Tesco 2011 Annual Report Download - page 67

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The Board considers that Tesco PLC complied in full with the Code and
New Code for the whole of the year ended 26 February 2011, with the
exception of:
(i) Provision A.3.2 of the Code (Provision B.1.2 of the New Code),
which requires that at least half of the Board, excluding the
Chairman, should comprise Non-executive Directors determined
bythe Board to be independent. The Board recognises the
importance of a balanced board with an appropriate level of
independence. Tesco had one more Executive Director than
Non-executive Directors (excluding the Chairman) between
July2010 and the end of the financial year. However, following
Sir Terry Leahy’s retirement and the appointment of Philip Clarke
as his successor as CEO in March 2011, there is now an equal
number of Executive and independent Non-executive Directors
and the Board is again balanced and compliant with the
relevant provisions.
(ii) Provision B.6.2 of the New Code, which requires that every three
years there should be an externally led evaluation of the Board’s
performance. The Board usually carries out an external Board
evaluation every three years, with internal evaluations in the
intervening years. The last external evaluation took place in 2007
and an externally facilitated evaluation would normally have taken
place this year. Given the extensive Board and senior management
changes taking place this year, however, it was decided that it
would be more appropriate to conduct an internal evaluation
process and to carry out an externally facilitated process next
year, once those changes have had an opportunity to bed in.
Further information on the Code and New Code can be found at
www.frc.org.uk.
We consider corporate governance critical to our business integrity
and to maintaining investors’ trust. I hope this report provides you with
a clear understanding of our governance processes and procedures and
how the Company complies with the Code and New Code.
David Reid
Chairman
Board composition and independence
As at 26 February 2011, the Board of Tesco PLC comprised eight
Executive Directors, seven independent Non-executive Directors and
David Reid, Non-executive Chairman. Sir Terry Leahy retired as Group
CEO on 2 March 2011 and was replaced by Philip Clarke. Patrick Cescau
is our Senior Independent Director. We believe that the size of the
Board is appropriate given the diverse markets the Group operates
in and the breadth of operations and services offered in eachmarket.
The structure of the Board and the way that it operates, based on
strong governance processes, together with the integrity of the
individual Directors, ensure that no single individual or group
dominates the decision-making process.
Biographies for the Directors can be found on pages 60 and 61 of this
Annual Report.
Changes to the Board since 27 February 2010 are as follows:
Sir Terry Leahy Executive Director Retired as CEO
2 March 2011
Philip Clarke Executive Director Appointed CEO
2 March 2011*
Charles Allen Non-executive
Director
Resigned
2 July 2010
Rodney Chase Non-executive
Director and Senior
Independent Director
Resigned
2 July 2010
Harald Einsmann Non-executive
Director
Resigned
2 July 2010
Gareth Bullock Non-executive
Director
Appointed
3 July 2010
Stuart Chambers Non-executive
Director
Appointed
3 July 2010
Patrick Cescau Non-executive
Director appointed
Senior Independent
Director
Appointed
3 July 2010**
* Prior to 2 March 2011 Philip Clarke was the Executive Director responsible for International
and IT.
** Prior to 3 July 2010 Patrick Cescau was a Non-executive Director.
Election of Directors
The Directors will comply with the New Code requirement to submit
themselves for re-election every year if they wish to continue serving
and are considered by the Board to be eligible. The Company’s Articles
of Association require all new Directors to be submitted for election by
shareholders in their first year following appointment.
TESCO PLC Annual Report and Financial Statements 2011
—
63
Overview Business review Governance Financial statements