Board Audit Committee
Reviews accounting policies and the contents of financial reports. Monitors disclosure controls and procedures and our internal control environment. Considers the adequacy and scope of the external and internal audit. Oversees the relationship with our external auditors.
Board HR and Remuneration Committee
Sets the policy for executive Directors' and senior executives' remuneration. Approves individual remuneration awards. Agrees changes to senior executive incentive and benefits plans. Governs employee share schemes. Looks at strategic HR issues.Board Corporate Governance and Nominations Committee
Reviews the composition of the Board. Recommends the appointment of new Directors. Considers succession plans for the Chairman and Group Chief Executive positions. Monitors corporate governance issues. Oversees the annual Board performance review.
Board Risk Committee
Approves the total level of risk we are prepared to take (risk appetite). Sets limits for individual types of risk. Monitors our risk profile. Obtains assurance that the principal risks have been properly identified and are being appropriately managed.
Introduction
We made further progress during 2005 in advancing our Corporate Governance agenda.
We published our ‘Charter of Expectations' on our website at the beginning of the year, setting out the role description for each position on the Board and the behaviours and competencies required to perform effectively in each role. It is against this Charter that the Board and its members are evaluated each year in the annual Board Effectiveness Review.
We also published in November a document entitled ‘Corporate Governance in Barclays'. This document outlines all policies and practices in place at Barclays in the area of Corporate Governance. A copy can be obtained from our website at www.investorrelations.barclays.co.uk
This year saw a number of new appointments to the Board, designed to broaden the range of skills and perspectives available to the Board and its Committees. The Board has been strengthened by the addition of Directors who have extensive experience in leading large, complex, multinational organisations and who have expert knowledge of marketplaces outside the UK which are important to our strategy.
Combined Code on Corporate Governance (‘the Code') – Statement of Compliance
For the year ended 31st December 2005, we complied with the provisions set out in Section 1 of the Code. We also applied the principles of the Code. Some of the ways we did this are described below.
Who is on the Board?
Our Board is currently made up of me, as Chairman, five executive Directors and ten independent non-executive Directors. Fulvio Conti will join the Board on 1st April 2006. Information on each of the Directors can be found under the Board and Group Executive Committee.
My role as Chairman and John Varley's role as Group Chief Executive are separate. The Board has agreed the responsibilities we each have. Sir Nigel Rudd and Sir Richard Broadbent continued to act as Deputy Chairman and Senior Independent Director, respectively, during 2005.
Every year, we consider whether each non-executive Director is independent. The Code suggests that independence may be affected if a Director has been on the Board for over nine years. We have considered this point carefully. We believe that Sir Nigel Rudd, who has been a Director since 1996, is independent. We reviewed Sir Nigel's performance as part of our Board Effectiveness Review and concluded that he makes an effective contribution as Deputy Chairman. We have therefore determined that each of the non-executive Directors is independent. In line with the recommendations of the Code, Sir Nigel stands for re-election by shareholders each year.
What is the Board's role?
The Board is responsible to shareholders for creating and sustaining shareholder value, through the management of our businesses.
To do this, we meet regularly and have a formal schedule of matters that only the Board can deal with. Some specific responsibilities have been delegated to Board Committees. A short description of each of our principal Board Committees is given above. Each Committee is made up solely of independent non-executive Directors, except for the Board Corporate Governance
and Nominations Committee, which I chair.
We have delegated responsibility for day-to-day management of the Group to the Group Chief Executive, John Varley. He is supported by the Group Executive Committee, which normally meets weekly.
How is the performance of the Board measured?
We carry out a Board Effectiveness Review each year. This review covers the performance of the Board, the Committees and each Director. For 2005, each Director completed
a questionnaire, followed by an interview.
We reviewed the results at our Board meeting in December and concluded that the Board
is performing effectively. There were some small areas where we feel we can make improvements. We have put a plan in place
to make these improvements in 2006.
How did the Board change in the year?
We made some new appointments to the
Board during 2005. Robert E Diamond Jr, who
heads our investment banking, investment management and wealth management operations, joined the Board in June. John Sunderland, Chairman of Cadbury Schweppes PLC and Robert Steel, who has significant US and investment banking experience, were both appointed as non-executive Directors in June.
Dr Danie Cronjé, Chairman of Absa, joined the Board as a non-executive Director in September and Fulvio Conti, Chief Executive of Enel SpA, will join the Board in April 2006 as a non-executive Director. The Board is composed of non-executive Directors with a wide range of business and other experience.
How do Directors ensure they are well-informed about their role and about the business?
When they are appointed, all Directors
meet with the Company Secretary. At this meeting they are briefed on their role and responsibilities and discuss the composition
of their induction programme. They then meet members of the senior management team. This gives them an insight into our businesses and how they operate. If a non-executive Director is appointed to a Board Committee, he or she meets with the Committee Chairman and other relevant executives.
They discuss the role of the Committee and the key issues it considers.
During 2005, a Board meeting was held at our contact centre at Gadbrook Park, near Crewe. Another Board meeting was held in South Africa, after we acquired a majority stake in Absa. These meetings allowed all Directors the opportunity to see our operations first hand and meet our frontline staff for themselves. In the first half of 2006, we will hold the first of a number of detailed business presentations for our non-executive Directors. This is the start of a two-year programme, which will cover each key business and operational area.
All Directors have access to the services of the Company Secretary. Independent professional advice is also available, on request, to all Directors at the Company's expense.
What do you do to keep shareholders informed?
We have a proactive approach to our shareholders. Senior executives hold meetings with key institutional shareholders to discuss strategy, financial performance and investment activities. I also meet regularly with investor bodies and investors to discuss our approach to corporate governance issues.
All Directors are encouraged to attend the Annual General Meeting (‘AGM'), where they are available to answer shareholders' questions. At our AGM, all resolutions are voted on a poll. We believe this allows the views of all of our shareholders to be reflected proportionately. The poll results are made available on our website, www.investorrelations.barclays.co.uk
We also aim to provide a first-class service to our private shareholders to help them in the effective and efficient management of their shareholding. Information on the services we make available to private shareholders is given within Useful information.
Matthew W Barrett
Chairman
9th March 2006
