Directors' Report: Governance - British American Tobacco

meeting to address Jan du Plessis’ decision to take up the role of
Chairman of Rio Tinto plc. He subsequently managed the process of
identifying and recruiting a successor to Jan du Plessis, meeting with
the Board’s recruitment consultants and shortlisting and meeting a
number of candidates. He is available should occasion arise where
there is a need to convey concerns to the Board other than through
the Chairman or Chief Executive.
Board balance and independence
The Board considers that all seven of the Non-Executive Directors are
independent, in the sense that they are free from any business or other
relationships which could materially interfere with or appear to affect
the exercise of their judgment and have not previously been involved
in the management of the Group. All Directors are aware of their
responsibility to take decisions objectively which promote the success
of the Company for the benefit of its members.
Meetings of the Board
The Board held eight meetings in 2009, seven of which were
scheduled and one of which was convened at short notice to address
Jan du Plessis’ decision to take up the role of Chairman of Rio Tinto plc.
It is scheduled to hold seven meetings in 2010.
Board meeting attendance
Meetings
Meetings
eligible
Name attended to attend
Jan du Plessis 1 7 7
Richard Burrows 2 3 3
Sir Nicholas Scheele 7 8
Paul Adams 8 8
Ben Stevens 8 8
Nicandro Durante 8 8
Karen de Segundo 8 8
Robert Lerwill 8 8
Ana Maria Llopis 7 8
Christine Morin-Postel 7 8
Gerry Murphy 3 6 6
Anthony Ruys 7 8
Thys Visser 4 3 3
Notes:
1 Jan du Plessis stood down from the Board and as Chairman with effect from
31 October 2009.
2 Richard Burrows was appointed to the Board on 1 September 2009 and was
appointed Chairman with effect from 1 November 2009.
3 Gerry Murphy was appointed to the Board on 13 March 2009.
4 Thys Visser retired from the Board on 30 April 2009.
The Chairman will always seek to obtain consensus at Board meetings
but, where necessary, 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 2009. The 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 Senior Independent Director, without the Chairman present.
CORPORATE GOVERNANCE
STATEMENT CONTINUED
The Board’s principal responsibilities include:
■ approving the Group’s business strategy and ensuring that
an effective management team and the necessary financial and
human resources are in place for the Group to meet its objectives;
■ agreeing the Group Budget;
■ approving the Company’s Annual Report and reviewing its periodic
financial reports;
■ declaring an interim dividend and recommending the final dividend;
■ agreeing the agenda for the Annual General Meeting;
■ agreeing succession plans and evaluating the Board’s performance
over the preceding year; and
■ reviewing the Company’s internal controls and governance
system and approving the Standards of Business Conduct and
other Group policies.
Key activities of the Board in 2009
Growth
The Board regularly reviewed opportunities to grow the business
including potential mergers and acquisitions activity. In 2009,
the Group successfully acquired the Bentoel tobacco business
in Indonesia. The Board also considered industry trends and the
outlook for the Group’s businesses in strategically important markets
and consumer segments. The Group’s innovation and new
product development programmes were reviewed and prioritised.
Productivity
With a continued focus on costs in 2009, the Board looked
at both short-term savings and the scoping of a longer-term
initiative, the Global Integration Project, addressing structural
costs. In consequence, a number of reorganisations within the
Group’s regions and functions were considered during the year,
and are now in the process of being implemented, and the
closure of the Group’s factory in Denmark has been announced.
Responsibility
The Board monitored developments in tobacco regulation
around the world, including the progress of the World Health
Organisation’s Framework Convention on Tobacco Control and
the potential impact that regulation may have on the Group’s
businesses or products. This is reflected in the priorities for the
Group’s Research & Development function.
Winning organisation
The Board reviewed succession planning in consultation with the
Nominations Committee, and a number of new appointments
were made in 2009 at both Main Board and Management Board
level. In addition, the position of the Group’s major pension funds
was reviewed including how the Group is managing future liabilities.
The results and action plans arising from the global ‘Your Voice’
survey of employees conducted in 2008 were also considered.
66 British American Tobacco Annual Report 2009 Directors’ report: Governance