Directors' Report: Governance - British American Tobacco

www.bat.com/annualreport2009
In addition, in line with its practice of visiting one of the Group’s
key markets annually, the Board held one of its meetings in Turkey,
where it received presentations from members of the British
American Tobacco Turkey top team, participated in a market visit
and visited the factory in Samsun.
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 the 10 senior Group
executives, whose names appear on the Management Board page.
It held 11 meetings in 2009, nine of which were scheduled and two
of which were convened to consider specific initiatives, including
the Global Integration Project. It is scheduled to hold nine meetings
in 2010. Members of the Management Board are invited to attend
meetings of the Board from time to time, in particular when the
Group’s strategy and budget 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 Corporate Social Responsibility (CSR) Committee, the
Nominations Committee and the Remuneration Committee. The roles,
membership and activities of these Committees are described in more
detail later in this Corporate governance statement and, in the case
of the Remuneration Committee, in the Remuneration report. The
full terms of reference for each Committee are available from the
Company Secretary and on www.bat.com.
Conflicts of interest
The Board has formal procedures for managing compliance with
the conflicts of interest provisions of the Companies Act 2006. The
Company’s Articles of Association permit the Board to authorise actual
and potential conflicts. Directors are required to give advance notice
of any conflict issues to the Company Secretary, and these will then
be considered either at the next Board meeting or, if the conflict or
potential conflict is due to arise prior to the next scheduled Board
meeting, at a meeting of the Board’s Conflicts Committee. The full
Board will be notified at its next meeting of any matters authorised
by the Committee. Once a year, at its meeting in February, the Board
reviews all conflict matters which have previously been authorised.
The review will take the form of a fresh consideration of each matter.
Directors are excluded from the quorum and the vote in respect of
any matters in which they have an interest.
Directors’ report: Governance
British American Tobacco Annual Report 2009
During 2009, a number of actual and potential conflicts were
notified to the Company in accordance with these procedures.
They were referred to, and, where appropriate, authorised by,
the Board and recorded in the register of interests maintained
by the Company Secretary. All were considered at meetings
of the Board and none were sufficiently significant to warrant
disclosure (although see Directors’ interests and indemnities
under Appointments to the Board below).
Information and professional development
All Directors receive induction on joining the Board, covering their
duties and responsibilities as directors. Non-Executive Directors also
receive a full programme of briefings on all areas of the Company’s
business from the Executive Directors, members of the Management
Board and other senior executives, and they may request such further
information as they consider necessary.
During 2009, both Richard Burrows and Gerry Murphy attended
induction briefings subsequent to their respective appointments.
These included sessions on the Group’s strategy, its organisational
structure and its business functions and activities, including its
financing principles and statutory reporting cycle, Environmental
Health & Safety issues, Research & Development activities
and regulation issues. They also attended sessions addressing
corporate governance issues and their duties as directors, the
Group’s internal control and risk management framework and
the role of the external auditors.
As Chairman designate, Richard Burrows received a broader
level of induction, which included more in-depth sessions on
the above subjects, sessions with Jan du Plessis on the role and
operation of the Board and the Board strategy review process,
and visits to a manufacturing facility in Germany and the Group’s
Research & Development site in Southampton. His induction
will continue into 2010 with visits to Group key markets and
a number of meetings to enable him to introduce himself to
institutional shareholders.
All Directors receive briefings designed to update their skills and
knowledge on a regular basis, for example in relation to the business
and on legal and regulatory requirements, and by visits to Company
sites (see the key activities of the Board in 2009). They also make use of
the opportunity to attend meetings of the Group’s regional audit and
CSR committees. In response to feedback received during the Board’s
2009 evaluation (see below), the Board timetable will be extended with
effect from 2011 to allow an additional day for training or briefings on
relevant matters.
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