Babcock International Group is committed to achieving the
highest standards of corporate governance. Today, it is more
important than ever to demonstrate excellence in our approach to
business ethics and internal control.
Please see the Governance section
of our latest Annual
Report.
Board Diversity
We recognise the value to the effectiveness of boards and board
committees of their being able to draw upon a diverse range of
skills, experience and outlook from amongst their members so as to
bring a wide range of perspectives to the oversight of company
strategy, risk mitigation and management performance. In
order to achieve long-term success in a competitive international
environment, companies need to draw upon a diverse range of
perspectives and competences that are relevant in that environment.
.As Babcock grows in size and complexity and increases its
activities around the world this is likely to become even more
important. Diversity in this respect is very much about the
personal approach, qualities and experience of individual directors
and not about simply who or what they are.
We note the views of Lord Davies in his Review into Women on Boards
published earlier this year as to increasing gender diversity on
boards and in senior management roles. We recognise that
gender, like other attributes and experience, can contribute to the
diversity of perspective that we seek and that in selecting for
board appointments this is something of which we need to be, and
are, conscious. That said, our overriding criterion for
appointment must always be merit and the best candidate for the
role.
We, like others, are sceptical of quotas for the numbers of women
(or any other persons based on group characteristics) on boards or
in other senior management roles as they do not necessarily deliver
the individuals with the best skill set or experience and can lead
to tokenism. We note that Lord Davies' review does not set
quotas as such, but encourages companies to state their aspirations
as to the numbers of women on their boards and that his report (and
others) recommend specific targets to be aspired to by certain
dates. We understand the good intent and motivation behind
this, but believe that stated aspirations as to targets of this
kind can easily become self-imposed quotas. They also
inadequately allow for the fact that companies in different sectors
have different challenges in this respect. The traditional
engineering sector in which Babcock primarily operates is
inevitably going to find that it is more challenging and will
take longer to find women candidates with the right experience and
background to move into senior management roles and board positions
than those operating in some other sectors.
When making future board appointments we will, nonetheless, of
course be aware of and have in mind the views expressed in the
Davies Review.
Ethical conduct
The Board insists that our business is carried out to the
highest standards of honesty and integrity. We have a Code of Conduct as well as a strict
anti-bribery and corruption policy in place giving guidance on
business dealings. This policy defines expected behaviours and is
formally re-emphasised to senior management each year who formally
confirm compliance. All employees are expected to avoid conflicts
of interest, to act lawfully and ethically and report any
non-compliance issues of which they become aware.
Babcock also subscribes to the Common Industry Standards for
European Aerospace and Defence.
Conflicts of interest
Babcock has adopted a formal procedure for the disclosure,
review, authorisation and management of Directors' actual and
potential conflicts of interest in accordance with the Companies
Act 2006. The procedure requires Directors formally to notify the
Board (via the Company Secretary) as soon as they become aware of
any new actual or potential conflict of interest or when there is a
material change in any of the conflicts of interest they have
already disclosed. Any potential conflicts of interest notified by
a Director are reviewed by the Board as soon as possible. The Board
considers whether a conflict or potential conflict does, in fact,
exist. If a conflict does, or could, exist, the Board will decide
whether it is in the interest of the Company to authorise it and,
if so, on what terms. In making their judgment on this, the other
Directors have regard to their general duties to the Company. A
register is maintained of all the disclosures made and the terms of
any authorisations granted. Authorisations can be revoked, or the
terms on which they were given varied, at any time if judged
appropriate. Possible conflicts of interest authorised by the Board
are reviewed annually. In the event of any actual conflict arising
in respect of a particular matter, mitigating action would be taken
(for example, non-attendance of the Director concerned at all or
part of Board meetings and non-circulation to him of relevant
papers).
Appointment and powers of Directors
A Director is appointed by ordinary resolution (i.e. a simple
majority of votes cast) at a general meeting of ordinary
shareholders. The Board also has the power to appoint a Director,
but any person so appointed must be stand for reappointment by
shareholders at the first Annual General Meeting following his or
her appointment by the Board.
Subject to the Company's Articles of Association, relevant statutory law
and any directions given by shareholders in general meeting, the
business of the Company is managed by the Directors, who may
exercise all powers of the Company that are not required to be
exercised by the Company in general meeting.
Board procedure
The Board holds a number of regular meetings each year,
typically nine. In addition, the Board holds ad hoc meetings from
time to time for specific purposes, for example in connection with
specific acquisitions. There are also Board Committees, details of
which can be found on the Board Committees
page.
Each year, the Board reviews its performance, the performance of
its committees and individual Directors. This is done annually,
with the support either of an independent facilitator or the
Company Secretary in alternate years. The process involves
individual confidential interviews with each Board member and other
senior employees. The results of these interviews are reported to
the Chairman and made available to the Board for discussion. Most
recently, it has been agreed that strategy and succession planning
should continue to be areas of particular Board focus.
Information and training for Directors
The Company arranges for new Non-Executive Directors to receive
detailed business briefings as regards the Group's operations and
to make induction visits to the Group's principal sites. Director
training for new directors, when appropriate, is arranged with
external providers.
Non-Executive Directors may at any time make visits to Group
businesses or operational sites, which are coordinated by the Group
Company Secretary's office. The whole Board also visits at least
one operational site each year. In addition, presentations on the
Group's businesses and specialist functions are made regularly to
the Board.
Board members receive copies of all minutes of meetings of the
Group Executive Committee (which comprises the Group Chief
Executive, Finance Director and Business Development Director as
well as Divisional Managing Directors) and copies of the Divisions'
monthly operating reports.
General director training is available to all Directors. The
Group Company Secretary briefs Board members on significant changes
in the law affecting their duties as directors.