,
Mr J A Gardiner, is an independent Non-executive Director who has
a primary responsibility of running the Board. The Chief Executive,
Mr T P Leahy, has executive responsibilities for the operations,
results and strategic development of the Group. Clear divisions of
accountability and responsibility exist and operate effectively
for these positions. In addition, Mr G F Pimlott is the senior
Non-executive Director. The Board ensures that no one individual or
group dominates the decision-making process.
The full Board meets ten times a year and annually devotes two
days to a conference with senior executives on longer term planning
giving consideration both to the opportunities and risks of future
strategy. The Board manages overall control of the Group’s affairs by
the schedule of matters reserved for its decision. Insofar as
corporate governance is concerned, these include the approval of
financial statements, major acquisitions and disposals, authority levels
for expenditure, treasury policies, risk management policies and
succession plans for senior executives. To enable the Board to make
considered decisions, a written protocol exists and has been
communicated to senior managers ensuring that relevant information
is made available to all Board members in advance of Board meetings.
All Directors have access to the services of the Company Secretary
and may take independent professional advice at the company’s
expense in the furtherance of their duties.
The Board delegates day-to-day and business management
control to the Executive Committee which comprises the Executive
Directors. This meets formally every week and its decisions are
communicated throughout the Group on a regular basis. The
Executive Committee is responsible for implementing Group policy,
the monitoring and performance of the business and reporting to the
full Board thereon.
Appointments to the Board for both Executive and Non-
executive Directors are the responsibility of the Nominations
Committee which is chaired by Mr J A Gardiner and whose members
are set out in the table on page 11.
As exemplified by the section on ‘Directors and their interests’ within
the Directors’ report on pages 7 and 8, the company’s Articles of
Association ensure that on a rotational basis Directors resign every
three years and, if they so desire and are eligible, offer themselves for
re-election.
The Board has also established a Compliance Committee whose
purpose is to ensure that the Board discharges its obligations to avoid
civil and criminal liability. The Committee, comprising two Executive
Directors and three members of senior management, normally meets
four times a year.
Directors’ remuneration
The Board has a long-established Remuneration Committee,
composed entirely of Non-executive Directors, which is chaired
by Mr C L Allen. The members are set out in the table on page 11.
The responsibilities of the Remuneration Committee together with
an explanation of how it applies the Directors’ remuneration
principles of the Combined Code are set out in the report of the
Remuneration Committee on pages 12 to 16.
Relations with shareholders
The Board attaches a high importance to maintaining good
relationships with all shareholders and, primarily through the Investor
Relations department, ensures that shareholders are kept informed
of significant company developments. During the year, Directors
have met with 81 of our leading shareholders representing over
51% of the issued shares of the company.
While the focus of dialogue is with institutional shareholders to
whom regular presentations are made on company direction, care is
exercised to ensure that any price-sensitive information is released to
all shareholders, institutional and private, at the same time as in
accordance with the Financial Services Authority requirements.
The Board regards the Annual General Meeting as an
opportunity to communicate directly with private investors and
actively encourages participative dialogue. The Chairman, Executive
Directors and chairmen of the Audit and Remuneration Committees
attend the Annual General Meeting and are available to answer
questions from shareholders present.
Each year end, every shareholder may choose to receive a full
Annual Report and Financial Statements or an abbreviated Annual
Review and Summary Financial Statement. At the half year, all
shareholders receive an Interim Report.These reports, together with
publicly-made trading statements, are available on the Group’s
website (www.tesco.com/corporateinfo).
CORPORATE GOVERNANCE