Wesfarmers complies with the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations (“ASX Principles”).
Wesfarmers’ corporate governance practices for the year ended
30 June 2007, and at the date of this report, are outlined in this corporate governance statement. The following table lists each of the ASX Principles and Wesfarmers’ assessment of compliance with the principles
| Status | |||
Principle 1: Lay solid foundations for management and oversight |
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| 1.1 | Formalise and disclose the functions reserved to the board and those delegated to management |  |
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| Principle 2: Structure the board to add value | |||
| 2.1 | A majority of the board should be independent directors |
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| 2.2 | The chairman should be an independent director |
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| 2.3 | The roles of chairman and chief executive officer should not be exercised by the same individual |
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| 2.4 | The board should establish a nomination committee |
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| 2.5 | Provide the information indicated in Guide to reporting on Principle 2 |
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Principle 3: Promote ethical and responsible decision-making |
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| 3.1 | Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to: | |
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| 3.1.1 | the practices necessary to maintain confidence in the company’s integrity |
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| 3.1.2 | the responsibility and accountability of individuals for reporting and investigating reports of unethical practices |
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| 3.2 | Disclose the policy concerning trading in company securities by directors, officers and employees | |
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| 3.3 | Provide the information indicated in Guide to reporting on Principle 3 | |
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Principle 4: Safeguard integrity in financial reporting |
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| 4.1 | Require the chief executive officer (or equivalent) and the chief financial officer (or equivalent) to state in writing to the board that the company’s financial reports present a true and fair view, in all material respects, of the company’s financial condition and operational results and are in accordance with relevant accounting standards |
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| 4.2 | The board should establish an audit committee | |
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| 4.3 | Structure the audit committee so that it consists of:
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| 4.4 | The audit committee should have a formal charter |
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| 4.5 | Provide the information indicated in Guide to reporting on Principle 4 | |
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| Principle 5: Make timely and balanced disclosure | |||
| 5.1 | Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance |
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| 5.2 | Provide the information indicated in Guide to reporting on Principle 5 | |
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| Principle 6: Respect the rights of shareholders | |||
| 6.1 | Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings | |
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| 6.2 | Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report | |
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| Principle 7: Recognise and manage risk | |||
| 7.1 | The board or appropriate board committee should establish policies on risk oversight and management | |
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| 7.2 | The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state to the board in writing that: | |
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| 7.2.1 | the statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board |
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| 7.2.2 | the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects | |
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| 7.3 | Provide the information indicated in Guide to reporting on Principle 7 | |
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| Principle 8: Encourage enhanced performance | |||
| 8.1 | Disclose the process for performance evaluation of the board, its committees and individual directors, and key executives |
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Principle 9: Remunerate fairly and responsibly |
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| 9.1 | Provide disclosure in relation to the company’s remuneration policies to enable investors to understand:
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| 9.2 | The board should establish a remuneration committee |
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| 9.3 | Clearly distinguish the structure of non- executive directors’ remuneration from that of executives |
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| 9.4 | Ensure that payment of equity-based executive remuneration is made in accordance with thresholds set in plans approved by shareholders |
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| 9.5 | Provide the information indicated in Guide to reporting on Principle 9 | |
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| Principle 10: Recognise the legitimate interests of stakeholders | |||
| 10.1 | Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders |
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