Corporate Governance Framework at Westfield Group - Assignment Example

Corporate Governance Framework at Westfield Group Name of the Student: Name of the Instructor: Name of the course: Code of the course: Submission date: ‘ Table of Contents Table of Contents 2 Introduction 3 Company profile 4 Corporate governance frameworkand how it positions the firm to engage with stakeholders on local and international levels 4 Promotion of ethical and responsible decision making 4 Safeguarding integrity in financial reporting 7 Respect for rights of members 10 Conclusion 11 References 11 Corporate Governance Framework at Westfield Group Introduction Corporate governance has been perceived to refer to that blend of regulation, law and suitable voluntary practices in the private sector which are key in enabling the company to attract both human and financial capital, attain efficient performance and eventually, perpetuate itself by producing economic value to its stakeholders on a long-term basis, while at the same time, respecting the interests of the stakeholders and the wider society (Gregory, 2002, p. 1). The corporate governance framework has thus for a long time been perceived to play an integral role in the achievement of the aforementioned objectives in diverse corporations. Against this backdrop, this paper is a profound effort to explore the corporate governance framework at Westfield Group (WDC). This will be through identifying at least three key features of Westfield Group Company’s corporate governance framework and how it positions the firm to engage with stakeholders on local and international levels. In a global context, the ethical challenges confronting this firm that may or may not be addressed with its current governance arrangements will be analyzed. Nonetheless, it is imperative to briefly explore this company’s profile aimed at gaining an insight into the rudimentary foundation of its corporate governance framework. Company profile According to Morningstar (2011, p. 1), WDC is a shopping center group which vertically integrated and internally managed. Its primary activities entail ownership, design, development, construction, property management, funds/assets management, leasing and marketing undertakings. In the recent years, this company has embarked on extensive internationalization which has seen the diversification of its interests. In this regard, the corporation operates a wide alley of shopping center portfolios with expansive investment interests in 111 shopping centers across Australia, the United Kingdom, United States, New Zealand and Brazil. This embodies approximately 23,400 retail outlets. WDC has continued to enlarge its portfolio which has been chiefly been through the development of super-regional centers. Since 2010, the corporation has been gradually minimizing its ownership interest in its assets. Acquisition and corporate undertakings have been regarded as less attractive when juxtaposed with development as a result of robust competition for centers which exhibit high quality. In addition, the funding for WDC is primarily sourced from debt, equity, strategic asset sales as well as joint venture partners (Morningstar, 2011, p. 1). Corporate governance frameworkand how it positions the firm to engage with stakeholders on local and international levels Several chief features of WDC’s corporate governance will be explored in this section. Promotion of ethical and responsible decision making Mahdavi (2003, p. 2) determined that as the multi-national companies embark on global expansion and entering foreign market, there is a necessity and increased importance of ethical conduct of the employees as the officers. In this case, Morf (1999, p. 265) perceived ethics as the moral principle which individuals and collectives infuse in their decision-making processes which assists in moderating the ultimate outcome to conform to the diverse norms as embedded in their societies. In this corporate governance framework of WDC, there is a robust mechanism of promoting ethical and responsible decision making, eventually positioning the firm to engage with stakeholders on local and international levels. Firstly, this is underpinned in the existent management structure of the corporation as well as the appointment procedures in this corporation at both the national and international level. According to Westfield Group (2011, p. 125), there is an inherent objective of the group that the board be of a size and composition which is favorable to judicious and effective decision making. This ought to be characterized by diverse skills and perspectives and in the overall interests of the larger Westfield Group. In addition, extensive consultation is mandatory between the nomination committee and the board in the process of appointing a new member to the board. On the other hand, the full board initially endorses new directors, who must then submit themselves for election by members of the Westfield Holdings Limited during the AGM following their endorsement. They are then bound for re-election by the members of the company every three years, in exception of the case of the Chief Executive Officer (or one of them in a situation where there is more than one CEO) (Westfield Group, 2011, p. 125). In regard to the code of conduct at both the national and international levels, the corporate governance framework at Westfield Group has several documents which underpin the ethics and responsible decision making. These include but not limited to director’s code of conduct, compliance manual, Westfield values, employees handbook and the whistleblower policy (Westfield Group, 2011, p. 128). On the other hand, there is a diversity policy at the corporation’s corporate governance framework of WDC which is founded on the belief that diversity is central in contributing towards the success of the business and also aims to human resource which is reflective of the communities in which the group has operations. Against this backdrop, there is an extensive commitment at Westfield Group to diversity which denotes that the corporation will continuously make efforts towards ensuring that it molds an environment which supports equal opportunities with equality in terms of access to career development, benefits and remuneration through the execution of practices, policies and procedures which are central in supporting diversity among other matter in the corporation (Westfield Group, 2011, p. 129). Some of the diversity initiatives in 2012 in WDC include pay equity, tracking progress, development Programs and Education and flexible Work Arrangements and Parental Leave. According the Group’s future goals, the company will continue to concentrate on improving the level of diversity through a wide alley of strategies aimed at attaining the business values which WDC aspires (Westfield Group, 2011, p. 129). This feature of promoting ethical and responsible decision making as embedded in the corporate governance framework of WDC is imperative both at the national and international level in the effort to engage the stakeholders. Firstly, it promotes the level of democracy in the appointment processes of the firm through incorporating the input of the stakeholders in the decision making process. On the other hand, it promotes diversity in regard to ethnicity and gender. This is particularly central in part in adhering to the resolutions of the Gender Equity in the Workplaces Summit 2011 held at Sydney Convention and Exhibition Center. This Summit was intended to progress the changes necessary in ensuring that large private sector institutions in Australia considerably enhance their representation of women in leadership positions which are considered senior in the subsequent decade. This fact is also supported by Strandberg (2005, p. 10) who cited that gender and ethnicity diversity as viewed as second order dimension of diversity, goals which are beginning to be addressed in the recruitment efforts of some boards. Nonetheless, there is bound to be some ethical challenges at the global level which might not be addressed by this corporate governance arrangement at WDC, for instance, in the gender related diversity issues. This can become manifest when the group decides to expand into the Muslim world, mostly in the Middle East where the issues of gender in workplaces are differently stipulated in the dominant Sharia Law when compared with how they are perceived in the western countries. Safeguarding integrity in financial reporting This is another central feature in the corporate governance framework at WDC. At the core of this feature are the Audit and Compliance Committee and the Compliance Sub-Committee of the Audit and Compliance Committee. According to the Westfield Group (2011, p. 130) the Audit and Compliance Committee is mandated with the role of ensuring that there is existence of an effective and efficient internal control framework within the group. This is chiefly undertaken through the formation and maintenance of internal controls which are adequate in safeguarding the assets of the corporation and warranting that the integrity and reliability of the financial and management reporting systems. The undertakings of this committee are embedded in the Audit and Compliance Committee Charter which is aimed at assisting the board fulfill its corporate governance responsibilities. On the other hand, the compliance committee which is a sub-committee of the Audit and Compliance Committee is mandated with the role of monitoring the compliance of the group with the compliance plan as well as reports on its findings to the board through the Audit and Compliance Committee. In addition, this sub-committee is usually the main recipient of the reports on compliance with relevant anti-money laundering legislations (Westfield Group, 2011, p. 131). This feature as embedded in the corporate governance framework of WDC positions the corporation to engage with stakeholders at both the national and international level in several capacities. Firstly, it permits the stakeholders to review the financial aspects of this firm which is fundamental in perpetuating an organizational culture of transparency and accountability. According to the Westfield Group (2011, p. 131) the stakeholders of this company are usually encouraged to attend the annual general meetings each year so that they can receive the annual financial statements as well as passing an advisory vote on the remuneration report. In this regard, the external auditor is usually present in these AGMs where he/she is available to answer any questions raised by the stakeholders in regard to financial matters. This is key in safeguarding integrity in financial reporting to the stakeholders both at the national and international levels. Secondly, the compliance officers who are stationed in the WDC operations in the United States, United Kingdom, Australia and New Zealand are mandated with the responsibility of reviewing and monitoring the effectiveness of compliance systems within the group on a continuous basis and eventually ensure that the appropriate measures are undertaken aimed at educating the staff in regard to their responsibilities as well as reporting to the Audit and Compliance Committee on these issues. This information is also floated during national AGMs where the stakeholders are permitted to scrutinize this information and vote for favorable way forward (Westfield Group, 2011, p. 130) This current governance arrangement instituted at WDC can be perceived to be in a position to cope with diverse ethical challenges facing the firm in the global context in regard to safeguarding integrity in financial reporting. This is mostly with the harmonization of the financial reporting and accounting standards in different regions around the globe which gives the global community a singular entity. This fact is supported by Shil, Das and Pramanik (2009, p. 194) who cited that the international as well as local bodies setting standards on financial reporting have managed to come up with projects of harmonization and in majority of the cases, they have become successful. In this regard, the current governance arrangement instituted at WDC is viewed to be in a capacity to surmount the diverse ethical challenges in regard to financial reporting, mostly at the international level with the finalization of the financial reporting standards harmonization in the global context. Respect for rights of members This is another feature in the corporate governance framework of WDC which exhibits the engagement of the stakeholders in the corporation’s activities at both the national and international levels. Westfield Group (2011, p. 131) revealed that the Westfield Group has a deep commitment towards providing the stakeholders with timely, comprehensive and equality in accessing information about its diverse activities which is key in enabling them in making informed decisions which are informed. In regard to communication with stakeholders, diverse communication strategies are put into utility by the corporation which include direct communication, regular publication of all the information relevant to the company in the Investor Service Section of the Westfield website as well as guaranteed access to market briefings through teleconferencing facilities and webcasting. Against this backdrop, the group uses its corporate website as a mechanism of providing information to the stakeholders and the wider community which is interested in investment ventures (Westfield Group, 2011, p. 131). On the other hand, the group encourages the stakeholders to regularly access the Annual Report online aimed at assisting the commitment of WDC to environmental sustainability as well as elevated cost efficiency. This current governance arrangement instituted at WDC is bound to be in a difficult position to overcome future ethical challenges facing the firm in the global context in regard to the respect of the rights of stakeholders in the firm. This is through extensive dynamics in the stakeholders requirements as a result of diversity and polarization of the stakeholders. Conclusion In conclusion, it is apparent from the above discourse that Westfield Group has a strategic corporate governance framework in terms of features like promotion of ethical and responsible decision making, safeguarding integrity in financial reporting and respect for rights of members. This positions the firm in a suitable niche in engaging the stakeholders on both the national and international levels. Nonetheless, there are several ethical challenges which the firm may fail address with its corporate governance arrangement. References Gregory, H.J., 2002, Comparative Matrix of Corporate GovernanceCodes Relevant To The European Union andIts Member States, Weil, Gotshal & Manges LLP, New York. Morningstar, 2011, ‘Westfield group (WDC)’, Retrieved 15th August 2012, < http://www.investsmart.com.au/shares/asx/WESTFIELD-GROUP-WDC.asp>. Mahdavi, I, 2003, ‘International Business Ethics: Strategies and Responsibilities’, Journal of Academic and Business Ethics, pp. 1-6. Morf, D. A., Schumacher, M. G., & Vitell, S. J, 1999, ‘A Survey of Ethics Officers in Large Organizations’, Journal of Business Ethics, vol. 20, 265-271. Shil, N., Das, B, &Pramanik, A, 2009, ‘Harmonization of Accounting Standards through Internationalization’, International Business Research, vol. 2, No. 2, pp. 194-201. Strandberg, C, 2005, ‘The Convergence of CorporateGovernance and CorporateSocial Responsibility;Thought-leaders Study’, Retrieved 15th August 2012, . Westfield Group, 2011, ‘Westfield Group Annual Report 2011’, Retrieved 15th August 2012, < http://westfield.web1.interactiveinvestor.com.au/westfield1201/PDF/WDC_AR11.pdf>. Read More