Annual Report and Accounts 2009 - BG Group

A DIRECTORS
The Board
The Board is responsible to BG Group’s
shareholders for creating and delivering
sustainable shareholder value through the
management of the Group’s businesses within
the Governance Framework. The Board’s role is
to set the Group’s strategy, and to ensure that
necessary resources are available, and that
appropriate controls, values and standards
are in place, to deliver it. As well as oversight
responsibility for financial performance,
internal controls and risk management of the
Group, the Board has a formal schedule of
matters specifically reserved to it for decision
which is set out in the table below.
Directors are expected, wherever possible,
to attend all Board meetings, relevant
Committee meetings and the annual general
meeting. The Board has regular scheduled
meetings throughout the year and holds
additional meetings as and when necessary.
During 2009, the Board met 11 times. A table
detailing the Directors’ attendance at each of
the Company’s Board and Committee meetings
during 2009 is set out on page 45. Within the
scheduled meeting programme, the Chairman
met with the Non-Executive Directors without
the Executive Directors being present.
In addition to those scheduled meetings,
the Board focuses on the Group’s strategy
at an annual two day planning conference.
The conference, held in June 2009, included
a detailed portfolio review, in depth
presentations on two key regions, Australia
and Brazil, and updates on exploration and
human resources. In light of the dramatic
changes in the economic environment in
the second half of 2008 and through 2009,
the Board took a fundamental look at the
strategic risks facing the business and spent
time reviewing and challenging assumptions
embedded within the Group’s strategy. The
Board also undertook a thorough review
Matters reserved to the Board
1 Approval of the Group vision, values and
overall Governance Framework.
2 Approval of the Company’s Annual Report
and Accounts, Remuneration report and
Quarterly Financial Statements.
3 Approval of any interim dividend and
recommendation of the final dividend.
4 Approval of Group financial policy.
5 Approval of material capital projects,
investments, acquisitions and disposals
by any Group company.
6 Approval of the Company’s long-term
finance plan and annual capital and
revenue budget.
7 Approval of any significant change in
Group accounting policies or practices.
of supply and demand drivers in all the
Group’s markets.
Chairman and Chief Executive
The posts of Chairman and Chief Executive
are separate and their responsibilities are
clearly established, set out in writing and
agreed by the Board. The descriptions of the
roles and responsibilities of the Chairman
and Chief Executive are also available on
BG Group’s website. The Chairman,
Sir Robert Wilson, is responsible for the
workings and leadership of the Board and
for the balance of its membership. The Chief
Executive, Frank Chapman, is responsible for
leading and managing the business within
the authorities delegated by the Board.
Board balance and independence
The Board is made up of a Non-Executive
Chairman, three Executive Directors (including
the Chief Executive and the Chief Financial
Officer) and eight independent Non-Executive
Directors. The Board considers there is an
appropriate balance between Executive and
Non-Executive Directors. This balance is
further enhanced by the varying lengths of
service of the Non-Executive Directors, which
is depicted in the chart below. A list of the
individual Directors, their biographies and
details of their committee membership is
provided on pages 38 and 39.
Length of service: Non-Executive Directors
0-3 years
4-6 years
9+ years
8 Approval of all circulars, listing particulars,
resolutions and corresponding
documentation sent to shareholders.
9 Approval of changes in the capital structure
of the Company or its status as a plc and, in
particular, the issue or allotment of shares
in the Company otherwise than pursuant to
Company-approved employee share schemes.
10 Approval of material changes to the
Company’s pension schemes rules, any
change of Trustee, or material changes to
funding and management arrangements.
11 Appointment, re-appointment and removal
of the Chairman and Directors and the
recommendation to shareholders of their
election or re-election under the Articles of
Association; the appointment and removal
of the Company Secretary.
The Non-Executive Directors have a wealth of
experience gained from a variety of private
sector and government backgrounds. They are
key to the formulation and development of the
Group’s strategy, to reviewing and monitoring
the performance of management, the integrity
of financial information, and internal control
and risk management frameworks.
Baroness Hogg was nominated by the Board
as Senior Independent Director with effect
from 1 January 2009. Her responsibilities
include meeting major shareholders as an
alternative point of contact to the Chairman,
Chief Executive or Chief Financial Officer.
The role of the Senior Independent Director
is clearly established, set out in writing and
agreed by the Board. The description of the
role is published on BG Group’s website. The
Senior Independent Director is expected to
commit at least three to four days per year to
the role, and significantly more in exceptional
circumstances. This is in addition to the
expected time commitment in her capacity
as a Non-Executive Director and Chairman
of the Remuneration Committee.
The Board considers all of its Non-Executive
Directors to be independent and free of any
business relationship or other circumstance
which could materially interfere with the
exercise of independent and objective
judgement. To assist in determining
independence, the Board undertakes an
annual review of the independence of its
Non-Executive Directors in accordance with
the criteria set out in the Combined Code.
Non-Executive Directors are appointed for
an initial three-year term. Subsequent
re-appointment is subject to rigorous review
by the Nominations Committee. All Directors
are subject to re-election by shareholders at
least every three years. In accordance with the
Combined Code, the Board also has a policy
requiring Non-Executive Directors who have
12 Approval of the division of responsibilities
between the Chairman and Chief Executive.
13 Establishing Committees of the Board,
approving their terms of reference
(including membership and financial
authority), reviewing their activities
and, where appropriate, ratifying
their decisions.
14 Recommendation to shareholders for the
appointment, re-appointment or removal
of the auditors.
15 Approval of this schedule of matters
reserved to the Board.
BG Group Annual Report and Accounts 2009
43
Directors’ Report
Business Review
Directors’ Report
Corporate Governance
Financial
Statements
Shareholder
Information