We will maintain robust corporate governance policies in all our businesses.
Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. We are very proud of our approach to corporate governance and believe it is vital to ongoing value creation for our shareholders and other stakeholders.
The corporate governance framework has been established by the Wesfarmers Board and is underpinned by the corporate governance statement in the 2014 annual report.
The Corporate Governance section of the company’s website contains access to all relevant corporate governance information, including director profiles, Board and committee charters and Group policies.
Role of Board and management
The role of the Board is to approve the strategic direction of the Group, guide and monitor the management of Wesfarmers and its businesses in achieving its strategic plans and oversee good governance practice. The Board aims to protect and enhance the interests of its shareholders, while taking into account the interests of other stakeholders, including employees, customers, suppliers and the wider community.
In performing its role, the Board is committed to a high standard of corporate governance practice and fostering a culture of compliance which values ethical behaviour, personal and corporate integrity, accountability and respect for others.
The Wesfarmers Managing Director has responsibility for the day-to-day management of Wesfarmers and its businesses and is supported in this function by the Wesfarmers Leadership Team.
The Board maintains ultimate responsibility for strategy and control of Wesfarmers and its businesses.
Structure and composition of the Board
Wesfarmers is committed to ensuring that the composition of the Board continues to include directors who bring an appropriate mix of skills, experience, expertise and diversity to board decision-making.
The Board currently comprises 12 directors, including 10 non-executive directors. Details of the directors, including their skills, experience and year of appointment, are set out in the 2014 annual report.
Committees of the Board
The Board has established an Audit Committee, a Nomination Committee, a Remuneration Committee and a Gresham Mandate Review Committee, as standing committees to assist with the discharge of its responsibilities.
Details of the current membership and composition of each committee are set out in the 2014 annual report.
Appointment of new directors
As part of the Nomination Committee’s oversight of Board succession planning, it is also responsible for identifying suitable candidates to fill Board vacancies as and when they arise, or to identify candidates to complement the existing Board, and make recommendations to the Board on their appointment.
Evaluation of the Board and its committees
The Nomination Committee is responsible for scheduling formal performance reviews of the Board, its committees and of each non-executive director. Click here to hear the Wesfarmers Chairman sharing his views on Board composition.
Directors are expected to be independent of management and other relationships or interests that may interfere with their ability to act in the best interests of the company. If directors want to become a director of another company, they must notify the Chairman. Eight out of the 10 Wesfarmers non-executive directors are considered to be independent. To find out more about director independence, please see the 2014 annual report.
Remuneration and evaluation of senior executives
Full details of the remuneration paid to non-executive and executive directors, and senior executives, are set out in the remuneration report in the 2014 annual report.
Senior executives comprising members of the Wesfarmers Leadership Team have an annual and long-term incentive or ‘at risk’ component as part of their total remuneration package. The mix of remuneration components and the performance measures used in the incentive plans have been chosen to ensure that there is a strong link between remuneration earned and the achievement of the Group’s strategy and business objectives and, ultimately, generating satisfactory returns for shareholders.
The ASX Corporate Governance Council sets out corporate governance principles and recommendations (ASX Principles) to achieve good governance outcomes and meet the reasonable expectations of most investors in most situations.
The Board believes that the governance policies and practices adopted by Wesfarmers this year follow the recommendations contained in the second edition of the ASX Principles.
For further information on Wesfarmers’ compliance with the ASX Principles and Wesfarmers corporate governance approaches, see the annual report.
Integrity in reporting
The Audit Committee monitors internal control policies and procedures designed to safeguard Group assets and to maintain the integrity of financial reporting.
The Audit Committee also oversees the appointment of external auditors and assurers to ensure the accuracy of our external reporting.
The effectiveness, performance and independence of the external auditor is reviewed annually by the Audit Committee.
If it becomes necessary to replace the external auditor for performance or independence reasons, the Audit Committee will formalise a procedure and policy for the selection and appointment of a new auditor.
The Risk Management Policy of Wesfarmers is approved by the Board. The policy details the overarching risk management controls that are embedded in the Group’s risk management framework and reporting systems and the division of the key risk management functions between the Board, Wesfarmers Managing Director and Finance Director, Audit Committee, divisional management and Group Assurance and Risk.
Click here to see the full corporate governance statement in our 2014 annual report, which covers these matters in more detail.