Tullow Oil plc Annual Report 2011 - The Group

Corporate governanceThe UK Corporate Governance CodeThe UK Corporate Governance Code 2010 (the “Code”) tookeffect from June 2010, replacing the Combined Code onCorporate Governance. The Code is publicly available onthe Financial Reporting Council’s website at www.frc.org.uk.As a UK company with a premium listing on the London StockExchange, Tullow Oil plc is required to state how it has appliedthe principles contained in the Code and to disclose whether ithas complied with the provisions of the Code during the year.The main principles of the Code focus on Leadership,Effectiveness, Accountability, Remuneration and Relations withShareholders. Details of how Tullow has applied these mainprinciples are set out below. It is the Board’s view that theCompany has fully complied with the Code provisions duringthe year ended 31 December 2011.LeadershipThe Company is headed by an effective Board which is collectivelyresponsible for the long-term success of the Company.The Role of the BoardThe Board sets the Group’s strategy, ensuring that the necessaryresources are in place to achieve the agreed strategic aims andobjectives, determines the Company’s key policies and reviewsmanagement and financial performance. It is accountable toshareholders for the creation and delivery of strong, sustainablefinancial performance and long-term shareholder value. Toachieve this, the Board directs and monitors the Group’s affairswithin a framework of controls which enable risk to be assessedand managed effectively through clear procedures, lines ofresponsibility and delegated authorities. The Board also hasresponsibility for setting the Group’s core values and standardsof business conduct and for ensuring that these, together withthe Group’s obligations to its stakeholders, are widelyunderstood throughout the Group.Board meetingsThe core activities of the Board are carried out in scheduledmeetings of the Board and its Committees. These meetings aretimed to link to key events in the Company’s corporate calendarand regular reviews conducted of specific business areas.Additional meetings and conference calls are arranged toconsider matters which require decisions outside the scheduledmeetings. In addition to the scheduled meetings of the Board,two strategy meetings are held annually with SeniorManagement present. During 2011, the Board met on 10occasions of which 9 were scheduled meetings.Outside the scheduled meetings of the Board, the Chairmanand Chief Executive Officer maintain frequent contact with theother Directors to discuss any issues of concern they mayhave relating to the Group or their areas of responsibility,and to keep them fully briefed on the Group’s operations.Matters reservedThe Board has a formal schedule of matters reserved thatcan only be decided by the Board. This schedule is reviewedby the Board each year. The key matters reserved are theconsideration and approval of: The Group’s overall strategy; Financial statements and dividend policy; Borrowings and treasury policy; Material acquisitions and disposals, material contracts,major capital expenditure projects and budgets; Risk management and internal controls (supportedby the Audit Committee); Succession planning and appointments (supportedby the Nominations Committee); The Group’s corporate governance and compliancearrangements; and Corporate policies.Summary of the Board’s work in the yearDuring 2011, the Board considered all relevant matters withinits remit, but focused in particular on the following key issues: Strategy and management with a particular focus onthe farm-down of its interests in Uganda; Environment, Health and Safety; Financial management; Regulatory/Compliance – including implications of theUK Bribery Act; Appointments and succession planning – this is dealtwith more fully in the Nominations Committee reporton pages 86 and 87; and Stakeholder relations.In order that the Board has the opportunity to see theCompany’s operations overseas, the Board holds at least oneBoard meeting each year at one of the principal overseasoffices of the Group. This provides senior managers from acrossthe Group with the opportunity to present to the Board and tomeet the Board members informally. It also provides the Boardwith an opportunity to meet a broad cross-section of staff and toassess senior managers at first hand. In 2011, the overseasBoard meeting was held at our Dublin office.100Tullow Oil plc 2011 Annual Report and Accounts