The Board of Wesfarmers Limited and the role and responsibilities of Board and management
The Board of Wesfarmers Limited
The Board of Wesfarmers Limited is committed to providing a satisfactory return to its shareholders and fulfilling its corporate governance obligations and responsibilities in the best interests of the company and its stakeholders. This corporate governance statement details the key aspects of the governance framework and practices of Wesfarmers. It regularly reviews its governance framework and practices so as to ensure they consistently reflect market practice and stakeholder expectations.
The Board believes that the governance policies and practices adopted by Wesfarmers during the reporting period for the year ended 30 June 2020 follow the recommendations contained in the third edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles). It is noted that the fourth edition of the ASX Principles was released on 27 February 2019 and takes effect for a listed entity’s first full financial year commencing on or after 1 January 2020 – for Wesfarmers, this is the year ending 30 June 2021.
The role and responsibilities of Board and management
The role of the Board is to:
- approve the purpose, values and strategic direction of the Group;
- guide and monitor the management of Wesfarmers and its businesses in accordance with the purpose, values and strategic plans;
- oversee good governance practice; and
- setting the Group’s risk appetite and monitoring and reviewing the Group’s financial and non-financial risk management systems.
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 to fostering a culture of compliance which values ethical behaviour, personal and corporate integrity, accountability, transparency and respect for others.
The Board has a charter which clearly sets out its role and responsibilities and describes those matters expressly reserved for the Board’s determination and those matters delegated to senior management. Senior management, amongst other matters, takes primary ownership of, and is responsible for:
- instilling and reinforcing the Group’s values;
- implementing sound risk management and controls which accord with the risk appetite set by the Board; and
- ensuring the Board receives timely and accurate information about the Group to enable it to fulfil its responsibilities.
Further information on the roles and responsibilities of the Board and of senior management can be found in the Board Charter, which is available in the corporate governance section of the company’s website at www.wesfarmers.com.au/cg
The Board holds management accountable for the performance of its delegated functions. In doing so the Board constructively challenges management’s proposals and decisions and seeks to instill a culture of accountability throughout the Group.
The Group 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.
Details of the members of the Wesfarmers Leadership Team are set out on pages 14 and 15 of the company’s 2020 annual report and in the 2020 Corporate Governance Statement. The Board maintains ultimate responsibility for strategy and control of Wesfarmers and its businesses.
In fulfilling its roles and responsibilities, the key focus areas of the Board during the 2020 financial year are set out below.
Key focus areas of the Board during the 2020 financial year included:
- Guiding and supporting management in relation to the Group’s response to the COVID-19 outbreak, with a key focus on the health and safety of the Group’s team members and customers
- Approving a $1.95b extension of the Group’s available committed bank facilities and asset sales to further enhance the company’s strong balance sheet position
- Reviewing and providing input into the business operations and the strategic plans of each division likely to impact long-term shareholder value creation
- Overseeing management’s performance in strategy implementation
- Overseeing the implementation of strategy to address areas of underperformance and reposition the portfolio to deliver growth in shareholder returns including changes to the Target and Kmart store networks
- Approving changes to the leadership structure of its industrial businesses
- Approving the partial sale of Wesfarmers’ 15 per cent shareholding in Coles Group Limited in two separate transactions:
- sale of 4.9 per cent shareholding in February 2020 for pre-tax proceeds of $1,047 million, net of transaction costs; and
- sale of 5.2 per cent shareholding in March 2020 for pre-tax proceeds of $1,062 million, net of transaction costs
- for total pre-tax profit on sale of approximately $290 million
- Monitoring and evaluating growth opportunities to complement the existing portfolio
- Overseeing completion of the acquisition of Australian online retailer Catch Group Holdings Limited for cash consideration of $230 million
- Overseeing completion of the acquisition of 100 per cent of the shares in Kidman Resources Limited at $1.90 per share by way of a Scheme of Arrangement
- Monitoring the Group’s operating and cash flow performance, financial position and key metrics, including financial covenants and credit ratings
- Reviewing the Group’s risk management framework, overseeing the implementation of strategies to improve the Group’s risk management framework and monitoring that the Group is operating with due regard to the risk appetite set by the Board
- Monitoring the Group’s safety performance and overseeing implementation of strategies to improve safety performance and enhance workplace safety awareness
- With the support of the Remuneration Committee, overseeing the Group’s remuneration framework and remuneration outcomes for senior management
- Reviewing the processes in place to attract, develop, motivate and retain talent
- Reviewing policies, reporting and processes to improve the Group’s system of corporate governance
- Appointing the Company Secretary