Annual report 2010 - Imperial Tobacco Group

Corporate Governance ReportOur commitment to maintaining highstandards of corporate governance andbusiness conduct remains fundamentalto ensuring our long-term sustainability.Strategy Performance Governance FinancialsIntroductionWe remain committed to high standards of corporateconduct and this report, together with the Directors’Remuneration Report, seeks to explain how in practicewe apply the principles of good governance advocated bythe Combined Code on Corporate Governance publishedin June 2008 (the Code). This report also includes theinformation required by the Disclosure and TransparencyRules (DTR) 7.2 to be contained in the Company’s corporategovernance statement, with the exception of the informationrequired by DTR 7.2.6, which is located on page 144.The Code sets out governance recommendations and bestpractice provisions which apply to UK listed companies andwith which companies must either comply or provide anexplanation for areas of non-compliance. The Code ispublicly available on the Financial Reporting Council’swebsite www.frc.org.uk.It is the Board’s view that the Company has been fullycompliant with the Code throughout the 2009/2010financial year.In light of the UK Corporate Governance Code (theRevised Code) published in June 2010 we are reviewingand, if appropriate, will enhance our governance and internalcontrol processes. As advocated by the Revised Code, weare introducing annual re-election for all Directors with effectfrom our Annual General Meeting (AGM) in 2011 and, inaddition, we are proposing a resolution to amend our Articlesof Association accordingly.How we meet our governanceresponsibilities in practiceA. Directors1 The Board: How do we ensure the Company is headedby an effective, collectively responsible Board?2 Chairman and Chief Executive: How do we ensure noone individual has unfettered powers of decision?3 Board balance and independence: How dowe ensure a sensible balance of Executive andNon-Executive Directors?4 Appointments to the Board: How rigorous is ourprocedure for the appointment of new directors tothe Board?5 Information and professional development: How do weinduct and regularly inform our Board?6 Performance evaluation: How do we formally evaluateour Board and Committees’ performance annually?7 Re-election: How do we ensure planned andprogressive refreshing of the Board?B. Remuneration1 The level and make-up of remuneration: What isour approach to remuneration and how do we linkit to performance?2 Procedure: What is our formal procedure for developingour policy on executive remuneration?C. Accountability and audit1 Financial reporting: How do we ensure wepresent a clear and balanced assessment of theCompany’s position?2 Internal control: What does our Board do to maintaina sound system of internal control?3 Audit Committee and Auditors: How do we formallyapply financial reporting and internal control principles?D. Relations with shareholders1 Dialogue with institutional shareholders: How doesour Board ensure that a satisfactory dialogue withshareholders takes place?2 Constructive use of the AGM: How does the Boardeffectively use the AGM to engage with investors?58