Changes in Corporate Governance and CSR at Westpac Banking Corporation

This presentation discusses the current board structure and model of Westpac Banking Corporation, recent changes, consequences, and insights. It also covers the scandals faced by the organization, selected ASX guidelines, stakeholder relationship, and Carroll's philanthropic model for CSR initiatives. The presentation highlights the company's commitment to CSR through various initiatives and programs.

CHANGES IN CORPORATE
GOVERNANCE AND CORPORATE
SOCIAL RESPONSIBILITY
WESTPAC BANKING CORPORATION

2
Current board structure and model
Overview
Number of MDs and
CEOs for different
segments
Diverse and
experienced Board
with Two-tier
structure

3
Current board structure and model
Overview
Millet-Reyes and Zhao (2010) also
pointed out that the Two-Tier
system has enabled the company
to encourage all stakeholders to
speak up when the thing goes
wrong.
None of the non-executive
officers are present on the
advisory panel; rather, the
executive members and the team
are given the accountability to
identify the loopholes through
direct communication with the
stakeholders.

4
Current board structure and model
Changes
Board structure has been
changed. After 10 years of
successful performance,
Elizabeth Bryan retired in
the Annual General
Meeting 2016.
In the FY 2017, new CEO
Nerida Caesar was
appointed to the Board. In
addition, Robert Elstone
also retired from the
Board in the FY 2017.

5
Current board structure and model
Consequences
Such changes have resulted
higher revenue and income.
Cash earnings have risen
by 2%
Cost to income ratio
became 42.2% in FY 2017
Earnings per share
increased by 2%
Liquidity and funding
position got improved
Overall loan grew by 3%

6
Current board structure and model
Insights
The Director and Executive
committee closely cooperate
with the advisory board and
chairman to develop the
business strategy and potential
planning to meet future goals.
Boo and Sharma (2008) are of
the opinion that a steady flow
of information between these
entities identifies the actual
gap between the risk
management and business
growth areas against the initial
set plans.

7
Current board structure and model
Insights
The company maintains
an environment for open
discussions and mutual
coordination.
Such environment may
enable the company to
make a steady flow of
information, which
drives the potential
growth (Kofman and
Murawski, 2015).

8
Scandals faced by the organisation
Despite ASIC’s repeated objection to the
extent of inquiry done before increasing the
credit card limit of some of the customer,
Westpac continued with the practice.
Westpac has issued more than 10,000 home
loans using automated Household
Expenditure Measure system, without an
actual evaluation of the customer’s declared
expenses.

9
Scandals faced by the organisation
The firm was alleged to sell products that
were priced in a manner to manipulate the
bank bill swap rate (BBSW) which is a
benchmark of interest rates in Australian
financial markets (Asic.gov.au, 2018).
The firm has disturbed the balance of finance
in all the occasions producing higher
revenues for themselves and causing more
harm to the customers and society (Lurdes
Neves, 2014).

10
Scandals faced by the organisation
Westpac has violated the Consequential
Utilitarian approach.
The stakes of different stakeholders had been
adversely affected.
Westpac has established a Stakeholder
Advisory Council to suggest guidance and
intuitions to its executives and the
sustainable leaders to enhance its functioning
opportunities in the operating marketplace.

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Stakeholder Relationship

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Selected ASX guidelines
Principle 1: Lay solid foundations for
management and oversight
Theory:
 The organization must establish a firm
structure of the board of directors,
executive officers, the departments and
supervisory committee.
 Such structure will provide a strong
foundation for management and
oversight.

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Selected ASX guidelines
Principle 1: Lay solid foundations for
management and oversight
Practice:
 The Westpac corporations have a deeply
structured board of directors, executives
and their respective committees.
 These are clearly mentioned in their annual
reports. They have the diversity of skills and
trait of women empowerment in their board
of directors and chief executive officers.

14
Selected ASX guidelines
Principle 3: Act ethically and responsibly
Theory:
 The organization must operate with
ethical principles as they are answerable
to the government, regulatory bodies,
stakeholders and the society.
 Such principle must follow the
ethical boundary in business context.

15
Selected ASX guidelines
Principle 3: Act ethically and responsibly
Practice:
 The company has to face scandals due to
the act of its employees and subsidiaries
in the past years.
 The board has acted responsibly by
mentioning the scams and the status in
their 2017 annual report.

16
Selected ASX guidelines
Principle 6: Respect the rights of
security holders
Theory:
 The security holders are key members to
the survival of a corporation. They are
the owner groups for the business.
 So, their rights are to be respected. Such
right may form the basis of corporate
goals and objectives in the long-run.

17
Selected ASX guidelines
Principle 6: Respect the rights of
security holders
Practice:
 The organization on their annual report
publishes their shareholding information
with the number of shares held by other
organization.
 There is also stakeholder engagement
information listed in the Information for
Shareholders section.

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Selected ASX guidelines
Principle 7: Recognise and manage risk
Theory:
 A risk is at times inevitable with massive
setbacks. Thus, the governance must have
a sound architecture to predict, assess
and manage risk.
 Such risk control mechanism may involve
risk mitigation, avoidance, acceptance or
rejection, based on the nature, likelihood
and impact of such risks.

19
Selected ASX guidelines
Principle 7: Recognise and manage risk
Practice:
 Westpac clear narrates their risk
mitigation policies under the Risk and
Risk Management section of their annual
report.
 They discuss a variety of risk including
credit, liquidity, market, operational and
compliance.

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Carroll’s philanthropic model
Carroll’s philanthropic
model suggests the way
of execution of CSR
initiatives as conceived
by the businesses
(Carroll, 2015).
As per the model, the
business has 4 types of
responsibilities under the
purview of CSR namely,
economic, legal, ethical
and philanthropic.

21
Carroll’s philanthropic model
As far as Westpac group is concerned, the
management of the business is involved in
various CSR activities in the country.
The management maintains a philanthropic
foundation that is committed to empower the
people around.

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Carroll’s philanthropic model
The Westpac Bicentennial Foundation
provides scholarship and fellowships every
year to 100 needy and meritorious students.
St.George Foundation, on the other hand,
provides healthcare services to the physically
disabled Australian kids every year.
Bank of Melbourne Neighbourhood Fund is a
special programme by the management of the
company under which the various charity
programmes are organised for the benefit of
Victorian communities.

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References:
 Millet-Reyes, B. and Zhao, R. (2010). A Comparison Between One-Tier and
Two-Tier Board Structures in France. Journal of International Financial
Management & Accounting, 21(3), pp.279-310.
 Boo, E. and Sharma, D. (2008). The association between corporate
governance and audit fees of bank holding companies. Corporate
Governance: The international journal of business in society, 8(1), pp.28-
45.
 Kofman, P. and Murawski, C. (2015). Does Australia Need a New Banking
Model?. Australian Economic Review, 48(2), pp.200-202.
 Asic.gov.au. (2018). 16-110MR ASIC commences civil penalty proceedings
against Westpac for BBSW conduct | ASIC - Australian Securities and
Investments Commission. [online] Available at: https://asic.gov.au/about-
asic/media-centre/find-a-media-release/2016-releases/16-110mr-asic-
commences-civil-penalty-proceedings-against-westpac-for-bbsw-conduct/
[Accessed 6 Sep. 2018].
 Lurdes Neves, D. (2014). Coaching and Ethical Leadership: A Competence
Executive Coaching Model for the Development of Ethical
Leadership. Journal of Psychology Research, 4(04), pp.12-21.
 Carroll, A. (2015). Corporate Social Responsibility (CSR) is on a
Sustainable Trajectory. Journal of Defense Management, 05(02), pp.56-77.
 Westpac.com.au. (2018). [online] Available at:
https://www.westpac.com.au/docs/pdf/aw/ic/2012_Annual_Report_on_Form
_20-F.pdf [Accessed 8 Sep. 2018].