BAE Systems 73 Annual Report 2017 Our customer contact is undertaken at all During such visits, we meet individuals Board evaluation levels on a daily basis to ensure that the for breakfast and dinner, tour the sites relationships we have continue to be open, and conduct town hall sessions with the Period of evaluation transparent and productive. From a Board workforce. During 2018, the Board will January/February with feedback and review perspective, however, we felt it was important also accompany the executive management taking place at a Board meeting held on to provide the non-executive directors with team to meet colleagues and customers in 21 February 2018. first-hand knowledge of the challenges and the US and the Kingdom of Saudi Arabia. Evaluation process opportunities with each of our major UK Additionally, the Corporate Responsibility Externally-facilitated self-assessment of the customers. To achieve this objective, we Committee makes independent visits to Board conducted in accordance with best invited senior members of the Royal Navy and operational sites across the world to evaluate practice described in the UK Corporate Ministry of Defence to join the Board for an and encourage the adoption of the highest Governance Code and other guidance. open exchange on our strengths, weaknesses standards of corporate behaviour. and opportunities. The forum provided a Facilitator robust discussion which was both instructive To further our practice of Board involvement in Ffion Hague at Independent Board Evaluation and encouraging. We intend to extend 2018, we intend to nominate a non-executive (IBE), which provides no other services to invitations to other customers in the coming director to accompany Charles Woodburn to BAE Systems. year in order to deepen our understanding participate in one of his regular meetings with Description of process of their needs and reinforce the relationships trade unions representatives in the UK. All directors interviewed by the facilitator for we enjoy. As we look forward to the year ahead, we are 1.5 hours based on a set agenda that had As a discipline, a number of Board meetings determined to continue this policy of deeper been tailored for BAE Systems. Ten senior are held on operational sites throughout engagement with all stakeholders to ensure executives were also interviewed. the year which provide an opportunity for we understand and respect the needs of our Feedback interaction with employees and a chance for shareholders, our suppliers, our colleagues A comprehensive report was produced by non-executive directors to develop deeper and our customers. IBE, which was provided to directors ahead insights into the quality of our current senior of the Board meeting at which the principal management and the potential for succession findings were presented by Ms Hague. in the next generation. Among other things, the report covered shareholder and stakeholder relations; strategy; governance and compliance; Board focus; risk management; succession planning; Board composition; Board culture; Sir Roger Carr Chairman relationship with senior management; decision-making; induction; papers; and Board resources. Governance highlights Feedback from the evaluation will be provided to individual directors by the – Executive succession planning – the planned succession process whereby Charles WoodburnChairman. Feedback on the Chairman’s succeeded Ian King as Chief Executive was completed in an orderly manner. own performance will be provided by the – Non-executive directors – Revathi Advaithi was appointed to the Board as an independent Senior Independent Director after he has non-executive, further strengthening it, particularly with regards to multinational business met with all the non-executive directors leadership, and engineering and manufacturing experience and expertise. to consider the material provided by IBE. – Audit re-tender – after a comprehensive and robust selection process led by the Audit Resulting actions Committee, Deloitte was selected for appointment to succeed KPMG as the Company’s The Board discussed the report and agreed auditors with effect from the Annual General Meeting in 2018. actions concerning: – Shareholder engagement – the Board as a whole engaged directly with major shareholders, – executive and non-executive succession including the hosting of an event at which governance arrangements for the Board and its planning; committees, and employee engagement activities were presented and discussed. – employee engagement, and diversity and inclusion; and – Customer engagement – in order to help directors to develop their understanding of – the provision of additional Board time the Company’s performance and relationship with key UK customers at first-hand, during for wider and more open-ended discussion the year, the Board visited a customer site and also met with senior Royal Navy and of certain matters. Ministry of Defence officials. – Reporting – the Board’s reporting on governance matters in these reports has been The Board will work on implementing enhanced further, including greater focus on how the directors discharge their duties these in 2018. and promote the success of the Company.