21 September 2016
The Manager
Market Announcements Office Australian Securities Exchange
Dear Sir,
2016 CORPORATE GOVERNANCE STATEMENT AND APPENDIX 4GIn accordance with ASX Listing Rules 4.7.3, 4.7.4 and 4.10.3, attached is the Wesfarmers Limited 2016 Corporate Governance Statement and Appendix 4G.
Yours faithfully,
L J KENYON
COMPANY SECRETARY
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.
Roles and responsibilities of the Board and managementThe 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 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 management.
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. Details of the members of the Wesfarmers Leadership Team are set out under the Wesfarmers Leadership Team profiles in the corporate governance section of the company's website at
www.wesfarmers.com.au/cg. The Board maintains ultimate responsibility for strategy and control of Wesfarmers and its businesses.
In fulfilling its roles and responsibilities, some key focus areas for the Board during the 2016 financial year are set out below.
Key focus areas of the Board during the 2016 financial year included:Overseeing management's performance in strategy implementation
Monitoring the Group's operating and cash flow performance, financial position and key metrics, including financial covenants and credit ratings
Reviewing business operations and development plans of each division likely to impact long-term shareholder value creation
Monitoring the Group's safety performance and overseeing implementation of strategies to improve safety performance and enhance workplace safety awareness
Reviewing talent management and development
Approving an organisational restructure combining the Chemicals, Energy and Fertilisers, Industrial and Safety, and Resources businesses to form a new Industrials division with Rob Scott as Managing Director
Approving an organisational restructure combining the Target and Kmart businesses to form a new Department Stores division with Guy Russo as Chief Executive Officer
Approving the acquisition of the United Kingdom retailer Homebase and other growth opportunities to complement the existing portfolio
Monitoring the implementation of risk management plans to address identified operational, financial and reputational risks for Group businesses
Reviewing policies to improve the Group's system of corporate governance, including approving amendments to the Securities Trading Policy and revising delegated authorities
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 (including gender diversity) to Board decision-making.
The Board currently comprises 10 directors, including eight non-executive directors. Details of the directors, including their qualifications and date of appointment are set out below. Detailed biographies are set out on pages 60 and 61 of the company's 2016 annual report.
Name of director | Term in office | Qualifications |
Michael Chaney AO | Director since June 2015 and Chairman since November 2015 | BSc, MBA, FAICD, FTSE |
Richard Goyder AO | Director since July 2002 | BCom, FAICD |
Terry Bowen | Director since May 2009 | BAcct, FCPA |
Paul Bassat | Director since November 2012 | B.Comm, LL.B. |
James Graham AM | Director since May 1998 | BE (Chem)(Hons), MBA, FIEAust, FTSE, FAICD, SF Fin |
Tony Howarth AO | Director since July 2007 | CitWA, SF Fin, FAICD |
Wayne Osborn | Director since March 2010 | Dip Elect Eng, MBA, FAICD, FTSE |
Diane Smith-Gander | Director since August 2009 | B.Ec, MBA, FAICD, FGIA |
Vanessa Wallace | Director since July 2010 | B.Comm, MBA, MAICD |
Jennifer Westacott | Director since April 2013 | BA (Honours), FAICD, FIPAA |
The Board is of the view that the tenure profile, represented by the length of service of each of its directors on the Board, is appropriately balanced such that Board succession and renewal planning is managed over the medium to longer term. The current directors possess an appropriate mix of skills, experience, expertise and diversity to enable the Board to discharge its responsibilities and deliver the company's strategic priorities as a diversified corporation with current businesses operating in supermarkets, liquor, hotels and convenience stores; home improvement; department stores; office supplies; and an industrials division with businesses in chemicals, energy and fertilisers, industrial and safety products, and coal.
The Board skills matrix set out below describes the combined skills, experience and expertise presently represented on the Board.
Skills, experience and expertiseCEO level experience - Capital markets
ASX-listed company experience - Finance and banking
Strategy and risk management - E-commerce and digital
Governance - Human resources and executive remuneration
Financial acumen - Marketing/customers/retail
Regulatory and government policy - Resources and industrial
International experience - Corporate sustainability
To the extent that any skills are not directly represented on the Board, they are augmented through management and external advisors.
Mr Archie Norman, who has significant retail experience, was appointed in 2009 as an advisor to the Board on retail issues. In this role, Mr Norman attends Wesfarmers Board meetings as required and is a director of the Coles and Target boards.
Independence of the Chairman
The Chairman is elected from the independent non-executive directors. The responsibilities of the Chairman are set out in the Board Charter.
Mr Michael Chaney is the present serving Chairman, who assumed the role at the conclusion of the 2015 Annual General Meeting. Further information on Mr Chaney is set out on page 60 of the company's 2016 annual report.
Director independence
Directors are expected to bring views and judgement to Board deliberations that are independent of management and free of any business or other relationship or circumstance that could materially interfere with the exercise of objective, unfettered or independent judgement, having regard to the best interests of the company as a whole.
Prior to accepting an invitation to become a director of an external company, each non-executive director is required to notify the Chairman. In considering the new appointment, the Chairman is to consider:
any Board policies on multiple directorships;
the terms of Wesfarmers' Conflicts of Interest Policy; and
the time commitment required of the director to properly exercise his or her powers and discharge his or her duties as a director and member of any Board committees.
An independent director is a non-executive director who is not a member of management and free of any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgement.
The Board regularly assesses the independence of each non-executive director in light of the information which each director is required to disclose in relation to any material contract or other relationship with Wesfarmers in accordance with the director's terms of appointment, the Corporations Act 2001, the Board Charter and Wesfarmers' Conflicts of Interest Policy. Each non-executive director may be involved with other companies or professional firms which may from time to time have dealings with Wesfarmers. Details of some of the offices held by directors with other organisations are set out on pages 60 and 61 of the company's 2016 annual report and on the company's website.
The Board considers any changes to non-executive director's interests, positions, associations or relationships that could bear upon his or her independence. The Board's assessment of independence and the criteria against which it determines the materiality of any facts, information or circumstances is formed by having regard to the ASX Principles, in particular, the factors relevant to assessing the independence of a director set out in recommendation 2.3; the materiality guidelines applied in accordance with Australian Accounting Standards; any independent professional advice sought by the Board at its discretion; and developments in international corporate governance standards.
The Board considers a relationship to materially interfere with, or that could reasonably be perceived to materially interfere with, a director's independent judgement, where it is of such substance and consequence and there is a real and sensible possibility that it would affect the director's judgement across all aspects of the director's role.
The Board has reviewed the position and relationships of all directors in office as at the date of the company's 2016 annual report and considers that seven of the eight non-executive directors are independent.
Ms Vanessa Wallace is deemed to be independent. Ms Wallace previously held senior roles at Strategy&, the consultancy firm formerly known as Booz & Company which forms part of the PwC Network, which is a provider of material professional services to the Group (a factor relevant to assessing the independence of Ms Wallace, according to recommendation 2.3 of the ASX Principles). Within the last three years, Ms Wallace's role with Strategy& was based in Japan and focused on managing the operations of Strategy&, Japan.
During that period, Strategy& has not been a material provider of professional services to the Group. The Board is of the opinion that Ms Wallace's past relationship with Strategy& and PwC does not compromise Ms Wallace's exercise of objective or independent judgement in relation to the company's affairs.
Mr James Graham is deemed not to be independent, by virtue of his position as Chairman of Gresham Partners Limited (Gresham), which acts as an investment advisor to the company. Details of Mr Graham's association with Gresham are set out in note 26 on page 127 of the company's 2016 annual report. The Board has determined that the appointment of Mr Graham continues to be in the best interests of Wesfarmers because of his substantial knowledge, technical competencies and expertise. There are a number of policies and protocols in place, including Wesfarmers' Conflicts of Interest Policy, the Gresham Mandate Review Committee Charter, Wesfarmers' Code of Conduct, Wesfarmers' Board Charter, and Directors' Standing Notices, to ensure that any conflicts of interest which may arise are managed in accordance with the ASX Principles and all applicable laws.
Wesfarmers Ltd. published this content on 21 September 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 29 September 2016 04:15:08 UTC.
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