Directors' Report: Governance - British American Tobacco

www.bat.com/annualreport2009
Key activities of the Nominations Committee in 2009
The Nominations Committee met five times in 2009. The specific
items considered by it included:
■ the recruitment of Dr Gerry Murphy and his appointment
to the Board as a Non-Executive Director;
■ the announcement by Jan du Plessis of his intention to take
up the role of Chairman of Rio Tinto p.l.c;
■ an updated role profile identifying the skills required for the
role of Chairman;
■ the recruitment and appointment to the Board as a Non-
Executive Director of Richard Burrows and his subsequent
appointment as Chairman on Jan du Plessis’ retirement;
■ continuing measures to refresh the Board, including further
non-executive appointments;
■ succession planning for the Executive Directors and members
of the Management Board; and
■ changes in the composition of the Management Board.
In 2009, the Committee reviewed its effectiveness as part of the Board
evaluation process. It concluded that it continues to operate effectively
and, in particular, that early discussions around succession planning
have helped by setting the context before decisions on timing and
candidates are required. The Committee identified a need for
additional non-executive appointments.
Terms of appointment to the Board
The Executive Directors have rolling contracts of one year. The Non-
Executive Directors do not have service contracts with the Company
but instead have letters of appointment. Details of the Company’s
policy on Executive Directors’ service contracts and the terms of
appointment for Non-Executive Directors are set out in the
Remuneration report.
Directors’ interests and indemnities
Further details of Directors’ contracts and letters of appointment,
remuneration and emoluments, and their interests in the shares of the
Company (including interests in share options and deferred shares)
as at 31 December 2009 are given in the Remuneration report. No
Director had any material interest in a contract of significance (other
than a service contract) with the Company or any subsidiary company
during the year.
Prior to his appointment as a Non-Executive Director, and subsequently
as Chairman, Richard Burrows disclosed to the Board that he is a
director of Rentokil Initial plc. Although this gives rise to no current
conflict of interest, the potential situational conflict was reviewed by
the Board and approved in accordance with the Company’s Articles
of Association.
Directors’ report: Governance
The Company’s practice has always been to indemnify its Directors
in accordance with the Company’s Articles of Association and to
the maximum extent permitted by law. As at the date of this report,
such indemnities are in force covering any costs, charges, expenses or
liabilities which they may incur in or about the execution of their duties
to the Company or to any entity which is an associated company (as
defined in Section 256 of the Companies Act 2006), or as a result of
duties performed by the Directors on behalf of the Company or any
such associated company.
Retirement by rotation and reappointment
Directors are submitted for reappointment at regular intervals by
application of the Company’s Articles of Association. These require that
at each Annual General Meeting, all Directors shall retire from office
by rotation who held office at the time of each of the two preceding
Annual General Meetings and who (at either of those preceding Annual
General Meetings): (1) did not previously retire by rotation, or (2) were
reappointed following his/her appointment as an additional Director
or to fill a vacancy. If the number of Directors retiring in this way is
less than one-third of the Directors who are subject to retirement by
rotation or if their number is not three or a multiple of three, then
additional Directors shall retire by rotation provided that a number not
exceeding one-third shall retire from office. Subject to the provisions of
the Companies Act 2006 and the Articles of Association, the Directors
to retire by rotation will be those who have been in office the longest
since their appointment or last reappointment.
The Board has progressively refreshed its membership over a number
of years. In this context, Non-Executive Directors who serve for a total
of more than six years are subject to a particularly rigorous review, and
additional service after that time is reviewed annually. This was done in
the case of Ana Maria Llopis, given that she has been a Non-Executive
Director since February 2003.
In accordance with the Articles of Association, and further to
recommendations made by the Nominations Committee to the
Board, the Directors named below will retire from the Board at the
forthcoming Annual General Meeting and, being eligible, will offer
themselves for reappointment:
Ana Maria Llopis
Christine Morin-Postel
Anthony Ruys
British American Tobacco Annual Report 2009
In addition, Richard Burrows, having been appointed as a Director on
1 September 2009, will also retire from the Board at the forthcoming
Annual General Meeting and, being eligible, will offer himself for
reappointment.
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