BAE-annual-report-2014

Governance
GOVERNANCE
SUMMARY
‘Every company should
be headed by an
effective board which is
collectively responsible
for the long-term success
of the company.’
UK Corporate Governance Code
The Company seeks to maintain the
highest standards of governance to ensure
that it is performance-driven, but value-led.
The Board is focused not simply on how
much money the Company makes for its
shareholders, but how it makes money.
To achieve this objective, the Board
comprises both a strong executive and
a majority of independent non-executive
directors who have been selected to
deliver an appropriate mix of diversity,
skills and experience.
The Board is led by an independent
Chairman, who in turn is well-supported
by a Senior Independent Director.
Board members populate a range of
formal committees to oversee financial
and cultural behaviour in the areas of audit,
remuneration and corporate responsibility.
Each committee is chaired by an
independent non-executive director.
Membership and make-up of the Board,
both for executive and non-executive roles,
is carefully considered on a regular basis.
The Nominations Committee is led by the
Chairman and includes all non-executive
directors. The Committee considers all
Board appointments. In addition, the
Committee reviews the bench strength of
the senior executive team in conjunction
with the Group Human Resources Director
to assess development needs, resourcing
and succession planning to meet the
strategy of the Company.
As part of the succession planning
process, external search firms are engaged
to identify suitable candidates for both
Board executive and non-executive roles
when appropriate. All appointments are
made on ability and merit, but the
Committee recognises and values the
benefit of diversity in Board composition
and executive management roles.
As a governing body, the Board focuses
on the principles of openness and
transparency to ensure the atmospherics
and dynamics within the boardroom
remain constructive and healthy. To review
progress, the Board commissions an
external independent evaluation every two
years. In the intervening years, the Board
undertakes an internal review comprising
a questionnaire completed by all Board
members supplemented by individual
discussion when required. Following
collective Board discussion on the findings
of the review, a plan for performance
improvement is developed, implemented
and monitored at six-monthly intervals as
a Board agenda item.
Details of governance processes and
procedures are listed opposite.
Sir Roger Carr, Chairman
54
BAE Systems
Annual Report 2014