Corporate Governance Report on Woolworths

This report analyzes the corporate governance practices of Woolworths Limited, focusing on their compliance with ASX principles, governance disclosures, and recommendations for future improvements. It highlights the importance of ethical conduct, board structure, and shareholder rights in enhancing corporate governance.

Running head: FINANCIAL ACCOUNTING
Financial Accounting
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Table of Contents
1. Introduction of the selected organisation:....................................................................................2
2. Corporate governance disclosures of Woolworths Limited:.......................................................2
3. Compliance of Woolworths Limited with the essential principles of corporate governance:.....4
4. Recommendations for future improvement:................................................................................6
References:......................................................................................................................................7

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1. Introduction of the selected organisation:
For this report, Woolworths Limited has been selected as the organisation, as it is one of
the leading retailers in Australia and it is listed on the Australian Stock Exchange. This is a retail
super chain and it is mainly owned on the part of Woolworths Group. The organisation is
involved in expanding the range of products sold in the supermarkets and corresponding retail
stores through the sale of stationery items, kitchenware and magazines. In addition, the
organisation has initiated various marketing strategies like promotional offers and discounts in
attracting new and potential customers.
2. Corporate governance disclosures of Woolworths Limited:
From the corporate governance report of the organisation, it has been found that the
board is to ensure the shareholders’ interests by appraisal of the organisational strategies,
performance and policies (Woolworthsgroup.com.au 2017). In order to ensure this, a board
charter has been adopted for regulating the composition of the board and the meeting process. In
addition, the chairperson of Woolworths Limited is accountable to monitor the contribution of
the individual directors along with evaluating their performance and the overall board.
It has been found that majority of the directors involved with Woolworths Limited are
independent, which could be validated with the help of the following figure:

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Along with this, the board has formed a nomination committee to review the potential
candidates for board appointment as well as the retired directors standing for re-election by
considering skills, experience and diversity of the board composition (Sivathaasan 2016).
Woolworths Limited has developed a code of conduct for all staffs, directors and executives.
Such code of conduct is associated with trading policy in company securities and continuous
disclosure to ensure the interests of all the associated stakeholders. Some of the codes of conduct
include the trading policy on company securities and continuous disclosure to comply with the
regulatory requirements (Beekes, Brown and Zhang 2015).

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For communicating with and ensuring participation of the shareholders, Woolworths
Limited holds annual general meetings mainly in November along with publishing the decisions
taken after the board meeting has been completed. The organisation has formed a risk
management team, which looks after the material business risks and report the same to the
management about managing such risks in an effective fashion. The remuneration committee has
been formed on the part of the organisation as well and most of the members in the remuneration
committee are independent and the head of the committee is not the head of the board.
3. Compliance of Woolworths Limited with the essential principles of corporate
governance:
The essential principles of corporate governance as laid out in the ASX rule and the
compliance status of Woolworths Limited are depicted as follows:
Presence of effective foundations for management and oversight:
A listed organisation is required to reveal the respective roles and responsibilities of its
board and management along with the way of monitoring and evaluating the overall performance
(Claessens and Yurtoglu 2013). From the above section, it has been found that Woolworths
Limited has adopted a board charter for regulating the composition of the board and the meeting
process. In addition, the chairperson of Woolworths Limited is accountable to monitor the
contribution of the individual directors along with evaluating their performance and the overall
board.
Structure of the board in adding value:

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As laid out by Larcker and Tayan (2015), a listed organisation needs to have a board of
effective size, skills, composition and commitment for enabling it in discharging its duties
effectively. It has been found that majority of the directors involved with Woolworths Limited
are independent and the board has formed a nomination committee to review the potential
candidates for board appointment as well as the retired directors standing for re-election by
considering skills, experience and diversity of the board composition.
Acting responsibly and ethically:
It is of utmost importance for an organisation to act in a responsible and ethical manner in
the operating market (Sivathaasan 2016). Woolworths Limited has developed a code of conduct
for all staffs, directors and executives. Such code of conduct is associated with trading policy in
company securities and continuous disclosure to ensure the interests of all the associated
stakeholders.
Safeguarding integrity in corporate reporting:
A listed organisation needs to have formal and rigorous methods for independent
verification along with safeguarding the integrity of corporate reporting (Tricker and Tricker
2015). Woolworths Limited has established a remuneration committee, in which most of the
members in the remuneration committee are independent and the head of the committee is not
the head of the board.
Respecting the rights of the shareholders:
It is necessary for a listed organisation to ensure the rights of the stakeholders by
providing them with effective facilities and information (Young and Thyil 2014). Some of the

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policies for ensuring the shareholders’ rights include the trading policy on company securities
and continuous disclosure to comply with the regulatory requirements.
4. Recommendations for future improvement:
Woolworths Limited could adopt the following measures for improving its corporate
governance principles further:
 The organisation needs to provide greater clarification of the board’s role in its corporate
governance statement
 Monitoring the organisational performance is another requirement, which would help in
identifying any disparity before the disclosures are made.
 The directors could be provided with greater financial information so that they could
evaluate the financial position of the organisation in a better manner and formulate any
steps for further improvements.
 The board and director performance needs to be evaluated independently and if any gap
is identified, measures need to be taken to strengthen the principles of corporate
governance.
 Woolworths Limited could conduct audit of all the individuals involved with the
organisation by appointing an external firm to examine the corporate behaviours and
policies.
 Finally, the organisation could develop a manual in order to govern the company
relations. The managers and owners need to be involved here for providing a message to
the staffs that effective behaviour within the organisation initiates from the top.

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References:
Asx.com.au. (2017). [online] Available at:
http://www.asx.com.au/documents/asx-compliance/cg_principles_recommendations_with_2010
_amendments.pdf [Accessed 5 Sep. 2017].
Beekes, W., Brown, P. and Zhang, Q., 2015. Corporate governance and the informativeness of
disclosures in Australia: a re‐examination. Accounting & Finance, 55(4), pp.931-963.
Claessens, S. and Yurtoglu, B.B., 2013. Corporate governance in emerging markets: A
survey. Emerging markets review, 15, pp.1-33.
Larcker, D. and Tayan, B., 2015. Corporate governance matters: A closer look at organizational
choices and their consequences. Pearson Education.
Sivathaasan, N., 2016. Corporate governance and leverage in Australia: A pitch. Journal of
Accounting and Management Information Systems, 15(4), pp.819-825.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices.
Oxford University Press, USA.
Woolworthsgroup.com.au. (2017). [online] Available at:
https://www.woolworthsgroup.com.au/icms_docs/182380_Corporate_Governance_Statement.pd
f [Accessed 5 Sep. 2017].
Young, S. and Thyil, V., 2014. Corporate social responsibility and corporate governance: Role of
context in international settings. Journal of Business Ethics, 122(1), pp.1-24.