ASX Principles and Woolworths Group: A Corporate Governance Report

This report provides an analysis of the corporate governance structure of Woolworths Group, a major retailer in Australia and New Zealand, in relation to the principles established by the Australian Stock Exchange (ASX). The report begins with an introduction to corporate governance, its importance, and the framework that guides companies. It provides background information on Woolworths Group, highlighting its customer-centric approach and its role in the Australian and New Zealand economies. The study then examines the corporate governance practices of Woolworths, referencing the company's annual Corporate Governance Statement. It outlines the key principles formulated by the ASX Corporate Governance Council, including the roles and responsibilities of management and the board, decision-making processes, financial reporting, shareholder rights, risk management, and employee remuneration. The report assesses the extent to which Woolworths adheres to these principles, identifying areas of strong compliance and highlighting areas where the company could improve. The report concludes by summarizing the findings and emphasizing the importance of a robust corporate governance structure for the company's success. The report also points out areas where Woolworths could improve its corporate governance practices such as recognizing employee and board contributions, and offering greater detail on sustainability and ethical practices.

Running head: CORPORATE GOVERNANCE
Corporate Governance
Name of the Student
Name of the University
Author Note

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Introduction:
Corporate Governance is the process by which companies are deemed to manage their
operations and their systems. It is a holistic approach by which most companies try to manage
and estimate the amount of risks facing the firm in question and hence mitigate the risks to the
fullest possible extent (Tricker and Tricker 2015). Ideally all companies are required to follow
the core set of corporate governance principles. Essentially, it consists of a set of frameworks
and structures that help the firm to steer in the correct direction (ArAs 2016). These rules and
principles help in setting of objectives for the firm and help them to understand who the major
stakeholders of the firm are and what their core responsibilities should be (Davies 2016).
Corporate governance principles primarily help the firm to realise the type and intensity of
innovation required and how various types of technological improvisation can be used to decide
the responsibilities and accountabilities of the different employees (Cuomo, Mallin and Zattoni
2016). This in turn helps to increase the productivities of the employees concerned and
effectively reach the optimum levels of potential and productivity (Bottomley 2016).
Woolworths Group is a vast company listed in the Australian Stock Exchange that is one of the
biggest retail chains especially in Australia. This firm has branches and chains spread all over
Australia and New Zealand. This study aims to focus on the best practices of corporate
governance as formulated by the ASX and then tries to study the corporate governance structure
and principles of Woolworths group to form a comparison as to what extent Woolworths as a
company has been able to maintain the standards set by the ASX principles and which are the
areas where they lag behind. It also aims to establish if the company has a weak, semi strong or
strong corporate governance structure with respect to adherence to the principles set by the ASX.

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Company Background:
Woolworths Group is one of the largest retailer store chains in Australia and New
Zealand and has operating over a long span of time. The company focuses on the needs of the
customer before anything else and is majorly customer interest driven company
(Woolworthsgroup.com.au 2018). The company is also responsible for creating employment for
millions of farmers in Australia and New Zealand. It also uses the concept of partnership for
efficient running of the business through the use of extensive partnership strategies. This in turn
helps in ensuring that the different departments of the firm are able to function smoothly and
provide consistent services to the customers.
The firm prioritises sustainable strategies to increase the amount of revenue generation
and growth. They also try to provide innovative and diversified products to the customers which
are new and fresh. Further, the firm has also been increasing trying to increase the portfolio
business through partnerships and use strategies and techniques that help in increasing the values
of the respective shareholders. This firm highly encourages changes in business strategies
according to customer feedbacks and changing customer demand patterns. In other words, the
firm aims at increasing efficiency of the processes at reduced costs. Further, it also tries to
produce and promote an increased number of brands, all of which are correlated and form a
complete cohesive structure.
Corporate Governance of Woolworths Group:
In the context of Corporate Governance, the company publishes a Corporate Governance
Statement every year that is reviewed and approved by the ASX in light of the principles set by

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the ASX Council themselves. This statement is formulated by a board that looks after the best
interests of the shareholders and also plans the financial objectives of the firm as a whole. It also
tries to ensure that the firm is acting ethically and responsibly and is giving back to the
community in which it operates (Woolworthsgroup.com.au, 2018). The codes of conduct, core
principles and the policies of diversity and inclusion are also mentioned in the same document.
Corporate Governance Principles Formulated by the ASX Corporate Governance Council:
According to the Australian Stock Exchange (2003), a good corporate governance
structure will primarily focus on the roles and responsibilities of the various members in the
management authority and the board of directors. Further, it is asserted that a corporate
governance structure and framework is strong and well formed only if a company has operated
for a large number of years and has altered the initial framework for a long time based on the
adverse situations during its years of operation (Aguilera, Judge and Terjesen 2018). As a matter
of fact,it is very crucial for the Australian companies to be at par with the other companies of the
world for which corporate governance in the best form is extremely essential (Davies 2016).
The best Corporate Governance Principles are mentioned here in this section to shed light on
the ideal characteristics of a good corporate governance framework.
 Firstly, it is extremely important to formulate a strong base which means that the primary
requirement of the firm for good corporate governance is to clearly and precisely lay
down the roles and responsibilities of the various managers and Board of Directors as
they form the backbone of any company and the operational systems of any firm are
directed by them.

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 Next, it is important to determine the strength or size of the management and the board
and also decide the intensity and weight of the roles and responsibilities being assigned to
the different members of the board. Further, in this context it is also important to properly
fix the composing elements of the board. This will help in bolstering the value and
importance of the board.
 Decision making is the next core element and the principle pertaining to the same
involves ethically being able to decide and take decisions which are well informed based
on research and past experiences.
 Next, it is important to formulate the financial budget and the financial objectives in such
a way that it helps in safeguarding the firm ethically and ensuring that the process of
financial reporting is done in an ethical way too.
 Disclosure and publishing of company information should be done in such a way that it is
done to the right extent and at the correct time.
 It is equally important and crucial to protect the rights and interests of the shareholders of
the company. For this the corporate governance structure to recognise and give value to
the shareholders.
 Innovative and tested methods of risk mitigation and management should be
implemented and effectively exercised. In fact, these methods should be tested internally
before direct implementation.
 The company should necessarily have rules and regulations and a well framed framework
in place to recognise the hard work of the employees and provide them with adequate and
judicious amounts of remunerations and salaries as well as incentives in relation to their
core responsibilities and productivities.

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 The board and the management should also be given credit and praised with awards and
recognitions for increased efforts and enhanced methods of handling the job of mitigating
risks.
 Finally, it is important to understand and give value to the interests and needs of the
various stakeholders of the firm.
Adherence to the principles by Woolworths:
If a careful evaluation of the corporate governance report of Woolworths Group is done, it is
noticed that most of the elements mentioned above are taken note of and dealt with in a serious
manner (Woolworthsgroup.com.au 2018). These are described in detail as follows:
 Firstly, the constitution section of the report outlines the most important element which is
the base of every firm. Further in this context the firm also has sections under which the
strength, constituting elements and the responsibilities of the group are mentioned
including the Directors and Group Executive Committee, Board Charter and Board
Committees. This section also forms a very important source of ethical and responsible as
well as well informed decision making.
 Secondly, it also highlights the importance of financial structuring and formulation of
financial objectives as well as risk management under the section of Group risk
Management.
 Further, the corporate governance report of Woolworths Group also enlists the ways and
forms of shareholder engagement. This section helps in enlisting the needs and
requirements of the shareholders and helps to cater better to their interests and helps in
forming a cogent structure that helps in maintaining strong shareholder relations that in

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turn helps in ensuring that the stability of the holistic growth of the company is
maintained.
 Next, the report also generates a section where the transparency of the disclosure of
information at the right time and in the right way is mentioned and explained in details
which is one of the most important principles as per the ASX Corporate Governance
Council’s set of best practice principles.
 The next important feature of the corporate governance report of Woolworths Group is
the mention of the various core values of the group and the ethical ways and forms in
which the core values lend to the catering of customer’s interests as per the changing
interests and demand patterns of these customers.
 The last section of the report mentions and elaborates on the principles and values of
diversity and inclusion. It mentions the policies and frameworks that help the firm to help
maintain gender equality and also help in creating equal opportunities for all the
employees as well as the freshers. It also helps in catering to the interests and needs of the
various stakeholders.
Hence, it can be asserted that apart from a few principles mentioned by the Australian Stock
Exchange Corporate Governance Council the company follows most of the principles mentioned
and has a well integrated and well formulated corporate governance structure. The parts of the
principles that are not adhered to and still needs to be incorporated are described in the
subsequent section of the study.

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Non Adherence to the principles by Woolworths:
The few best principles of corporate governance that are not included and should be
included and dealt with in greater depth by the company and the same should be included in the
report published. These include mention of how the company helps in providing recognition to
the managers and the board of directors when the initiatives and strategies taken and used by the
firm are enhanced and helps in boosting the growth of the company (Aguilera and Crespi-
Cladera 2016). Similarly, there should be increased and better mention of the remuneration
growth levels and recognition policies for the employees based on their productivities and
capacity development. Further there should be more in depth mention and discussion of the
measures and methods using which the company is able to maintain the trust of and cater to the
interests of the stakeholders. As a matter of fact, the firm should also be able to provide greater
depth of information regarding the techniques it uses for sustainable and ethical measures taken
by it to cater to the financial aims and objectives of the firm.
Conclusion:
Woolworths Group is one of the biggest retailer chains in Australia and New Zealand and
is one of the companies that are listed in the Australian Stock Exchange and accounts for a lot of
revenue generation for the country as a whole and also serves as a source of income and
employment generation especially for farmers. This firm has a well designed and well framed
corporate governance structure that helps it to manage its operations smoothly and provide
consistent services to its customers by keeping the interests of the shareholders and the
customers catered to at all points of time. The report of corporate governance published by the
firm also provides a clear evaluation of the various processes that help it to maintain the growth

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in a ethical and sustainable manner. However, although the firm caters to most of the principles
prescribed by the Australian Stock Exchange it lags behind in mentioning and discussing few of
the principles. Hence, it can be asserted that the firm has a semi-strong corporate governance
structure and has to improve some parts of it to become a completely strong corporate
governance oriented firm.

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References:
Aguilera, R.V. and Crespi-Cladera, R., 2016. Global corporate governance: On the relevance of
firms’ ownership structure. Journal of World Business, 51(1), pp.50-57.
Aguilera, R.V., Judge, W.Q. and Terjesen, S.A., 2018. Corporate governance deviance. Academy
of Management Review, 43(1), pp.87-109.
ArAs, G., 2016. A handbook of corporate governance and social responsibility. Routledge.
Australian Stock Exchange (2003). Principles of Good Corporate Governance and Best Practice
Recommendations. Sydney: Australian Stock Exchange Ltd., p.11.
Bottomley, S., 2016. The constitutional corporation: Rethinking corporate governance.
Routledge.
Cuomo, F., Mallin, C. and Zattoni, A., 2016. Corporate governance codes: A review and
research agenda. Corporate governance: an international review, 24(3), pp.222-241.
Davies, A., 2016. Best practice in corporate governance: Building reputation and sustainable
success. Routledge.
Davies, A., 2016. The globalisation of corporate governance: The challenge of clashing
cultures. Routledge.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices.
Oxford University Press, USA.

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Woolworthsgroup.com.au. (2018). Corporate governance - Woolworths Group. [online]
Available at: https://www.woolworthsgroup.com.au/page/about-us/our-approach/corporate-
governance/ [Accessed 8 Sep. 2018].
Woolworthsgroup.com.au. (2018). Woolworths Group: Quality Brands and Trusted Retailing.
[online] Available at: https://www.woolworthsgroup.com.au/ [Accessed 8 Sep. 2018].
Woolworthsgroup.com.au. (2018). Woolworths Group: Quality Brands and Trusted Retailing.
[online] Available at: https://www.woolworthsgroup.com.au/ [Accessed 8 Sep. 2018].