Table of Contents
Section 1 1
1.1 Company Profile: 2
1.2 Corporate Governance Disclosures, and are they sufficient? 2
1.3 Key issues that may have impacted on the company’s corporate governance performance 3
1.3.1 Glass Ceiling 3
1.3.2 Climate Change 3
1.3.3 Petroleum Accidents 4
1.4 Potential ethical considerations impacting on the company and the industry in which it operates 4
1.4.1 Petroleum Industry 4
1.4.2 Price Fixing 4
1.5 Theoretical Frameworks supporting Caltex CSR disclosures: 5
1.5.1 Stakeholder/Legitimacy Theory 5
1.5.2 Agency Theory 5
2.1 Part a 6
2.1 Part b 7
1.1 Company Profile:
Sweeney & Worthington (2008) state that oil prices are a crucial element not only within transportation industries yet also within the banking industry which often affects countries at large. Given that an increase or decrease in crude oil based on the Australian Dollar will either create an earnings loss or gain for Caltex, to account for this fluctuation Caltex has adopted the RCOP NPAT method that removes this impact and provides an accurate reading of financial reporting (Caltex 2013).
1.2 Corporate Governance Disclosures, and are they sufficient?
The Annual Report lists Caltex 8 main corporate governance disclosures. Caltex ensures compliance with the company’s continuous disclose obligations as identified in Caltex Continuous Disclosure Policy (2012) (Caltex 2012). As stated in the Annual Report (2012), Caltex’s corporate governance disclosures and practices comply with the ASX Corporate Governance Corporate Principles and Recommendations and is sufficient, with the exception of Principle 2 – Structure the board to add value. Recommendation 2.1 in principle 2 states that the majority of the board should be independent directors. Caltex’s Continuous Disclosure Policy sets out the key obligations of the Board to ensure that they comply with the disclosure obligation (Caltex 2012). Caltex is committed to conducting business and operations in accordance with the high standards of corporate governance, and in the best interest of shareholders. In assessing the corporate governance of Caltex, the Horwath Corporate Governance Report is used as a benchmark. This reports measures and ranks corporate governance practices and policies of Australia’s largest 250 companies. According to the 2009 WHK Horwath Corporate Governance Report, Caltex Australia were rated 4, 4 and 5 stars in the years 2007, 2008 and 2009 respectively (Crow Horwath, 2009). In addition to this, when comparing Caltex disclosure levels with Shell, they both follow the corporate governance disclosures. Therefore is it important to disclose CSR performance when benchmarking against competitors. It is interesting to note that despite adhering to the ASX principles, no additional information has been disclosed.
1.3 Key issues that may have impacted on the company’s corporate governance performance
1.3.1 Glass Ceiling
Caltex, despite having a female CEO currently, are congruent with other Australian organizations in that they are skewed towards having a board comprised of males which blatantly compromises Caltex’s “Equal Opportunity Policy” (Caltex 2012). Research conducted by Curtin University in conjunction with the Western Australian government (2010) proposes that women are under-represented in senior management positions. There is significant evidence to suggest that there is a direct correlation between organisational success and the critical mass of female leaders. Caltex is gradually modernizing its board, balancing the amount of females to male ratio. In 1997...