Barclays 2006 Annual Report Download - page 123

Barclays PLC
Annual Report 2006 119
Governance
2
Regular items for Board meetings include the Finance Director’s Report,
the Group Chief Executive’s Report on the key issues affecting the
Group and operational performance, strategy updates from the main
businesses or functions and reports from each of the principal Board
Committees. Strategy execution updates presented in 2006 included UK
Retail Banking, International Retail and Commercial Banking, Barclays
Capital, Barclaycard, Barclays Global Investors and UK Business Banking.
The Board also received strategy updates from the Chief Information
Officer and a report on the integration of Absa. Updates are also provided
on the Group’s strategy and business in key global regions. The chart sets
out how the Board allocated its time at its meetings during 2006.
It is part of the Chairman’s role to ensure that Directors receive accurate,
timely and clear information about the Group’s performance, to enable
the Board to take sound decisions, to monitor effectively and to provide
advice to promote the success of the Group. The Chairman works
closely with the Company Secretary to ensure that information flows to
Directors promptly. Supporting papers for Board and Board Committee
meetings are generally distributed at least one week in advance of each
meeting. During the year, a Directors’ Intranet was launched, which
enables all Directors to access electronic copies of Board papers,
reports, minutes and other key documents quickly and securely via a
dedicated private network. In addition, all Directors have access to the
services of the Company Secretary and his team, who, amongst other
things, facilitate information requests and meetings for non-executive
Directors with senior management. Independent professional advice is
also available, on request, to all Directors at the Company’s expense.
Board Effectiveness
We conduct an annual review of the Board’s performance, which covers
the effectiveness of the Board, Board Committees and individual
Directors. Following the 2005 Board Effectiveness Review, the Board
concluded that it was operating effectively. An action plan was put
together to address those areas where the Board felt that some
improvements could be made. The actions were primarily focused on
ensuring that the Board gained a deeper understanding of the Group’s
competitive position and the health of the customer franchise. As a
result, improvements were made to the competitor monitoring and
customer franchise health reports received by the Board. The Board
Corporate Governance and Nominations Committee monitored the
progress of the action plan during 2006.
For our 2006 Board Effectiveness Review, we again asked Egon Zehnder
International independently to facilitate the evaluation process. This
took the form of a detailed questionnaire completed by each Director
and supplementary individual interviews, including peer evaluation of
fellow Directors. The results of the evaluation were presented to the
Board in December 2006 and the Board concluded that it continues to
operate effectively. Areas to be covered in the action plan for 2007
include the provision of additional training on risk issues, including risk
management and measurement, and continued work on agenda
management to ensure there is sufficient time for rigorous debate and
exchange of ideas.
Other
11%
Strategy Formulation
and Implementation
Monitoring
40%
Financial and
Operational Performance
34%
Governance
and Risk
15%
Board allocation of time
Appointment of Directors
The Board Corporate Governance and Nominations Committee is
responsible for overseeing the process for appointing new Directors
to the Board and it reports on its activities during 2006 on page 120.
The process for nominating Directors for appointment is set out in
‘Corporate Governance in Barclays’.
Induction and Training
All new Directors receive a comprehensive induction, tailored to their
individual requirements, when they join the Board or a Board
Committee. The induction is arranged by the Company Secretary and
includes training on Directors’ duties and responsibilities in addition
to meetings with the heads of all the major businesses and functions.
Training is normally delivered over the initial six-month period following
the Director’s appointment. On an ongoing basis, the Company
Secretary facilitates additional training and updates for Directors on
particular issues, such as Sarbanes-Oxley and Basel II. A two-year
programme of business training for non-executive Directors began in
2006, with non-executive Directors attending sessions hosted by
International Retail and Commercial Banking and UK Business Banking.
Further sessions are planned for 2007.
We also aim to hold some of our Board meetings away from our global
headquarters to allow Directors the opportunity to meet our frontline
staff and to see our operations at first hand. During 2006, a Board
meeting was held at our Barclaycard headquarters in Northampton and
further offsite visits will be made in 2007. In addition, non-executive
Directors are encouraged to make site visits individually or to liaise with
senior management on particular areas of interest.
Re-election of Directors
All Directors are required to seek re-election at least every three years
in accordance with the recommendations of the Code. Sir Nigel Rudd,
who has served on the Board since 1996, seeks re-election annually as
recommended by the Code. Details of Directors proposed for re-election
at the 2007 Annual General Meeting (AGM) are given in the Directors’
Report on page 114 and in the Notice of Meeting, which is included
separately with the Annual Report.
Independence of non-executive Directors
The Code set outs circumstances which may appear relevant to the
Board’s determination of whether a non-executive Director is
independent. The Board has also concluded that the following behaviours
are essential for the Board to consider a Director to be independent and
assesses each non-executive Director against these criteria:
•Provides objective challenge to management.
•Is prepared to challenge others’ assumptions, beliefs or viewpoints
as necessary for the good of the organisation.
•Questions intelligently, debates constructively, challenges rigorously
and decides dispassionately.
•Is willing to stand up to defend their own beliefs and viewpoints in
order to support the ultimate good of the organisation.
•Has a good understanding of the organisation’s businesses and
affairs to enable them to properly evaluate the information and
responses provided by management.
The Board considers the issue of independence on an annual basis.
The Board reviewed the independence of non-executive Directors in
February 2007 and concluded that each of them continues to
demonstrate the behaviours it considers to be essential indicators of
independence. In the case of Sir Nigel Rudd, the Board considered the
length of his tenure on the Board when assessing his independence.
However, the Board concluded that he continued to demonstrate the
independent behaviours set out above and that his length of tenure was
actually an aid to his independence, given his knowledge and experience
of the Group. In the case of Dr Danie Cronjé, the Board gave particular
consideration to his position as Chairman of Absa when assessing his