Salz Review - Wall Street Journal

101
Salz Review
An Independent Review of Barclays’ Business Practices
not make it certain that all decisions will be good ones. The following are some of
the issues that we considered relevant to our Review:
― The Board’s composition and organisation for the effective challenge of
management;
― The time expectations made of non-executives;
― The information available for effective oversight and decision making;
― Board oversight of the executive team;
― The approach to succession planning;
― The operation of subsidiary boards;
― The approach to culture and values that existed in the Group and their effect
on business practices;
― The oversight of pay decisions;
― The oversight of operational, reputational and conduct risk;
― The approach to Board evaluations and improving the Board’s effectiveness;
― Engagement with external stakeholders, especially with shareholders, and the
openness of communications.
Each is explored in more detail in this section, except for the Board’s role in the
governance of remuneration, which is considered in Section 11.
9.15 Since 2007, the demands on the Board have increased substantially. For much of that
time it was a period of intense crisis and, for almost everyone, unprecedented
uncertainty. For Barclays there was a particular focus, through this crisis, on retaining
its independence from Government control. Given the investment bank’s exposures,
this was a considerable challenge. There were many positives in the performance of
the Barclays Board in the way it coped with this challenge, and successfully steered
an independent course to become one of the leading universal banks in the world
today. Approximately 40 other banks in Europe required direct state aid (including –
in the UK – LBG, RBS and Northern Rock). The number, complexity and intensity
of the challenges Barclays faced in this period need to be borne in mind in judging
the Board’s effectiveness.
9.16 In January 2012 Marcus Agius reported to the Board that a review by the FSA
supervisors of the governance of the Board and its Risk and Audit Committees
found that both the design and effectiveness were satisfactory. In the FSA’s detailed
review there were suggestions as to how to improve the Board’s understanding of,
and engagement with, the investment bank. In addition, it was noted that the Board
meetings were short whereas the information packs were long. Other observations
included the risk that Board members tended to look to one non-executive as a
recognised expert on a technical area to provide comfort. This was regarded as
important by the FSA as it continued to view Barclays as one of the most challenging
firms in both its regulatory as well as its accounting approaches. Finally, there was a
need to give operational and reputational risks appropriate profile and attention.