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 2010 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 and adheres to strong corporate governance practices.

Composition
The Company’s Board presently has six directors, comprised of two Executive Directors and four Non-Executive Directors.  Each of the existing executive directors has extensive knowledge of the oil and gas industry with combined experience in excess of 60 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 and bring a broad range of business and commercial experience to the Board. The Board believes that its composition is suitable for operating an effective publicly traded 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 Officer 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 Officer 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 Officer are exercised by different individuals.

Mr Paul Mortimer is the Non-Executive Chairman of the Company. In addition to Hardy, he is also a director of two oil and gas royalty funds, Gemini Oil & Gas Limited and Gemini Oil & Gas Management Limited.

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 terms of reference for Audit, Remuneration and Nomination Committees can be found on the Company’s website.

The Board considered various issues that would normally fall within the terms of reference of the various committees. All members of the Audit Committee and the Remuneration Committee are Non-Executive Directors. Both executive and Non-Executive Directors are members of the 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 Auditing Practices Board of the UK Financial Reporting Council.

AUDIT COMMITTEE  [Back to Top]
The Audit Committee is chaired by Dr Carol Bell and its other members are Mr Pradip Shah and 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 met three times during 2010 with 100 per cent attendance by committee members with external auditors attending two of the three meetings. It monitors the controls that are in place to ensure the integrity of the financial information reported to shareholders. In addition, it oversees an effective system of risk management within the Company.

The Audit Committee also oversees the relationship with the external auditors, 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 by invitation.

REMUNERATION COMMITTEE  [Back to Top]
The Company’s Remuneration Committee comprises of three Non-Executive Directors, Mr Pradip Shah (Chairman), Mr Paul Mortimer, and Dr Carol Bell. Hardy’s Remuneration Committee operates within the terms of reference approved by the Board. There were four meetings of the Remuneration Committee held during 2010 with 100 per cent attendance.

The Remuneration Committee considers remuneration policy, employment terms and remuneration of the executive directors and also reviews 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 participate 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. 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 Company’s Nomination Committee comprised three Non-Executive Directors – Mr Paul Mortimer (Chairman), Mr Pradip Shah and Mr Sastry Karra. Effective 12 May 2010, the Committee was reconstituted with Ian Bruce (Chairman) and Pradip Shah as its membership. 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 was one meeting of the Nomination Committee held during 2010 with 100 per cent 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.

Hardy Oil and Gas plc © 2012