Corporate Governance Assignment 01 (GC0138)
Table of Contents
Introduction.
Task 1: Discuss to what extent BHP Billiton PLC board of Directors complies with the requirements of the board effectiveness principle.
Task 2: Critically review the implications of the following board characteristics on the BHP Billiton PLC Board?
- a) Board diversity.
- b) Board knowledge and Independence.
Task 3: Student engagement
Conclusion.
References.
Introduction
Corporate governance is coming at the forefront in many organizations including several codes of conduct, rules, and regulations, and suggested best practices. The key aim of corporate governance is to ensure the expectation of stakeholders and provide transparency and credibility in corporate financial reporting. According to Gillan and Martin (2007), many giant corporations across the world fail because of the incapability of their management control.
The aim of this paper is to evaluate the practices of corporate governance of a reputed company; named BHP Billiton Plc. BHP Billiton Plc is a leading multinational resources company. It is operating in nine separate segments: petroleum, iron ore, steel materials, energy coal, manganese, diamond products, base metals, aluminum, and stainless steel materials. BHP Billiton is now operating in more than 100 nations over the world. BHP Billiton has a strong governance framework to gain long-term value creation. The following diagram shows the framework of BHP Billiton’s corporate governance (BHP Billiton, 2014).
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Diagram: BHP Billiton governance structure Source: BHP Billiton Annual Report (2016)
This paper evaluates the corporate governance of BHP Billiton PLC. The first part evaluates the characteristics of the board of governance including diversity, skills, experiences, and independence. Then, the diversity of the board of governance is evaluated in the second part. Finally, the board knowledge and independence are evaluated in the third part.
Task 1: Discuss to what extent BHP Billiton PLC board of Directors complies with the requirements of the board effectiveness principle
| Board characteristics | Code guidelines | BHP Billiton Plc |
| Diversity | Code B.2.4: Appoints to the board (under effectiveness)
Following this code, the organization should describe the diversity policy of boards. This description should include sex and gender, measurable objectives that need to be implemented, and progress of objective gaining. | This code is strongly complied with by BHP Billiton Plc comply. One of the principles and measurable objectives of BHP Billiton Plc is to support the achievement of diversity and underpin requirement standards. The aim of this policy and objective is to define the diversity approach and create an inclusive workplace with workforce diversity. The Board, Governance Committee and Nomination of BHP Billiton Plc believe that managing diversity in its workplace is essentials to gain corporate and organizational goals. BHP Billiton Plc also believes that managing diversity is important to have the right blend of perspectives among the Board and its committees and meet the expectation of shareholders (BHP Nilliton, 2016, p.100) |
| Skills | Code B.4.1. states that the Chairman should ensure formal, tailored and full induction for the new directors. Following this code, directors should be able to meet the needs of shareholders. Code B.4.2. states that the Chairman should provide intensive training and developments need to the directors and should review on a regular basis. Code B.2.2. discloses that the Nomination Committee should evaluate and assess the balance of skills and knowledge, experiences, and independence, and should take actions as required. | BHP Billiton Board has available skills and experiences to deal with the challenges it faces from society, market, climate changes. The Sustainability Committee of BHP Billiton is responsible to deal with climate changes and its effects on the business. In a word, the board of BHP Billiton has enough skills in the allocation of human, capital and financial resources to ensure long-term shareholders’ value. For improving the skills, the Board has taken several initiatives to make sure appropriate decisions formed by expert advisers and climate changes science. In addition, reviews and monitoring are done on a regular basis on how the Board performance can be improved (BHP Billiton, 2016, p.100).
When a new appointment is required to the Board, several skills and knowledge, background and qualification, reference-check are evaluated along with gender, nationalities and geographic locations (BHP Billiton, 2016, p.100).
To improve the skills and performance of the directors, the governance and nomination committee at BHP Billiton provides several induction, training and development programs. Every non-executive Director is provided with an induction program. Following this induction program, the Non-executive Directors are provided effective training through different improvement programs and training and development programs. These programs focus on several matters related to business nature including governance issues, social and environmental issues (BHP Billiton, 2016, p.101)………………………
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