WESFARMERS SUSTAINABILITY REPORT 2018

The Board of Wesfarmers Limited and the role and responsibilities of Board and management

The Board of Wesfarmers Limited

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. This statement details the key aspects of the governance framework and practices of Wesfarmers. Wesfarmers regularly reviews its governance framework and practices so as to ensure that it consistently reflects market practice and stakeholder expectations. The Board believes that the governance policies and practices adopted by Wesfarmers during the reporting period for the year ended 30 June 2019 follow the recommendations contained in the third edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles). It is noted that the fourth edition of the ASX Principles was released on 27 February 2019, and takes effect for a listed entity’s first full financial year commencing on or after 1 January 2020. Many of Wesfarmers' corporate governance policies and practices set out in the 2019 Corporate Governance Statement also comply with the fourth edition of the ASX Principles.

The role and responsibilities of Board and management

The role of the Board is to approve the purpose, values and strategic direction of the Group, to guide and monitor the management of Wesfarmers and its businesses in accordance with the purpose, values and strategic plans, and to 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 to fostering a culture of compliance which values ethical behaviour, personal and corporate integrity, accountability, transparency and respect for others.

The Group 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 on pages 12 and 13 of the annual report and 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, the key focus areas of the Board during the 2019 financial year are set out below.

Key focus areas of the Board during the 2019 financial year included:

  • Overseeing management’s performance in strategy implementation;

  • Reviewing business operations and the development plans of each division likely to impact long-term shareholder value creation whether through portfolio management, consideration of divestment options or other strategies;

  • Overseeing the implementation of strategy to address areas of underperformance and reposition the portfolio to deliver growth in shareholder returns;

  • Overseeing the implementation of the Coles demerger;

  • Approving the sale of Wesfarmers’ 40 per cent interest in the Bengalla Joint Venture for $860 million with a pre-tax gain on disposal of $679 million (August 2018);

  • Approving the sale of the Kmart Tyre and Auto Service business for $350 million with a pre-tax gain on disposal of $267 million (August 2018);

  • Approving the sale of Wesfarmers’ 13.2 per cent interest in Quadrant Energy for approximately US$170 million with a pre-tax gain on disposal of US$98 million (November 2018);

  • Monitoring the Group’s operating and cash flow performance, financial position and key metrics, including financial covenants and credit ratings;

  • Reviewing the Group’s risk management framework and monitoring that the Group is operating with due regard to the risk appetite set by the Board;

  • 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;

  • Monitoring and evaluating growth opportunities to complement the existing portfolio;

  • Reviewing policies, reporting and processes to improve the Group’s system of corporate governance; and

  • Appointing the Company Secretary.