BP was founded as the Anglo Persian Oil Company by William Knox D’Arcy in 1909 BP produces 3. 9 million barrels of oil equivalent per day of oil and gas for customers across the world The 1,768-kilometre Baku-Tbilisi-Ceyhan (BTC) pipeline, from Baku in Azerbaijan through Georgia to Ceyhan on the Turkish Mediterranean coast, represents one of the great engineering projects of our era With partners Petrochina and Sinopec we plan to develop approximately 1000 outlets in China by the end of 2007 Corporate Governance Issues.
How our governance practices differ from those followed by domestic US companies listed on the NYSE .BP American depositary shares (ADSs) are listed on the New York Stock Exchange. Each BP ADS represents six BP ordinary shares. Although non-US companies like BP are exempt from most of the corporate governance rules of the New York Stock Exchange (NYSE), pursuant to Rule 303A. 11 of the NYSE Listing Manual, we are required to disclose any significant ways in which our corporate governance practices differ from those followed by domestic US companies listed on the NYSE. Independence
BP has adopted a robust set of board governance principles, which reflect the UK’s prevailing principles-based approach to corporate governance. As such, the way in which BP makes determinations of directors’ independence differs from the NYSE rules. NYSE Rule 303A. 02 sets out five bright line tests for director independence. In addition to these five tests, the NYSE also requires that the board of directors “affirmatively determines that the director has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company)”.
BP’s board governance principles require that all non-executive directors be “independent in character and judgement and free from any business or other relationship which could materially interfere with the exercise of their independent judgement”. The BP board has determined that, in its judgement, all of the non-executive directors are independent. In doing so, however, the board did not explicitly take into consideration the NYSE’s five bright line tests. Committees BP has a number of board committees which are broadly comparable in purpose and composition to those required by NYSE rules of domestic US companies.
For instance, BP has a chairman’s (rather than executive) committee, nomination (rather than nominating/corporate governance) committee, remuneration (rather than compensation) committee and an audit committee. These committees are composed solely of non-executive directors whom the board has determined to be independent, in the manner described above. The BP board governance principles prescribe the tasks, process and composition of each of the committees (which are summarised in the annual report and on the website). BP has not, therefore, adopted separate charters for each committee.
One of the NYSE’s additional requirements for the audit committee states that at least one member of the audit committee is to have “accounting or related financial management expertise”. For 2007, the board determined that Douglas Flint possessed the financial and audit committee experience as defined for the purposes of disclosure in Item 16A of Form 20-F, and has nominated him as audit committee financial expert.Shareholder approval of equity compensation plans The NYSE rules require that shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions to those plans.
BP complies with UK requirements which are similar to the NYSE rules. The board, however, does not explicitly take into consideration the NYSE’s detailed definition of what are considered “material revisions”. Code of ethics The NYSE rules require that domestic US companies adopt and disclose a code of business conduct and ethics for directors, officers and employees. BP has adopted a code of conduct, which applies to all employees, and has board governance policies which address the conduct of directors. In addition BP has adopted a code of ethics for senior financial officers as required by the SEC.
BP considers that these codes and policies address the matters specified in the NYSE rules. Other exchanges In the US, BP is also listed on the Chicago Stock Exchange (CHX). The listing standards of this exchange are very similar to the NYSE’s, and the discussion on corporate governance practices above also reflects significant ways in which BP’s corporate governance practices differ from those required for US companies under the listing standards of the CHX. As a foreign private issuer listed on this exchange, BP is exempt from most of the exchange’s corporate governance standards requirements.
Business Ethics As one of the world’s leading companies, we have a responsibility to set high standards: to be, and be seen to be, a business which is committed to integrity. In a complex global business environment like ours, that’s not always easy. Our code of conduct is designed to help us achieve this. Our code of conduct is the cornerstone of our commitment to integrity. As Tony Hayward, the group chief executive, affirms: “Our reputation, and therefore our future as a business, depends on each of us, everywhere, every day, taking personal responsibility for the conduct of BP’s business”.
The BP code of conduct is an essential tool to help our people meet this aspiration. The code summarizes our standards for the way we behave. All our employees must follow the code of conduct. It clearly defines what we expect of our business and our people, regardless of location and background. Ultimately it is about helping BP people to do the right thing. The code includes many examples of how our group values should be applied in specific situations. The level of detail and practical approach signal our determination to embed our values and a culture of integrity more firmly in our group.
The code covers five key areas of our business operations: health, safety, security and the environment – fundamental rules and guidance to help us protect the natural environment, the safety of the communities in which we operate, and the health, safety and security of our people. employees – covering fair treatment and equal opportunity, providing guidance for dealing with cases of harassment or abuse and for protecting privacy and employee confidentiality
Business partners – providing detailed guidance on giving and receiving gifts and entertainment, conflicts of interest, competition, trade restrictions, money laundering and working with suppliers. Governments and communities – covering such areas as bribery, dealing with governments, community engagement, external communications and political activity. Company assets and financial integrity – containing guidance about accurate and complete records and reporting, protecting company property, intellectual property, insider trading and digital systems
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