The Australia (BHP Billiton 2017). There are

The chosen company for this
particular report is BHP Billiton Ltd. It is an Australian Company whose
headquarters in Melbourne. The basic reason of choosing this company in this
particular project is that it is regarded as the world’s largest mining company
and apart from this it is referred as the fourth largest company in Australia (BHP Billiton 2017). There are many aspects in the
company that can be explored and the large profile of the company made it easier
to choose the company for writing this assignment. The operations of the
company are extended to the mining of minerals beside oil and production of
gas. The company owns the subsidiaries in the field of logistics and transport.
It does not end here, the company reportedly made significant donation towards
the society.  It has a global impact. The
process of operation is carried in over 25 countries. It is also working in the
sector of mining and is using green energy in order to minimize the emissions (BHP Billiton 2017). These are the main reasons for
choosing this company. However the most important factor for choosing this
particular company is the controversy that it faced in the recent times. It was
in the news for its poor performance according to the stock exchange in
Australia. The transition from being a good company to a bad company is
something that can be witnessed in the report. This was an exciting area to
work upon.

 

 

Answer to Question
2:

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Board Characteristics

Approach
Did
the Company comply with the code? Explain/Provide Evidence

Implications
 

Separated roles of CEO/Chairman

Yes the company has complied with the code of Corporate
Governance.
According to the code of Corporate governance every company
should be headed by an effective board which is collectively responsible for
the long-term success of the company. There should be a clear distinction
between running of the board and the executive responsibility for the smooth
running of the business of the company. The Chairman and the CEO should be
responsible for leadership of the entire board and to ensure the
effectiveness on all the aspects of the role (Keay
2014). The company fulfills all the above mentioned factors and has
maintained the code. The Chairman and the CEO directs the entire board and
are the ultimate decision makers of the company. Therefore they serve a great
responsibility (Filatotchev, Jackson and
Nakajima 2013).

The company functions properly under the leadership of the
Chairman and CEO. The code of governance aids the company to maintain the
decorum and it keeps pedagogy in the company.

Role of Executive Leadership team

Under the code of governance the ELT should be responsible for
the daily management of the group and for leading the delivery of the
objectives related to the strategy. This is maintained by the Executive
Leadership Team and they are well-organized in it (Dignam and Galanis 2016).

Executive leadership team helps to maintain the proper track of
the delivery of the products. The objectives of the strategy guides the
organization in the right path. This is the major effect of this code of
corporate governance.

Role of operations management committee

The code of corporate governance proposes the fact that the responsibility
of the operations management committee is to plan, direct and control the
activities of the company (Khan, Muttakin and
Siddiqui 2013). The company complies all the codes of corporate
governance. The operations management committee leads all the key group strategies,
decisions related to investment and operations .They also provide
recommendations to the board and discloses the financial and other
performance primarily by commodity (Daily and
Dalton 2015).

Operation Management Committee has a major implication in the
company. The disclosure of the financial and other performance of the
commodity provides the most meaningful vision into the nature and financial
outcomes of the activities of the business.
 

 

 

 

Answer to Question 3:

 

Board
Characteristics

Approach
Did
the Company comply with the code? Explain/Provide Evidence

Implications

Gender
diversification (percentage of female to male)

 The organization does not
have a balanced workforce in relation to the gender diversity as they are
operating in the mining industry, so for extracting minerals and ores the
management recruits male individuals mostly.

 The management of BHP
Billiton aims to achieve a gender balance in their organization by the year
2025 and are currently working on this issue (Adhariani, Sciulli and Clift 2017).

Skills
and Board Knowledge
(Skills,
Current and previous board experiences)

The management board of BHP Billiton has sustained a matrix of
skills for a few years and the matrix can impact the industry along with the
external environment in general. The board members of BHP Billiton are
experienced enough. The majority of the board members have more than 10 years
of working experience as a manager or advisor.

 The highly experienced
and effective board members of BHP Billiton are seen to increase the
productivity of the business organization. Under their supervision, the
organization can aim to capture the majority of the global market within a
few years.

Age

(Average
Age of the Board)

The average age of the board is 62.

As the average age of the board members is 62, it is likely that
they have more experiences than any other individual working in the same
sector (Olivier and Wright 2014).
Thus it can be considered as an advantage of the business organization.

Independence

 (Number of Independent board members to executives)

Currently BHP Billiton has 8 independent board executives
working for them who are experienced enough to run the business successfully.

 Having 8 independent
board members is one of the plus points of the business organization and the
management can use it to increase the productivity and profitability of the
organization.

 

Answer to Question 4:

 

Accountability
Components

Approach
Did
the Company comply with the code? Explain/Provide Evidence

Implications

 Structure of Audit Committee
(number of independent board members)

 Currently in the audit
team of BHP Billiton there are 10 members with experience of more than 20 years
in the finance sector, which helps the organization to face no issues
regarding financial matters.

 Having a well-structured
audit team the management of BHP Billiton experience advantage in the
financial sector and that directly help the organization to eradicate any
financial and legal issues.

External
Auditors
(who
are the auditor of the firm, what is the time scale of their contract)

At the time of merging, the management of BHP Billiton stated
that they would put the external audit to tender and they appointed
PricewaterhouseCoopers and KPMG along with Anderson as the external auditors.

 By appointing big reputed
organizations as an external auditors BHP Billiton continued to show their
class and that projected why they are different from any other organizations
working in the same sector.

Board
Evaluation
 (when was the last time the firm took and external perspective to
this)

·        
The
board will evaluate the effectiveness of the chairman, committees, and
individual directors along with the process of governance.
·        
The
board will evaluate the level of performance of the directors.
·        
All
the evaluations will be on the basis of the balance of skills, tasks
performed by the board, experience and independence of the company on the
board.

The evaluation of the board of BHP Billiton will vastly help the
management of the organization to identify the strengths and weaknesses of
the governance body which can effectively improve both the productivity along
with the profitability of the business organization.

 

 

 

Answer to Question 5:

 

     Remuneration Characteristics

Approach
Did
the Company comply with the code? Explain/Provide Evidence

Implications

Structure
of Remuneration (Components of Pay/ Claw back/ Long-term
targets)

The structure of remuneration of BHP Billiton is directly related
with the performance of the groups during the financial year. The
remuneration policies of BHP Billiton shall be put in front of the
stakeholders and the AGM for three yearly approvals (Salvioni and Astori 2015).

The improved structure of remuneration will help the general
workforce of the business organization to get further motivation and loyalty
towards the organization .If the work force is motivated it  t will positively impact  the productivity and profitability of the
business corporation.

Structure
of Compensation Committee
 (number of independent board
members)

 
 

 

 

CSR
characterteristics

Approach
Did
the Company comply with the code? Explain/Provide Evidence

Implications

AGM
Reporting
(number of
meetings/disclosure of voting)

·        
The
management of BHP Billiton ensures that they will assess their CSR
performance in relation with the Global Compact principles set by UN.
·        
The
Board of BHP Billiton will arrange an annual forum regarding CSR that will
bring all the senior executives and the major private business organizations
together to discuss on the environmental and social issues. (Fonseca,McAllister
& Fitzpatrick 2014).
·        
By
investing in the projects that favors communities, which will ensure a
persistent framework to measure the tangible progress.

If the CSR activities of the business organization get enhanced,
eventually it will increase, the repute of the organization in global market
and that can effectively improve the level of productivity and profitability
of the business corporation. As the organization BHP Billiton agrees all the
regulations set by UN, the organization will not face any threats in this
regard at least.

Communications
with Shareholders
 (What tools are used)

The management of BHP Billiton maintains a good communication
with the shareholders. After conducting the general meetings or summits they
provide all the necessary information to their shareholders to maintain a
basic transparency.
This is a good initiative taken by the management of the
organization as it improves the relation between the governance body and the
shareholders of the organization.

By Maintaining a strong communication with the shareholders the
management of BHP Billiton can experience a transparency and loyalty of the
shareholders of the organization (Pottenger and Leigh 2016).

 

 

 

 

 

Answer to Question
6:

There are many
shareholders of the company and they are consistent. The biggest shareholder of
the company is Bank of America Corp. With the market
capitalization of 147 billion pounds it can be ranked in one of the four major
money-center banks in the United States. This provides a full range of
financial services, investment-banking services and commercial services. The
company has been found to be operated through five business divisions. The five
divisions are consumer banking, the investment management, Legacy and
servicing, Global Markets and Global wealth (Tricker
and Tricker 2015). The other important stakeholder of the company is Dimensional Fund Advisors LP. It is a private investment-management
firm whose headquarters are situated in Austin. It launches and manages equity
and fixed-income mutual funds and investment portfolios for the clients. It
also looks after the investment in real estates. This firm has many offices in
areas like in U.S, Canada, the United Kingdom, Australia, the Netherlands,
Germany, Singapore and Japan. The third most important shareholder is Earnest
Partners LLC. The company is a privately owned investment-advisory and
management firm. Its headquarters is in Atlanta. It deals with equity and
fixed-income. Apart from this the firm also deals in alternative investments
and other assets. The other prominent shareholder is CL Investment Inc. This company is a Toronto-based subsidiary
of CI Financial Corporation. The company offers investment management and
advisory services to a wide range of clients. This looks after fixed-income
mutual funds and it manages the portfolios of the clients. Apart from these
shareholders, other shareholders are Neuberger
Berman Group LLC (Clarke 2014).

The company is found to cooperate
well with the shareholders. The employees of the company make effort in reporting
about the progress of company to the shareholders (Sanalvioni and Bosetti
2015). They inform their shareholders about the annul business and about their
annual progress. The shareholders are provided with detailed information. This transparency
of the company is important as the shareholders invest money in the company
(Idowu, Capaldi and Zu 2013). At the end of the year shareholders expect some
amount of cooperation and some amount of profit from the company. This keeps
their relationship healthy. It’s a large organization where the shareholders
have kept their trust on the company. The decision of the company can bring the
stakeholders to risky situation and therefore they are supposed to be informed
about all the situations that are faced by the company (Bushee, Carter and
Gerakos 2013).

 

Answer
to Question 7:

 

The company is found to fulfil all
the codes of the corporate governance. The company is not found to lack any
major code which is the reason that it’s rated one of the biggest and largest
growing company. The only drawback in the company is on the part of the duties
of the directors. According to the code of governance in relation to the duties
of the directors, they should use their abilities towards the best possible
interest of the organization (BHP Billiton. 2017). However in this case as the
directors are not able to channelize their skills towards the company’s best
interest they are not fulfilling the director’s duty. It can also be stated in
this case that as there is no diversity in the board with respect to
educational background they do not have the ability to bring the company out of
the adverse situation.  Apart from this
the company is found to abide by all the code of corporate governance and there
is no chance to find any fault in the company regarding this (ArAs 2016).

 

Part 3:

 

CRICITAL REFLECTION:

The difficulty that I faced while
doing this assignment was to find the relevant information of the company and
to study the exact code of corporate governance. The functions and the role of
the shareholders was a huge thing to find and a difficult one. However from the
assignment I learned the policies and the norms of the code of corporate
governance. By analyzing the pitfalls in the system I realized the ways by
which it could be improved. I realized some problems that were there in the
company and I came up with some way on how to improve those. In the first place
the responsibility of the managing director of the company must be separated
from that of the chairman. Both of them should manage their affairs separately
without interfering with each other responsibilities. The company should
seriously address the need of sub committees. The committees must consist of
the non-executive directors who are independent. The subcommittees must be made
with respect to areas like nomination, audit, appraisal and remuneration. I
realized that it is extremely necessary to have an efficient and independent
board of directors within the company and the company maintains a good relation
with the shareholders as this is the first and foremost ethics that the company
must follow. I could extract about the necessity of the code of corporate
governance and the function of the same in any company. This was my
understanding of the work.

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