Discuss about the Corporate Governance of Woodside Petroleum.
This report is basically discussed about the company Woodside petroleum and the governance policies and practices adopted by the company. Woodside petroleum is Australian gas and Oil Company. It is a well-known company in the market for its capabilities as an explorer, a producer, a developer and a supplier. Services of the company are based on environmental performance and strong safety. The mission of the company is to provide higher returns to its shareholders and vision of the company is to become the leader in the market of oil and gas (Woodside, 2016).
Woodside petroleum has a great history and it has get lots of achievements during its operations. Company believes in doing right things and delivering the best services to its customers. Company is famous in whole because it provides the unique services with core values. Apart from this, the company always tries to protect environment and society and keeps them safe. Company has a unique strategy for the business so that it can maintain its strong position in the market by delivering best services to the customers. It also has the strategy for the employees so that employees get higher satisfaction level (The Australian, 2016).
Health and safety: Woodside petroleum believes that health and safety should be the priority for employees. It has a policy of ‘no one gets hurt, no incidents’ for the employees. Company gives full protection and support to the employees so that they live better life with their work. The objective of the company is to provide health and safety performance. There is a behavioral framework of the company ‘our safety culture’ which help the employees because they play a vital role in company’s safety culture. Company has a strong focus on the process of managing risks (Woodside, 2014).
The company Woodside petroleum has maintained a strong financial position in the market. It has continuously maintained a strong balance sheet and operating cash flow. There are three main operations of the company: Exploring, developing and producing. In exploring, the company focus on the building a material for the future growth opportunities of the business (Letts, 2016). Company takes bids and finds out commercial oil and gases in different areas. In developing, company expands its LNG portfolios through developing and identified growth opportunities. The third operation of the company is producing, by which company produces LNG assets. Australia is the most experienced LNG operator because of the Woodside petroleum. The company operates its business through value chain. There are four value chains adopted by the company:
Acquire and Explore: To manage the risk and increase the returns for shareholders, company explores globally. The company does global exploration and corporate acquisition. Once company has proved the presence of hydrocarbon in the assets, it has sent the asset for development process.
Develop: Company works closely with its customers, shareholders, partners, suppliers and government to get the opportunities for the development process. After the confirmation and the approval of resources, the company moves to delivery of project and construction.
Operate: The Company has the experience of around 30 years in operating of oils and gas facilities with the performance of environmental safety. When the development of resource is completed, it moves to operation part.
Market: Company believes in the safe and reliable delivery of services to its customers. It is the leading supplier of oil and gas in Asia specific region and the Australian domestic gas market. It has strong capability in contracting, marketing and trading (Smith, 2015).
Woodside petroleum is also investing in new technologies by discovery, development and innovation. The company is focusing on four technological areas i.e. subsurface technology, disruptive technology, upstream technology and downstream technology. It is continuously trying to develop new technologies that would help to increase the production of the company. Apart from the work, Woodside petroleum also established social relationship with its customers. Company gives responses on the issues which are raised by the customers and try to meet with the expectations of the customers and shareholders. Company invests in the programs which are beneficial for the health, economic and social development and welfare for the local community. It has also made a management team named security and emergency management for the safety of people and assets (Woodside, 2015).
An unethical practice refers to harm of the people, animals and environment due to business of company. It may be different issues such as child labor, unfair wages, forced labor, dumping toxic waste into environment etc. There are also some unethical issues in Woodside Petroleum which was criticized by the public. First issue was that Woodside Petroleum failed in climate advocacy fund and shareholder raised the issue to disclose its carbon price assumption. But company was failed to do so (The climate institute, 2011). In an annual general meeting of the company, Woodside Petroleum had failed in carbon disclosure issue. The company always claimed to have strong environmental identification but it had failed in the carbon disclosure issue and people of Australian super fund considered that there are risks in Woodside black box (Just invest, 2011). Second issue was raised by public when company reduced the cost to maintain its profit. To earn the same profit, company had cut more than 300 jobs and it had also done the same thing in previous year (Janda, 2015). It impact on lots of employees who were working for the company. The decision of job cut was an effort to adjust the fluctuation in the oil price, but it affected the livelihood of many employees. Third, Company had faced a strike of shareholders on the issue of incentive and bonus payment structure. Along with this, they wanted the answer regarding the growth strategy of the company. Some investors were concerned about the long term growth opportunity in the company (Smith, 2016). These some problems were criticized by the public and it has impacted on the image of the company.
Woodside petroleum is devoted to proper corporate governance and has developed a culture that values ethical behavior, integrity and respect in the work. Company believes that adopting and operating with high level standards of corporate governance is necessary for long-term performance and value creation of the company (ACCA, N.D.). Company has a proper structure for the operations. It has a core framework of corporate governance including mission, vision, strategic direction and core values of honesty, admiration, working together, regulation and quality of work within the company. The governance framework is for each person who is the employee of the company. The model of corporate governance of Woodside petroleum is discussed below:
Figure 1: Corporate governance of Woodside
(Source: Woodside, 2015)
Board composition: The figure provides a clear description of governance of the company. The business and related issues of the company are to be managed by the direction of the Board. The Board has permitted an official Board Charter which includes the role, powers, duties and functions of the board. Along with this, the Board in the Board Charter also has the responsibility of the management of company’s business activities which is managed by the Chief Executive Officer (CEO). He is responsible to the Board. The Board Charter and the designation of Board authority to the CEO are to be observed on a regular basis. The composition of board should be according to some principles i.e.:
Role and Responsibilities of Board: The main role of the Board is to set the company’s strategic direction, to select and assign a CEO and to manage the company’s management and business activities on daily basis. The Chairman of the company is accountable for the effective performance of the Board and for the protection of relations between directors and management which are important, agreeable and good for the company. The responsibilities of chairman are properly described in the Board of charter. The Board and its committee members try to give assurance to the shareholders that the Board selects the right skills, knowledge, experience and diversity which is necessary to govern the company. There are some powers and responsibilities of the Board for taking decisions:
There are some standards and guidelines principles which are necessary for the operations of any business. The aim or purpose of the guideline principles is to improve the operating environment and ability to adapt the change within the company. These guidelines principles help the companies to work ethically in the market. The standards and guidelines principles for the company are described below:
These are some regulatory framework under the governance of a company which helps the company to behave ethically with the employees and the society (OECD, N.D.)
The Woodside Petroleum has an effective team of governance. Company has made a code of conduct which has sets of practices, standards and principles related to personal and corporate behavior. It refers to how company adopts practices and regulations in daily business. Company made zero-tolerance policy against un-ethical behavior. There are disciplinary policies which will be taken against any unethical behavior. If someone is engaged in unlawful and inappropriate behavior in work related place and in work hours, disciplinary actions will be taken.
The issues which are criticized by public will be addressed by the immediate supervisor or the senior member available on the business unit, human resource manager or another higher authority in the HR team, antifraud or corruption advisor, a member of legal team, the CEO or a head of internal audit (Woodside, 2016).
Operations in governance: Company has made rules and policies related to health and safety of the employees and rules regarding the issues raised by operations which impact on the environment. The regulations and policies made by the company are:
Company focused on health and safety policies so that every employee may be safe and secure in the organization. The aim of these policies is to provide safe environment for the employees of the company. For this, company made operating standards, Health, safety, environment and quality policy, supporting processes and control etc. Company also focused on the protection of environment in which it operates. Company believes that the success of long term business depends upon the healthy environment. Company set operating standards, supporting process in the Health, safety, environment and quality policy.
Along with this, company tried to make the best place for the work. Company set the regulations and policies to deliver higher returns to shareholders. The policy of the company includes managing and hiring the employees on the basis of their experience, competence and performance regarding age, gender, beliefs, physical ability and cultural background. Company has promoted diversity through interactions and treated every person according to the values of Woodside’s.
There are some duties of directors of the company. The general duties of director are to act for the welfare of the company and efficient and effective use of his duties and powers for the best of company.
There are certain duties of managers and supervisors under each business unit and they have to follow them on their work place. There are policies and regulations for the managers such as Information management operating standards and security operating standard. Along with this, there are policies related to research and development of products and their innovations made by the company. The name of this policy is Technology development and registered intellectual property operating standards.
There is one more important policy regarding the shareholders. This is the duty of the company to release the information to its shareholders. The full report of the activities of Woodside’s should be released to the shareholders. In order to fulfill these obligations, company has made a policy named Continuous disclosure and market communication policy.
To conduct the business effectively, Woodside has to deal with government and company’s decisions are directly affected by the decisions of government. To deal with the government related issues, company has also made a policy named Company bribery and corruption policy (Woodside, N.D.).
Customer satisfaction is the important part of the company’s operating environment. By these policies and regulations, company is able to operate its business in effective and proper way. These regulations also help the company to overcome from the critics made by public.
Conclusion
By the above discussion, it has been analyzed that Woodside petroleum is famous and established Oil and Gas Company in the Australia. It has strong team of governance to handle the issues raised by the public. Company has a unique strategy for the business so that it can maintain its strong position in the market by delivering best services to the customers. Woodside petroleum makes social relationship also with its customers. Company gives responses on the issues which are raised by the customers and try to meet with the expectations of the customers and shareholders. To overcome from the critics, company has made different policies and regulations in different areas of business. From the report, it can be seen that Company has made a code of conduct which has sets of practices, standards and principles. It is expected that by practicing these relations and policy, company will operate its business for long time.
Here are some recommendations for the Woodside petroleum which can be adopted by the governance team:
References
ACCA, (N.D.), Disclosures on corporate governance, , accessed on 13th September 2016 from https://core.ac.uk/download/pdf/13120504.pdf
Janda, M., (2015), Woodside Petroleum set to cut around 300 jobs as profit rises 38pc, accessed on 13th September 2016 from, https://www.abc.net.au/news/2015-02-18/woodside-petroleum-posts-38pc-profit-rise/6138366
Just Invest, (2011), Woodside chairman dismisses carbon Price disclosure resolution, accessed on 13th September 2016 from https://www.justinvest.net.au/2011/05/woodside-chairman-dismisses-carbon-price-disclosure-resolution/
Letts, s., (2016), Woodside half-year profit drops 50pc as oil crash bites, accessed on 13th September 2016 from https://www.abc.net.au/news/2016-08-19/woodside-half-year-profit-drops-50-pc-as-oil-crash-bites/7765632
OECD, (N.D.), OECD GUIDING PRINCIPLES FOR REGULATORY QUALITY AND PERFORMANCE, accessed on 13th September 2016 from https://www.oecd.org/fr/reformereg/34976533.pdf
Smith, A.G., (2015), Design work on Woodside’s Browse floating LNG project to start, accessed on 13th September 2016 from https://www.smh.com.au/business/design-work-to-start-on-woodsides-browse-floating-lng-project-20150630-gi23v4.html
Smith, A.G., (2016), Woodside Petroleum investors seek answers on growth, M&A, accessed on 13th September 2016 from https://www.smh.com.au/business/woodside-petroleum-investors-seek-answers-on-growth-ma-20160513-gout6r.html
The Australian, (2016), WPL details, accessed on 13th September 2016 from https://markets.theaustralian.com.au/shares/WPL/woodside-petroleum-limited
The climate change institute, (2011), Woodside petroleum dodges climate change resolution, accessed on 13th September 2016 from https://www.climateinstitute.org.au/articles/media-releases/woodside-petroleum-dodges-climate-change-resolution.html
Woodside, (2014), realizing our Global Vision, accessed on 13th September 2016 from https://www.woodside.com.au/Investors-Media/announcements/Documents/18.02.2015%202014%20Annual%20Report.pdf
Woodside, (2015), Corporate governance statement, accessed on 13th September 2016 from https://www.woodside.com.au/Investors-Media/announcements/Documents/17.02.2016%202015%20Corporate%20Governance%20Statement.pdf
Woodside, (2015), sustainable development report 2015, accessed on 13th September 2016 from https://www.woodside.com.au/Investors-Media/announcements/Documents/18.03.2016%202015%20Sustainable%20Development%20Report.pdf
Woodside, (2015), The Woodside Innovation & Technology Hub, accessed on 13th September 2016 from https://www.woodside.com.au/Working-Sustainably/Documents/WITH_Brochure.pdf
Woodside, (2016), experience the energy, accessed on 13th September 2016 from https://www.woodside.com.au/Pages/home.aspx
Woodside, (2016), Reconciliation Action Plan, accessed on 13th September 2016 from https://www.woodside.com.au/Working-Sustainably/Documents/2016_RAP.PDF
Woodside, (N.D.), Woodside policy, accessed on 13th September 2016 from https://www.woodside.com.au/supplying_to_woodside/Documents/Code%20of%20Conduct%20(December%202015).pdf.
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