Corporate Governance
Directors' Report on Corporate Governance
Tesco PLC is committed to the highest standards of corporate governance as we recognise that good governance is crucial in helping the business to deliver its strategy, generating shareholder value and safeguarding our shareholders’ long-term interests.
Compliance with the Combined Code
The Combined Code on Corporate Governance sets out guidance in the
form of principles and provisions on how companies should be
directed and controlled to follow good governance practice. The
Financial Services Authority (FSA) requires companies listed in the
UK to disclose, in relation to Section 1 of the Combined Code, how
they have applied the principles and whether they have complied
with its provisions throughout the financial year. Where the
provisions have not been complied with companies must provide an
explanation for this.
The Board considers that Tesco PLC complied in full with the Combined Code principles of Corporate Governance and Code of Best Practice for the whole of the year ended 28 February 2009, with the exception of provision A.3.2, in respect of which the company was not in compliance for part of the year.
Provision A.3.2 requires that at least half the Board, excluding the Chairman, should comprise Non-executive Directors determined by the Board to be independent. The Board recognises the importance of a balanced board with an appropriate level of independence. There were, however, two unexpected changes to the Board in the year, with the resignation of Carolyn McCall and E Mervyn Davies as Non-executive Directors due to conflicts of interest, which resulted in the Board not being in balance.
While the process of finding replacements for Carolyn McCall and E Mervyn Davies was started immediately, the Board places a priority on ensuring that the right candidates are selected and the process of recruiting individuals with the right experience, availability and skills to complement those of the existing Board can take a significant amount of time. The Company announced the appointment of two new Non-executive Directors on 17 December 2008 as replacements for the two Non-executive Directors who had resigned, and the appointment of a further Non-executive Director was announced on 12 January 2009, in order to ensure that the Board remained in balance once the new Group Finance Director, Laurie McIlwee, was appointed on 27 January 2009.
Jacqueline Tammenoms Bakker and Patrick Cescau joined the Board with effect from 1 January and 1 February respectively, and Ken Hanna joined the Board with effect from 1 April 2009, at which point the Board became once again fully compliant with provision A.3.2.
Further information on the Combined Code provisions can be found
at www.frc.org.uk.
Full details of our latest Corporate Governance report can be found in the Annual Report and Financial Statements
435.45p
Updated 12/03/2010 : 17:41
