bat plc annual report 2007 - Corporate governance statement (1 of 5)

 
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Annual Report and Accounts 2007

British American Tobacco has long been committed to maintaining high standards of corporate governance. Our corporate governance framework is directed towards achieving our business objectives in a manner which is responsible and in accordance with high standards of honesty, transparency and accountability.

These principles are reflected in our Standards of Business Conduct, which have been in place for many years and have recently been updated in order to ensure that they remain at the forefront of best business practice. Every Group company and every employee worldwide is expected to live up to them. In addition, the principles set out within our Statement of Business Principles are designed to help meet the expectations placed on us by our various stakeholders. Both documents are available from the Company Secretary and on bat.com.

The principal governance rules applying to UK companies listed on the London Stock Exchange are contained in the Combined Code on Corporate Governance adopted by the Financial Reporting Council in June 2006 (the Code). As required by the Code, this Statement reports on how the Code’s principles are applied by the Company and provides our formal report on compliance with the Code’s provisions.

The Board

The Board is responsible to the Company’s shareholders for the success of the Group and for its overall strategic direction, its values and its governance. It provides the leadership necessary to enable the Group’s business objectives to be met within the framework of the internal controls described below, while also ensuring that the Company’s obligations to its shareholders and others are met.

Directors

The Company currently has a Board of 12 Directors: the Chairman, three Executive Directors – the Chief Executive, the Chief Operating Officer and the Finance Director – and eight Non-Executive Directors. They are listed in the Directors’ Report and their details appear on Board of Directors.

Rupert Pennant-Rea and Piet Beyers retired as Non-Executive Directors on 26 April 2007 and 30 June 2007 respectively, Christine Morin-Postel and Karen de Segundo were appointed as Non-Executive Directors on 1 October 2007, and Antonio Monteiro de Castro retired as Chief Operating Officer on 31 December 2007. Nicandro Durante was appointed to the Board as Chief Operating Officer on 1 January 2008. Paul Rayner will retire as Finance Director at the conclusion of the Annual General Meeting on 30 April 2008. Ben Stevens has been appointed to the Board with effect from 3 March 2008 and will succeed Paul Rayner as Finance Director on 30 April 2008.

Meetings of the Board

The Board held eight meetings in 2007 and is scheduled to hold seven meetings in 2008.

Among the key matters on which the Board alone may make decisions are the Group’s business strategy, its annual budget, dividends and major corporate activities. It is also responsible for reviewing the Company’s internal controls and governance system and for approving our Standards of Business Conduct. In addition, the Board annually:

  • approves the Annual Report and Accounts, recommends the final dividend and agrees the agenda for the Annual General Meeting;
     
  • reviews the quarterly and interim results and declares an interim dividend;
     
  • agrees succession plans and evaluates the Board’s performance over the preceding year; and
     
  • agrees the two year Company budget.

The agenda for Board meetings is set by the Chairman in consultation with the Deputy Chairman, the Chief Executive and the Company Secretary. In addition to the Company Secretary, the General Counsel to the Company ordinarily attends all meetings of the Board.

Non-Executive Directors, led by the Chairman, meet, if required, prior to meetings of the Board without the Executive Directors present and also meet annually, led by the Deputy Chairman, without the Chairman present.

All Directors are aware of their responsibility to take decisions objectively in the interests of the Company. The Chairman will always seek to obtain consensus at Board meetings but, in exceptional circumstances, decisions will be taken by majority. If any Director has concerns about the running of the Company or a proposed action which cannot be resolved, such concerns will be recorded in the Board minutes. No such concerns arose in 2007.

Management Board

The Board delegates to the Management Board responsibility for overseeing the implementation by the Group’s operating subsidiaries of the policies and strategy which it sets, and for creating the conditions for their successful day-to-day operation. The Management Board is chaired by the Chief Executive and its other members are the Finance Director, the Chief Operating Officer and nine senior Group executives, whose names appear on Management board. It held nine scheduled meetings in 2007 and is scheduled to hold the same number of meetings in 2008. Members of the Management Board are also invited to attend meetings of the Board from time to time, in particular when the Group’s future strategy and annual budgets are under discussion.

Board Committees

The Board has established four principal Board Committees, to which it has delegated certain of its responsibilities. They are the Audit Committee, the Nominations Committee, the Remuneration Committee and the Corporate Social Responsibility Committee. Each has its own clear terms of reference, which are available from the Company Secretary and on bat.com. The roles and membership of these Committees are described in more detail where appropriate below.

Board and Committee meetings held in 2007

The following table shows the total number of Board and Committee meetings held in 2007 and the number attended by their respective members.

 BoardAuditNominationsRemunerationCSR
Number held85662
Number attended     
J P du Plessis8-6--
K H Clarke75552
P N Adams8----
P A Rayner8----
A Monteiro de Castro8----
P E Beyers [1]3-2-0
R E Lerwill75552
A M Llopis74542
C Morin-Postel [1]32121
R L Pennant-Rea [1]22221
A Ruys75662
Sir Nicholas Scheele85662
K de Segundo [1]22011
M H Visser7-4-1

– Indicates not a member of that Committee.

Notes:

  1. Rupert Pennant-Rea retired from the Board on 26 April 2007; Piet Beyers retired from the Board on 30 June 2007. Christine Morin-Postel and Karen de Segundo were appointed to the Board and its four Committees with effect from 1 October 2007.
  2. Every Director withdrew from any meeting at which his or her own position was being considered.
  3. All Directors attended the Annual General Meeting in April 2007 with the exception of Anthony Ruys, who was unable to attend due to a conflicting engagement.
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