Tesco 2011 Annual Report Download - page 66

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Introduction from the Chairman
At Tesco PLC we are committed to the highest standards of corporate
governance, as we recognise that strong governance is crucial in
helping the business to deliver its strategy, generating shareholder
value and safeguarding our shareholders’ long-term interests.
We have been active in contributing to the debate on governance,
and will continue to put forward our views on what constitutes good
governance. As a demonstration of our commitment to corporate
governance we have chosen to report against the new UK Corporate
Governance Code (New Code) before it applies to us fully.
The composition of our Board has been developed to ensure that the
Company can benefit from the depth of experience, independence
and knowledge of our Directors, whilst allowing the Board to discharge
its duties effectively. We have rigorous director selection and evaluation
processes, which include assessing their time commitments as well
as their skills. During 2010 the Nominations Committee oversaw the
appointment of two new Non-executive Directors and the implementation
of the succession plan for a new CEO following Sir Terry Leahy’s
decision to retire. We welcome Stuart Chambers and Gareth Bullock
as new Non-executive Directors and Philip Clarke as the new CEO;
we thank Charles Allen, Rodney Chase and Harald Einsmann for their
guidance and support as Non-executive Directors over a number of
years, and Sir Terry Leahy for his loyal service and contribution to Tesco
as CEO for the past 14 years. In addition, we were pleased to appoint
Patrick Cescau as Senior Independent Director following Rodney
Chase’s retirement.
We have a solid and experienced leadership team, who are collectively
responsible for the long-term success of the Company. We have a clear
understanding of our roles and responsibilities in running the business
and an honest and open environment in which both Executive
and Non-executive Directors can constructively contribute to the
development of the Company. We have a robust culture of good
governance, including maintaining high ethical standards and strong
personal integrity – this is formalised in our Group Code of Business
Conduct, which has been adopted across the business and sets out
clearly our expectations of how our employees will behave. All
businesses within the Group are required to monitor their compliance
with the Group’s governance framework and this compliance is
reviewed regularly.
Compliance with the UK Corporate Governance Code
Both the existing Combined Code and the New Code set out main
principles and specific provisions on how companies should be directed
and controlled to follow good governance practice. The Financial
Services Authority (FSA) requires companies listed in the UK to disclose,
in relation to the Code and New Code, how they have applied those
principles and whether they have complied with the provisions
throughout the financial year. Where the provisions have not been
complied with companies must provide an explanation for this.
Tesco has performed strongly
during the year 2010/11, whilst
maintaining our strong culture of
good governance and recognising
the needs of our shareholders
which has helped to build
ourbusiness.
David Reid
Chairman
62
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TESCO PLC Annual Report and Financial Statements 2011
GOVERNANCE
Directors’ report on corporate governance