Corporate Governance: Watpac Limited is an Australian Construction and Property Development company that is listed on the Australian Stock Exchange. The company was established in 1983 and has developed to become one of the leading firms in national construction, property development, and mining services. Watpac has a history that spans more than three decades of success and growth and employs over 1,350 people in various cities in Australia such as Brisbane, Sydney, and Melbourne ("About Watpac," n.d.). The firm's competitive advantage can be attributed to its diversified business strategy, the depth of its local expertise and networks, and mixing the strength of its national reach with balance sheet. The other significant element of its competitive advantage is its corporate governance that is based on certain policies and procedures.

Outline of the Review:

This analysis of Watpac Limited's corporate governance will be based on its 2013 annual report, which was a reflection of the organization's year of consolidation and change. The report primarily focuses on reviewing the structure, process, and effectiveness of the governance of the company and providing recommendations for appropriate improvements. Notably, the report begins with a brief discussion of the importance of reviewing Watpac's corporate governance based on the annual report. This is followed by examining the bases or criteria of the firm's governance based on relevant standards or guiding principles as well as the reasons for their use. The next segment provides a brief critical review of the company's governance through application of relevant principles, concepts, standards, and other tools or techniques. The final part of the report provides a list of recommendations for suggested improvement for the organization based on the review. Therefore, the report is divided into three major sections that guide the review or analysis.

Importance of the Review:

Corporate governance can basically be regarded as the regulated or occasional self-regulated regime of compliance. This process is not limited to the legal aspects established under the relevant legislation or the general law. It exceeds to include accountability and norms of corporate governance best practice and essentially refers to the process through which companies are controlled and directed. Generally, corporate governance entails establishing right policies and procedures for things to be done in a proper way, representing owners and other interest groups, and translating vision into organizational philosophy (Sookdar, n.d.). Therefore, the review of an organization's corporate governance helps in determining whether the firm's compliance with legal controls and accountability based on these legal measures and best practices in corporate governance. This analysis is also important in understanding Watpac's shareholder rights, examining the roles of Chairman and Chief Executive, and understanding board structures and committees. Conducting the review is also important in understanding Watpac's risk management and corporate social responsibility and sustainability.

As previously mentioned the review of Watpac's corporate governance will be based on certain standards and guiding principles. The guiding principles in review the Watpac's corporate governance is the organization's obligations to the society at large, investors, employees, managers, and customers. This is primarily because a company demonstrates good governance by providing benefits to each of these stakeholders. Actually, good corporate are usually made through the combined efforts of all stakeholders i.e. board of directors, shareholders, investors, employees, dealers, the government, customers, and the society at large (Fernando, 2009, p.57). Therefore, the principles or standards guiding this review include the governance partnership, the regulatory framework, functions of the board, capabilities and responsibilities of the directors, corporate risk assessment, and corporate social responsibility and sustainability.

These standards and guiding principles have been selected as the basis for the review because they represent the best practices with which a good corporate are based. A good corporate or organization is determined based on its value to shareholders, investors, the society at large, employees, customers, managers, and the government. Secondly, these standards and principles are the basis for the review because they are the best practices in corporate governance. They not only represent the regulatory framework for governance of organization but also reflect best practices across organizations.

Critical Review of Watpac's Corporate Governance:

The top management of Watpac Limited support the core principles established by the Australian Stock Exchange Corporate Governance Council based on the 2010 revised principles and recommendations ("Corporate Governance Statement," n.d.). The company has established structures, policies, and procedures that have been created by its Board and management. These components are developed progressively and geared towards ensuring that Watpac's operations are founded on similar core principles advocated by the Council. The main principles that oversee the organization's corporate governance include...

The others include safeguarding integrity of financial reporting, making timely and balanced disclosure, respecting shareholders' rights, recognizing and managing risk, and fair and responsible remuneration.
The company has not only established a Board of Directors but also contains Group Senior Executive Team, which is made of leaders from across the business who are mandated with driving financial performance, values and culture and secure and high-quality delivery of projects. The board of directors is one of the strategies of internal governance mechanisms that are geared towards ensuring that the interests of managers and shareholders are closely aligned and as part of disciplining and eliminating ineffective management teams (Kang, Cheng & Gray, 2007, p.194). The company ensures that these interests are aligned by giving the Board the responsibility to develop structures, policies, and processes that govern the organization's operations based on core principles recommended by ASX Corporate Governance Council.

According to Garratt (1996), some of the major responsibilities of Board of Governors include policy formulation and foresight, strategic thinking, accountability, and supervision of management. Watpac's board of governors plays these functions effectively by ensuring that operations are based on core principles promoted by the Council and that the organization's corporate governance policies and processes are designed based on the firm's size, structure, and associated risks. Boards have traditionally used historical, audited, and financial accounts to tell the story of their stewardship to shareholders. In the past few years, listed firms not only provide details to their performance but also anticipate the future (Tricker, 2012, p.194). While Watpac's board has used financial accounts to show its performance, very little attention has been given to anticipate the future though it is a listed company in ASX. Actually, shareholders are only provided with hard copies of annual and half-yearly financial reports that show Watpac's performance from a financial angle.

In attempts to promote the governance partnership between investors, companies and directors, the Board has delegated the implementation of strategy and everyday business operations to the firm's Chief Executive Officer and the Group Senior Executive Team. This initiative is also geared towards promoting the independence of directors during operations. The Board has also instituted a Nomination Committee to ensure it functions effectively with relevant skills and experience. However, the diversity of the management team in terms of gender is a major issue for that needs to be addressed. The company's management team does not consist of fair representation of women because it functions in business segments that usually have low representation of female workers. Actually, the entire Board of Directors and Group Senior Executive Team consist of men, which do not represent gender diversity.

With regards to the regulatory framework, the organization's directors support the core principles established by the Australian Stock Exchange Corporate Governance Council. Actually, each of the principles used that informs Watpac's corporate governance policies and practices are based on the recommendations provided by the Council. The Board has not only demonstrated support for these recommendations but used them as the basis for governance policies and practices. Actually, the management team utilizes the Council's recommendations as guidance for optimizing corporate performance and accountability. These recommendations are based on regulatory requirements in Australian Stock Exchange.

In relation to corporate risk assessment, the company's high priority on risk management is evident in fact that regular reports on the status of business risks are provided by the Audit and Risk Committee to the top management ("Watpac Annual Report," 2013). Watpac has also established a unique Group Risk Function led by a Group Risk Manager. The risk management policies and practices are guided by the International Standard on Risk Management ISO31000.

A good corporate fulfills its obligation to the society at large through corporate social responsibility and sustainability. Actually, corporate social responsibility is regarded as the human face of business (Holme & Watts, 2000). Watpac's annual report 2013 does not include any corporate social responsibility initiatives undertaken by the company.

Recommendations:

Watpac Limited can enhance its corporate governance initiatives through implementing a series of recommendations. The first recommendation is for the organization to adopt a raft of measures for showing its current performance and anticipating the future. Watpac should consider publishing narrative information that will be easily understood by all shareholders in addition to the financial information that is relatively difficult to interpret and understand. The publication should include the firm's mission and overriding objectives, performance, assumptions regarding the future and its strategies, and exposures to risk (Tricker,…