Analyzing Corporate Governance and Responsibilities at BHP Billiton

The assignment delves into the intricate aspects of corporate governance at BHP Billiton, emphasizing the duties and responsibilities of company directors in ensuring ethical management practices. It explores how these responsibilities align with sustainability reporting standards prevalent in the mining industry. By referencing stakeholder theory, it assesses how BHP Billiton's governance structures accommodate various stakeholders' interests. The essay critically evaluates BHP Billiton’s adherence to major corporate governance frameworks such as ASX CGC, UK Corporate Governance Code, and OECD Principles of Corporate Governance. Through this analysis, the assignment underscores the importance of robust governance mechanisms in fostering transparency, accountability, and ethical business conduct within large multinational corporations like BHP Billiton.

Running head: CORPORATE GOVERNANCE
Corporate governance
Name of the student
Name of the university
Author note

1CORPORATE GOVERNANCE
Table of Contents
Part 2:.........................................................................................................................................2
Answer to question 1..................................................................................................................2
Answer to question 2..................................................................................................................2
Answer to question 3..................................................................................................................5
Answer to question 4..................................................................................................................7
Answer to question 5..................................................................................................................8
Answer to question 6................................................................................................................10
Answer to question 7:...............................................................................................................11
Part 3:.......................................................................................................................................12
Critical reflection.....................................................................................................................12
References................................................................................................................................14

2CORPORATE GOVERNANCE
Part 2:
Answer to question 1
The chosen company for this particular report is BHP billion Ltd. It is an Australian
Company which has the headquarters in Melbourne. The basic reason of choosing this
company in this particular project is it is regarded as the world’s largest mining company and
apart from this it is referred as the fourth largest company in Australia (BHP Billiton 2017).
There are many aspects in the company that can be explored and the large profile of the
company made it easier to choose the company for writing this assignment. The operations of
the company are extended to the mining of minerals beside oil and production of gas. It has a
global impact. The process of operation is carried in over 25 countries. The company owns
the subsidiaries in the field of logistics and transport. It does not end here, the company
reportedly made significant donation towards the society. It works in the sector of mining and
therefore it uses green energy in order to minimize the emissions (BHP Billiton 2017). These
are the main reasons for choosing this company. However the most important factor for
choosing this particular company is the controversy that it faced in the recent times. It was in
the news for the poor performance according to the stock exchange in Australia. The
transition from being a good company to a bad company is something that can be witnessed
in the report. This was an exciting area to work upon.

3CORPORATE GOVERNANCE
Answer to question 2
Board characteristics Approach
Did the Company comply with the
code? Explain/Provide Evidence
Implications
Separated roles of
CEO/Chairman
Yes the company complied with
the code of Corporate
Governance. According to the
code of Corporate governance
every company should be headed
by an effective board which is
collectively responsible for the
long-term success of the company.
There should be a clear distinction
between running of the board and
the executive responsibility for the
smooth running of the business of
the company. The Chairman and
the CEO should be responsible for
leadership of the entire board and
to ensure the effectiveness on all
the aspects of the role (Keay
2014). The company complies
with the above mentioned factors
and it maintains the code. The
Chairman and the CEO directs the
The company functions properly
under the leadership of the
Chairman and CEO. The code of
governance help the company to
maintain the decorum of the
company and it keeps pedagogy
in the company.

4CORPORATE GOVERNANCE
entire board and they are the
ultimate decision makers of the
company. Therefore they serve a
great responsibility (Filatotchev,
Jackson and Nakajima 2013).
Role of Executive
Leadership team
Under the code of governance the
ELT should be responsible for the
daily management of the group
and for the leading the delivery of
the objectives related to the
strategy. This is maintained by the
Executive Leadership Team and
they are efficient in it (Dignam
and Galanis 2016).
This helps to maintain the proper
track of the delivery of the
products. The objectives of the
strategy direct the organization in
the right path. This is the major
implication of this code of
corporate governance.
Role of operations
management committee
The code of corporate governance
opines the fact that the
responsibility of the operations
management committee is to plan
and direct and control the
activities of the company (Khan,
Muttakin and Siddiqui 2013). The
company complies by all the
codes of corporate governance.
The operations management
This has a major implication in
the company. The disclosure of
the financial and other
performance of the commodity
provides the most meaningful
insight into the nature and the
financial outcomes of the
activities of the business and the
facilities greater comparability
against the industry peers.

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committee directs all the key
group strategies, decisions related
to investment and operations and
it provides recommendations to
the board. They disclose the
financial and other performance
primarily by commodity (Daily
and Dalton 2015).
Answer to question 3
Board characteristics Approach
Did the Company comply with the
code? Explain/Provide Evidence
Implications
Gender diversification
(percentage of female to
male)
The organization does not have a
balanced workforce in relation to
the gender diversity as they are
operating in the mining industry
and in extracting minerals and
ores the management recruits
male individuals mostly.
The management of BHP Billiton
aims to attain a gender balance in
their organization by the year of
2025 and they are currently
working on the issue (Adhariani,
Sciulli and Clift 2017).
Skills and Board
knowledge and
(Skills, Current and
The management board of BHP
Billiton has sustained a matrix of
skills for a few years and the
matrix can impact the industry
The highly experienced and
effective board members of BHP
Billiton are seen to increase the
productivity of the business

6CORPORATE GOVERNANCE
previous board
experiences)
along with the external
environment in general. The board
members of BHP Billiton are
experienced enough while
working for other concerns and
while working for BHP Billiton.
The majority of the board
members have of more than 10
years working as a manager or
advisor.
organization like never before and
under their supervision, the
organization can aim to capture
the majority of the global market
within a few years.
Age
(Average Age of the
Board)
The average age of the board is
60.
As the average age of the board
members is 60, then it is likely
that they have more experiences
than any other individual working
in the same sector (Olivier and
Wright 2014). Thus it can be
considered as an advantage of the
business organization.
Independence
(Number of Independent
board members to
executives)
Currently BHP Billiton has 10
independent board executives
working for them who are
experienced enough to run the
business successfully.
Having 10 independent board
members is one of the strongest
points of the business
organization and the management
can use it to increase the
productivity and profitability of

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the organization.
Answer to question 4
Accountability
components
Approach
Did the Company comply with the
code? Explain/Provide Evidence
Implications
Structure of audit
committee (nb of
independent board
members)
Currently in the audit team of
BHP Billiton there are 10
members with experiences of
more than 20 years in the finance
sector and that helps the
organization to face no issues in
relation to financial matters.
Having a well structured audit
team the management of BHP
Billiton experience advantage in
the financial sector and that
directly help the organization to
eradicate any financial and legal
issues.
External Auditors
(who are the auditor of
the firm, what is the time
scale of their contract)
At the time of merging, the
management of BHP Billiton
stated that they would put the
external audit to tender and they
appointed
PricewaterhouseCoopers and
KPMG along with Anderson as
the external auditors.
By appointing big reputed
organizations as external auditors
BHP Billiton continued to show
their class and that projected why
they are different from any other
organizations working in the same
sector.
Board evaluation  The board will evaluate
the effectiveness of the
The evaluation of the board of

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(when was the last time
the firm took and external
perspective to this)
chairman, committees,
and individual directors
along with the process of
governance.
 The board will evaluate
the level of performance
of the directors.
 All the evaluations will be
on the basis of the balance
of skills, tasks performed
by the board and the
experience and
independence of the
company on the board.
BHP Billiton will immensely help
the management of the
organization to identify the
strengths and weaknesses of the
governance body and that can
effectively improve the
productivity along with the
profitability of the business
organization.
Answer to question 5
Remuneration
characteristics
Approach
Did the Company comply with the
code? Explain/Provide Evidence
Implications
Structure of
Remuneration
(Components of Pay/
Clawback/ Long-term
targets)
The structure of remuneration of
BHP Billiton is directly linked
with the performance of the
groups during the financial year.
The remuneration policies of BHP
Billiton shall be put in front of the
stakeholders and the AGM for
three yearly approvals (Salvioni
and Astori 2015). In the structure
The improved structure of
remuneration will help the
general workforce of the
business organization to get
further motivation and loyalty
towards the organization and
this will positively impact on
the productivity and
profitability of the business

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of the remuneration committee of
BHP Billiton, the field
supervisors evaluate and gather
the reports regarding the level of
performance and involvement of
the general employees and then
send them to the senior managers.
The senior managers consult with
the HR managers regarding this
issue and then send the file to the
board of directors. After getting
approved from the directors, the
HR managers fix the
remuneration structure of the
employees.
corporation.

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CSR characteristics Approach
Did the Company comply with the
code? Explain/Provide Evidence
Implications
AGM reporting (nb of
meetings/ disclosure of
voting)
 The management of BHP
Billiton ensures that they
will assess their CSR
performance in relation
with the Global Compact
principles set by UN.
 The board of BHP Billiton
will arrange an annual
forum regarding CSR that
will bring all the senior
executives and the major
private business
organizations together to
discuss on the
environmental and social
matters (Fonseca,
McAllister and Fitzpatrick
2014).
 By investing in the
projects favoring the
communities will ensure a
persistent framework to
measure the tangible
progress.
If the CSR activities of the
business organization get
enhanced, eventually it will
increase the reputation of the
organization in global market
and that can effectively
improve the level of
productivity and profitability of
the business corporation. As
the organization BHP Billiton
abides by all the regulations set
by UN, the organization does
not have any threats in this
regard at least.
Communications with
shareholders (what tools
are used)
The management of BHP Billiton
maintains a good communication
with their shareholders. After
conducting the general meetings
or summits they provide all the
necessary information to their
shareholders to maintain a basic
transparency. This is a good
initiative taken by the
management of the organization
as this improves the relation
between the governance body and
By maintaining a strong
communication with the
shareholders the management
of BHP Billiton can experience
a transparency and loyalty of
the shareholders of the
organization (Pottenger and
Leigh 2016). This can
effectively improve the
financial issue of the
organization and lets the
organization to generate more

11CORPORATE GOVERNANCE
Answer to question 6
There are many shareholders of -the company and they are consistent. The biggest
shareholder of the company is Bank of America corp. With the market capitalization of 147
billion pounds it can be ranked in one of the four major money-center banks in the United
States. This provides a full range of financial services, investment-banking services and
commercial services. The company has been found to be operated through five business
divisions. The five divisions are the consumer banking, the investment management, Legacy
and servicing, Global Markets and Global wealth (Tricker and Tricker 2015). The other
important stakeholder of the company is Dimensional Fund Advisors LP. It is a private
investment-management firm that has its headquarters situated in Austin. It launches and
manages equity and fixed-income mutual funds and investment portfolios for the clients. It
also looks after the investment in real estates. This firm has many offices in many areas like
in U.S, Canada, the United Kingdom, Australia, the Netherlands, Germany, Singapore and
Japan. The third most important shareholder is Earnest Partners LLC. The company is a
privately owned investment-advisory and management firm. The headquarters of the
company is in Atlanta. It deals with equity and fixed-income investments (Mason and
Simmons 2014). Apart from this the firm also deals in alternative investments and other
assets. The other prominent shareholder is CL Investment Inc. This company is a Toronto-
based subsidiary of CI Financial Corporation. The company offers investment management
and advisory services to a wide range of clients. This looks after fixed-income mutual funds
and it manages the portfolios of the clients. Apart from these shareholders there are other
shareholders are Neuberger Berman Group LLC (Clarke 2014).
The company is found to cooperate well with the shareholders. The employees of the
company make effort in reporting about the progress of their annual general report to the
shareholders (Salvioni and Bosetti 2015). They inform about their annul business and about