Western Australia's largest companies have delivered diverse results in a survey of corporate governance standards.
Western Australia's largest companies have delivered diverse results in a survey of corporate governance standards.
Woodside Petroleum Ltd earned top marks, while Wesfarmers Ltd and Fortescue Metals Group Ltd finished at the bottom of the 20-company list.
The 2008 BDO Kendalls Large-Cap Corporate Governance survey ranked the corporate governance standards of the 20 biggest companies listed on the Australian Securities Exchange.
Eight companies, including BHP Billiton Ltd, Woolworths Ltd, the big four banks and Perth-based Woodside scored a perfect eight for the survey.
Fortescue ranked last, scoring four out of eight, with Wesfarmers and SingTel only slightly improved with five out of eight.
The BDO survey found that 30 per cent of Australia's top 20 companies failed to have a fully independent board of directors, while 40 per cent failed to have a dedicated risk management committee.
Fortescue failed to meet half of the best practice guidelines, failing on board independence, failing to have fully independent remuneration and nomination committees, and lacking a dedicated risk management committee.
Wesfarmers' website states that the company '...complies with the ASX Corporate Governance Council's principles of good corporate governance', which are generally accepted as the benchmark in Australia.
However, the BDO survey draws on international practice and in some cases set a higher standard than the ASX best practice principles.
It found that Wesfarmers fell down because it failed to have fully independent audit and nomination committees, and did not have a dedicated risk management group.
Apart from this, BDO said Wesfarmers has "outstanding corporate governance".
BDO director of risk advisory services, Andrew Pearce, said that good corporate governance was essential to company operation.
He said that while some could tighten their corporate governance structures, most have satisfied best practice guidelines.
"Overall the corporate governance structures for the top 20 companies by market capitalisation are of a very high standard, and in the majority of cases the structures put in place meet all the best practice guidelines," Mr Pearce said.
The major banks - National Australia Bank Ltd, ANZ Banking Group Ltd, Westpac Banking Corporation and Commonwealth Bank Ltd - all earned perfect scores, complying with every aspect of the best practice guidelines.
With the survey results of the top 20 companies seen as positive, Mr Pearce believes that this will help to encourage other listed companies to set higher governance standards.
"All things considered, the findings are very encouraging, as the largest companies set an extremely high standard for other listed companies to follow," he said.
"As was demonstrated by the findings released last year, many of the companies listed on the ASX still have a few areas for improvement to measure up to the largest corporations in Australia."
The survey results were based on the 2007 annual report disclosures of the 20 largest companies by market capitilisation as at March 13, 2008.
