Hardy Oil and Gas plc is incorporated in
the Isle of Man. The Company is not subject to any corporate
governance regime in its place of incorporation. The Company
substantially complies with the Combined Code on Corporate
Governance and supports high standards of corporate
governance. A detailed Corporate Governance Report can be
viewed in our
2008 Annual Report and Accounts
Role and Operations of the Board
The Board is accountable to the shareholders for the creation
of long-term shareholder value and delivery of strong,
sustainable operating and financial performance. In order to
accomplish its objectives, the Board directs and monitors the
Group’s affairs on an ongoing basis. It provides the Company
with its overall strategic direction, ensures that the Company
has the necessary financial and human resources in place,
monitors performance of the Company and its management on an
ongoing basis and adheres to strong corporate governance
practices.
Composition
The Company presently has seven directors, comprised of three
executive directors and four non executive directors. On 24
October 2008, the size of the Board was increased to seven
with the appointment of Ian Bruce as an independent non
executive director. Each of the executive directors has
extensive knowledge of the oil and gas industry with combined
experience of around 100 years. The non executive directors
have either held senior appointments in oil and gas companies,
companies with interests in the energy sector or have
significant corporate and financial experience. The non
executive directors bring a broad range of business and
commercial experience to the Board. The Board believes it is
an effective board that is collectively responsible for the
success of the Company and that its composition has been
suitable, providing a balance of skill sets to run an
effective international junior oil and gas company.
Chairman and Chief Executive
There is a clear division of duties and responsibilities
between the Non Executive Chairman and the Chief Executive of
the Company. The Chairman provides leadership to the Board and
ensures its effectiveness of its role and setting the agenda.
The Chairman is also responsible in ensuring that the Board is
provided with accurate, timely, and clear information in
relation to the Group and its business. He is in regular
communication with each of the executive and non executive
directors on an ongoing basis. The Chief Executive is
responsible for the running of the organisation and the
execution of the Company’s strategies, goals and objectives.
The roles of Chairman and Chief Executive are exercised by
different individuals.
Board Committees
The Board has established Audit, Remuneration and Nomination
Committees, each of which has terms of reference (approved by
the Board) setting out its authority and duties. The Board
considered various issues that would normally fall within the
terms of reference of the various Committees. All members of
the Audit Committee are non executive directors. All members
of the Remuneration Committee are non executive directors
although until 3 November 2008, Mr Sastry Karra, executive
director and chief executive, was also a member of the
Committee. Both executive and non executive directors are
members of Nomination Committee although the majority of
committee members are independent non executive directors.
The Nomination Committee and Remuneration Committee meet as
and when required, but at least once a year. The Audit
Committee meets at least three times a year to review, among
other things, financial reporting with respect to interim and
annual results and for audit planning purposes. The Company’s
auditors attend at least two of these meetings to discuss any
audit related issues and to review formally with committee
members reports issued to the Company by the auditors. The
Audit Committee ensures that any non-audit services conform to
the ethical standards for auditors issued by the UK Auditing
Practices Board.
In addition, each Director and committee has access to the
advice of the Company Secretary, Richard Vanderplank of
Equity Limited.
AUDIT COMMITTEE [Back
to Top]
The Audit Committee is
chaired by Dr Carol Bell and until 3 November 2008 its other
members were Mr E. P. Mortimer and Mr Pradip Shah. On 3
November 2008, Mr E. P. Mortimer was replaced by Mr Ian Bruce.
All of the committee members are independent non executive
directors. Dr Carol Bell, Mr Pradip Shah and Mr Ian Bruce have
extensive corporate, financing and banking experience. The
Board is satisfied that the Audit Committee has recent and
relevant financial experience. The Audit Committee is
responsible for a wide range of financial matters and meets at
least three times a year. There were three meetings of the
Audit Committee in 2008 with 100% attendance by committee
members and external auditors. It monitors the controls that
are in place to ensure the integrity of the financial
information reported to shareholders. The Audit Committee also
oversees the relationship with the external auditor, reviews
the scope and results of audits and provides a forum for
reporting by the Group’s auditors. The Company has a policy in
place for the award of non audit services provided by external
auditors, which requires approval of the Audit Committee. The
Audit Committee ensures that the independence and objectivity
of the external auditors is safeguarded when securing
non-audit services from the auditors. The Audit Committee also
focuses on compliance with legal requirements, accounting
standards and the Listing Rules and the Disclosure and
Transparency Rules and ensures that an effective system of
internal control and risk management systems are maintained.
The ultimate responsibility for reviewing and approving the
annual report and accounts and the half yearly reports remains
with the Board. Some or all executive directors attend
meetings of the Audit Committee upon invitation.
REMUNERATION
COMMITTEE [Back
to Top]
Until 3 November 2008, the
Company’s Remuneration Committee comprised two non executive
directors, Mr E.P. Mortimer and Mr Pradip Shah, and one
executive director, Mr Sastry Karra. Mr E.P. Mortimer was
the Chairman of the Remuneration Committee. On 3 November
2008, Dr Carol Bell joined the Committee, replacing Mr
Sastry Karra. In addition, Mr Pradip Shah became Chairman of
the Remuneration Committee. Hardy’s Remuneration Committee
operates within the terms of reference approved by the
Board. There were five meetings of the Remuneration
Committee held during 2008. The Remuneration Committee
considers remuneration policy, employment terms and
remuneration of the executive directors and in future will
also review the remuneration of senior management. The
Remuneration Committee’s role is advisory in nature and
makes recommendations to the Board on the overall
remuneration packages for executive directors in order to
attract, retain and motivate high quality executives capable
of achieving the Group’s objectives. The Remuneration
Committee also reviews proposals for the share option plans
and other incentive plans, makes recommendations for the
grant of awards under such plans as well as approving the
terms of any performance related pay schemes. None of the
directors participates in any discussion or votes on any
proposal relating to his or her own remuneration. The
Board’s policy is to remunerate the Group’s senior
executives fairly and in such a manner as to facilitate the
recruitment, retention and motivation of suitably qualified
personnel. The Remuneration Committee, while considering
remuneration packages of Hardy executives, has reviewed the
policies of comparable groups in the industry. During 2008,
the Committee retained the services of Mr Simon Patterson of
Patterson and Associates who provided consulting services to
the Committee with respect to a review of compensation
practices of executive and non executive directors. The
remuneration of the non executive directors is determined by
the Chairman and the executive directors outside the
framework of the Remuneration Committee.
NOMINATION COMMITTEE [Back
to Top]
The Nomination Committee
comprises two non executive directors – Mr E.P. Mortimer
(Chairman) and Mr Pradip Shah – and one executive director,
Mr Sastry Karra. The Nomination Committee considers the
structure, size and composition of the Board, retirements,
replacements and appointments of additional directors,
reviews succession plans for the directors and makes
recommendations to the Board on membership of the Board, its
committees and other matters within its remit.
There were two meetings of Nomination Committee held during
2008 with 100% attendance by the Committee members. Any new
appointments to the Board are considered by the Nomination
Committee and made after Board approval. Following
appointment, a new director is given a detailed presentation
of the activities of the Company. If an appointment is made
without using an external search agency or open
advertisement, the entire Board selects a new director.
During 2008, the Board appointed Mr Ian Bruce as a non
executive director based on the recommendation of the
Nomination Committee. The Committee was assisted by an
external search firm in the selection process and the
undertaking of due diligence on prospective candidates. |
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