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. The corporate governance statement details the key aspects of the governance framework and practices of Wesfarmers. The company regularly reviews its governance framework and practices so as to ensure they reflect market practice and stakeholder expectations.

The Board believes that the governance policies and practices adopted by Wesfarmers during the reporting period ended 30 June 2021 follow the recommendations contained in the fourth edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles) released on 27 February 2019.

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;

guide and monitor the management of Wesfarmers and its businesses in accordance with the purpose, values and strategic plans;

oversee good governance practice; and

set the Group’s risk appetite and monitoring and reviewing the Group’s financial and non-financial risk management systems.

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 Board has a charter which clearly sets out its role and responsibilities and describes those matters expressly reserved for the Board’s determination and those matters delegated to senior management. Senior management, amongst other matters, takes primary ownership of, and is responsible for:

instilling and reinforcing the Group’s values;

implementing sound risk management and controls which accord with the risk appetite set by the Board; and

ensuring the Board receives timely and accurate information about the Group to enable it to fulfil its responsibilities.

Further information on the roles and responsibilities of the Board and of senior management can be found in the Board Charter, which is available in the corporate governance section of the company’s website at www.wesfarmers.com.au/cg

The Board holds management accountable for the performance of its delegated functions. In doing so the Board constructively challenges management’s proposals and decisions and seeks to instill a culture of accountability throughout the Group.

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 company’s 2021 Annual Report and in the 2021 Corporate Governance Statement. The Board maintains ultimate responsibility for strategy and control of Wesfarmers and its businesses.

Key focus areas of the Board during the 2021 financial year included:

Guiding and supporting management in relation to the Group’s response to the COVID-19 outbreak, with a key focus on the health, safety and wellbeing of the Group’s team members and customers

Setting new emission reduction targets and aspirations for the Group’s businesses

Approving the Final Investment Decision for the Mt Holland lithium project and commitment of initial funding

Overseeing management’s strategy to accelerate data and digital capabilities including improvements to supply chain systems and processes to accommodate increased demand due to COVID-19 and development of a Group data and digital ecosystem

Reviewing and providing input into the business operations and the strategic plans of each division likely to impact long-term shareholder value creation

Overseeing management’s performance in strategy implementation

Overseeing the implementation of strategy to address areas of under-performance and reposition the portfolio to deliver growth in shareholder returns including ongoing changes to the Target and Kmart store networks

Monitoring and evaluating growth opportunities to complement the existing portfolio

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, overseeing the implementation of strategies to improve the Group’s risk management framework and monitoring that the Group is operating with due regard to the risk appetite set by the Board

Reviewing and updating the Group’s risk appetite statement to reflect new and emerging risks and changing circumstances

Monitoring the Group’s safety performance and overseeing implementation of strategies to improve safety performance and enhance workplace safety awareness

Overseeing the Group’s remuneration framework and remuneration outcomes for senior management

Reviewing the processes in place to attract, develop, motivate and retain talent

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

Monitoring the Group’s performance on key ESG metrics and overseeing implementation of strategies to improve ESG performance and enhance ESG awareness.