Compliance with the Main Principles of the Corporate Governance Code
In the year ended 31 December 2015, we complied with the main principles of the UK Corporate Governance Code 2014 (the Code) save for Section D.1.1, which recommends a three-year vesting period for all shares granted as part of remuneration. As described in the Directors’ Remuneration Report and Policy of our 2014 Annual Report (pages 86 to 99), shares granted as discretionary compensation vest over a two-year period following the work year for which the discretionary compensation was earned. However, our overall remuneration package is weighted heavily to deferred share compensation and includes deferred salary shares which vest over a five-year period following the work year. As a result, the average vesting period for deferred share compensation exceeds the Code’s recommended minimum of three years. A full version of the Code can be found on the Financial Reporting Council’s website: www.frc.org.uk.
A1 Role of Board
Our principal duty, collectively, is to promote the long-term success of the Group by directing management in creating and delivering sustainable shareholder value. We do this by setting the Group’s core values, strategy and key policies and overseeing their implementation by management. We met formally 12 times during the year and all of our Directors attended our annual Investor Day. We have an annual schedule of rolling agenda items to ensure that all matters are given due consideration and are reviewed at the appropriate point in the financial and regulatory cycle, although this is flexible to enable pressing matters, when they arise, to be dealt with in a timely manner. To ensure that we meet our responsibilities, specific key decisions are reserved for approval by the Board. A full formal schedule of matters specifically reserved for the Board can be found here http://bgeo.com/page/id/67/schedule-of-reserved-matters
A2 Clear division of responsibilities
Each of the Chairman, CEO and Non-Executive Directors has clearly defined roles within our Board structure that are reviewed on an annual basis. A description of these roles can be found here http://bgeo.com/page/id/66/roles-and-responsibilities
A3 Role of Chairman
The Chairman sets the agendas for meetings, manages the meeting timetable and facilitates open and constructive dialogue during the meetings.
A4 Role of Non-Executive Directors
The Chairman promotes an open and constructive environment in the boardroom and actively invites the Non-Executive Directors’ views. The Non-Executive Directors provide objective, rigorous and constructive challenge to management and meet regularly in the absence of the Executive Director. The Chairman seeks input from the Non-Executive Directors ahead of each Board meeting in order to ensure that any particular matters raised by Non-Executive Directors are on the agenda.
B1 Composition of the Board
The Nomination Committee is responsible for regularly reviewing the composition of the Board. The Committee works to ensure that the Board continues to have the right balance of skills, backgrounds, knowledge, experience, independence, perspectives and Group knowledge necessary to discharge its responsibilities in accordance with the highest standards of governance.
B2 Board appointments
The appointment of new Directors to the Board is led by the Nomination Committee. There is a formal, rigorous and transparent procedure for the appointment of new Directors.
B3 Time commitments
Prior to appointment, our Directors are notified of the time commitment expected from them. Each Non-Executive Director is expected to commit approximately 25 to 35 days per year to the role. An additional time commitment is required to fulfill their roles as Board Committee members and/or Board Committee Chairmen, as applicable. External directorships, which may impact existing time commitments, must be agreed with the Chairman.
B4 Training and development
Induction, on-going training and professional development programmes are in place and the Chairman frequently reviews each of the Non-Executive Directors’ training and development needs.
B5 Provision of information and support
The Chairman, in conjunction with the Company Secretary, ensures that all Board members receive accurate and timely information and any other support requested, including access to external legal advice.
B6 Board and Committee performance evaluations
In 2015, the Board engaged Lintstock Ltd, an external effectiveness evaluation specialist, for the second year in a row, to assess the performance of the Board, its committees, the Chairman, the CEO and individual Directors. Details of the evaluations can be found in the Governance section of the 2015 Annual Report and Accounts.
B7 Re-election of Directors
All Directors are subject to shareholder election or re-election. All of our Directors except for Hanna Loikkanen, who will be put forward for election will be subject to re-election at the 2016 AGM.
C1 Financial and business reporting
The Directors' report is set out in full in 2015 Annual Report and Accounts. This report includes an explanation concerning the Directors' responsibility for preparing the Annual Report and Accounts and a statement that the Directors' consider the Annual Report and Accounts, taken as a whole, to be fair, balanced and understandable and that it provides the information necessary for shareholders to assess the our performance, business model and strategy. The Strategic Report section of the 2015 Annual Report and Accounts set outs the business model, the strategic objectives and performance of the Group.
C2 Risk management and internal control systems
The Board is ultimately responsible for maintaining the Group’s risk management and internal control systems. It determines the Group’s risk appetite and monitors risk exposures to ensure that the nature and extent of the main risks are consistent with our overall goals and strategic objectives. The Board also assesses the effectiveness of the risk management and internal control systems and focuses on the resolution of any internal control failures that may arise. The Board is supported by the Audit and Risk Committees in relation risk management and internal control.
C3 Role and responsibilities of the Audit Committee
The Board has delegated a number of responsibilities to the Audit Committee which is responsible for monitoring and reviewing the Group’s financial reporting arrangements, the effectiveness of internal financial controls and the internal and external audit processes. The Audit Committee also has an important role in the Group’s risk management framework. The Committee reports to the Board on how it discharges its responsibilities. The full list of Committee responsibilities are in its written terms of reference, available here http://bgeo.com/page/id/70/terms-of-reference
D1 Levels and elements of remuneration
The Board aims to reward employees fairly. Our remuneration structure for executive management comprises a modest cash salary, deferred salary shares and deferred discretionary compensation. This structure entrenches a culture of hard work and loyalty to the Group and directly and naturally aligns the interests of shareholders and executive management. Our Directors' Remuneration Policy, which was adopted by shareholders at our 2014 AGM, can be found on pages 89 to 95 of the 2013 annual report.
D2 Development of remuneration policy and packages
Our Directors' Remuneration Policy, which was adopted by shareholders at our 2014 AGM can be found on pages 89 to 95 of the 2013 Annual Report.
|E. Relations with Shareholders||
E1 Shareholder engagement and dialogue
The Board takes an active role in engaging with its shareholders. The Board’s primary contact with institutional shareholders is through the Chairman, Senior Independent Non-Executive Director, CEO and Head of Investor Relations, each of whom provides a standing invitation to shareholders to meet and discuss any matters they wish to raise. Our Committee Chairmen also make themselves available to answer questions from investors. The Chairman ensures that the Board is kept apprised of shareholder views.
E2 Constructive use of the AGM
The AGM provides the Board with an important opportunity to meet with shareholders, who are invited to meet with the Board following the formal business of the meeting.